Understanding Confirmations in Cryptocurrencies
In cryptocurrencies, confirmations play a crucial role in validating and securing transactions.
Since cryptocurrencies operate decentralized without a central authority, transactions are processed and verified by the network itself, primarily by miners.
Unconfirmed Transactions and the Mempool in Blockchain
When a transaction (TX) is initiated, it needs to be acknowledged by the network before it can be permanently recorded on the blockchain.
Transactions that users have requested but have not yet been included in a new block by a miner are considered unconfirmed.
These unconfirmed transactions are stored in the mempool, which serves as a backlog of pending transactions.
Security through Confirmations
The number of confirmations is important for ensuring the security and immutability of transactions.
If an attacker attempts to manipulate the blockchain by introducing false transaction data, they would need to compromise the security of each successive block, starting from the latest one in the chain.
The more confirmations a transaction has, the more challenging it becomes for an attacker to tamper with all the blocks and reverse the transaction.
Confirming Transaction Security
Due to this security consideration, many crypto businesses, including wallets and exchanges, require a certain number of confirmations before considering a transaction valid and irreversible.
Typically, a minimum of three confirmations is required, although the specific number may vary depending on the business’s policies.