San Francisco-based cryptocurrency giant Coinbase is set on improving the process of sending Bitcoin from their wallet system to external addresses, largely considered one of the most frustrating components of any digital currency transaction, especially when networks experience heavy loads.
To address this issue, Coinbase’s engineering team has begun to roll out a well-established protocol called child pays for parent (CPFP), which, in laymen terms, uses higher fees as an incentive for miners to push through a transaction. CPFP works by sending a second transaction (child) with a higher fee, increasing the likelihood of the initial transaction (parent) getting picked up on the network.
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 https://t.co/oRzxeqx9RM
— Coinbase (@coinbase) October 3, 2018
While this process can be successfully implemented by more experienced users outside of Coinbase, the company has worked to automate the process on the back-end. According to the announcement, if a customer’s transaction is stuck on pending for at least 4 blocks, Coinbase will broadcast and pay for a child transaction at a sufficient fee rate in order to push through the parent transaction.
Scaling of the Bitcoin network has been a hot subject over the last year, especially following the massive clog experienced at the height of the December bull run. The prevailing solution has been focused on the Lightning Network, a second-layer protocol that designed to improve bitcoin’s scalability and speed through bidirectional payment channels.
However, given the complexity of the development and governance of bitcoin’s massive network, alternative solutions are definitely needed for the time being and the Coinbase’s focus on CPFP could ultimately work to further distance the company from its competitors.
Photo: Marco Verch / Flickr
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.