Namecheap now accepts Bitcoin with zero confirmations

http://community.namecheap.com/blog/2013/07/15/bitcoin-zero-confirmation/

by ted0 • 13 years ago

123 60 13 years ago

community.namecheap.com

dllthomas5• 13 years ago

This certainly seems to make more sense in a case like this - where deployment takes some time and the user is relying on continued service.

rdl• 13 years ago

Plus domain registrars get to roll back transactions over 14 days, I think.

duskwuff• 13 years ago

I think the limit is shorter these days (more like 2 or 3 days), and there's a penalty for using it too often. Still plenty for these purposes, though.

sehrope• 13 years ago

This is a perfect use case for zero confirmation transactions. Less friction for a legit customer and no real loss for the business if they need to roll back the transaction if it doesn't confirm. The only risk[1] I can see for Namecheap is the $.18 ICANN fee and that's assuming they're still on the hook for it if they cancel the registration.

[1]: Besides currency conversion risk of Bitcoin -> USD of course.

larrys2• 13 years ago

"Namecheap is the $.18 ICANN fee "

Competitor to namecheap here. Nope not on the hook for either the ICANN fee or the registry fee if done w/i 5 days.

Edit: for .com .org .net .info

gesman• 13 years ago

This could be done by everyone delivering service, rather than products.

dllthomas5• 13 years ago

Not really. If it's a situation where having the service for a brief period of time is valuable, and which can be active before a double-spend would be detected, you'll probably see as much fraud as for a physical good of a similar value.

On the flip side, requiring confirmations before physically shipping a product but not before beginning provisioning would likely be doable.

drcode10• 13 years ago

"Explain it like I'm Five"

All bitcoin transactions get written to a globally-shared ledger of transactions that is maintained by the bitcoin network. Roughly every ten minutes, a new page is added to the ledger that includes (most of) the latest transactions. When your bitcoin transaction is added to this ledger, it is called a "confirmation".

Accepting bitcoins with "zero confirmations" means that namecheap doesn't wait ~10 minutes before accepting your payment. Instead, they accept your transaction as soon as it is widely broadcast over the network, which takes only about a second after you send your money.

The danger, of course, is that the payment never makes it into this ledger, which basically means the transaction is invalidated, and the money "was never sent". This only happens in unusual circumstances (can't get into them all in this short explanation) and is only a small risk.

dllthomas5• 13 years ago

I don't think many five-year-olds would understand that, but I appreciate the attempt.

teej• 13 years ago

Isn't this exploitable by forging a transaction? The way I thought the ecosystem worked was that bitcoin mining verified the authenticity of transactions of the page, thus creating the "confirmation". Couldn't a malicious party create a fraudulent transaction to namecheap if they aren't verifying that it's real?

drcode10• 13 years ago

This is complicated to answer in detail, but the short answer is "It is easier to make gold out of lead than forge a bitcoin transaction." Not sure where that quote originally came from.

pixelcort• 13 years ago

Although the transaction is not yet confirmed in a block, the receiving party can verify that the transaction is at least a valid transaction.

VMG2• 13 years ago

the danger lies in double spending: https://en.bitcoin.it/wiki/Double-spending

MichaelGG• 13 years ago

Even if it was easy to forge, what's the point? As soon as it is clear that it's not a valid transaction, they can just cancel your order.

JoshTriplett• 13 years ago

As I understand it, in order to forge a transaction and construct a double-spend scenario, you have to have the ability to rapidly mine a bitcoin block, and then not submit it, thus forfeiting the 25BTC reward you'd normally get for the block. So, that type of fraud doesn't seem worth it unless you're scamming significantly more than the value of 25 BTC (currently close to $2500).

Which makes it fairly reasonable for a seller of $5-15 products that can be cancelled to take on that risk, since it's a lot less problematic and time-delayed than credit card chargebacks. "You'll gain high confidence within 10-40 minutes" seems preferable to "you might get a chargeback months later".

(Clarifying edit: I don't know if that's accurate for zero-confirmation double-spends; it's accurate for non-zero-confirmation double-spends.)

dwaltrip• 13 years ago

As I understand, if they wait 10-20 seconds and listen to the network to make sure no conflicting transaction is broadcast, the odds of a successful double spend drops to very very low.

larrys2• 13 years ago

"The danger, of course, is that the payment never makes it into this ledger"

As a registrar I can confirm that we can back out and get our money refunded for any transaction within 5 days. Now you can't abuse that (and there is a ratio of reversals you can do w/o having a problem) but the risk they are taking by waiting is actually far less than a credit card risk where you lose big time if fraud is involved (it gets kicked out much later than the cutoff to get the money back for the registry fee). And with cc you get dinged with a penalty and lose the money.

geuis• 13 years ago

I'd love to hear more about the decision trade off they made. On the one hand, you want to have a minimum of at least a handful of confirmations to verify that the btc aren't being double-spent. This means a delay of several minutes or longer. Alternatively, you can accept on faith with zero-confirmations that the btc is legit.

