Bitcoin payments processor Bitnet has launched a new tool that allows merchants to mitigate the risk of accepting bitcoin payments without confirmations. The new “Instant Approval” service applies data provided by blockchain web service company BlockCypher to determine if a transaction is safe to accept.
Because of how the Bitcoin network is designed, bitcoin payments cannot be fully trusted until they have been confirmed by miners and included in at least one block, while waiting up to six blocks is advised. But since this can sometimes take more than an hour, it makes Bitcoin a less-than-perfect payments system. Bitnet, therefore, has now introduced its Instant Approval tool to solve this problem to a large extent. Seamus Cushley, VP Product at Bitnet, said:
“One of the biggest challenges for merchants wanting to accept bitcoin is how to accommodate the delayed confirmation times into their ‘real-time’ checkout flows and still be assured of being funded. […] We partnered with BlockCypher to provide key data for our ‘Instant Approval’ service due to their best-in-class metrics and enterprise service.”
Together with BlockCypher, Bitnet analyzes all ongoing transactions on the Bitcoin network. Taking into account factors such as the amount of fees paid and the propagation speed, the payment processing company believes it can calculate the probability that a bitcoin transaction will actually confirm on the blockchain. Importantly, Bitnet takes on the financial liability for that estimation as well, so that a merchant won't be at risk of double spends.
Speaking to CoinDesk, Bitnet's Chief Commercial Officer Afik Khan explained:
"Most transactions propagate across the bitcoin network with predictable speed, if this is not the case it means that the transaction is being rejected by some peers or nodes. This rejection is typically the result of the peer believing that the transaction is non-standard."
Bitnet made headlines in October of last year for raising US14$ million in an investment round. The payment processor's most notable partnership to date has been with Universal Air Travel Plan (UATP), a global payment solution for the airline industry.
CoinTelegraph reached out to Bitnet, but received no response before time of publication.
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Because of how the Bitcoin network is designed, bitcoin payments cannot be fully trusted until they have been confirmed by miners and included in at least one block, while waiting […]