Homework on Finality - Questions

Blockchain and Bitcoin 101
#5038
  1. What we mean when we say that blockchain has transaction finality is that that once a transaction is approved by the nodes on the network it can not be reversed.
  2. We are able to do business with strangers without having intermediaries intercept transactions.
2 Likes
#5039
  1. What do we mean when we say that blockchain has transaction finality/immutability? It means transactions cannot be reversed.
  2. How does this lead to the trustless environment that blockchain creates? once a transaction is verified on the blockchain there can be no chargebacks, and the transaction can never be taken off the blockchain.
1 Like
#5040

  1. Once a transaction is verified, it cannot be undone

  2. Transactions cannot be reversed and so are verified to have occurred. They cannot be claimed to have not occurred and not amenable to blocking or reversal. This builds trust in the transaction activity ie the protocol, so individual parties need not be trusted.

2 Likes
#5041

A1. Blockchain has finality/immutability means that nobody can get it back or change it once transaction has happened and verified.
A2. By the feature of finality, blockchain creates the trustless environment meaning that it removes trust in the chain of blocks and makes it possible to trade with strangers.

2 Likes
#5042

Thanks for sharing your experience with the merchant. I just started this course and learning about blockchain. I had been confused about how this trustless system would benefit the consumer. My concern was what if I paid but never received my item and the merchant insists that they sent it? Basically, you just illustrated that I would lose my payment to the merchant for a non delivered item using the blockchain but would have protection as a consumer using traditional credit card payment.šŸ’

#5043

The transaction of you paying the merchant is verifiable as having occurred. The merchant cannot challenge that the transaction had occurred to a particular receiving address.

However if the merchant chooses not to honor the transaction by sending you the product, he would have stolen your bitcoin. This is the same as if you paid a person cash, got a receipt, but the person does not give you the product. So theft.

Credit card companies can block the transaction and reverse it, itā€™s true, and this was developed as a safeguard against bad merchants in the earlier days of credit cards. This comes at a cost to all credit card users though, since you are paying as interest and also as fees to support these middle men to protect you for such a bad transaction.

The risk in bitcoin youā€™ve pointed out is true, because, like cash, once you pass the money over, you have to trust the merchant to send you the product. His is where trust enters the system.

The trustlessness described for bitcoin is that you donā€™t have to trust anyone to maintain,secure or use BTC as a currency. The US dollar however does require us to trust that someone is maintaining its value, regulating its supply and distribution etc. Itā€™s a trust currency, bitcoin is a trustless currency.

1 Like
#5044

Thank you for the reply.

#5045

  1. What do we mean when we say that blockchain has transaction finality/immutability?
    once a-transaction is confirmed it canā€™t be reversed.

  2. How does this lead to the trustless environment that blockchain creates?
    you can do business with strengers and all transactions are verified and cannot be modified

1 Like
#5046

  1. It means that the transaction can never be changed or amended once it is made. It is immutable. If you send the bitcoin to the wrong person, you canā€™t take it back. You can cancel the transaction.

  2. This leads to the trustless environment because you donā€™t have to trust what the person says he willl do. As long as the person has sent the bitcoin to you, he canā€™t reverse it as the network does not permit it. This makes it possible to do business even with a stranger.

1 Like
#5047

1: every transaction that goes onto the blockchain is irreversible and impossible to change.
2: people using the blockchain for transaction ā€˜trustā€™ the math (algorithm) of the blockchain which is transparant and can be checked by everyone. Therefore trust in whoever you are transacting with becomes irrelevant.

1 Like
#5048
  1. Once a transaction has been verified it is mathematically impossible to change the verified block.
  2. You no longer have to worry about a transaction being reversed once itbis verified it is ā€œset in stoneā€
1 Like
#5049
  1. Once the transaction is verified the block is closed and canā€™t be changed because it will disrupt the chain of transactions that have happend.
  2. This allows us to no longer need to trust the other party because the network verified it for us
1 Like
#5050

  1. What do we mean when we say that blockchain has transaction finality/immutability?
    The block chain is like a digital stone. Transactions cannot be erased, and are therefore Final and Immutable to all users with access. The transactions in many block chains are PUBLIC, so all who is interested can view the transactions.

  2. How does this lead to the trustless environment that blockchain creates?
    DONā€™T TRUSTā€¦ VERIFY!! This is the community creed, and the blockchain allows us to adopt this creed without much pressure or manipulation from the outside influences because it is written in the code to allow validation nodes to make decisions.

1 Like
#5051

  1. unidirectional way that gives transparence to the ecosystem.

  2. that the information must be verified first before is sent, and one is sent in cannot be modified.

1 Like
#5052

  1. What do we mean when we say that blockchain has transaction finality/immutability?
    When a transaction is confirmed it is irreversible. It is included into the current block of transactions and it is practically impossible to change it.

  2. How does this lead to the trustless environment that blockchain creates?

    When the decentralised blockchain network secures the finality one does not need to trust in a transaction, it is always executed.

1 Like
#5053
  1. If a transaction happened it is (written) forever on the blockchain.
  2. No need to trust someone, we all trust the algorithm and the network. It is impossible to modify or delete a transaction.
1 Like
#5054

Finality

  1. What do we mean when we say that blockchain has transaction finality/immutability?

It means that the transaction is final and cannot be reversed or modified after being completed (unless the person or piece of code on the other end of the transaction sends it back which will be a new transaction added to the blockchain not an edit of the original or transaction in question).

  1. How does this lead to the trustless environment that blockchain creates?

The sender cannot reverse the payment. The receiver cannot deny receiving since the transaction can be verified. There isnā€™t a central authority to rely on or that can reverse or deny transaction.

1 Like
#5055
  1. It means that once a transaction has been accepted into the blockchain, its validity canā€™t be disputed, nor can the transaction be reversed or modified in any way.
  2. As long as the participants in a transaction have faith in the objective finality/immutability of the blockchain used to record their transaction, they do not need to have any further concern about whether the value transfer can be denied, changed or undone by either party.
1 Like
#5056
  1. transactions can not be reversed and no charge backs.
  2. Trust the math and protocol.
1 Like
#5057

Question 1) What do we mean when we say that blockchain has transaction finality/immutability?

A blockchain is said to have finality/immutability because each individual node on the network holds its own, updated, verified copy of the ledger, and this ledger cannot be tampered with, without miners on the network rejecting the new ledger as fraudulent. This decentralized network then, has assurances built in to the protocol that the current state of the ledger is true, and any transactions made cannot be reversed or cancelled, giving the transaction finality and immutability. This process of creating finality holds true for data such as supply chain records and merchandise inventory, as well as financial transactions.

Question 2) How does this lead to the trust-less environment that blockchain creates?

Blockchain creates trust-less environments by not expecting end users to trust the intentions of any one centralized person or group. It achieves this by utilizing a decentralized network of nodes and miners that use financial incentives to confirm and update transactions on the ledger, this ledger is held by every node on the network, can be freely audited, and provides transparency to transactions. No trust is required, only a sophisticated use of mathematical protocols and code.

1 Like