How is the immediate transfer confirmed? If there is no confirmation time, then what is the mechanism to keep the chain from being abused and cheated? I looked at the website, the FAQ's and I just don't have the time and patience for a white paper today, is there some place the system itself was covered that I am missing?
That's a good question and requires a long answer.
To make transactions fast we let merchants operating in exchange mode perform transactions with zero (minimum) confirmation. That means merchants and consumers will not have to wait long till the transaction gets into new block.
How we do that?
For bitcoin and altcoins we pay attention to 3 parameters:type of transaction, spread of the transcation in the web transaction fee.
When a standard transaction gets into a full node's mempool, can not be replaced, and we can spend it for certain. By a standard transaction we mean a paytohash transaction without the possibility of replacing it by fee (bip125). Also we check what percentage of complete nodes that also received this transaction. The standard transaction + spread on the network gives a good percentage of that there can't be a double spending attack.
We also check the transaction fee so that it corresponds to the average level at the moment to ensure that the transaction will get into one of the new blocks.
This altogether gives us a good percentage of probability (90+) to judge that the transaction will get into the blockchain even before it actually happens.
This allows you to make a payment in 8-10 seconds.
But this approach does not work with ether. Here any transaction in mempool can be replaced by another with a larger gas price. Therefore, here we use one confirmation and check the distribution of the confirmed block in the network in order to guarantee a high probability that the transaction will remain in the blockroom.
This, with sufficient gas price, it reduces the transaction to 15-20 seconds.
We also take into account the individual solutions of different coins of the InstantSend type in dash, which allows you to make payments within seconds.
In addition, to make transactions even faster, we use our reputation system. Buyers registered in our system and committing a large number of successful transactions will not have to wait for confirmation at all. Transactions for them become instant.
Moreover, since this function works in the exchange mode, we take all the risks associated with the transaction not being confirmed on ourselves.
To protect ourselves from probability that something goes wrong we limit the amount that can be made without confirmations to 200 euros. For registered customers with a high rating this limit can be extended.
