Difference between revisions of "Confirmation"
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| − | '''Bitcoin transaction confirmation''' is | + | '''Bitcoin transaction confirmation''' is the process of finalising a transaction - with an economically expensive attestation - by the Mining network that the transaction is valid, and does not conflict with any previously seen transactions. One of the key functions of Bitcoin, is that it solves the problem of [[Double-spending|double-spending]] by establishing the order in which conflicting transactions have been publicly broadcast on the network. [https://bitcoinsv.io/bitcoin.pdf], i.e. the risk that a digital currency token may be copied and spent more than once. In spite of having no central authority to verify that its tokens are not being duplicated, Bitcoin successfully avoids double-spending through a system of distributed transaction confirmation, based on the [[Nakamoto Consensus|consensus]] of a network of validators. Bitcoin SV transaction confirmation time cannot be precisely predicted. However, once a transaction has been relayed around the network it has a high probability of being included in the next mined [[block]] if the including transaction fee is sufficient to satisfy most Miners. |
| − | ==How Bitcoin | + | ==How Bitcoin transactions are confirmed== |
| − | A transaction is the exchange of information between parties. That information can be a quantity of [[Satoshis}, tokens or data of some other kind. Confirmation occurs when that transaction is included in a block that is added to the Bitcoin [[ | + | A transaction is the exchange of information between parties. That information can be a quantity of [[Satoshis}, tokens or data of some other kind. Confirmation occurs when that transaction is included in a block that is added to the Bitcoin [[Blockchain]]. When a user wishes to have a transaction confirmed, the complete transaction is broadcast from their wallet to Miners in the network who verify that it is valid. |
| − | Once validated, [[Mining| | + | Once validated, [[Mining|Miners]] will decide whether or not to include this transaction in their block template and attempt to mine it. |
| − | When a | + | When a Miner discovers a block that includes the transaction, it is considered '''confirmed'''. Each time a new block is added to the chain, the transaction is said to be confirmed again with the number of confirmations, being the number of blocks added to the ledger that build upon the block containing the transaction. This generally considered to be a measure of how difficult it would be for a dishonest Miner to invalidate the transaction by mining a longer competing chain containing a double-spend. |
| − | == Bitcoin SV | + | == Bitcoin SV confirmation time == |
| − | Typically, a transaction that is sent to the network with fees that adhere to the acceptance rate of X% of the network's hash rate will have X% chance of being mined in the next block | + | Typically, a transaction that is sent to the network with fees that adhere to the acceptance rate of X% of the network's hash rate, will have X% chance of being mined in the next block. |
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| + | For example, if it is known that 20% of nodes will accept transactions at a given fee rate, the user can assume that there is a 20% chance of it being included in the next block, or conversely that it is likely to be mined in 1 of the next 5 blocks, or within a 50 minute timeframe. | ||
| + | For users whose transactions are less time critical, this is a mechanism to reduce transaction fees, especially in high volume applications. | ||
| + | ==Confirmations in commerce== | ||
| + | Transaction confirmations are a means for receivers to gain assurance that the information they have received is valid, [[immutable]], and backed by the proof of work on the network. For most applications, including small to medium value commerce, confirmations are not required, however many businesses including cryptocurrency exchanges will make users wait for up to 6 confirmations before accepting funds for trade. Importantly, it is up to the user to set their own comfort threshold for doing business. | ||
=See Also= | =See Also= | ||
Latest revision as of 02:14, 22 April 2022
Bitcoin transaction confirmation is the process of finalising a transaction - with an economically expensive attestation - by the Mining network that the transaction is valid, and does not conflict with any previously seen transactions. One of the key functions of Bitcoin, is that it solves the problem of double-spending by establishing the order in which conflicting transactions have been publicly broadcast on the network. [1], i.e. the risk that a digital currency token may be copied and spent more than once. In spite of having no central authority to verify that its tokens are not being duplicated, Bitcoin successfully avoids double-spending through a system of distributed transaction confirmation, based on the consensus of a network of validators. Bitcoin SV transaction confirmation time cannot be precisely predicted. However, once a transaction has been relayed around the network it has a high probability of being included in the next mined block if the including transaction fee is sufficient to satisfy most Miners.
How Bitcoin transactions are confirmed
A transaction is the exchange of information between parties. That information can be a quantity of [[Satoshis}, tokens or data of some other kind. Confirmation occurs when that transaction is included in a block that is added to the Bitcoin Blockchain. When a user wishes to have a transaction confirmed, the complete transaction is broadcast from their wallet to Miners in the network who verify that it is valid. Once validated, Miners will decide whether or not to include this transaction in their block template and attempt to mine it. When a Miner discovers a block that includes the transaction, it is considered confirmed. Each time a new block is added to the chain, the transaction is said to be confirmed again with the number of confirmations, being the number of blocks added to the ledger that build upon the block containing the transaction. This generally considered to be a measure of how difficult it would be for a dishonest Miner to invalidate the transaction by mining a longer competing chain containing a double-spend.
Bitcoin SV confirmation time
Typically, a transaction that is sent to the network with fees that adhere to the acceptance rate of X% of the network's hash rate, will have X% chance of being mined in the next block.
For example, if it is known that 20% of nodes will accept transactions at a given fee rate, the user can assume that there is a 20% chance of it being included in the next block, or conversely that it is likely to be mined in 1 of the next 5 blocks, or within a 50 minute timeframe. For users whose transactions are less time critical, this is a mechanism to reduce transaction fees, especially in high volume applications.
Confirmations in commerce
Transaction confirmations are a means for receivers to gain assurance that the information they have received is valid, immutable, and backed by the proof of work on the network. For most applications, including small to medium value commerce, confirmations are not required, however many businesses including cryptocurrency exchanges will make users wait for up to 6 confirmations before accepting funds for trade. Importantly, it is up to the user to set their own comfort threshold for doing business.
See Also
References
[1] Nakamoto, Satoshi. "Bitcoin: A Peer-to-Peer Electronic Cash System."