Vee Finance, a decentralized finance platform, has officially confirmed its hack on Avalanche. On September 20, the hacker managed to transfer funds worth $35 million. In terms of assets, it was 8804.7 ETH (around $26 million) and 213.93 BTC (around $9 million). According to the report, the stablecoin was left untouched. As for the hacker, the report confirms that they have not yet transferred or processed the funds. The team is working to provide more details of the incident. Further,…
Several things happen before an operation is included in the system when you transact on the Bitcoin network.
Unconfirmed transactions first accumulate in a pool known as mempool. Then, miners choose a transaction at random (but most miners prefer those with high fees) and add it to a transaction block. They then verify the transaction by solving complex mathematical problems, i.e., Proof of Work.
Next, the network confirms the block and adds it to the blockchain. Blocks added to the blockchain amount to Bitcoin confirmations. Bitcoin confirmation is essential in the prevention of double-spending attacks. But, not many people in the crypto community understand the concept. Here is an in-depth explanation.
What are Bitcoin Confirmations?
Bitcoin confirmations refer to the number of blocks added to the Bitcoin blockchain after validating a particular transaction. Transactions on the Bitcoin network are not handled individually, but instead, they are bundled into a block in the blockchain. A block of Bitcoin transactions holds up to 1 MB of transactions, just like digital files.
More blocks added to the Bitcoin network lead to increased confirmations, which enhance the transaction’s security.
How Do Bitcoin Confirmations Work?
Whenever a user makes a transaction on the Bitcoin network by sending bitcoins to another user, they must submit the recipient’s address (public key). They must also sign in with their private key.
Note The public and the private key form the asymmetric key pair.
For the transaction to be processed and confirmed, miners first validate the public key. If the public key signature is authentic, miners then add the operation to the mining block. The transaction is later confirmed when the block is added to the blockchain.
Note that users can add an invalid asymmetric key pair to the block and, consequently, to the blockchain either knowingly or unknowingly. However, when a lousy pairing is added to a blockchain, miners overlook that particular blockchain and don’t add other blocks to it.
If miners reach a consensus that a block is valid, it is added to the blockchain through mining.
Number of Confirmations
Transactions on the Bitcoin blockchain remain “n/unconfirmed” until the transaction is six blocks deep. Users on the network consider six confirmations safe and secure enough for the transaction to be valid and permanent.
Six blocks were chosen as the standard number of confirmations as it’s assumed that an attacker of the Bitcoin network is less likely to accumulate more than 10% of the network’s hash rate. Besides, a risk of 0.1% is negligible and acceptable. Six blocks are also quite useful in subduing casual attackers and superb attackers with more than 10% hashrate.
Therefore, users should wait until five additional blocks are added to the first block, which usually represents the first Bitcoin confirmation. This way, the chances of a transaction being invalidated is less than 0.1%.
The set number of confirmations on the Bitcoin blockchain is not pegged at six blocks. Bitcoin exchanges and merchants who accept bitcoin as a means of payment can choose an ideal number of blocks required for the transactions (funds) to be confirmed. Some merchants, especially those dealing in inexpensive or non-fungible products, may choose to have only one block for the transaction to be approved as soon as it’s made. In such instances, the risk of double-spend attacks is insignificant.
The number of confirmations on the Bitcoin network increases with the value of the transaction. When a more significant transaction value is involved, the number of approvals is increased to secure the transaction. For instance, Bitcoin experts recommend 60 confirmations for transactions involving over $1,000 000. For transactions value below $1 000, 3 approvals are sufficient.
How to Find Out if the Number of Confirmations is Sufficient
It is possible to calculate whether the number of confirmations vis a vis hash rate proportion is sufficient to safeguard a transaction. Websites such as people.xiph provides crypto users with these services. Also, Bitcoin whitepaper provides the AttackerSuccessProbability formula to find out the right number of confirmations.
Some mining rigs may, however, conceal their hash power or provide inaccurate hash power. You may end up getting the wrong number of confirmations as a result. Therefore, users should use many confirmations up to 144 blocks deep, especially in transactions involving the irreversible sale of items with a higher value than the block reward.
How Much Time do Bitcoin Confirmations Take?
The time taken for Bitcoin confirmations to go through depends on the mining block interval, which is about 10 minutes. However, not all block intervals are exactly 10 minutes. A complicated statistical occurrence known as the Poisson process helps in determining block interval time.
When the standard six blocks are involved, the confirmation takes close to one hour. However, confirmations may take much longer if the Bitcoin network has high traffic, perhaps due to high price volatility. Also, transactions will remain unconfirmed for a long time in the event of a Bitcoin transaction stuck, usually caused by a low transaction fee attached.
How to Check Bitcoin Confirmations
Bitcoin wallets give you the transaction details and ID and view the transaction on a block explorer. Once you’ve successfully made a transaction, you can search the ID using a block explorer such as blockchain.info to check the number of confirmations made on that particular transaction.
Importance of Bitcoin Confirmations
Bitcoin confirmations guarantee the immutability of the network against attacks such as double-spending attacks. Without confirmations, a double spend is likely since the next block that is solved may confirm a different block rather than the one with the transaction. The second block may indicate that the coins may be spent elsewhere. Confirmations make it increasingly difficult for an attacker to falsify a transaction on the Bitcoin network.
Bitcoin confirmations measure how many blocks have passed since a transaction was added to the Bitcoin blockchain. Bitcoin confirmations are crucial to protecting the network from attacks, including double-spending attacks, Finney attacks, and race attacks. Although the standard number of confirmations on the Bitcoin network is six blocks, more confirmations are crucial for a secure transaction involving enormous amounts of money. For Bitcoin merchants dealing in highly valuable products, an increased number of confirmations is vital to safeguard the transaction.