How does BitPay manage to confirm transactions so fast (less than a minute)?

8

I believe it takes about an hour for 6 confirmations. (Edited from David Schwartz's comment)

However, when I purchased some stuff from merchants who used BitPay, the payment/orders were confirmed in like 20 seconds or so? Since BitPay is confirming the order before 6 confirmations, how does it protect itself from double spending attacks?

Medicine

Posted 2013-06-12T17:35:01.757

Reputation: 572

How long do you think it takes BitPay to confirm a transaction? Are you assuming that just because the buyer isn't waiting at a screen, that means the transaction has already been confirmed? (Also, on average it's 10 minutes per confirmation, or 60 minutes for 6 confirmations.) – David Schwartz – 2013-06-12T18:42:51.133

@DavidSchwartz I was able to place orders with merchants using BitPay in less than 30 seconds from sending payment to confirmation of payment on BitPay screen and confirmation of order from merchants? BitPay has retail store solutions where the customer pays with bitcoin and leaves with his stuff which looks like is getting processed in less than a minute. – Medicine – 2013-06-12T19:48:40.097

Answers

7

BitPay takes all the risks of a double-spend and they don't wait for any confirmation to make the user feel good with the purchase. The merchant doesn't care because they'll receive fiat and most of them are not direct access purchases.

rdymac

Posted 2013-06-12T17:35:01.757

Reputation: 1 397

1how does this scale when it is used in retail stores and I shopped for expensive stuff, say jewellery or a macbook etc...? – Medicine – 2013-06-18T00:06:37.193

@Medicine Same as my previous answer. They take the risks for the instant payment. There's no other way around, unless you use a Green Address. – rdymac – 2013-06-19T00:56:27.823

They probably charge extra for the exchanging of currencies because of that. And you did say it takes several seconds, which often is enough to detect a double-spend attempt (but often not). – Daniel H – 2013-06-19T02:21:09.373

@DanielH, couldn't just several huge fradulent transactions render them bankrupt like MtGox? – Pacerier – 2014-03-20T16:48:33.893

@Pacerier I read they've not receive a double spend attempt yet, they'd love to though, so they can appear in the media telling the story... – rdymac – 2014-03-30T21:00:28.257

1

As I understand. In a bricks and mortar retail environment listening software can be employed which in just a few seconds reduces the risk of a double spend to a mathematical possibility rather than a practical concern.

Mail order, as soon as the transaction is detected, well there is no risk.

John Law

Posted 2013-06-12T17:35:01.757

Reputation: 11

Do you have any information or source regarding "in just a few seconds reduces the risk of a double spend to near negligible". – Pacerier – 2014-03-20T16:47:53.647

0

"For security and fraud prevention reasons, we require one confirmation on the bitcoin blockchain before we can credit funds can be added to the BitPay Card.

Note that confirmation times are determined by the Bitcoin network, not by BitPay. One confirmation may take as few as several seconds to as much as a few days, but most transactions are confirmed within an hour." - from their site. So they wait just for one conf.

theDuke

Posted 2013-06-12T17:35:01.757

Reputation: 1