Quote from: franky1 on November 21, 2016, 07:55:38 AM

Quote from: Daneric on November 21, 2016, 07:11:24 AM

What I know is that bitcoin transactions are irreversible. Then why is it that you have to wait for the confirmation before initiating anything?

bitcoin transactions are only irreversible AFTER confirmation.
imagine it like:
writing a cheque. you can validate the cheque by calling the bank and checking the balance is available to spend and the person is who they say they are. but until the cheque is cleared by the cheque clearing house you dont yet have the funds to spend yourself and the funds can bounce.

writing a transaction. you can validate the transaction by checking the inputs and checking the balance is available to spend and the signature belongs to the inputs. but until the transaction is confirmed into a block you dont yet have the funds to spend yourself and the transaction can be rejected.

there are a few ways to write a transaction announcing you as the destination. making you see the unconfirmed transaction. but then write another transaction using the same original input funds to move the funds elsewhere and getting that transaction accepted into a block before the one you were hoping for. thus making the one you were hoping for get rejected.

so until the transaction you were hoping for is confirmed (irreversible) dont trust it.

double spends are actually easy.
(a)someone makes a tx to you, but have insufficient fee.

(b)someone makes a tx to themselves with a sufficient fee. and then a (c)third transaction prespending that transaction with a suffient fee to push transaction c through.
this is using features called RBF(replace by fee) and CPFP(child pays for parent)

so until the transaction you were hoping for is confirmed (irreversible) dont trust it. especially ones with insufficient fee

This is a very detailed insight and it has opened my eyes. Actually, someone can send you bitcoins and forward the transaction ref to you as prove of payment. This means that the tx ref only can not act as prove of payment until there are confirmations on the transaction.