United States-based and regulated cryptocurrency exchange Gemini today introduced a new first for digital asset exchanges: zero-confirmation pre-credited bitcoin deposits.
Last year, Gemini decreased the required number of bitcoin confirmations for deposits from six to three and continues to have industry-leading turnaround times for U.S. dollar wire deposits and withdrawals.
Eric Winer, VP of Engineering at Gemini stated:
“We pride ourselves on helping you move your money faster. Our unique Instant ACH system lets US-based customers deposit U.S. dollars and trade immediately, a process that used to take up to a week.”
Zero-Confirmation Bitcoin Deposits
Here’s how it works: Gemini is running every bitcoin deposit through a proprietary analysis to determine how likely it is to get confirmed, even if the network is clogged with other transactions. If a transaction passes the criteria (which may take a few minutes), Gemini will pre-credit the amount of a deposit and make it available for trading immediately. Tests show that around two out of three deposits meet the criteria for being pre-credited.
Users will be able to sell BTC for USD or ETH faster and more efficiently. You can also trade in Gemini’s daily two-sided auction without a delay due to bitcoin network congestion. Then, once a deposit eventually reaches its required three confirmations, users will be able to withdraw the amount of their deposit or any USD or ETH purchased with the deposit.
Improved Instant ACH
The new zero-confirmation BTC deposit feature is similar to Gemini’s existing Instant ACH system: funds are available for trading right away, and they become available for withdrawal only once your deposit fully clears. Instant ACH is a popular feature, and after listening to user comments and feedback over the last year, Gemini made some changes to how they calculate a client’s “Available for Withdrawal” balance.
The Problem with Deposit Delays
Due to bitcoin’s increasing transaction volume but fixed network capacity, it’s taking much longer for transactions to get mined into a block and included in the blockchain. Transactions tend to get mined faster if their senders pay higher fees, so Gemini uses an aggressive fee algorithm to help bitcoin withdrawals get confirmed as soon as possible. The feature is included for free as part of the company’s exchange services.