Understanding Confirmation in the Context of Cryptocurrencies
Confirmation, in the world of cryptocurrencies, refers to the verification and proof that a transaction has been added to a coin‘s blockchain and is considered valid.
It assures that the transaction has occurred and is secure.
The concept of confirmation is particularly relevant in decentralized cryptocurrencies like Bitcoin.
From Initiation to Inclusion
When a transaction is initiated, it is broadcast to the network of nodes (computers) that maintain the blockchain.
Miners responsible for validating and adding transactions to the blockchain include the transaction in a block.
Confirmation refers to the number of blocks that have been added to the blockchain since the inclusion of the transaction block.
The Power of Multiple Blocks
As each block is added to the blockchain, the transaction becomes more secure because reversing or altering a transaction would require significant computational power to rewrite multiple blocks.
The general rule is that the more confirmations a transaction has, the higher the level of security and certainty associated with it.
Choosing the Right Number of Confirmations
For smaller transactions or situations where immediate confirmation is not crucial, parties may agree to accept zero confirmations, meaning they consider the transaction valid as soon as it is broadcast to the network.
However, for more significant transactions or when a higher level of security is desired, parties may choose to wait for more confirmations.
Unconfirmed Transactions and Confirmation Times
It’s important to note that an unconfirmed transaction is awaiting inclusion in a block by miners. Each subsequent block added to the blockchain represents an additional confirmation.
Thus, the time required to obtain multiple confirmations increases accordingly.
For instance, if one confirmation takes around 10 minutes, six confirmations could take approximately an hour.