Coinbase reveals way to improve Bitcoin [BTC] reliability
One of the biggest cryptocurrency exchanges in the world, Coinbase, revealed how the platform uses economic incentives in order to improve Bitcoin [BTC] reliability.
In the official blog post published on October 3, Coinbase mentioned that due to fluctuating and unpredictable transaction fee, the confirmation time of a transaction can be really slow at times. And, this is the reason why the platform is implementing economic incentives.
The platform revealed how the technology known as ‘Child Pays for Parent’ is used to tackle the problems. "To address these challenges, we leaned on a well-known procedure which uses economic incentives enabled by the Bitcoin protocol for improving confirmation time of transactions: Child Pays for Parent (CPFP), and we’ve implemented this at Coinbase scale, sometimes using it to rescue thousands of transactions in a single day," according to the post.
Coinbase shared the news through its official Twitter handle.The tweet read, “Blockchain transaction fees can be notoriously volatile. Learn how our engineering team is using a technique called Child Pays for Parent to improve the reliability of #Bitcoin transactions for our customers. #CPFP”
In the blog, it was explained how the technology works mentioning that the platform is trying to balance two important factors when a user makes a BTC transaction to another address on the network. The two factors include – the transaction fee or the amount the customer paid to include their transaction into a block and the speed of the transaction that gets included in that block.
The post also explained that Bitcoin operates with a fee market and it is quite different from a credit card processor as it charges the fee by cutting a percentage out of the transaction.“This is somewhat analogous to a pay-as-bid auction, which is structured as follows: potential buyers will submit bids at different prices, and the auctioneer will select the highest bidders as the winners,” according to Coinbase.
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