bitcoin-dev

Draft BIP for User-Defined Transaction Flags Policy & Strategy

Draft BIP for User-Defined Transaction Flags Policy & Strategy

Original Postby Isaac Eiter

Posted on: April 14, 2024 20:12 UTC

In the ongoing discussion about the practicality of Bitcoin transactions for retail and service providers, a key concern is raised regarding the reliability of 0-confirmation (0-conf) transactions.

When merchants accept Bitcoin payments in real-time, the necessity for these transactions to be recognized as final immediately is paramount to prevent fraud. However, this immediacy cannot be guaranteed until the transaction has been included in a block. The suggestion of adding a "final" flag to transactions to denote their completion and prevent double-spending is critiqued as providing a false sense of security. This critique underlines that such measures do not alter the fundamental requirement for transaction confirmation within a block, emphasizing that on-chain point-of-sale (POS) transactions may not be economically viable in a fully Bitcoin-integrated economy.

Further analysis suggests that for significant POS transactions where the value justifies on-chain processing, parties involved should be prepared to wait for the transaction's inclusion in a block. This approach underscores the importance of transaction verification over convenience in high-value exchanges.

The debate extends into the realm of automated or recurring payments, where time sensitivity is generally lower. In such scenarios, the introduction of a "Do Not Reinclude" (DNR) flag, intended to enhance the efficiency of transaction processing and fee competition for block inclusion, is questioned. The argument presented is that the assurance provided by such a flag is unnecessary, as the reliance on transaction confirmation through block inclusion remains the more secure method for validating transactions. This skepticism towards the DNR concept highlights doubts about its ability to address any significant problems within the Bitcoin transaction process, particularly concerning the optimization of next block fee competition.