Transaction Finality on Bitcoin

[Abiky]

I've curious lately to know about "Transaction Finality" on the Bitcoin blockchain. Even after being years on the crypto space, there are a lot of things related to Bitcoin's technical aspects which I'm not aware of. I'd like to know how many confirmations does a transaction need to be considered as "final" on the Bitcoin blockchain?

This is important, because if Bitcoin lacks transaction finality, then a few forks here and there could alter the history of your transactions across the Blockchain. Ethereum has been deeply concerned about "Transaction Finality" which is why the dev team has come up with Casper PoS + Sharding consensus to prevent this. Does this mean that transactions on a PoW blockchain are not final at all? I'm sort of confused with this, and I'd like someone to help me clarify about this matter.

Any help would be greatly appreciated. Thanks in advance.

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In short, there's no such concept.

[blckhawk]

As far as I know, confirmations are different from finality in a blockchain. Confirmation is the amount of validation made my miners on a transaction. On the other hand, Finality refers to the method on how blockchain protocols consider a transaction final.

On Bitcoin network, they appeal on what's called Probabilistic Finality. From the term itself 'Probability', it appeals to the chances of reverting a transaction to mere impossible, because it digs deep the transaction of up to six blocks, making forks extremely difficult to alter hashes.

There are other types of finalities for other blockchain-based systems. Though all of them are given criteria for either availability (fast transactions), or consistency (security filtering out bad transactions).

Reference here: https://medium.com/mechanism-labs/finality-in-blockchain-consensus-d1f83c120a9a

[TheNewAnon135246]

Most exchanges consider 3 confirmations secure enough to consider a transaction as final. This website uses 6 confirmation as an example but it perfectly shows how secure the Bitcoin network is, compared to altcoins: https://howmanyconfs.com/

[pakhitheboss]

Most exchanges consider 3 confirmations secure enough to consider a transaction as final. This website uses 6 confirmation as an example but it perfectly shows how secure the Bitcoin network is, compared to altcoins: https://howmanyconfs.com/

I think most exchange consider 1 transaction on Bitcoin Blockchain to be consider as final. The same is applicable for wallets as after 1 confirmation you can retransfer Bitcoin to another wallet. Actually 10 confirmation are required but, 6 is considered final.

[pooya87]

we define a transaction to be "final" when it has a certain number of confirmation so that the cost of reversing it is so huge that it can be considered piratically impossible.
in bitcoin, 1 confirmation already increases the cost of reversing it (the 51% attack) by a lot but usually 3 is the magic number of confirmation that you can call it "final". of course there are additional consideration such as the network state, for example if there is a planned fork like in 2017 that could have a risk of splitting the chain. and also the type of node the user is running (full versus SPV).

This is important, because if Bitcoin lacks transaction finality, then a few forks here and there could alter the history of your transactions across the Blockchain. Ethereum has been deeply concerned about "Transaction Finality" which is why the dev team has come up with Casper PoS + Sharding consensus to prevent this.

it comes down to how centralized the cryptocurrency is. for example in bitcoin thanks to its decentralization you can't just have a fork anytime you want! forks take a lot of  time and convincing of the entire network (or at least 95% of them) to take place otherwise they won't happen. in short you have to ask whether the cryptocurrency is immutable or not.
but when it is centralized, has low hashrate, has flaws in the protocol,... like ethereum, new attack surfaces exist that can increase risks. we saw how the ethereum owners easily reversed a huge number of blocks a couple of years ago, which led to ETH not being immutable anymore. and that means your ethereum transactions can never be considered final no matter what.

[Wind_FURY]

I've curious lately to know about "Transaction Finality" on the Bitcoin blockchain. Even after being years on the crypto space, there are a lot of things related to Bitcoin's technical aspects which I'm not aware of. I'd like to know how many confirmations does a transaction need to be considered as "final" on the Bitcoin blockchain?

It would depend on the transaction amount in my opinion. For small transactions in the Bitcoin blockchain, one is usually enough, for bigger, some merchants ask for three, some for six confirmations.

Plus also because of the total hashing power that Bitcoin has, one confirmation is equal to more confirmations in other blockchains, which make the other blockchains less secure.

[davis196]

I've curious lately to know about "Transaction Finality" on the Bitcoin blockchain. Even after being years on the crypto space, there are a lot of things related to Bitcoin's technical aspects which I'm not aware of. I'd like to know how many confirmations does a transaction need to be considered as "final" on the Bitcoin blockchain?

