The eCash project recently launched Avalanche post-consensus on mainnet, and several exchanges have already adopted the new technology to lower their block confirmation requirement on deposits from as much as 11-confirmations to 1-confirmation. Since block times are on average 10 minutes, this reduces the wait time on eCash deposits from a couple of hours, to mere minutes.
But even more importantly, what this tells me is that the industry is starting to understand the significance of what the eCash team has accomplished. Double-spends are a threat to any business that deals with cryptocurrencies, but they are most dangerous to exchanges that can be exploited for enormous amounts of money by double-spend attacks. This is when someone deposits coins, sells those coins for another cryptocurrency, then withdraws the new coins to a wallet they control before “re-orging” the blockchain of the first coin to make it as if they were never deposited at all. In order to prevent such attacks, exchanges try to protect themselves by requiring many confirmations before the coins are credited to their customer’s accounts.
For example, BCH deposits on Binance require 6-confirmations before you can trade them on their platform. This is because the more block confirmations a transaction has, the more difficult and expensive it is to reverse. By comparison, eCash requires only a single confirmation on Binance, a difference of an hour for BCH, versus 10 minutes for XEC. Binance is able to safely do this because eCash now features what’s known as 1-block finality. Any transaction that has been mined in a block can be considered final, because not only do you need enough mining power to try and reverse the transaction, you also need to buy a huge amount of eCash so as to stake them and run your own Avalanche nodes. This would not only take an enormous amount of money to accomplish, but ultimately you “ought to find it more profitable to play by the rules than to undermine the system”.
And this is only the beginning. Once eCash activates Avalanche pre-consensus, exchanges will be able to credit customers with their XEC instantly. No more having to wait for blocks, period. This is one of the holy grails of crypto. Along with scaling, security, and privacy, instant finality is a key requirement to having a form of digital money that can be used just like cash.
I’m excited for the future because there are projects like eCash focused on actually solving the problems to enable us to have a censorship-resistant digital currency. I commend the three exchanges–Indodax, Binance, and Huobi–for being true pioneers and enabling 1-block deposits for XEC. That tells me they understand the technical benefits of combining Avalanche and Nakamoto consensus as well as believing in the mission that cryptocurrencies are trying to fulfill.
As for the exchanges that have yet to activate 1-block finality, or haven’t even listed eCash, I can’t help but ask why not? Do you not understand the technology? Do you not believe in the mission? Or are you just lazy, incompetent, or scared? Or maybe it’s all three.