A zero confirmation transaction is a transaction that has yet to be confirmed on the blockchain.
You may look at it as the act of a seller releasing goods before the blockchain confirms the payments. The assumption is that the confirmation will go through. It’s a good way of building trust between the parties.
It’s a popular payment method as it enables faster completion of trades. Thus it’s convenient for the trading parties. That said, it’s a controversial topic too. Some quarters say it exposes one to the risk of double-spending.
Yet, many still hold that these transactions are the key to mainstreaming crypto. Consequently, there are initiatives to curb the possibilities of double-spending.
Satoshi’s take on Zero Confirmation Transactions
Zero confirmation transactions aren’t new to crypto payments. Back in 2010, Satoshi Nakamoto talked about them in the “Bitcoin Snack Machine” conversation.
Satoshi argued that it was possible to fast-track transactions with good-enough checking. He proposed a timeframe of 10 seconds or less.
Nakamoto held that networks could achieve this feat if the nodes accepted only the first transaction phase. They then incorporate it into the block they’re trying to generate.