Topic: Why few cryptocurrencies requires more no. of confirmations on the Blockchain? (Read 168 times)

first you need to understand what "confirmation" means.
when we say a transaction has x number of confirmation it means that the transaction is x blocks deep or in other words x blocks were found after the block containing that transaction.

now in a proof of work based cryptocurrency blocks are found by doing "work", this work becomes harder the more miners doing it with a variable called difficulty and also it becomes easier if there are fewer miners doing the work. this design is there to ensure blocks are always found at a fixed interval no matter how many miners are sharing the work.

now the problem with this design is that if there are few miners and difficulty is low (which makes it easier to mine blocks) if some malicious actor had a large mining power they could go on that chain and start competing with others and perform a 51% attack which in simple terms means the malicious actor rejects all the other blocks and since he has more "power" he can create more blocks and introduce them as the longest chain.
this attack becomes harder by two things: 1. higher hashrate -> higher difficulty 2. more confirmation, in other words it is harder to reverse a block that is 100 blocks deep compared to a block that is 10 blocks deep.

most altcoins don't have that much hashrate and many are capable of performing 51% attacks on them which is why exchanges, to protect themselves, require a lot more confirmation on these coins.

Just remember that "that" example 600 required confirmations for VET is only limited/required to the exchange, merchant or any 3rd-party services.
In their (Digital Currencies) Blockchains' protocol, one confirmation is as good as "sent".

As for 51% attack, you might need to read more about "mining" to understand the written articles about it on the internet.

Basically, a malicious Pool/Miner who controls more than half (51%+) of the total hashrate (mining power) of the network could alter the newest block(s) in a variety of ways, the deeper the block, the harder it is to make an alteration (but even the latest block isn't an easy feat).
That's why merchants/exchanges want their transaction(s) buried in the blockchain as deep as possible.

Thanks for sharing your thoughts on this. I didn't understand what is a 51% attack and how it will affect the exchanges?

Yes, this is the case.
BTC blocktime is 10minutes, so 6 confirmations is about 1 hour.

Other blockchains have a much faster blocktime, like Ethereum which has something like 15 seconds.

As you said hash power of the network is indeed a problem. Recently bitcoin gold suffered a 51% attack and some exchanges lost money. So exchanges are now more cautious about confirmations of small coins, in case of a 51% attack.

In all blockchain based coins there's a chance (bigger or smaller) that a short-lived fork happens. I am not that technical, but there are a couple of things that can lead to that. However, after a number of blocks one of those forks are usually "discarded", and those blocks are considered "orphan" I think.
However, this kind of situation can lead to transactions that are seen as having 1 confirmation by some and unconfirmed by others, depending on the part or the chain/fork they follow.
Normally the transactions from orphaned blocks are picked up sooner or later into (another) valid block (remember? on the valid chain they were never included at all).

This can lead to super-rare situations where somebody can show a transaction having 1 confirmation, but still having the possibility to be double spent.
Even on Bitcoin network most of the businesses wait for at least 3 confirmations (some even 6!).

On "less reliable" blockchains the numbers are bigger. Of course, on the blockchains with low hash rate where 51% attacks can happen, then the number of confirmations becomes super high. I don't know though all the conditions which "dictate" these numbers.

They require more confirmation because either the block time is so fast or the hash rate/power/validations are still low, so 1 or 2 confirmation could be easily modified/edited/attacked by malicious user/node as long as they have enough power. Bitcoin hash rate is so big that it's nearly impossible or require a lot of economic costs just to attack a new block/change 1 confirmation, which is why some exchange or merchant accept 1 confirmation.

Of course, the rate might change by the time the coins arrived on your wallet, but that's the risk. Almost every coins/token have this risk, so it's impossible to avoid it. Which is why most people will try to arbitrage with another coins/tokens that have quick confirmation (becasue it's more centralized) like XLM or XRP.

I have recently started my crypto journey. I had some VET tokens, I was selling that to buy BTC. But I didn't know that VET requires(around 600 confirmations) more no. of block confirmations to initiate the exchange. It took more time to confirm on the blockchain. By the time it confirms, the rate will fluctuate and we will receive less coins than expected.

Not only this coin, there are other coins like ETC, ZCL, Bytecoin, Expanse coin etc. which requires more no. of confirmations on the blockchain.

My question here is: if these coins take more time to confirm on the blockchain, will the rate don't change? We may receive less coins in this case right? Then why do people still trade these coins? Please share your thoughts on this.