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Author Topic: Transaction Finality on Bitcoin  (Read 667 times)
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February 25, 2020, 09:23:21 PM
 #41

As I understand, transactions are only as final as the network is secure.

The deeper a transaction is rooted in the blockchain, the more difficult it is to modify, since it would require more work to achieve.

This is because a large number of blocks would need to be undone by the attacker. Because of this, surface level blocks (e.g. ones that were just finalized) are more vulnerable to a majority attack, while a more sustained attack might be able to alter blocks from a few hours ago. Most platforms bank on the fact that such an attack would be thwarted well before older transactions are modified.

Exactly. That's the way it's been for PoW-based cryptocurrencies like Bitcoin and Ethereum. The real deal would be PoS-based cryptocurrencies with the "Nothing at Stake" problem. This would greatly undermine the transaction finality on PoS blockchain networks as validators/stakers will be able to support various forks without any costs involved. In PoW chains, it's much more difficult to revert transactions when they have a lot of confirmations on the network. The older the transaction is, the harder it'll be for anyone to "roll it back" within the Blockchain. In the case of ETH's DAO hack, it was easy to "roll back" transactions because they were relatively new/fresh. If time would've passed by without any action from the ETH community, it would've been near impossible to revert transactions on the Blockchain.

Nonetheless, I think that transactions on the Bitcoin blockchain are considered as "final" once they have a lot of confirmations on the network. The more confirmations, the more costly it'll be to perform a 51% attack in order to "roll back" transactions from the Blockchain. In my point of view, PoW provides better security against external attacks/manipulation than PoS itself. The decision of the ETH dev team switching from PoW to PoS could undermine the security of the Blockchain as we know it (even though it increases scalability/performance). I'd suggest that Ethereum and Bitcoin should adopt "checkpoints" in order to remain immutable for the foreseeable future. Just my thoughts Grin

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February 25, 2020, 10:00:06 PM
 #42

We need to get back to the roots to solve this question... so let's start with why bitcoin needs confirmations? This is to avoid the double-spend problem... It is easy to double-spend a transaction without confirmations, but it's almost impossible to double-spend a transaction with 1 confirmation or more. For that, we need to make a 51% attack on the network, so. This is why with one confirmation we should feel secure but not safe.

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February 28, 2020, 09:33:59 PM
 #43

1. N@S is a myth for children, that don't know most Proof of Stake coins Burn all Transaction fees.
    ie: No incentive at all to multistake, N@S myth Busted

2. PoW is never finalized from someone controlling 51%, as they could rewrite it unto the last checkpoint.
    PoS is closer to being finalized unless someone controls closer to 90%, which is more difficult than the 51% in PoW.
    This is because most PoS coins go dormant for a specified time after staking , ASICS never go dormant.
  
3.  But if you want a guarantee no blocks can be changed by anyone even with 100%, then you have to use checkpoints in PoW or PoS

Thanks for the clarification. I've figured checkpoints are a must if Ethereum or Bitcoin want to maintain the integrity of their transaction history across the Blockchain. As for Bitcoin, devs do not care about finality because the cryptocurrency has never experienced a 51% attack (as far as I know). But in the case of Ethereum, that's another story since transactions were rolled back after the DAO hack which occurred in 2016.

I've read somewhere that the ETH dev team is planning to "punish" malicious validators (stakers) within the ETH blockchain. Validators would simply lose all of their ETH if they try to disrupt the Blockchain. Something like this should be implemented on the Bitcoin blockchain, but modified to work with its PoW consensus algorithm. Better yet, Bitcoin could adopt a multi-algo PoW model in order to maintain its integrity for the foreseeable future. Digibyte already has this, and it's one of the most secure cryptocurrencies of today. This coupled with checkpoints, should make Bitcoin transactions completely irreversible no matter what. Only then, true transaction finality will be achieved across the Blockchain.

Nonetheless, developers of the BTC blockchain are more focused on scalability than anything else. Their resources have shifted into the development of the Lightning Network which is bound to increase Bitcoin's adoption within the mainstream world. But I believe they should also focus on security/reliability by adding a decentralized checkpoint system in order to make Bitcoin transactions truly final. If there no interest/demand for something like this, there's the risk of someone altering Bitcoin's transaction history in the future. With the Chinese controlling more than 51% of BTC's hashrate, anything could happen. I hope that Bitcoin remains a censorship-resistant and truly decentralized cryptocurrency for years to come. Just my opinion Smiley

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February 29, 2020, 02:39:50 AM
 #44

I want to know lately to find out about "Transaction Finality" on the Bitcoin blockchain. I have also been curious about how much confirmation is needed to actually verify a transaction, and why it is necessary to have more than one confirmation only to actually make a transaction successful. This creature says, what you know is if an input has "enough" (which can have various meanings) the amount of confirmation and you can or can't spend it (it's yours or not). I am somewhat confused by this, and I want someone to help me clarify this issue. Huh
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February 29, 2020, 03:09:42 AM
 #45

But I believe they should also focus on security/reliability by adding a decentralized checkpoint system in order to make Bitcoin transactions truly final. If there no interest/demand for something like this, there's the risk of someone altering Bitcoin's transaction history in the future. With the Chinese controlling more than 51% of BTC's hashrate, anything could happen. I hope that Bitcoin remains a censorship-resistant and truly decentralized cryptocurrency for years to come. Just my opinion Smiley

You can write the code yourself or submit a general idea about it. Let the community discuss and see if anyone picked your idea. In the worst scenario, there might be a fork or a split.

