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In this episode of “The Van Wirdum Sjorsnado”, hosts Aaron van Wirdum and Sjors Provoost discussed replacement by compensation (RBF). RBF is a trick that replaces unconfirmed transactions with contradictory transactions that involve a higher fee.

RBF essentially allows users to pay a transaction fee to incentivize miners to include the transaction in a block. Van Wirdum and Provoost explained the three benefits of RBF: the option to ‘speed up’ a transaction (one), which in turn can result in a more effective block space fee market (two), as well as the potential to use more efficiently of block space by updating transactions to include more recipients (three).

The biggest downside to RBF is that it makes it slightly easier to double spend unconfirmed transactions, which was also the cause of last week’s double spend controversy that dominated headlines. Van Wirdum and Provoost discussed some solutions to mitigate this risk, including “opt-in RBF” currently being implemented in Bitcoin Core.

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Finally, Provoost explained in detail how opt-in RBF works in Bitcoin Core and what conditions must be met before a transaction is considered replaceable. He also noted some complications with this version of RBF, for example in the context of the Lightning Network.

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