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From: Jeff Garzik <jgarzik@bitpay.com>
Date: Sun, 21 Jun 2015 12:49:41 -0700
Message-ID: <CAJHLa0NJw2UA68gJq8bqLXr4ptgWC8drvvs8d3AwA+iHcmMvJQ@mail.gmail.com>
To: Eric Lombrozo <elombrozo@gmail.com>
Content-Type: multipart/alternative; boundary=089e0149ce38762d4905190c76e1
Cc: Bitcoin Dev <bitcoin-development@lists.sourceforge.net>,
	Justus Ranvier <justusranvier@riseup.net>
Subject: Re: [Bitcoin-development] F2Pool has enabled full replace-by-fee
Precedence: list

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On Sun, Jun 21, 2015 at 12:42 AM, Eric Lombrozo <elombrozo@gmail.com> wrote=
:

> Thanks for asking *the* question, Jeff. We often get caught up in these
> philosophical debates=E2=80=A6but at the end of the day we need something=
 concrete.
>
> Even more important than the specific software you=E2=80=99re using is th=
e
> security policy.
>
> If you must accept zero confirmation transactions, there are a few
> concrete things you can do to reduce your exposure:
>
> 1) limit the transaction amounts for zero confirmation transactions - do
> not accept them for very high priced goods=E2=80=A6especially if they req=
uire
> physical shipping.
> 2) limit the total amount of unconfirmed revenue you=E2=80=99ll tolerate =
at any
> given moment - if the amount is exceeded, require confirmations.
> 3) give merchants of subscription services (i.e. servers, hosting, etc=E2=
=80=A6)
> the ability to shut the user out if a double-spend is detected.
>

Already done -- BitPay merchants choose their level of transaction
security.  Level of confirmations is directly exposed to merchants, so that
they choose the level of risk for themselves.

Physically shipped orders and subscriptions are actually the easy cases and
are already handled.  These can accept 0-conf for an initial order phase,
then have the luxury of time to wait for confirmations before shipping /
canceling a subscription.

Electronic goods instantly delivered are the toughest use case.  Even
there, merchants choose their level of risk.


> 4) collect legal information on purchasers (or have the merchants collect
> this information) so you have someone to go after if they try to screw yo=
u
>

The system requests this information on orders yes.  Merchants also collect
this info as their needs dictate.


> 5) create a risk profile for users=E2=80=A6and flag suspicious behavior (=
i.e.
> someone trying to purchase a bunch of stuff that totally doesn=E2=80=99t =
fit into
> their purchasing habits).
> 6) get insurance (although right now reasonably-priced insurance is
> probably pretty hard to obtain since statistics are generally of little
> use=E2=80=A6we=E2=80=99re entering uncharted territory).
> 7) set up a warning system and a =E2=80=9Cpanic=E2=80=9D button so that i=
f you start to
> see an attack you can immediately disable all zero confirmation
> transactions system-wide.
> 8) independently verify all inbound transactions and connect to multiple
> network nodes=E2=80=A6check them against one another.
>

Definitely looking at or have implemented this sort of stuff.  I cannot get
into detail in public...

--=20
Jeff Garzik
Bitcoin core developer and open source evangelist
BitPay, Inc.      https://bitpay.com/

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<div dir=3D"ltr">On Sun, Jun 21, 2015 at 12:42 AM, Eric Lombrozo <span dir=
=3D"ltr">&lt;<a href=3D"mailto:elombrozo@gmail.com" target=3D"_blank">elomb=
rozo@gmail.com</a>&gt;</span> wrote:<br><div class=3D"gmail_extra"><div cla=
ss=3D"gmail_quote"><blockquote class=3D"gmail_quote" style=3D"margin:0 0 0 =
.8ex;border-left:1px #ccc solid;padding-left:1ex"><div style=3D"word-wrap:b=
reak-word"><div><div class=3D"h5"><span style=3D"color:rgb(34,34,34)">Thank=
s for asking *the* question, Jeff. We often get caught up in these philosop=
hical debates=E2=80=A6but at the end of the day we need something concrete.=
</span><br></div></div><div><br></div><div>Even more important than the spe=
cific software you=E2=80=99re using is the security policy.</div><div><br><=
/div><div>If you must accept zero confirmation transactions, there are a fe=
w concrete things you can do to reduce your exposure:</div><div><br></div><=
div>1) limit the transaction amounts for zero confirmation transactions - d=
o not accept them for very high priced goods=E2=80=A6especially if they req=
uire physical shipping.</div><div>2) limit the total amount of unconfirmed =
revenue you=E2=80=99ll tolerate at any given moment - if the amount is exce=
eded, require confirmations.</div><div>3) give merchants of subscription se=
rvices (i.e. servers, hosting, etc=E2=80=A6) the ability to shut the user o=
ut if a double-spend is detected.</div></div></blockquote><div><br></div><d=
iv>Already done -- BitPay merchants choose their level of transaction secur=
ity.=C2=A0 Level of confirmations is directly exposed to merchants, so that=
 they choose the level of risk for themselves.</div><div><br></div><div>Phy=
sically shipped orders and subscriptions are actually the easy cases and ar=
e already handled.=C2=A0 These can accept 0-conf for an initial order phase=
, then have the luxury of time to wait for confirmations before shipping / =
canceling a subscription.</div><div><br></div><div>Electronic goods instant=
ly delivered are the toughest use case.=C2=A0 Even there, merchants choose =
their level of risk.</div><div><br></div><div>=C2=A0</div><blockquote class=
=3D"gmail_quote" style=3D"margin:0 0 0 .8ex;border-left:1px #ccc solid;padd=
ing-left:1ex"><div style=3D"word-wrap:break-word"><div>4) collect legal inf=
ormation on purchasers (or have the merchants collect this information) so =
you have someone to go after if they try to screw you</div></div></blockquo=
te><div><br></div><div>The system requests this information on orders yes.=
=C2=A0 Merchants also collect this info as their needs dictate.</div><div><=
br></div><div>=C2=A0</div><blockquote class=3D"gmail_quote" style=3D"margin=
:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div style=3D"word=
-wrap:break-word"><div>5) create a risk profile for users=E2=80=A6and flag =
suspicious behavior (i.e. someone trying to purchase a bunch of stuff that =
totally doesn=E2=80=99t fit into their purchasing habits).</div><div>6) get=
 insurance (although right now reasonably-priced insurance is probably pret=
ty hard to obtain since statistics are generally of little use=E2=80=A6we=
=E2=80=99re entering uncharted territory).</div><div>7) set up a warning sy=
stem and a =E2=80=9Cpanic=E2=80=9D button so that if you start to see an at=
tack you can immediately disable all zero confirmation transactions system-=
wide.</div><div>8) independently verify all inbound transactions and connec=
t to multiple network nodes=E2=80=A6check them against one another.</div></=
div></blockquote><div><br></div><div>Definitely looking at or have implemen=
ted this sort of stuff.=C2=A0 I cannot get into detail in public...</div></=
div><div><br></div>-- <br><div class=3D"gmail_signature">Jeff Garzik<br>Bit=
coin core developer and open source evangelist<br>BitPay, Inc. =C2=A0 =C2=
=A0 =C2=A0<a href=3D"https://bitpay.com/" target=3D"_blank">https://bitpay.=
com/</a></div>
</div></div>

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