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Author Topic: Miners and Payment Confirmations  (Read 455 times)
IveBeenBit
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June 02, 2012, 07:52:12 PM
 #1

OK so I get that the miners are somehow involved in confirming payments. Am I right to assume that a payment will remain unconfirmed until the next block is released?

Once that block is released, will you always have only 1 confirmation, or is it possible that more than one miner has confirmed your payment in between the time you made it and the time before the block gets released?

Can you get more than one confirmation in each subsequent block? In other words when people talk about the magical "6 confirmations" will that always take almost an hour, or is it usually done faster?

Also, who gets the miner fees? I understand that the fee is an incentive for a miner to confirm your transaction. Does the fee go to the first miner to confirm or is it shared among all the different miners that confirm once you have several confirmations?

What is the size of a typical fee and does it really help to get your transfers confirmed faster, or is that propaganda to get us to "support the network?"

Thanks for your patience.
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June 02, 2012, 08:11:12 PM
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I can answer your last two questions:

The fee goes to the miner who solves the block. So if you're solo mining, you'll usually get a bit more than 50 BTC.
And yes, fees actually do get it confirmed faster. If you're combining lots of micro-inputs from mycryptcoin into a micro-transaction, and you don't supply a fee, your transaction might never be confirmed. (See: http://bitcoincharts.com/bitcoin/txlist/)

I recommend asking me for a signature from my GPG key before doing a trade. I will NEVER deny such a request.
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June 02, 2012, 08:22:34 PM
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OK so I get that the miners are somehow involved in confirming payments. Am I right to assume that a payment will remain unconfirmed until the next block is released?

That all depends on the recipient.

SatoshiDICE for instance, can accept payment on 0/unconfirmed because they turn around and use those funds in the payout.  So if the wager never confirms, the payout will never confirm either.

A retail merchant, for instance, might not really be worried that you'll try to double spend on that 2 BTC purchase, and might have no problem accepting on 0/unconfirmed.  (There are configurations a merchant would follow to protect against a race attack).

Most exchanges and merchants require six confirmations as that is the level where the chance of reversal is mathematically not ever going to occur.

Once that block is released, will you always have only 1 confirmation, or is it possible that more than one miner has confirmed your payment in between the time you made it and the time before the block gets released?

This is a good article describing the process:

 - http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash/0

It includes the following infographic:



(Those boxes in the top-right are an illustration of the block chain.)

So if your transaction is first included in block 1,000 then it has 1 confirmation.  When there eventually is block 1,002 it has 3 confirmations.  At block 1,005 it will finally have the 6 confirmations that most exchanges and merchants require.

Can you get more than one confirmation in each subsequent block? In other words when people talk about the magical "6 confirmations" will that always take almost an hour, or is it usually done faster?

Bitcoin mining's algorithm targets one block every 10 minutes.  In reality, variance plus changes in hashing capacity will cause that "six confirmations" to occur as quickly as a fraction of an hour or as long as several hours.

Also, who gets the miner fees? I understand that the fee is an incentive for a miner to confirm your transaction. Does the fee go to the first miner to confirm or is it shared among all the different miners that confirm once you have several confirmations?

While there are cases where a block at a certain height is solved by a second (or third) miner, all but one of those blocks are eventually orphaned, and thus the coins in their block reward will never confirm.

You can see this visually occur here:
 - http://blockchain.info/orphaned-blocks

So if you are solo mining, you get the block reward as well as the fees.  if you are pool mining, what you get is whatever the pool you participate in offers.  Some keep the fees.  The fees currently are a tiny fraction of the amount of the block reward though.  Every bit of helps though I know.

What is the size of a typical fee and does it really help to get your transfers confirmed faster, or is that propaganda to get us to "support the network?"

There's a huge difference between no fee and at least the minimum fee.  Without a fee, your payment might not get included in the next block based on a few factors (age of the coins selected for the transaction, amount of the payment, etc.).  If you include the fee recommended by the client, the payment will likely be included in the next block or two.  If you add a much higher fee, it still will likely be included in the next block or two.  (i.e., paying above the minimum doesn't really help get it to confirm any faster.)  The goal is to get it included in a block.  After it is in a block, it continues to gain confirmations with each new block, regardless fo whether or not it had a fee, or the amount of the fee.

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June 02, 2012, 08:45:12 PM
 #4

I think Stephen missed a bit what the OP was after on some points, so I'll provide my own answers.

Am I right to assume that a payment will remain unconfirmed until the next block is released?
Yes. Confirmed = There is a block which includes the transaction.

Once that block is released, will you always have only 1 confirmation
Yes. The only way to confirm a transaction is to release a block which acknowledges it. With the first block that includes the transaction you will have 1 confirmation.

Can you get more than one confirmation in each subsequent block?
No. If you think of the block chain as a tower of lego blocks, with your transaction being included in one of them, the number of confirmations is the number of blocks above it (including itself).

In other words when people talk about the magical "6 confirmations" will that always take almost an hour, or is it usually done faster?
It will take about an hour, which is one reason why people shouldn't talk about the magical 6 confirmations.

Also, who gets the miner fees? I understand that the fee is an incentive for a miner to confirm your transaction. Does the fee go to the first miner to confirm or is it shared among all the different miners that confirm once you have several confirmations?
To the first miner. This is to incentivize him to include the transaction in the block; subsequent miners don't have much say on the matter, they automatically confirm it by linking to the previous block.

What is the size of a typical fee
Take a look at the fees in this block for example. Mostly 0's, then the default fee 0.0005 BTC (equivalent to less than a cent), then some other values.

and does it really help to get your transfers confirmed faster
In most cases it doesn't matter. In some cases 0.0005 BTC can help a lot, without it it can be stuck in low-priority limbo for a while, and sometimes miners reject all fee-less transactions disregarding the fee size. More than that doesn't really help currently.

, or is that propaganda to get us to "support the network?"
I don't think anyone would care enough to do this propaganda, the network does just fine currently based on newly minted coins. In the future it will be more interesting.

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IveBeenBit
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June 02, 2012, 08:56:52 PM
 #5

Thanks alot for the helpful answers, guys. It clears up a lot of questions I had about fees, payments and confirmations, and answers some questions I didn't know that I had about how the block chain gets built. A lot of understandings are falling into place.
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