To ensure security, cryptocurrency transactions must pass through multiple confirmation steps before finalization. This article explains the risks of unapproved transactions and how they can be avoided by prescribing solutions. It also explains some common doubts. The content has been revised to be clearer, more specific, and more readable.
What Are Unconfirmed Transactions?
Transactions that remain pending have been sent to the network but are yet to be confirmed by miners or incorporated into the blockchain. They remain in a temporary state until miners validate them and integrate them into a block on the blockchain. This intermediate state introduces several vulnerabilities for users.
Risks of Unconfirmed Transactions
Double Spending
Attackers may exploit unconfirmed transactions to spend the same cryptocurrency multiple times. This occurs when the network processes conflicting transactions with the same inputs but prioritizes the one offering a higher fee.
- Example: In 2019, a Bitcoin Cash vulnerability showed how attackers could sign multiple transactions to different recipients, causing network congestion and allowing the malicious transaction to succeed.
Reversibility
The Replace-by-Fee (RBF) protocol enables users to replace unconfirmed transactions with newer ones that offer a larger fee. Although this function is useful for transactions of coins to be confirmed faster and even for lowering costs in the case of large blocks, it can be maliciously used to cancel a transaction or fail in the successful purchase of items.
Delays Due to Network Congestion
Low-fee transactions are usually the ones that get stuck in the mempool (the waiting area for pending transactions) when the traffic is at its highest. For example, the Bitcoin mempool soared at the beginning of 2021 and thus the longest delays had been hours or even days.
How to Mitigate Risks
Set Competitive Fees
Using fee estimation tools like Bitcoin Core or services like mempool space ensures transactions are prioritized by miners.
Use Transaction Accelerators
Services such as ViaBTC’s accelerator rebroadcast unconfirmed transactions, reducing delays and increasing the chances of confirmation.
Monitor Network Congestion
Keeping track of the mempool allows users to optimize the timing of their transactions, especially during low-traffic periods.
How Many Confirmations Are Needed for Security?
- Bitcoin: Six confirmations are widely accepted as secure for high-value transactions, while smaller transactions may be safe after three.
- Ethereum: Around 12 confirmations are typically required, depending on the transaction size and purpose.
Emerging Technologies to Reduce Risks
Layer 2 Solutions
Technologies like Lightning Network (Bitcoin) and Optimism Rollups (Ethereum) are designed to empower the fast-moving off-chain validations keeping security still the first priority.
Blockchain Upgrades
Enhancements like Ethereum’s sharding or Bitcoin’s Taproot make the networks less congested which in turn ensures the confirmation of transactions faster and scalability improvement.
Conclusion
Unconfirmed transactions pose risks, such as reversibility, double spending, and delays. However, users can mitigate these risks by setting appropriate fees, leveraging transaction accelerators, and monitoring network activity. As blockchain technology evolves, new solutions promise to enhance transaction speed and reliability.