This is important, because if Bitcoin lacks transaction finality,then a few forks here and there could alter the history of your transactions across the Blockchain. Ethereum has been deeply concerned about "Transaction Finality" which is why the dev team has come up with Casper PoS + Sharding consensus to prevent this. Does this mean that transactions on a PoW blockchain are not final at all? I'm sort of confused with this, and I'd like someone to help me clarify about this matter.

Any help would be greatly appreciated. Thanks in advance.

"A few forks here and there."Haha,that's funny.
Can you explain in detail how a few forks can alter our transaction history?You admit that you are not an expert in Bitcoin's technical aspects,but you question the security of the blockchain and you come up with this weird "transaction finality" concept.
I'm not a blockchain guru or expert,but I have my own childish and oversimplified concept about how the blockchain works.
Old transactions get confirmed again and again every time a new transaction happens.The new transactions get confirmed again and again,every time a newer transaction happens.That's why we call it blockchain.It's like a chain.

[joniboini]

Actually 10 confirmation are required but, 6 is considered final.

Is this related to exchange or wallet? 10, 6, 3, or whatever number it is, most of them are self-decided by the exchanges.

The number of 'required' confirmation is 'arbitrary'. Considering how secure the network right now then 1 confirmation is probably good enough for most cases.

[NeuroticFish]

Bitcoin's blockchain records basically the money flow. It doesn't care about the actual wallet and how "final" you feel the funds in it are.

This being said, all you know is if an input has "enough" (which can have various meanings) number of confirmations and you can or cannot spend it (it's yours or not). That's just simply all.

[Abiky]

It would depend on the transaction amount in my opinion. For small transactions in the Bitcoin blockchain, one is usually enough, for bigger, some merchants ask for three, some for six confirmations.

Plus also because of the total hashing power that Bitcoin has, one confirmation is equal to more confirmations in other blockchains, which make the other blockchains less secure.

Exactly. The more confirmations a transaction has, the lesser the probability of "rollbacks" will be. Since Bitcoin is the most secure Blockchain network today, a single confirmation might be all you need to feel safe without worrying about getting your funds "double-spent". The real deal will be with smaller blockchain networks which are easily prone to a 51% attack. Maybe the Ethereum developer team have been concerned about transaction finality because of security issues within the chain? After all, Ethereum is not as secure as Bitcoin is in terms of hashrate.

One thing for sure, is that transactions made on PoW blockchains are considered as "final" while that's not the case with PoS blockchains (someone correct me if I'm wrong). The amount of energy spent mining Bitcoin compensates for the security and reliability of the entire Blockchain network. It could be said that transactions on the Bitcoin blockchain are considered as final after a couple of network confirmations. But no one knows for sure, as Blockchain technology is still being thoroughly tested within the mainstream world. Just my thoughts

[chip1994]

I've curious lately to know about "Transaction Finality" on the Bitcoin blockchain. Even after being years on the crypto space, there are a lot of things related to Bitcoin's technical aspects which I'm not aware of. I'd like to know how many confirmations does a transaction need to be considered as "final" on the Bitcoin blockchain?

It depends on the system of the exchange to give exact figures. in fact it is just a number to confirm exactly which blocks of blocks have been received to process or not. exchanges usually only need 3-5 confirmations of completing a transaction and this is quite normal. When an error occurs, the blocks will surely stop processing and be canceled, then the system will notify that your transaction has failed and ask you to make a new transaction. Simply put, the blockchain system is quite smart and you don't need to worry too much about this.

[pooya87]

It could be said that transactions on the Bitcoin blockchain are considered as final after a couple of network confirmations. But no one knows for sure, as Blockchain technology is still being thoroughly tested within the mainstream world.

it is not that complicated to know. it is a matter of cryptography. in order to reverse a transaction that is already confirmed you have to mine the same block. but the problem is that you have to first have a huge hashrate that allows you to mine that block within reasonable time. lets say it is block #100, while you are mining that again the rest of the world is mining #101 and by the time you find #100 the rest of the world is on #102 now you are 2 blocks behind and the chain you have is a shorter one with less work that is rejected.

[ranochigo]

Exactly. The more confirmations a transaction has, the lesser the probability of "rollbacks" will be. Since Bitcoin is the most secure Blockchain network today, a single confirmation might be all you need to feel safe without worrying about getting your funds "double-spent". The real deal will be with smaller blockchain networks which are easily prone to a 51% attack. Maybe the Ethereum developer team have been concerned about transaction finality because of security issues within the chain? After all, Ethereum is not as secure as Bitcoin is in terms of hashrate.

