Blockcypher: Zero confirmation for Bitcoin transactions is still feasible

Blockcypher is a company that provides Bitcoin wallet services to large institutions such as exchanges and payment service providers. Due to the recent congestion of the Bitcoin network caused by the emergence of "dust" transactions, one of BlockCypher's major customers, Erik Voorhees' ShapeShift.io, suffered a double-spending attack and lost 2.6 BTC.

The most important service provided by Blockcypher is what they call the "Confidence Factor" technology. If the Blockcypher processor has reasonable reasons to determine (that is, more than 99%) that a double-spending attack will not be launched, then the transaction will be processed with zero confirmation. In this regard, Blockcypher describes it as follows:

“Simply put, if an unconfirmed transaction reports a 99.9% confidence factor, then our data shows that there is a 0.1% chance that a double spend will succeed. We are conservative by design. Even when we confirm a 90% confidence factor, the probability of a double spend succeeding is significantly less than 10%.”

For trading platforms like ShapeShift, the ability to trade quickly is key to their success. This facilitates instant conversion of digital currencies on their platforms. For Bitnet, the "confidence factor" technology is also very useful. In the past few months, Bitnet has reached partnerships with several payment providers, such as Cardinal Commerce, a large payment provider. Therefore, for them, the ability to process transactions quickly and hassle-free is key to their business model, so it is inevitable that they will now integrate Blockcypher's "confidence factor" technology.

Over 100,000 Double Spends

How the double spend happened is still unclear, but a BlockCypher representative, Josh Cincinnati, published an insightful blog post explaining that the attack vector used to perform the double spend has been patched. Cincinnati said that our company continuously improves its algorithm after any successful double spend attack, and we have systematically improved zero confirmation transactions to reduce the possibility of double spend attacks.

He wrote:

“In fact, we’ve seen dozens of different types of double-spend attacks, some successful, some not. All of these cases, including the most recent one, have provided us with useful insights to improve our confidence factor technology. 99.989% of double-spend attacks have a confidence factor of less than 90% or even less. Our confidence factor, even at less than 90%, does a good job of filtering out the most problematic and risky transactions.”

He said that there were more than 100,000 double-spending attempts to attack the network, and ShapeShift was also attacked during this period, but among so many double-spending attacks, only 11 double-spending "confidence factors" were evaluated by BlockCypher's "confidence factor" technology to be over 90%. If these huge numbers of double-spending attacks were successful, they could cause great harm to the network, but fortunately they did not succeed.