In this case, it sounds like Namecheap decided the ease of use is economically more valuable than the threat of being cheated. I like this line of thinking.

Further, it could be that it's not really a risk for Namecheap, because they can reverse a domain name purchase afterwards if the btc payment is fraudulent.

drcode10• 13 years ago

The latest I've heard is that an extremely sophisticated hacker can roll back* a zero confirmation transaction in about one third of attempts... so long term such a hacker could manage a 33% discount on purchases.

*Via a double spend attack with careful selection of peer connections and precise timing

dllthomas5• 13 years ago

But even if that's the case, when the double spend is spotted the service can be canceled, which in this case seems likely to be before service is started anyway.

nadaviv2• 13 years ago

I wouldn't usually worry about accepting zero confirmation transactions on a website. Most digital orders are reversible and physical orders take some time to process (packaging, shipping, etc).

However, with brick and mortar stores, 0-confirmations transactions are much more problematic for the business. The customer could be long gone with your product by the time you notice the double-spend. OTOH, the 10 minutes delay is also much more problematic for the customer with physical stores (imagine a customer having to wait for 10 minutes to buy a pack of gum).

One interesting solution for making zero-confirmations safer to accept is fidelity bonds [1], where you would "sacrifice" some Bitcoins from your address, a sort of "safe deposit" that you never get back. From that point on, until that address is seen to commit a double-spend, merchants can accept zero-confirmation payments from it knowing that attempting to double-spend would make the customer's initial deposit invalidated. As long as the deposit is larger than the transaction amount, it'll make double-spending unprofitable.

Edit: Another interesting aspect is that fidelity bonds can also be used to make other kinds of fraud unprofitable, not only double-spending. However, while its easy to determine when a user committed a double-spend attack (just show two signed transactions paying the same coins to two different places), its not that straight forward to prove other kinds of fraud.

[1] https://en.bitcoin.it/wiki/Fidelity_bonds#Financial_Services

petertodd2• 13 years ago

It's actually not all that hard and doesn't require timing more precise than a few seconds. You can try it yourself: https://blockchain.info/create-double-spend

That site isn't great because it's tricky to hit the two submit buttons in succession, but a fairly trivial script can do the same thing without much difficulty.

The reason why you don't hear about it is in reality there pretty much aren't any services out there that are actually vulnerable to that kind of double-spend in a way that results in genuine financial loss. Aside from some rare exceptions everyone accepting zero-conf transactions are either selling something that can be recalled after the fact, (tell the shipping department to stop) or has zero marginal cost. (like mp3s)

mikemoka• 13 years ago

Could the raise of anonymous and distributed services using bitcoin be the answer of people exasperated by government surveillance?

drcode10• 13 years ago

Bitcoin, from its inception, has had deep ties with radical libertarianism. Suspicion of the government is the raison d'être of bitcoin.

(though of course the software itself is completely ideologically neutral)

VMG2• 13 years ago

Nice to read this. The experience with paying with BTC last time I tried is was less than pleasant - I had to wait about an hour until the funds appeared.

drcode10• 13 years ago

I hate to disappoint you, but the main stream user experience of bitcoin remains a clusterfk. Things are slowly improving though (new payment protocol, hardware wallets, zero-conf transactions, lightweight wallets, deterministic wallets, etc.)

nrb• 13 years ago

This depends on the client. The reference client will not display the funds as available until it reaches 6 confirmations (~60 minutes) but the coins are theoretically available to spend as soon as your client knows about them, it's just a matter of using a client that allows you to do so, and also making sure that the network knows that you have coins in the address you specified as an input before you try to spend them yourself.

jotm3• 13 years ago

Who actually uses bitcoins and what for? Last time I checked, I couldn't buy bitcoins with my Paypal account or credit card.

The only way I see it being useful is if I get paid for some hacking job or botnet (then spend the money on Namecheap domain and hosting :-)...

