What Are Bitcoin Confirmations?

When a bitcoin transaction is first made, it's considered "Unconfirmed". This means the transaction has been broadcast to the network but isn't yet recorded in the blockchain, which is the permanent record of all bitcoin transactions. To get a transaction confirmed, it needs to be included in a block by miners. Miners bundle transactions together into blocks and race to solve complex mathematical problems. The first miner to solve the problem adds their block of transactions to the blockchain and is rewarded with new bitcoins.

Each block mined on top of the block containing your transaction counts as an additional confirmation. The more confirmations a transaction has, the more secure it is because it becomes exponentially harder to reverse. Think of it like building a tower of blocks – each block adds more weight and makes the tower harder to topple.

How Many Confirmations Are Enough?

While one confirmation means a transaction is part of the blockchain, most exchanges and services prefer to wait for 6 confirmations (about 60 minutes) to consider a transaction final. This is because the most recent blocks can theoretically be removed from the blockchain in a rare event called a reorganization. The likelihood of six blocks being reorganized is extremely low, so waiting for six confirmations provides a high degree of certainty that a transaction is final.

However, waiting for multiple confirmations might not be necessary for small transactions like buying a cup of coffee. A merchant might accept a zero-confirmation transaction in situations where they'd typically accept a credit card payment without an ID.

Under the Hood of a Bitcoin Confirmation

Transaction Broadcast: When a transaction is made, it's broadcast to nodes on the Bitcoin network. The transaction enters the "mempool", a holding area of pending transactions.

Miner Selection: Miners select transactions from the mempool to include in blocks.

Block Creation and Hashing: Miners group transactions together into a block. They then perform proof-of-work by finding a special number, called a nonce, that, when added to the block data and run through a hashing algorithm (SHA256), results in a hash value that meets specific criteria. This process requires significant computational power.

Block Propagation and Validation: Once a miner finds a valid hash, they broadcast the complete block to the network. Other nodes validate the block, ensuring all transactions within it are valid and follow the rules of the network.

Confirmation: If a majority of the network's computational power agrees that the block and its transactions are valid, the block is added to the blockchain. Every node updates its copy of the blockchain to include the new block. At this point, the transactions in the block are considered "confirmed".

Subsequent Confirmations: Every time a new block is added to the blockchain on top of the one containing your transaction, it receives an additional confirmation. Each confirmation makes it exponentially harder to reverse the transaction because it would require changing all the blocks added after it.

When Are Bitcoin Confirmations Sufficient?

One confirmation may be acceptable for transactions involving digital goods with low or no marginal cost to the merchant. The risk is comparable to accepting a credit card payment without ID or a signature. Three confirmations are commonly treated as secure by some users, but this practice delegates the responsibility of validation and may be based on a flawed trust model. Six confirmations are generally accepted as secure by most exchanges and services. This provides a higher degree of confidence that the transaction has settled. Most Bitcoin users wait for six confirmations due to the possibility of block reorganizations.

Finality is Subjective: Ultimately, the number of confirmations needed for a Bitcoin transaction to be considered final is decided by the individual or entity receiving the payment. Several factors influence this decision, including:

• Value of the Transaction: Larger transactions may warrant a longer waiting period.
• Risk Tolerance: Merchants selling low-cost items might accept fewer confirmations.
• Network Hash Rate: If the Bitcoin hash rate decreases significantly, more confirmations might be necessary for the same level of security.

It is essential to note that relying on a third-party block explorer to determine transaction confirmation may be misguided. The most secure approach is to run your own node to independently validate transactions.

Replacing Stuck Bitcoin Transactions

Transactions broadcasted to the Bitcoin network become part of the mempool as they await confirmation. Occasionally, low-fee transactions get stuck in the mempool. Boosting a stuck transaction involves changing the fee associated with it. A higher fee increases the likelihood that a miner will add a transaction to a block. Miners are incentivized to prioritize transactions with the highest fees because they receive those fees, along with newly minted Bitcoin, as a reward for ordering transactions into blocks.

Users can boost a transaction by selecting the "Boost Transaction" option. The user can then select a new transaction fee or manually set their own fee. After setting a new fee, the user must sign the transaction again. The newly signed transaction with a higher fee will replace the old transaction and be broadcasted to the network. This new transaction can be monitored on Mempool.Space. The user’s vault balance will adjust after 3+ confirmations.

This method of replacing an unconfirmed transaction with one that pays a higher fee is known as replace-by-fee (RBF) fee bumping. To increase the fee using RBF, a conflicting version of the transaction is created that pays a higher fee. This conflict arises when two or more transactions try to spend the same UTXO, forcing the miner to choose only one.

Bitcoin Core, and other full nodes that support transaction replacement, require each replacement transaction to pay a higher fee rate than the transaction it is replacing. Bitcoin Core also currently requires the replacement transaction to have a higher total fee, though developers have been looking for ways to remove this requirement.

How Fees Impact Confirmation Time

Transaction fees directly influence how quickly a transaction gets confirmed on the Bitcoin blockchain. Here's why:

• Miners Prioritize Transactions with Higher Fees: Miners receive transaction fees for including transactions in the blocks they add to the blockchain. They are incentivized to prioritize transactions with higher fees because this maximizes their revenue.
• Limited Block Space: Each block has a limited amount of space (1MB). This means only a certain number of transactions can fit into a block. During busy periods, when many users are trying to send transactions, those with the highest fees are more likely to be included in the next block.
• Fee Rate Determines Speed: The fee rate, measured in satoshis per byte of data (sats/vByte), directly determines how quickly a transaction will be confirmed. Users can often determine the fee rate in their wallets, allowing them to pay a higher fee for faster confirmation.
• Lower Fees Mean Longer Waits: If you choose to pay a lower fee, your transaction might take longer to confirm, potentially hours, days, or even weeks.

Let me know if you'd like more details on how to estimate an appropriate fee!