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Author Topic: Can Someone Explain Me About Bitcoin BlockChain Confirmation In A Easy Way?  (Read 20469 times)
AnonCard
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September 22, 2012, 01:06:37 PM
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As The Topic Says I Wanna Understand What Is Blockchain Confirmation, Because Everytime I Transfer BTC At MtGox It Says Transaction Needs 6 Confirmation Before It Is Deposited Into Your MtGox Account.

Please Explain In Easy Way  Smiley

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September 22, 2012, 01:16:54 PM
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Basically MtGox is waiting 6 confirmations to ensure your transaction is legit.

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September 22, 2012, 01:42:59 PM
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Every transaction must be verified, and added to the blockchain. This is done with the process of mining. Part of the mining process verifies that the transactions are consistent, come from a valid client, and don't contradict other transactions. This avoids the possibility of double spend and counterfeit BTC.
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September 22, 2012, 05:14:50 PM
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Every transaction must be verified, and added to the blockchain. This is done with the process of mining. Part of the mining process verifies that the transactions are consistent, come from a valid client, and don't contradict other transactions. This avoids the possibility of double spend and counterfeit BTC.


I Appreciate, But As I Said Please Explain In A Easy Newbie Language.

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September 22, 2012, 05:53:00 PM
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As The Topic Says I Wanna Understand What Is Blockchain Confirmation, Because Everytime I Transfer BTC At MtGox It Says Transaction Needs 6 Confirmation Before It Is Deposited Into Your MtGox Account.

Please Explain In Easy Way  Smiley

When you exchange cash when making a purchase from a store, you can then walk out seconds later with the item you purchased because the merchant now has the cash you gave in exchange.  A piece of paper used as cash can only exist in one place or another -- either in your purse or wallet, or in the merchant's cash register.  It cannot exist in both at any one piont in time.    There's no legal way that you can spend that cash at more than one store.  Cash then, cannot be double spent (excluding, of course, where cash is illegally being counterfeited).

Electronic cash accounting systems, such as those used by a bank, emulate that.  Before you withdraw cash at an ATM, your bank's accounting system will check to see the balance held in your account.  At the moment your withdrawal is processed, your account it debited.  That happens instantly rather than overnight or the next day because the the bank doesn't want to risk that you would visit another ATM and be able to withdraw more funds than you had in your account.  With that being instant, it prevents you from double spending funds from your bank balance.  In that way, the banks electronic cash systems emulate physical cash.

If there is a dispute, such as if the ATM thinks it spit out cash, but a malfunction resulted in no cash actually coming out, then the bank investigates and when warranted makes a correcting entry to the customer account.  The bank is the authority there.  The bank asserts "the truth" as far as its customer's account balances.

Bitcoin's architecture is such that there is no bank or anyone else with the authority to adjust balances.  There is no central authority.  The truth is determined from the consensus of computing work performed by miners who follow a specific protocol.    That computing work builds the Bitcoin blockchain.

When you first make a Bitcoin transaction and that transaction is broadcast to the network, "the truth" has not yet been established.  With Bitcoin's decentralized architecture, this consensus needs to form after your transaction gets included in a block and a chain of additional blocks extend from that.  At any point in time there could be two or more solved blocks at the same level in the blockchain competing to win this consensus.  At the time, there is no way to know which block will eventually attain consensus as being "the truth" and which blocks will lose support and become orphaned.

Only after the chain of blocks is extended with enough additional blocks on top is it then known which of the potentially competing blocks attained consensus and became "the truth".  The mathematics of the protocol show it to be safe to accept as "the truth" a block from the longest chain that occurred five or more blocks prior.  A block extended with five further blocks will show a total of six confirmations.

A Bitcoin exchange, just like your bank, cannot be exposed to the risk of double spending.  It will credit your account for the transfer of your funds only after it knows for sure "the truth", and thus it must ignore any blocks until they are part of the longest chain and have six or more confirmations.


Here is an interactive diagram that goes through the technical details of a Bitcoin transaction:

 - http://staging.spectrum.ieee.org/static/how-a-bitcoin-transaction-works


And here's the static image from that:



 - http://spectrum.ieee.org/img/06Bitcoin-1338412974774.jpg

AnonCard
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September 22, 2012, 05:58:24 PM
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As The Topic Says I Wanna Understand What Is Blockchain Confirmation, Because Everytime I Transfer BTC At MtGox It Says Transaction Needs 6 Confirmation Before It Is Deposited Into Your MtGox Account.

Please Explain In Easy Way  Smiley

When you exchange cash when making a purchase from a store, you can then walk out seconds later with the item you purchased because the merchant now has the cash you gave in exchange.  A piece of paper used as cash can only exist in one place or another -- either in your purse or wallet, or in the merchant's cash register.  It cannot exist in both at any one piont in time.    There's no legal way that you can spend that cash at more than one store.  Cash then, cannot be double spent (excluding, of course, where cash is illegally being counterfeited).

Online accounting systems, such as those used by a bank, emulate that.  Before you withdraw cash at an ATM, your bank's account system will check to see the balance held in your account.  At the moment your withdrawal is processed, your account it debited.  That happens instantly rather than overnight or the next day because the the bank doesn't want to risk that you would visit another ATM and be able to withdraw more funds than you had in your account.  With that being instant, it prevents you from double spending funds from your bank balance.  In that way, the banks electronic systems emulate cash.

If there is a dispute, such as if the ATM thinks it spit out cash, but a malfunction resulted in no cash actually coming out, then the bank investigates and when warranted makes a correcting entry to the customer account.  The bank is the authority there.  The bank asserts "the truth" as far as its customer's account balances.

Bitcoin's architecture is such that there is no bank or anyone else with the authority to adjust balances.  There is no central authority.  The truth is determined from the consensus of computing work performed by miners who follow a specific protocol.    That computing work builds the Bitcoin blockchain.

When you first make a transaction and that transaction is broadcast to the network, "the truth" has not been established yet.  With Bitcoin's decentralized architecture, this consensus needs to form after your transaction gets included in a block and a chain of additional blocks extend from that.  At any point in time there could be two or more solved blocks at the same level in the blockchain competing to win this consensus.  At the time, there is no way to know which one will eventually attain consensus as being "the truth" and which ones will lose support and become orphaned.  Only after the chain of blocks is extended with enough additional blocks is it known which block attained consensus as being "the truth".  The mathematics of the protocol show it to be safe to accept as "the truth" a block from the longest chain that occurred five or more blocks prior.  A block extended with five further blocks will show a total of six confirmations.

A Bitcoin exchange cannot be exposed to the risk of double spending.  It can only credit your account for the transfer of your funds after it knows for sure "the truth", and thus it must ignore any blocks until they are part of the longest chain and have six or more confirmations.


Here is an interactive diagram that goes through the technical details of a Bitcoin transaction:

 - http://staging.spectrum.ieee.org/static/how-a-bitcoin-transaction-works





Thankx Dude It Really Help

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September 22, 2012, 11:58:34 PM
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@ AnonCard.. you my friend.. has made my day a bit easier.  Thank you for your in-depth explanation. I truly appreciate it.
stepkrav
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September 23, 2012, 12:53:47 AM
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@Stephen Gornick

hey that was a really helpful and easy to understand post. Thanks for that.
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