What Is a Zero Confirmation or Unconfirmed Transaction?
A zero confirmation or unconfirmed transaction refers to an exchange that has not yet been recorded or verified on the blockchain.
To understand this concept, it’s important to revisit some fundamental principles of blockchain technology.
Decentralized Ledger
A blockchain is a decentralized ledger consisting of a continuous sequence of blocks.
The blockchain is maintained by a network of distributed nodes that collectively agree on the validity of the data recorded on the ledger.
To manipulate the blockchain, malicious actors must control at least 51% of the computing power across the entire network, which is highly unlikely.
When users send data to the blockchain, they must wait for one of the network nodes to register and verify the data before adding it to a block.
As the blocks are linked together, each verified block confirms the integrity of all previous blocks.
Unconfirmed Blockchain Transactions
A zero confirmation transaction refers to a transaction that has been initiated but has not yet been confirmed and incorporated into the blockchain.
In other words, only the party initiating the transaction knows it.
Until a block is mined and other network participants confirm the transaction, it is considered to have zero confirmations.
It’s important to note that the time it takes to confirm a transaction can vary depending on the network’s transaction volume.
Considerations and Risk
In certain scenarios, a zero confirmation transaction can be noticeable, such as when a seller releases goods before the network confirms the Bitcoin payment, assuming that it will eventually be confirmed.
Typically, at least six confirmations from the network are required to have a high level of certainty that the transaction has been verified.