What am I missing?

wmf• 13 years ago

If you're a serious speculator then you can figure out how to buy BTC with an ACH or wire transfer. Also, I suspect a lot of miners are looking for ways to spend their BTC.

jotm3• 13 years ago

I just see that more and more people adopt bitcoin, that it's anonymous, distributed and secure, and it's been described as the next best thing since banknotes - I just can't see the usefulness...

drcode10• 13 years ago

Well, you can go to my bookstore cointagion.com and buy lots of ebooks :-)

But yes, for the most part bitcoin is still a solution looking for a problem. The three best candidates for large-scale future use are, in my opinion (1) sending money overseas for employees/family (2) store of value in countries with high inflation (3) some kind of business model, as yet undiscovered, involving "reverse micropayments" (by which I mean micropayments involving few buyers, many sellers)

rbreve• 13 years ago

you can buy bitcoins using coinbase.com or localbitcoins.com

sirsar• 13 years ago

I couldn't buy bitcoins with my Paypal account or credit card

I'm very interested in any irreversible asset you can buy anonymously with a reversible payment method. Seriously.

llamataboot• 13 years ago

You used to be able to buy lindens via credit card and pay bitcoin via lindens, but I'm not sure if that has gotten harder to do

plg• 13 years ago

they don't need confirmation, they can find you without it if they need to (and so can the NSA)

kyledrake• 13 years ago

As an interesting note, I used the free Namecheap domain coupon I got at the Bitcoin conference to register NeoCities.org. Thanks guys! Great service, highly recommended.

lowglow• 13 years ago

Wait! I didn't see this in my bag from the bitcoin conference! Argh...

ted0• 13 years ago

drop me a line and i'll make sure to hook you up! ted@namecheap.com

untothebreach• 13 years ago

Funny this got to the front page today - this morning I bought a domain name from namecheap. First I tried to use my credit card. It was denied, for no apparent reason as I keep it paid off. Then I used my debit card, and it went through. However, later today BOTH my cards were temporarily suspended, and I had to wait on hold twice to verify that, yes, I did authorize a payment to namecheap.com.

Nothing else in my recent purchase history was out of the ordinary, which makes me think that namecheap.com is just one of those entities that the Cc companies have flagged.

bdonlan• 13 years ago

Sounds like the first denial was due to an automated fraud check with a false positive. When that happens, it's a good idea to call your credit card company right away - if it was such a fraud check, they can usually reactivate it right away and whitelist the merchant you tried to buy from, allowing you to retry the transaction - and more importantly, ensuring that your card isn't suspended and later declined again at an inopportune time.

RKearney2• 13 years ago

After Namecheap shut down imgur by changing their nameservers without the owners consent, I'm wary to give them another shot.

jafaku• 13 years ago

Why did they do that?

RKearney2• 13 years ago

https://news.ycombinator.com/item?id=5276648

Long story short it was alleged there was child pornography hosted on imgur. Namecheap took it upon themselves to "Block the domain for abuse" because the owner of the domain didn't reply in a time frame Namecheap deemed appropriate. Since Namecheap neither hosts, nor transmits any of the content on Imgur, it was very troublesome to hear they would shut down someones domain by their own hand, with no involvement, nor request from law enforcement.

  > I'm the CEO of Namecheap here. Just want to let you all know  
  > that I am personally looking into this. The domain was taken  
  > down by an overzealous abuse team member who had no knowledge  
  > of who imgur was. Although we did send 6 separate emails over  
  > the last week, it should have still been escalated. I am  
  > reviewing our policy to see how we can avoid this type of  
  > situation further in the future. To the folks at IMGUR, I want  
  > to sincerely apologize for this situation and the extreme  
  > inconvenience this has caused you. If you can connect me with  
  > someone in your company. I'd like to give you a personal call  
  > and discuss the matter further.  
  >  
  >  -Rick Kirkendall - CEO

I just don't feel comfortable leaving my domain name in the hands a lone abuse department team member that can evidentially change any domains nameservers without any approval or oversight.

Additionally, the new nameservers Namecheap picked had a 48 hour TTL, meaning the website was potentially down for 2 days for some people.

ticklishconcept2• 13 years ago

Maybe I'm missing something, but I do not believe there is a possibility of a double spend with the way NameCheap has setup their payment.

To pay with Bitcoin, you have to send BTC to your Namecheap account (which is done through BitPay), and wait for 6 confirmations (1 hour). They say "Funds will be added to your account within one hour after payment is confirmed. On very rare occasions, it may take up to 24 hours for the funds to be credited."

After that point, you can buy domain names with zero confirmations, but there is no risk at this point, because it is Namecheap account credit.

drcode10• 13 years ago

If you were right, then that would not be an example of zero confirmations.

I suspect you found old text that they need to update.

ticklishconcept2• 13 years ago

I just bought a domain on namecheap.com with Bitcoin to test it out, and I had to wait an hour for the confirmation.

Namecheap now accepts Bitcoin with zero confirmations

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