Topic: Using an off-chain service vs. accepting zero confirmation transactions? (Read 588 times)

I'd definitely go with accepting 0 confirm transactions. After all the things happening with Bitcoin, trusting coins to a third party is something that I simply cannot do. I think the risk of depositing coins on a service is way bigger than the risk of a double spend, or another kind of attack...

There are also technologies being developed to make transactions faster within the Bitcoin network. Let's see if those evolve and take off. Meanwhile, 0 confirm it is.

Zero confirmation transactions are usable if you connect to multiple trusted nodes and if you require identification of the people that is making the transaction.

The amount of double spends would be insignificant

I am relatively new to the concept of off-chain transactions. I can't offer my personal opinions on that, but when it comes to zero confirmation transactions, I believe that the downside to those is they are not as secure as transactions that have been confirmed. However, in real world situations where you can't wait for confirmation times, I am not sure which would be better.

both methods have some pros and cons. using an off-chain service like a coinbase wallet account, can make purchases go fast and smooth but you are relying on a third party service. if they go offline your bitcoin is lost too.
but accepting 0 confirmation makes it that you have complete control over your money and rely on nobody.

I liked the McDonald example and probably what we need is the zero confirmation transactions however so we can do transactoin even faster then before however the off-chain thing is really good to have more privacy (which is screwed now by exchange who ask you for ID and your whole life story ... )

To me personally it doesn't matter. I would accept either of both as long as the amount of hassle for me as a custommer stays as low as possible.

Merchants are always in a risky position due to chargebacks, hacks, fake money, etc. That's something they will always have to deal with.

Other than the successful double spend against OKPay which happened during the March 2013 fork (link), I think the only other occasions where a double spend against an actual business was successful were the ones against SatoshiDice (link) where it was possible to cancel out losing bets by double spending them while only letting winning bets go through.


I don't think it's really possible to know whether or not a company that offered such services was reputable unless they collapsed (at which point it would be too late, of course). Using the example of Inputs.io, TradeFortress was a highly trusted user here on the forums and his service claimed to have a very high standard of security - even going so far as to calling itself as "the most secure wallet ever created". Mt. Gox was the largest, and for a long time - the only, exchange in operation and that one also ended very badly for its customers.

Personally, I think it's best to consider all such services as being risky. However, if zero confirmation transactions aren't readily accepted by retailers due to the risk of fraud then I suppose they will become a necessary evil.

If it's a reputable company i don't mind off-chain, see Coinbase. The good thing is with bitcoin people are free to choose.

for me it is either accepting zero, i don't see a big problem here(which is only for big transactions in the case of a finney attack for example) because of node propagation in the case of an attack, also the chances are very slim, there was not even a single case until now right?

or to go with sidechain if they were to be implemented in the future; a specific sidechain for faster cnformation

Obviously, there are some situations where waiting ~10 minutes or more for a single confirmation or up to an hour or more for multiple confirmations is unrealistic.

If you wanted to purchase a burger from a McDonalds drive-thru or a coffee from Starbucks, which method do you think is better - either using an off-chain service like Inputs.io or accepting zero-confirmation transactions?

Using an off-chain service:

In this method, you would have an account at a centralized wallet service that would work like a personal hot wallet. It would a contain a (hopefully) small amount of coins for day-to-day transactions. This wallet would have a similar function and purpose to a physical wallet that you might have in your pocket. Both the merchant and the customer would have their own accounts and all transactions would be done internally and in an off-chain manner.

The downsides are that this brings centralization into Bitcoin payments and the service could get hacked or the owner could choose to run away at any moment and users would be out of funds. In fact, this is exactly what happened with Inputs.io.

Accepting zero-confirmation transactions:

The other method is to simply accept zero-confirmation transactions. Unfortunately, this opens up the possibility of double spending via services like BitUndo. Even though the chances of a successful double spend attempt being pulled off are currently very low, the customer loses nothing by attempting it (i.e. they would simply pay for the product as normal if it fails), and if such an attempt were successful, then the merchant would be out of pocket for any goods or services sold with no possible recourse other than to accept their loss since Bitcoin transactions aren't reversible.