Many newbies who have just got involved in the blockchain may feel surprised when they are told that “A successful bitcoin transfer needs 6 confirmations.” Why are 6 confirmations are needed? Does it refer to the confirmation of 6 bitcoin mining workers on the network?
Here in the article, we would like to explain the principles in detail.
In the article What Is 51% Hashrate Attack, we introduced that after successfully launch of 51% hashrate attack, the double-spending can be realized. Let’s briefly review the process of double-spending:
Suppose Mr. Black sends 666BTC to Mr. HELLOBTC which has been packaged in the Nth block. Within a few minutes, Mr. Black repented. By means of more than 50% of hashrate under his control, he launched the 51% hashrate attack. By eliminating the 666BTC transaction sent to Mr. HELLOBTC, he reorganized the Nth block and continued to extend the block after it to make it the longest legal chain.
This is known as the process of double-spending, in which the 666BTC sent from Mr. Black to Mr. HELLOBTC was invalidated.
From the aforesaid example, we can see that even if Mr. HELLOBTC received the 666BTC from Mr. Black and the transaction had already been packaged, the transaction was still likely to be invalidated.
In order to avoid the loss resulting from double-spending, it is generally believed that the bitcoin transaction with 6 blockchain confirmations are basically impossible to be tampered. That is, if the 666BTC transaction from Mr. Black to Mr. HELLOBTC was packaged in the Nth block (the first block confirmation), when Mr. HELLOBTC waited until the N+5th block appears (the sixth block confirmation), the transaction was basically impossible to be tampered.
Please note that the term “basically” is used here, because it’s not completely absolute.
Not long ago, a hacking and coin stealing incident occurred at Binance and a total of more than 7,000 bitcoins were stolen. The bitcoin was transferred by hackers and the transaction records were packaged at the block height 575013. Shortly after the incident, some people proposed to reorganize the blocks. At that time, many blocks(more than 6) had been confirmed.
Block reorganization means to delete the hacker’s transaction records starting from the block where the bitcoin was stolen and recreate all the subsequent blocks afterwards as shown as below:
It’s said that after the incident of the bitcoin stealing, the CZ of Binance made a phone call to Wu Jihan at Bitmain on reorganization of bitcoin blockchain. At the time, they were able to combine high bitcoin hashrate to reorganize the blockchain as the longest legal chain of bitcoin from a technical point of view.
When the news on reorganization was revealed, the whole industry was completely stirred with all kinds of disputes. Of course, the reorganization didn’t occur in the end and Binance was willing to bear all the losses of the hacking incident.
In general, the more blocks are confirmed, the more secure they are and the less likely they are to be tampered and reorganized after 51% hashrate attack. As it has been said that the transactions will be safe with 6 block confirmations, this number 6 is not mandatory. It just means it’s less likely to be tempered with 6 block confirmations because it’s hard for the hackers to control a large amount of bitcoin hashrate to commit evils currently.
Every bitcoin block is packaged every 10 minutes averagely and 6 block confirmations mean 60 minutes. So, do we have to wait for more than 60 minutes for every bitcoin transaction?
Not necessary indeed. For small transactions, there is no need to wait for 6 block confirmations because bitcoin is less likely to suffer from 51% hashrate attack. Generally speaking, bitcoin transactions of less than US$1,000 can be confirmed by 1 block; as for the bitcoin transactions of US$1,000~US$10,000, at least 3 block confirmations are requested for recharging and withdrawal on general trading platforms; as for the bitcoin transactions of US$10,000~US$100,000, basically 6 block confirmations are needed; for transactions more than US$100,000, it’s better to have more block confirmations.
So, how many block confirmations are you willing to wait for when you make a Bitcoin transfer?