Chain Reorganization Risk

Definition ∞ Chain Reorganization Risk refers to the possibility that a previously accepted block on a blockchain becomes orphaned or replaced by an alternative block sequence. This event occurs when a longer, valid chain is discovered by network participants, causing a rollback of transactions on the shorter chain. Such a risk is inherent in proof-of-work blockchains, particularly during periods of low network hash rate or malicious attacks. It introduces uncertainty regarding transaction finality.
Context ∞ News about Chain Reorganization Risk typically pertains to security vulnerabilities or network stability concerns in specific proof-of-work cryptocurrencies. A significant chain reorganization can lead to double-spending incidents or a temporary disruption of network operations, affecting user confidence and asset value. Protocols aim to mitigate this risk through various consensus rule adjustments or by increasing confirmation requirements for high-value transactions. Monitoring this risk is vital for understanding the security posture of decentralized ledgers.