Bitcoin transactions need 2 hours to be safe, says developer
If someone asked you how many blocks (or minutes) they should wait to make sure their Bitcoin (BTC) transaction is irreversible, would you know what to say? The “rule of thumb” would be between three to six blocks (around 30 to 60 minutes), but experts say it should be even more.
Different people could give different answers, and a recent post by Luke Dash Jr. (@LukeDashjr) — a Bitcoin Core developer — on X suggests that a 12-block waiting (around 120 minutes) is the safer approach, considering Bitcoin mining‘s current state.
Indeed, probably should wait a good 12 blocks now
— Luke Dashjr (@LukeDashjr) September 19, 2023
With that in mind, Finbold went deeper into understanding what is the safer confirmation time for a Bitcoin transaction.
Bitcoin transactions have probabilistic finality
Due to Bitcoin having what is called ‘probabilistic finality’, transactions’ irreversibility increases for each new block added to the blockchain after the block that included the transaction.
When someone sends BTC from one address to another — which could be depositing BTC to a centralized exchange in order to sell — the Bitcoin transaction sits in a mempool, waiting for the next miner to find a block and include this sending there, before broadcasting this block to the network, that will be added to the blockchain.
However, according to the Bitcoin whitepaper, if another miner spends more hashrate and broadcasts a block with the same block height, the first block could be invalidated, as Bitcoin nodes would follow the chain with the highest work (hashrate) put into it.
Each new block broadcasted after the first increases the work put into this given chain, which makes it harder for the block sequence to be invalidated. Probabilistic increasing irreversibility of all the transactions that were validated by this sequence, or chain.
Why does Bitcoin confirmation time need to increase?
Another renowned Bitcoin contributor, Jameson Lopp, wrote an article called “How Many Bitcoin Confirmations is Enough”, addressing all the technical and mathematical aspects that answer this question.
According to Lopp, the needed confirmation time for a 99.9% certainty of irreversibility increases according to the percentage of a theoretical attacker would have from the network’s hashrate. Going from 5 blocks (50 minutes) for a 10% hashrate, to 340 blocks (over 56 hours) for a 45% hashrate.
% Attacker Global Hashrate vs # Confs for 99.9% Certainty. Source: Jameson Lopp
Notably, this aligns with the answer Luke Dash Jr. gave about the 12 confirmations needed considering that two Bitcoin mining pools already have over 20% of the global hashrate. These are Foundry USA and Antpool, with 29.67% and 22.75% of the total hashrate in the last month, respectively.
Bitcoin mining pools 1-month hashrate ranking. Source: mempool.space
Therefore, the recommended waiting time will vary depending on the state of the network but also on the risk tolerance of the receiving part. Some centralized exchanges have chosen to wait for three blocks depending on the deposit size, while others require four, five, or even six blocks — each block having an average interval of 10 minutes.
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