The smaller coins have encountered 51% attack before and it was profitable for them due to the relatively lower cost of the attack as compared to the amount double spent. It is important to consider the number of confirmations required to the total value of the transaction. For the lower value transaction, it's possible for the transaction to be instantaneous if the merchant is willing to take the risk for the sake of a faster and smoother checkout. For exchange, they usually require a much higher number of confirmations. Up till 5 confirmations, the risk of double spending with less than 51% of the network is still possible (albeit still rather expensive and requires some luck).

[Debonaire217]

I once too became curious about how many confirmation is needed in order to completely verify a transaction, and why does it needs to have more than 2 confirmation just to completely made a transaction successful. With this regard, I have came up to conclusion that the transaction is quite more secured based from the number of confirmation it gets from the miners.

Most of the time, the transactions I've created is already been processed with just at least 3 confirmation on the network.

[atjiat]

Exactly. The more confirmations a transaction has, the lesser the probability of "rollbacks" will be. Since Bitcoin is the most secure Blockchain network today, a single confirmation might be all you need to feel safe without worrying about getting your funds "double-spent". The real deal will be with smaller blockchain networks which are easily prone to a 51% attack. Maybe the Ethereum developer team have been concerned about transaction finality because of security issues within the chain? After all, Ethereum is not as secure as Bitcoin is in terms of hashrate.

The smaller coins have encountered 51% attack before and it was profitable for them due to the relatively lower cost of the attack as compared to the amount double spent. It is important to consider the number of confirmations required to the total value of the transaction. For the lower value transaction, it's possible for the transaction to be instantaneous if the merchant is willing to take the risk for the sake of a faster and smoother checkout. For exchange, they usually require a much higher number of confirmations. Up till 5 confirmations, the risk of double spending with less than 51% of the network is still possible (albeit still rather expensive and requires some luck).

I apologize for the concern, but I am concerned about one question, how vulnerable the transaction can be, until the first confirmation, since I used to consider the blockchain bitcoin flawless at all levels of its use.  Is it possible to cancel a transaction before the first confirmation in the bitcoin blockchain?  I understand that many blockchains and different coins have flaws and especially the facts of vulnerability, but there is nowhere to get information about the real possibilities of loss.

[ranochigo]

I apologize for the concern, but I am concerned about one question, how vulnerable the transaction can be, until the first confirmation, since I used to consider the blockchain bitcoin flawless at all levels of its use.  Is it possible to cancel a transaction before the first confirmation in the bitcoin blockchain?  I understand that many blockchains and different coins have flaws and especially the facts of vulnerability, but there is nowhere to get information about the real possibilities of loss.

It's somewhat alright to accept zero-conf transactions if it ticks a few criteria. Generally, with opt-in RBF flag in the transaction, it is a very high risk transaction since the ease of double spending that transaction is extremely high; anyone can easily replace it with another transaction to an alternative address. In a brick-and-mortar store where the customer would want a fast transaction settlement, it would be more advisable to accept zero-conf transaction following a risk assessment.

Once it has one confirmation at least, it is generally safe to accept transaction of a decent value.

[hatshepsut93]

Ethereum has been deeply concerned about "Transaction Finality" which is why the dev team has come up with Casper PoS + Sharding consensus to prevent this. Does this mean that transactions on a PoW blockchain are not final at all? I'm sort of confused with this, and I'd like someone to help me clarify about this matter.

Ethereum is concerned with "transaction finality" because they want to switch to PoS, and in PoS 51% attacks are more dangerous because of the "nothing at stake" problem, which is why they try to invent some countermeasures to deal with this problem. Bitcoin is a PoW currency, so you don't have to worry about it as long as the hashrate remains big enough, and currently it's really big and keeps growing.

[Wind_FURY]

Newbies, Nothing at Stake is NOT a myth. It's a known theoretical weakness in POS. In POS, a bad actor will not lose anything if he/she misbehaves, by signing in each and every fork. In fact, it encourages them to sign each and every fork because there are no costs.

[bgaf]

The number of 'required' confirmation is 'arbitrary'. Considering how secure the network right now then 1 confirmation is probably good enough for most cases.

How this confirmation becomes arbitrary? I often got experience this when Im doing some transactions on different exchange. The confirmation varies and they have different figures such as Binance, Kucoin, and even wallet transactions. Is the exchange changing it or the blockchain securing this confirmation and validation or they just prefer it depends on the level of security that is being process?