Economic finality describes the point at which the cost to reverse a confirmed transaction on a blockchain becomes prohibitively expensive, making such an action economically impractical for an attacker. Unlike absolute finality, which is cryptographic, economic finality acknowledges that while technically possible, the financial resources required to undo a transaction outweigh any potential gain. This concept provides a practical assurance of transaction permanence, particularly in Proof-of-Work systems. It depends on the network’s security budget and the value secured by the transaction.
Context
Economic finality is a recurring topic in discussions about blockchain security, especially for Proof-of-Work chains like Bitcoin. News often reports on analyses of a network’s economic security, assessing the cost of a 51% attack and its implications for transaction reversibility. The concept helps users and institutions gauge the practical risk associated with accepting transactions as final, influencing the number of confirmations considered sufficient for high-value transfers.
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