Of course, time is priceless and precious too, and this is the reason why when we spend some money, we want a guarantee of instant results. But, the Bitcoin transaction takes some time and we have to be a little patient.
Actually, when we make a transaction, it goes into a pool of unconfirmed transactions, that is Bitcoin mempool. From here, Bitcoin miners select our transaction and place it into a block of transactions after solving a specific mathematical puzzle called a proof of work. After that the Bitcoin Network confirms our block and clubs it to the blockchain. Each new block added to the blockchain is another confirmation for our transaction.
What is Confirmation time?
The period between a blockchain transaction submission to the network and the time when it is finally recorded into a confirmed block is called confirmation time. In other words, it tells about the total time a user has to wait until their transaction is collected and confirmed by a miner node.
It occurs due to following reasons:
- Total network activity,
- Hash rate
- Transaction fees.
- If the Bitcoin network is congested, there will be a backlog of transactions in the mempool.
On the Bitcoin network, the average confirmation time is about 10 minutes. However, transaction time can vary.
What is A Transaction?
Transaction is one of the most important parts of the bitcoin system. Transaction is the data structure that encodes the transfer of value between participants in the Bitcoin system. Once it is done, it is finally added to the global ledger of transactions (the blockchain).
Transaction Lifecycle
In general, it has the following steps
- Origination/ Creation: A transaction’s lifecycle starts with its creation, also known as origination. The transaction is then signed with one or more signatures for its authorization.
- Broadcasting/ Propagation: The transaction is then broadcasted on the bitcoin network, where each network node (participant) validates and propagates the transaction until it reaches (almost) every node in the network. The nodes don’t need to trust the sender or establish the sender’s “identity.” Because the transaction is signed and contains no confidential information, private keys, or other credentials,
- Verification: Finally, the transaction is verified by a mining node and included in a block of transactions that is recorded on the blockchain.
Depending on the type of blockchain and network frame, this time can be minimized by offering a higher transaction fee, which attracts miners and they prioritize the transaction.
How Many Confirmations are required for Bitcoin Transactions?
Once a new transaction is verified and included in a new block, it will count as one confirmation. After an average of 10 minutes, another block will be created with that transaction, which will count two confirmations.
- For very large value transactions, six confirmations are generally desired, which can take an hour.
- For multi-million-dollar transactions, dozens of confirmations may be required. However, to buy an inexpensive item or send a small amount of coins to someone, often, no confirmation is required.
- Some services only require one confirmation, while some exchanges need 3 or more BTC confirmations.
- For Binance, 1 block confirmation is needed for BTC deposits, and 2 block confirmations is needed for Bitcoin withdrawals.
- For Coinbase, 3 block confirmations before considering the BTC transaction final.
Security After Confirmations
A large amount of computing power is required to solve these puzzles, so it is almost difficult to undo. This is because each puzzle builds upon the previous blocks so to get to block #2, one has to undo blocks #7, #6, #5, #4, and #3. This would take a nearly impossible amount of computing power, so your Bitcoin is perfectly safe after six confirmations.