What does zero confirmation transaction mean? - Bitcoinist.net



A zero confirmation transaction is when a company or a merchant accepts a Bitcoin transaction when it gets broadcasted to the network, not when it gets put into a block where it is then sitting for 10 minutes for the first confirm.

Some companies already do this, with Bitpay being an excellent example of this. Since Bitpay is a payment processor, any company using Bitpay will allow customers to experience instant  transactions.

Services that would benefit especially from zero confirmation transactions are exchanges, allowing for more liquidity and movement of Bitcoin and altcoins as Bitcoin for most exchanges requires 3 confirms before it’s useable.

This hinders the ability for day traders to arbitrage and work from exchange to exchange, which is an upset to some. For less secure altcoins, the number of confirms before you can use an Altcoin may increase, lessening the chance of making a quick buy or sell at good prices.

This truly makes transactions instant, allowing you not have to wait 10 minutes or so before you “have paid”. Some people may be concerned with this method as it’s technically less secure and could be susceptible to 51% attacks, but with Bitcoins network hashrate, a 51% attack is highly unlikely. Since in Bitcoin chargebacks are nonexistent, I wouldn’t be too concerned about accepting zero confirmation transactions. If you want to be especially safe, I think 1 confirmation is a great way to implement this without making potential customers wait too long before completing a purchase.

If you don’t want to wait that long, waiting a couple seconds for the transaction to broadcast to several nodes will also increase security. The more nodes that accept the transaction as legitimate, the less likely that it’s a double spending attempt.