The number of blocks added to the blockchain since a transaction was included.
Confirmations refer to the number of blocks that have been added to the blockchain since a specific transaction was included. Each new block represents an additional confirmation for the transactions included in previous blocks. This system is fundamental to blockchain security as it indicates how deeply embedded a transaction is in the blockchain's history, making it increasingly difficult to reverse as more blocks are added.
For instance, if a transaction was included in block 100, and the current block height is 105, that transaction has 5 confirmations.
In Bitcoin Cash, new blocks are generated approximately every 10 minutes, meaning a transaction with 6 confirmations is about one hour old and considered highly secure for most purposes.
Each block in a blockchain includes a set of transactions. Miners add new blocks on top of the existing ones, and each new block confirms the transactions in the previous blocks. The more confirmations a transaction has, the more secure it is considered to be, as it would require an attacker to reconstruct the entire blockchain from that point forward—a task that becomes exponentially more difficult with each additional block.
While it's possible for a block to be orphaned due to network forks, a transaction with more than 3 confirmations is generally considered very secure under normal network conditions. This security model is based on the computational power required to rewrite the blockchain history.
If a Bitcoin transaction is included in block 100, and the current block height is 103, the transaction has 3 confirmations and is considered secure. If the block height increases to 104, the transaction has 4 confirmations and is even more secure.
In Bitcoin Cash, the difficulty adjustment algorithm ensures consistent block times, providing reliable confirmation times for merchants and users. This predictability is crucial for real-world commerce applications, allowing businesses to confidently accept payments after an appropriate number of confirmations based on the transaction value and risk tolerance.
Different cryptocurrencies may require different numbers of confirmations to be considered secure. This is due to variations in network hash power, block time, and implementation details. Wallets and services will often specify a required number of confirmations before they consider a transaction to be valid.
Each additional confirmation adds another level of security to a transaction. It's important to use an appropriate number of confirmations depending on the specific blockchain, the value of the transaction, and the risk tolerance of the recipient.
For instance, a Bitcoin transaction might be considered secure after 6 confirmations, while a Litecoin transaction might require 12 confirmations due to its faster block time.
Cryptocurrency exchanges typically require different confirmation thresholds before crediting deposits to users' accounts. For Bitcoin Cash, exchanges might require 6-15 confirmations depending on their security policies, while for smaller transactions like retail purchases, merchants might accept fewer confirmations or even zero-confirmation transactions for low-value items.
The concept of confirmations has important implications for the practical use of cryptocurrencies. For high-value transactions, waiting for multiple confirmations provides security against double-spend attacks. For everyday purchases, merchants might accept fewer confirmations to improve user experience while maintaining reasonable security.
Some cryptocurrencies and layer-2 solutions have developed technologies to enable secure instant transactions without waiting for confirmations. These innovations aim to make cryptocurrencies more practical for everyday use cases like retail purchases.
Bitcoin Cash has historically explored various technologies to make zero-confirmation transactions more secure for everyday use, such as improvements to the transaction propagation network and pre-consensus mechanisms that help detect double-spend attempts quickly.
Payment processors for merchants often manage the risk associated with confirmations. They might instantly approve transactions for their merchants while taking on the risk themselves, waiting for the required number of confirmations before settling the funds to the merchant's account.
A coffee shop accepting Bitcoin Cash might choose to accept payments with zero confirmations for small purchases, as the risk of a double-spend attack for such small amounts is low compared to the convenience of instant transactions. Meanwhile, a car dealership would likely wait for multiple confirmations before completing a vehicle sale.
All terms and definitions may update as the Cryptionary improves.