Homework on Finality - Questions

Blockchain and Bitcoin 101
#1007

The blockchain has transaction finality/immutability means once the transaction is performed it cant be changed.
This leads to a trustless environment in blockchain because all know going in that once a transaction is performed, it cant be changed and all in network can verify it - so all can trust it is correct.

#1008

  1. They can never be rolled back

  2. Parties can trust the math behind the system, that network will do what it is designed to do

#1009

  1. Blockchain has transaction finality/immutability, meaning once a transaction is processed and approved, it is recorded on the blockchain and cannot be change ā€˜Irreversibleā€™.

  2. This allows for a trustless environment because there is no need to trust anyone other that the network and mathematics that the blockchain is built on.

#1010
  • What do we mean when we say that blockchain has transaction finality/immutability?
    <it means that the transaction can not be reversed or cancel
  • How does this lead to the trustless environment that blockchain creates?
    This cualitative feature of blockchain removes a huge part of trust because once the block is completed nobody can reverse it
#1011

1 - Once a transaction has occurred there is no way to reverse or alter it once it is on the blockchain it is there forever

2 - This allows the removal of trust but implements verification allowing for strangers to do business with each other and thus people do not get cheated

#1012

Homework on Finality - Questions

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

Once a transaction has been confirmed/verified by the blockchain network, it is permanently recorded in the public ledger and there is no way to reverse it in the way transactions using credit cards can be reversed using chargeback.
Hence if a user accidentally sends cryptocurrency to the wrong recipient, there is no way to retrieve it. This finality is the price for having a secure, peer-to-peer payment system in which parties can transact directly with each other without the need for trust. This does mean, however, that blockchain is not suitable for all use cases, for example where there is a need to be able to reverse transactions.

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

Finality (which is a result of the immutability of entries written to the decentralised ledger) reassures each recipient that once they have received payment, it is safe, it cannot be reversed. This protects recipients from post-transaction fraud. Although this makes the blockchain network trustless (you are trusting the blockchain standards and protocols to verify the transaction rather than trusting the counterparty) fraud is still possible. For example, you may lured into sending cryptocurrency to a scammer, but this is a consequence human misjudgment rather than a vulnerability in the blockchain itself. Finality does of course mean that once the scammer has your money, you have no recourse whereas a centralised authority such as a bank can act as an arbiter of first resort and help recover your lost funds.

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#1013

  1. There is no way to undo or somehow change a transaction after it appears on blockchain.

  2. Finallity and immutability eliminate any kind of ambiguity that is needed for trustless environment.

#1014
  1. It means that when the transaction has been completed, there is no way to reverse the transaction.
  2. Because you can do business or basic transactions with strangers, and you dont have to trust them(and they dont have to trust you). Everyone trusts in network and there is no need to worry about scams/chargebacks/etc.
#1015
  1. CanNOT be reversed. End of. There for eternity
  2. Once you receive payment, you know it is yours to do with whatever, forever, publically.
    No reversal by paypal or a credit card company to worry about.
    Once something is on the ledger, itā€™s a fact!
#1016

  1. What do we mean when we say that blockchain has transaction finality/immutability?
    -When we say blockchain has transaction finality we mean that once a transaction has been done, it cant be undone. There is no way to undo a transaction.

  2. How does this lead to the trustless environment that blockchain creates?
    -This leads to a trustless environment because there is no relying on a third party to handle the transaction nor is it possible to manipulate a third party for scamming by merchants or consumers. Everything is put into a block and mined and is there forever.

1 Like
#1017
  1. Once a transaction is verified by the network of cpuā€™s, itā€™s done and cannot be deleted. Itā€™s therefore final and immutable.
  2. I donā€™t need to trust you, I trust the network of cpuā€™s, i.e. the math, the mining, for your transaction to be a valid one.
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#1018
  1. Once a transaction is confirmed it cannot be reversed
  2. Both parties in the transaction do not need to trust each other for the transaction to confirm
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#1019

Transactions cannot be reversed, theyā€™re final.

You donā€™t have to rely on a middleman, fraud can be prevented, as all transactions are settled for eternity and are viewable by anyone.

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#1020

Q1: Finality, to me, in the simplest terms means ā€œall transactions are finalā€.

Q2: Since all transactions are final and are physically impossible to reverse this removes issues currently present within some industries such as consumer and merchant fraud.

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#1021
  1. This means that the transaction cant be reversed. Once the transaction is on the network it stays there forever.
  2. It means that you can do business with strangers and they would not be able to cash back after receiving the product.
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#1022

  1. What do we mean when we say that blockchain has transaction finality/immutability? Transactions cannot be reversed. The only way to have a transaction ā€œreversedā€ would be to have the receiver personally send the bitcoin or cryptocurrency back to the sender. However, the actual first transaction can never be reversed.

  2. How does this lead to the trustless environment that blockchain creates? There is no trust required. A transaction cannot be falsified therefore of I am selling a product and offering bitcoin payments I KNOW 100% that once I receive those funds I will not be receiving a charge back which would also cost me extra money on top of the funds being returned. I know that I am in the clear and can happily send out the product to the consumer. All I have to do is verify on the blockchain that the transaction went through and was successful.

1 Like
#1023

Glenn_CostaRica

1. What do we mean when we say that blockchain has transaction finality/immutability?
Finality is a consequence of immutability: data that has been printed on the immutable ledger cannot be erased or modified, therefore it determines a new truth that cannot be disproved or reversed. Any new state of the blockchain is a final truth. It will stay immutable forever. Most public and decentralized blockchains, by design, do not admit any kind of reversibility of the truths established by their open ledgers.

2. How does this lead to the trustless environment that blockchain creates?
Immutability and finality are pillars for trustlessness, since they help remove third parties like banks, judges or any organization that can tamper with transactions or states of the system.

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#1024

1.) This means that once a transaction has been processed it is on the block-chain permanently.

2.)Transactions can be verified mathematically, they can not be reversed or modified

#1025
  1. What do we mean when we say that blockchain has transaction finality/immutability?
  • You cannot fake transaction or record, everything transaction is written on the block which closely impossible to edit or deleteā€¦
  1. How does this lead to the trustless environment that blockchain creates?
  • No one owns the network, so there is no central authoruty which decide what to do.
    Everything done mathematically.
#1026
  1. It cannot be retracted. Itā€™s permanent.
  2. No reversal of transactions means you cannot say that you didnā€™t receive something when in actuality you have