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In the second installment of this two-part blog series, GAP600 expands on the state of 0-conf and instant deposits in the cryptocurrency and Bitcoin space by delving into the different characteristics of coins and how these impact 0-conf transaction (tx) enablement.
The GAP600 approach to 0-conf
In part 1 of the report, we outlined the technical workings of the GAP600 solution and how it enables instant 0-conf payment and deposit acceptance across Bitcoin SV (BSV), Bitcoin (BTC), Bitcoin Cash (BCH) and Ethereum (ETH) transactions, while protecting businesses against risks such as fraud and double-spend when accepting instant crypto payments and deposits.
It is, however, pertinent to expand further on the technical aspects by outlining GAP600’s approach and philosophy in the context of 0-conf enablement.
GAP600 currently offers 0-conf tx services for BTC, BCH, BSV and ETH. As already outlined above, we look for a reasonable fee/size or fee/weight and monitor for any propagation issues or conflicts and no other issues when guaranteeing 0-conf transactions made using Bitcoins.
Among the Bitcoin fork coins, the first-seen rule is generally respected by mining pools once a transaction is received . This rule implies that once a mining pool has received a tx, they will not replace it with a conflicting tx.
This rule is generally followed, except where we see a great variance in fees over time of stress in the BTC network. A transaction with an unreasonably low tx will be susceptible to double spend on the BTC network. The network topography that makes up the Bitcoin network is also a small world design or Mandella network, which ensures fast transaction propagation, as well as a very close singularity regarding what everyone sees in their mempool.
Bitcoin is designed in a UTXO (unspent transaction outputs) format, in which transactions or address capability is defined by valid transaction outputs. This design is very efficient and scalable as it does not require constant account status monitoring to validate a transaction.
The ETH approach, on the other hand, is account-based, which means each transaction has an associated number that can be processed on the account and ordering system. Furthermore, the ETH blockchain does not lend itself to a small world structure. As such, there is no clear picture available of all transactions at any given time.
Consequently, on Ethereum, we experience differences in what our various nodes see at the 0-conf level. This adds complexity to our processes when we aim to monitor propagation and conflicting transactions. Through reasonable fee monitoring propagation and waiting for one confirmation, we can currently guarantee 1-conf ETH transactions.
GAP600 currently offers 0-conf tx services for BTC, BCH, BSV and ETH. As already outlined above, we look for a reasonable fee/size or fee/weight and monitor for any propagation issues or conflicts and no other issues when guaranteeing 0-conf transactions made using Bitcoins.
Among the Bitcoin fork coins, the first-seen rule is generally respected by mining pools once a transaction is received . This rule implies that once a mining pool has received a tx, they will not replace it with a conflicting tx.
This rule is generally followed, except where we see a great variance in fees over time of stress in the BTC network. A transaction with an unreasonably low tx will be susceptible to double spend on the BTC network. The network topography that makes up the Bitcoin network is also a small world design or Mandella network, which ensures fast transaction propagation, as well as a very close singularity regarding what everyone sees in their mempool.
Bitcoin is designed in a UTXO (unspent transaction outputs) format, in which transactions or address capability is defined by valid transaction outputs. This design is very efficient and scalable as it does not require constant account status monitoring to validate a transaction.
The ETH approach, on the other hand, is account-based, which means each transaction has an associated number that can be processed on the account and ordering system. Furthermore, the ETH blockchain does not lend itself to a small world structure. As such, there is no clear picture available of all transactions at any given time.
Consequently, on Ethereum, we experience differences in what our various nodes see at the 0-conf level. This adds complexity to our processes when we aim to monitor propagation and conflicting transactions. Through reasonable fee monitoring propagation and waiting for one confirmation, we can currently guarantee 1-conf ETH transactions.
GAP600 is currently researching how to support omni token transactions. Omni is a protocol that runs on top of BTC and also uses an account-based model, with the sequence of transactions defined by the order they are included in a block on the BTC network.
The challenge regarding omni from our perspective is that any tx with an output of a specific address can be used to move omni coins. As such, if an omni account has more than one valid UTXO, the capacity to guarantee 0-conf transactions becomes limited.
Ultimately, though, the ability to enable safe and secure instant or near-instant 0-conf payments or deposits already exists. By removing the inherent risk of double-spend, we believe that 0-conf can and should become the industry standard for cryptocurrency transactions. Only them will cryptocurrency realize its potential as a replacement for fiat currency.
Daniel Lipshitz
CEO GAP600 Ltd