GAP600, a global pioneer in cryptocurrency payment transaction enablement, has concluded an agreement with Quoine to implement a solution that expedites deposit confirmations for the fintech provider’s cryptocurrency exchanges.

Quoine provides trading, exchange, and next-generation financial services powered by blockchain technology. It operates fully compliant cryptocurrency exchanges and will soon launch Liquid, a global liquidity platform backed by Quoine’s Qash token for all crypto investors, token issuers and a new generation of financial services customers.

“Generally, crypto exchanges wait to receive at least six confirmations before processing a transaction,” said Seth Melamed, Quoine Global Head of Operations.

Customer experience

While this mitigates risk for the exchange by nullifying instances of double-spend and ensuring deposit validation, the process takes time, which negatively impacts on the customer experience and trading strategies.

“It can be a frustrating and limiting experience for users and traders to wait at least an hour before a Bitcoin transfer reflects in their account, or a transaction is finalized, which is why we sought a service that could streamline the process.”

According to Melamed, Quoine chose GAP600 following a due diligence process because the company offers a specialized solution that few providers in the marketplace can deliver.

Risk-mitigated, final

“GAP600 facilitates instant, risk-mitigated cryptocurrency commerce by enabling exchanges, and other payment service providers, operators and merchants that accept cryptocurrency, to recognize unconfirmed Bitcoin and Bitcoin Cash transactions as final,” said Daniel Lipshitz, GAP600 founder and CEO.

GAP600’s proprietary risk engine analyzes and performs live risk scoring for each transaction as it reaches the mempool. This enables the company to guarantee cryptocurrency payments before they reach the blockchain.

Instant score, validity guaranteed

While the Quoine implementation is currently in a ramp-up phase, once fully operational – expected October 1st 2018 – Quoine will be able to send a cryptocurrency transaction query to GAP600 and the system will instantly score it and guarantee its validity.

“The bespoke solution implemented for Quoine includes unique implementation aspects, which will provide significantly faster deposit authorization than the industry standard for other exchanges. It will also enable transactions guaranteed against double spend by GAP600, which is insured with a superior A+ underwriter,” said Lipshitz.

With the ability to reflect deposits in customer accounts faster than other exchanges, Quoine would gain a distinct competitive advantage over its global competitors. “It will also craft a more compelling user experience, which will be positive for our service offering, especially for high volume traders, for whom speed is essential,” explained Melamed.

Serving clients with innovation

This ability to drive additional users to trade on Quoine’s exchanges will boost trading volumes and liquidity, which is a key strategic objective for the fintech company. “Enabling these capabilities would mark another significant step towards maintaining our position as one of the top tier cryptocurrency exchanges in the world. Our partnership with GAP600 and fast BTC deposits reflects Quoine’s focus on serving our clients with innovation,” added Melamed.

“We’re extremely proud to be pioneering instant exchange transaction enablement with Quoine, a company that is not only an industry leader in the Asian market, but a prolific global innovator,” continued Lipshitz. “The team at Quoine has big ambitions and we’re excited to be a part of enabling their vision.”

The partnership is significant for GAP600 as it marks the company’s entrance into the Japanese market – a truly powerful region in the cryptocurrency arena. The Quoine partnership completes GAP600’s offering to a global client base. “The fact that Quoine is a fully licensed and regulated provider lends significant credence to the GAP600 value proposition, and is validated recognition of our capabilities,” Lipshitz concluded.

Insights from GAP600 data

Last summer we launched GAP600, a service that guarantees zero confirmed bitcoin transactions for any wallet. Essentially, we enable instant acceptance of bitcoin transactions before they’re actually included in a block. To this end, we analyze and score every single bitcoin transaction on the network. When our algorithm approves a transaction, we guarantee the value of that transaction regardless of whether it’s included in a block. Our customers include bitcoin service providers, payment processors and exchanges. Since going live, we’ve processed more than 200K transactions for clients that accept zero confirmed transactions.

Looking at the actual data that has passed through our clients networks, we’ve managed to gain real insights about the nature of bitcoin transactions and the risks involved in accepting zero confirmed transactions.

Double Spend is a real issue

Double spend transactions are a known phenomenon in the bitcoin world and are essentially fraudulent transactions. While the actual percentage of successful double-spends on the network is low, we noticed that it still represents significant value. In the month of December 2016 alone, we rejected 121 double-spend transactions which would have amounted to a loss in excess of US $80k had they been accepted. From our observations, providers who offer instant bitcoin acceptance become more susceptible to double spend attacks (to be expected). In the transactions we processed, we saw 0.16% double spends, which is 0.09% higher than our observed bitcoin network average of 0.07%.

Transaction block acceptance takes time

By design, the average time between bitcoin block publications is 10 minutes. This is reflected in our data where we saw that the median time for a typical transaction to be accepted in a block was 8 minutes. It is important to note however that many real transactions don’t necessarily get included in the next block and the real transaction acceptance times can be much longer. For this reason, the average time we saw for a transaction to be accepted in a block was actually 16 minutes.

Block acceptance time is unpredictable

Averages are averages, but the real data shows a very large variance in the time it takes for transactions to be accepted. In many cases, it can take hours to be accepted and in extreme cases it can even take days or weeks.

Zero confirmation is risky business

If, as a bitcoin service provider, you’re willing to wait until your transaction is included within a block, you would have little to no risks. However, in a world where customers expect a minimum level of service that includes instant response from services, providers cannot afford to wait for block inclusion. Zero confirmation acceptance is becoming a standard for bitcoin service providers and as a result these risks need to be mitigated in order to accept zero confirmed bitcoin transactions.