Confirmed and unconfirmed blockchain transactions
The main feature of cryptocurrencies like BTC or ETH is that they are not issued by a central authority. There is no bank or government in charge of processing transactions. Instead, a network of independent nodes validates and confirms transfers of decentralized cryptocurrencies.
In the context of blockchain, a confirmation is when miners add a new block to the chain. The first confirmation of a transaction occurs when it is added to the chain as part of a block. After that, each additional block added to the chain counts as another confirmation of that transaction. This is important, because blocks that are deeper down the chain are much harder to reverse.
Therefore, the more confirmations a transaction has, the harder it is to hack. Because of this, most wallets and exchange platforms require several block confirmations before they accept a transfer.
TRANSACTION CONFIRMATION ESSENTIALS
When you send a crypto transaction from your wallet, it is broadcast to the network of nodes. Nodes store unconfirmed transactions in their memory pool (or mempool). Miners then take these transactions from the mempool and include them in blocks. This makes the transaction a part of the blockchain, giving it its first confirmation. At that point, the transaction can no longer be reversed (unless the block is orphaned). However, the transaction may not actually be completely finalized yet.
Most cryptocurrency wallets and exchanges require several block confirmations before accepting a transaction. This provides assurance that the transactions are trustworthy, so it makes sense to wait for a few additional blocks before accepting transactions. There are two reasons for this:
- After a few confirmations, the block your transaction is packed in becomes much harder to hack.
- Sometimes, two miners create a block at the same time. This creates a parallel chain for a short time. Soon, the nodes agree on which version of the blockchain is the “right” one and the parallel chain is abandoned. If wallets accepted transactions with only one confirmation, they could end up on the abandoned chain.
Each wallet or exchange sets its own limit for how many confirmations it requires. This number also depends on each specific blockchain. The average block confirmation time for Ethereum transactions is under 20 seconds. Bitstamp requires 12 block confirmations to accept an ETH deposit. If the fee (or gas limit, since we’re talking Ethereum) is high enough, you should receive your transfer within 4 minutes.
Bitcoin, on the other hand, requires 10 minutes on average for a block confirmation. Therefore, waiting for 12 block confirmations would take far too long. BTC blocks are also harder to hack (because they require more proof of work), so the required number of confirmations is generally much lower. Bitstamp requires 3 confirmations before accepting Bitcoin deposits.
It is quite simple to check the status of your transaction on the blockchain. If it is marked as “unconfirmed,” in most cases you just need to be patient. Confirmation time varies from currency to currency. When the network is busy, your transaction may take longer than usual to get picked from the mempools. If your transfer is marked as “confirmed,” but still hasn't shown up in your wallet or account, check how many block confirmations it has received.
However, it is possible that it will simply take too long for your unconfirmed transaction to be processed. In case you forget to set a fee, or if you set it low (especially when the network is busy), your transaction may get stuck in the memory pools. To get the highest reward possible, the miners will pick transactions with higher fees first and ignore transactions with fees set too low. Unconfirmed transactions are eventually dropped from the mempools. An unconfirmed BTC transaction is usually dropped after 2 weeks.
There is no easy way to cancel a transaction once it is broadcast. Some wallets release the coins back to the sender, but this can take a long time. To avoid a long wait, a stuck transaction can be processed by being rebroadcast with a higher fee attached to it, meaning that it will be mined more quickly than the old transaction.
If you use a reliable exchange platform, you needn’t to worry about fees and stuck transactions, as the exchange sorts this out for you.