Bitcoin Forum

Gemini Speeds Up Deposits to Bypass Bitcoin Network Congestion

Digital currency exchange Gemini is doing away with transaction confirmations for approved customers. Announced yesterday, the move will see the New York-based exchange, founded by investors Cameron and Tyler Winklevoss, begin crediting users for their bitcoin deposits before those transactions have been confirmed on the network.

http://www.coindesk.com/gemini-speeds-deposits-bypass-bitcoin-network-congestion/

It may seem like a handy added benefit, but I personally don't see much value in it. It doesn't matter how much they analyze deposits to determine the probability of getting a confirmation as it still can be bypassed in some cases. In case it does get bypassed, and the person in question has "these" coins being credited to his account directly and start executing orders, what if later turns out the deposit in question won't confirm and is double spend elsewhere...? Will they roll back everything as they did back then when someone accidentally bought the price up to $2200 there? Probably yes.

Bids for the zero-deposit offer confirmation is the latest step of the company as it seeks to attract more traders - this one great innovation.

The key word there is "approved" customers. They know from their analysis that these transactions are likely to confirm. These approved customers are likely long-term customers who are unlikely to attempt to double spend. Hence the risk associated with this is low.

It doesn't matter how approved customers are, the main point of attention should be that an exchange at all times should avoid making decisions that potentially can harm their clients. No matter how the low the chances of abuse are, it still offers an opening for people to disrupt that exchange, where in that case a roll back is the only option left for Gemini. They already proved in the past to not be shy of performing a roll back even though the person that made the mistake opted for no roll back.