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There seems to be a lots of variations in confirmation time.

https://blockchain.info/charts/avg-confirmation-time

I would like to understand factors that affects the confirmation time.

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First, let's start with the definition of confirmation:

After a transaction is broadcast to the Bitcoin network, it may be included in a block that is published to the network. When that happens it is said that the transaction has been mined at a depth of 1 block. With each subsequent block that is found, the number of blocks deep is increased by one. To be secure against double spending, a transaction should not be considered as confirmed until it is a certain number of blocks deep.

See: Confirmation

What this means is that you can determine the number of confirmations before you consider the transaction "confirmed", and this number represents the number of blocks since the transaction was put in the blockchain (including it's block).

So, the question becomes what determines block time? This is determined by the current difficulty assigned by the network. This difficulty is adjusted every 2016 blocks (about every 2 weeks) to get a target block time of 10 minutes. So, if the hashing power of all the miners on the network increases significantly, the difficulty will compensate by increasing as well (once the 2016 blocks have been mined since the last adjustment). Then, if the network hashing power drops off significantly, block time will take a lot longer because there isn't as much mining power able to solve the high difficulty every 10 minutes.

Note: Difficulty determines the target hash value that the block hash must be less than in order for it to be counted as a valid block.

  • Thank you. But it does not seem to explain why the confirmation time significantly increased in Dec 17. – 171124 Jun 6 '18 at 15:24
  • You didn't ask that. But transaction volume is an important component. One potential theory was that exchanges like gdax were not using sendmany in the transactions, so that significantly increased transaction volume. – JBaczuk Jun 6 '18 at 18:52
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Confirmation time is effected by two things: the time to find a block, and the transaction fee paid by a transaction.

Since a confirmation means that a transaction has been included in a block, one factor in the time for a transaction to confirm is the amount of time it takes to find a block. This is, on average, 10 minutes. However the time between blocks is not always 10 minutes, it can vary quite a lot, typically from a few seconds to 2 hours. This means that if miners just happen to be really unlucky for a certain block, then the confirmation time for a transaction could be very long.

The other limiting factor is the transaction fee. For a transaction to be confirmed, a miner must select it for inclusion in their block. The selection is based by transaction fee (specifically the fee rate). Transactions that pay a higher fee rate will be selected first. If there happens to be a lot of unconfirmed transactions, transactions with lower fee rates will take longer to confirm as they have to wait for the transactions that pay higher fee rates to be confirmed first. This will also effect confirmation times.

  • Then how do you explain that the confirmation time significantly increased in Dec 17? – 171124 Jun 6 '18 at 15:24
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    @171124 the number of transactions sent was very high around that time, so many transactions that paid lower fees took longer to confirm, as the higher fee transactions were confirmed first. – chytrik Jun 6 '18 at 17:33
  • jochen-hoenicke.de/queue/#1,1y – JBaczuk Jun 6 '18 at 18:48
  • Thank you. So is it that many people want to buy/sell bitcoin at that time, and the demand for confirmation outstripped the supply of mining powers? – 171124 Jun 6 '18 at 18:55
  • You could think of it that way. It's really the demand for transacting Bitcoin (buy/sell volume is irrelevant) exceeds the supply of block space for transactions (mining power is irrelevant, more mining power does not effect this much). – Andrew Chow Jun 6 '18 at 19:30

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