Topic: services that require 0 confirmations (Read 1116 times)

this is correct but if someone were to bet with a 0 confirmations TX they could let the TX confirm if they win the bet and attempt to double spend the outputs of the TX if they lose.

That would not work with LB for sure because even though you can double-spend with 10(max) sec interval LB still delays payments that are at risk plus even if you manage to double-spend after 10 sec they still spend your unconfirmed inputs as payout so your double-spend has lover chance of winning the race.

With zero confirmations, double-spends are possible even without having any mining power "on your side". If the service credits your account and allows you to do irreversible things with that credit, then they are at risk. This can be mitigated by allowing only reversible things, banning accounts/IPs who double spend (this is only marginally useful if accounts can be created anonymously), making the only "credit" be dependent on the original tx confirming (as some gambling sites do), etc.
There needs to be some balance of time delay (high confirmations = long wait) vs security (high confirmation = high security) and prevention (if you wait for 6 confirmations before doing anything on your end, it's all-but-perfectly secured) vs cure (you can monitor for double-spend attempts and ban accounts). Different services choose different confirmation numbers based on how many confirmations their business needs, based on factors like these.

You don't need an orphaned block for a double spend to take place. That would argue for accepting 1 confirmation. All that needs to happen to double spend a 0 confirmation is that the service sees a tx that doesn't enter the blockchain in the end (e.g. because you announced it only to the merchant, and announced a conflicting tx to the rest of the network at the same time).

Usually when there is a 0 confirmation policy in terms of gambling, the payment back is sent using the funds of the money sent in, so if that never confirms, your payment back will also never confirm (correct me if I'm wrong). Luckyb.it has 0 confirmations, and they pay back within roughly 10 seconds from your bet (technically instant if you don't count the plinko animation), so theres an example. I think there is a way to purposefully make it so it doesn't confirm, so I don't know how that would work on luckyb.it

Orphaned blocks where transactions are lost are pretty rare. They are rare enough that Bitpay can take payment with 0 confirmations.

For the services that instantly credit your account after you deposit bitcoin, are they at risk?  Because I know bitstamp now requires 6 confirmations and others usually require 3 confirmation.  I'm unclear why some require 0 confirmation, and why some require so many.