Subject: Re: [Bitcoin-development] alternate proposal opt-in miner takes double-spend (Re: replace-by-fee v0.10.0rc4)

From: Justus Ranvier <[email-masked]>
Date: Sun, 22 Feb 2015 10:00:05 -0600

On 02/22/2015 07:50 AM, Matt Whitlock wrote:
> This happened to one of the merchants at the Bitcoin 2013
> conference in San Jose. They sold some T-shirts and accepted
> zero-confirmation transactions. The transactions depended on other
> unconfirmed transactions, which never confirmed, so this merchant
> never got their money.
> 
> I keep telling people not to accept transactions with zero
> confirmations, but no one listens.

A better solution is to track the failure rate of zero confirmation
transactions, and adjust prices accordingly to cover the expected loss.

This is what every merchant *already does* since no payment method has
a 0% fraud rate.

Even physical cash has a probability of being counterfeit, and the
prices you pay for things at a convenience store already have that
risk priced in.

The idea that zero confirmation transactions require a 100% guarantee
is a strawman, especially since there exists no number of
confirmations the actually produce a 100% irreversibility guarantee.

Zero confirmation transactions can work as long as the risk of
reversal is measurable and reasonably stable.