BitGo has made one more step towards reliable and quick bitcoin transactions. It has launched BitGo Instant, the world’s first way to safely receive zero-confirm Bitcoin transactions with a full financial guarantee. Let’s clear out how it will help to make bitcoin more mainstream.
Now digital payments still can’t compete with traditional ones. However in some way they surpass the latter. Thus a typical bank transfer might take up to three days, while bitcoin transaction will take you no more than 10 minutes. “Time is money,” says Ben Davenport, BitGo’s co-founder and chief technology officer. “People want to move money quickly, especially when you have volatility and people want to move money to the exchange that has the best price.”
The process of recording transactions in the blockchain is called getting a single “confirmation”. If the transaction has not yet been included in a block and thereafter is not confirmed, the sender can spend the money elsewhere. The transaction at this time slot is known as “zero-confirm”.
That is why most Bitcoin businesses require multiple confirmations to credit a customer’s account. Unfortunately, this increases transaction time from 30 minutes to multiple hours due to the slow and unpredictable rate of block creation by miners.
BitGo Instant allows instantaneous Bitcoin transactions that are immediately guaranteed at certain merchants. It works on the BitGo traditional multi-signature security technology. Each wallet has three keys – the first is held by the user, the second is held by BitGo, and the final third is held by a third-party key recovery service (KRS). BitGo Instant requires two signatures to confirm the transaction – from the user and BitGo. KRS approval will be necessary for a double spend.
When BitGo signs a BitGo Instant transaction, it cryptographically signs a guarantee on the transaction. The recipients can be sure that if the transaction is not ultimately confirmed in the blockchain, they can file a claim and will get full compensation from BitGo.
“I think what makes BitGo Instant different is transactions are on-Bitcoin-blockchain (no additional new blockchain or hardware); our network is open access. Anyone can get an Instant-send-capable wallet. Anyone can receive it. And the technology is available today and is easy to integrate,” says Davenport.
BitGo Instant will launch with a number of exchanges and consumer Bitcoin apps, including Bitfinex, Bitstamp, CoinHako, FoldApp, Genesis Trading, Kraken, Shapeshift, Unocoin and others.
Jesse Powell, CEO at Kraken, looks forward to working with BitGo Instant: “Cross-exchange spreads will likely come down, improving the efficiency of bitcoin markets around the globe. Moreover, merchants or merchant processors who join the network will be able to instantly convert bitcoin they collect from customers, eliminating bitcoin price risk.”
By the way, Kraken has just acquired two large exchanges Coinsetter and Cavirtex to expand to prime North American markets. Client accounts of both exchanges will be automatically transferred to Kraken’s cutting edge, low fee platform on January 26, 2016. This will let Kraken open an access to full suite of advanced exchange services, including seamless bitcoin-dollar (XBT/USD) trading, to most of Americans and Canadians.