I believe security is always on their mind. No developer is stupid enough to ignore it. I'll ignore the 51% part, but just remember, just because you have the power to do it, doesn't mean you can ignore the cost to do it.

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February 29, 2020, 01:40:21 PM
 #46

I've figured checkpoints are a must if Ethereum or Bitcoin want to maintain the integrity of their transaction history across the Blockchain. As for Bitcoin, devs do not care about finality because the cryptocurrency has never experienced a 51% attack (as far as I know).

It's not that devs "don't care", it's that checkpoints turn it into a game of pot luck, creating disparity.  If 'user A' received their transaction before the checkpoint, their transaction is safe, but if 'user B' received a transaction after the most recent checkpoint, they could still lose their funds, destroying any faith they had that the blockchain is impartial, neutral or fair - all things we generally claim it to be.  

Or in reverse, users sending payments might profit illicitly if it was rolled back to a checkpoint and they got their BTC returned after using it to purchase a product or service.  How pissed off would you be if you were the merchant providing that service?  

So, if Bitcoin's security ever fails, it fails for everyone equally.  No two-tier lottery where some users win while others lose.

Worse still, game-theory seems to indicate that, understanding the above concept, it could conceivably create additional incentive to attempt a hashrate attack in order to game a checkpoint system.

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March 04, 2020, 10:12:56 PM
 #47

You can write the code yourself or submit a general idea about it. Let the community discuss and see if anyone picked your idea. In the worst scenario, there might be a fork or a split.

I believe security is always on their mind. No developer is stupid enough to ignore it. I'll ignore the 51% part, but just remember, just because you have the power to do it, doesn't mean you can ignore the cost to do it.

Good point. It all depends on community consensus than anything else. If the BTC community approves checkpoints and other security mechanisms, I don't a reason why developers wouldn't care more or less about it. Security and decentralization has always been Bitcoin's "motto". I'm sure that developers, miners, and community members will work together in order to make Bitcoin the strongest Blockchain in the world. It's already the most secure Blockchain in the world, but there's still room for improvement.

As you've said earlier, anyone can write code or submit a general idea about it. There are many Bitcoin Improvement Proposals out there which are subject to the approval of the Bitcoin community. I believe that something as important as transaction finality should gather the attention of everyone in the BTC space once 51% attacks become a threat to the Blockchain. Considering that Chinese miners still control more than 51% of BTC's hashrate, anything could happen in the future. But knowing that malicious attackers would quickly lose their incentive/reward from the Blockchain, it's very unlikely such situation will happen by then.



It's not that devs "don't care", it's that checkpoints turn it into a game of pot luck, creating disparity.  If 'user A' received their transaction before the checkpoint, their transaction is safe, but if 'user B' received a transaction after the most recent checkpoint, they could still lose their funds, destroying any faith they had that the blockchain is impartial, neutral or fair - all things we generally claim it to be.  

Or in reverse, users sending payments might profit illicitly if it was rolled back to a checkpoint and they got their BTC returned after using it to purchase a product or service.  How pissed off would you be if you were the merchant providing that service?  

So, if Bitcoin's security ever fails, it fails for everyone equally.  No two-tier lottery where some users win while others lose.

Worse still, game-theory seems to indicate that, understanding the above concept, it could conceivably create additional incentive to attempt a hashrate attack in order to game a checkpoint system.

In that case, Bitcoin should remain as it is right now. Adding complex features or improvements would only make matters worse, in my own opinion. Besides, there are other ways to maintain the integrity of BTC transactions without the need for checkpoints. If 51% attacks become a real threat to the Blockchain, developers could easily switch to a new PoW algo that's ASIC-Resistant. Or they could simply adopt alternative mining protocols like Betterhash or Stratum V2 in order to make mining more decentralized. Considering that Bitcoin's transaction history has remained intact since inception (AFAIK), I doubt the immutability of the Blockchain would be much of a concern in the future. Still, we should be prepared for any adverse situations that may happen in crypto land. It's in developer's best interests to maintain the BTC blockchain as secure and resilient as possible, in order to fulfil Satoshi's vision of a censorship-resistant and decentralized economy for the whole world to enjoy. Just my thoughts Grin

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elenag442
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April 20, 2020, 08:46:13 AM
 #48

I once excessively got interested in what number of affirmation is required so on totally check an exchange, and for what reason does it must have in more than 2 affirmation just to totally made an exchange fruitful. With this respect, I even have came up to resolution that the exchange is extremely more made sure about based from the number of affirmation it gets from the diggers.

More often than not, the exchanges I've made is as of now been prepared with exactly in any event 3 affirmation on the system. Smiley Smiley
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