In Support of Opt-In RBF

I thought it would be good if I briefly shared BitPay’s thoughts on “Opt-In Replace By Fee”. While it might not have been communicated well (it even took us by surprise), we do support it. We support it because it adds a useful feature to the Bitcoin mesh network. In fact, more than a year ago we were trying to figure out how we ourselves would lobby for this capability as it is an enabler for an internal project we’ve been working on. We were thrilled when we saw that Opt-In RBF was merged.

By default, nodes on the Bitcoin network use a “first seen” policy when it comes to conflicting transactions. This means that if a node sees a transaction that conflicts with an earlier transaction, the node will simply disregard the later transaction. This behavior is useful because it increases the cost of successfully executing a double spend and zero confirmation transactions can be risk adjusted accordingly. At BitPay, by default, we require six confirmations, but merchants can choose to accept transactions with zero or one confirmation (with either us or the merchant taking the risk).

Opt-In RBF adds a new capability to the mesh network. If desired, the originator of a transaction can request an alternate behavior when it comes to conflicting transactions. If the later transaction includes a higher fee, the node will replace the original transaction. This too has its uses and we intend to exploit this new feature of the mesh network in the future.

In summary, both the “first seen” and “RBF” behaviors are useful and valuable features of the mesh network. The “first seen” behavior is not being dropped and existing wallets and infrastucture that make use of the “first seen” behavior will not be affected (except for minor changes needed to detect RBF transactions). This new functionality makes Bitcoin itself more valuable.