1

After the 51% attack on Bitcoin Gold. The developers of the cryptocurrency recommended the exchanges to increase the confirmations. I don't understand why would increasing the confirmations help if the attacker has control over the history of the blockchain. I'm missing something for sure.

2

Exchanges only process a deposit after a certain number of blocks have confirmed (been mined on top of) the block containing the transaction depositing coins to an exchange.

The more confirmations you wait for, the larger the number of blocks an attacker needs to rewrite. As the number of blocks requiring rewriting increases, so does the attacker's required hashpower.

To rewrite a history of only 1 block, you need to mine 1 block. To rewrite 10 blocks, you need to rewrite 10 blocks in a row, faster than the rest of the miners can extend the existing 10 block chain further. The difficulty of pulling this off increases exponentially as the length that must be rewritten increases.

By increasing their confirmation requirements, exchanges can make it infeasible/too expensive for an attacker to complete a double spend attack.

3

If the exchange waits for 6 confirmations (1 hour) and sends the dollars then, it could be possible that no one even noticed that there was such an attack. Then a scammer could pay out twice.

But if the exchange waits 12 hours for example, some miners will probably recongnize that they do mine on a shorter chain within this time.

In the bitcoin system, 6 confirmations mean in more than 99.9% of the cases that the transaction is done. There are only a few scenarios in the bitcoin history when that was not the case.

But you need less mining power to attack Bitcoin Gold. So I would aggree that the exchanges should wait longer.

  • Beat me by 4 seconds :) – Raghav Sood Jun 4 '18 at 10:01

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