Let’s say I send you 1 Bitcoin. After a few minutes you see that this transaction has received one “confirmation”. What does this actually mean?
The block chain is built out of “blocks”. Each new block is a set of new unique Bitcoin transactions that were recently made. So when I broadcasted to the network that I want to send you 1 Bitcoin the transaction went into an unconfirmed transactions pool.
Miners entered the unconfirmed transactions pool, took this transaction and others like it, verified they were valid (meaning I actually have the 1 Bitcoin to spend), and grouped them into a block. The new block is set at the top of the blockchain and is considered confirmed. Now miners can move on to build the next block on top of that one.
Each time a new block is built it means that the older blocks got confirmed again (since they are checked also in the process). The more confirmations you get, the harder it will be for someone to manipulate the system and remove the block containing this transaction from the wall (or blockchain) since it’s buried under the other blocks that were confirmed.
It is recommended to wait for at least 6 confirmations in order to be 99.9% sure that your transaction won’t get canceled – this takes roughly 1 hour to achieve. If you’re dealing with smaller amounts of money you’re probably OK with waiting for just 1 confirmation.
Reversing a transaction takes planning, time and effort and a lot of computing power. Most people probably won’t go through all of that trouble for a small amount of money.
Latest posts by Ofir Beigel (see all)
- “JPMorgan CEO Jamie Dimon says bitcoin is a ‘fraud’ that will eventually blow up” – CNBC | $4,367.12 - September 12, 2017
- How to Buy Bitcoins if You’re a Noob – Bitcoin Whiteboard Tuesday - September 12, 2017
- “Why China Crushed Bitcoin” – Forbes | $4,450.15 - September 9, 2017