Block Finality Impact Blockchain Networks?
Block finality plays a crucial role in blockchain networks as it ensures the irreversibility of transactions once they have been confirmed and added to a block. This concept of finality is what makes transactions on the blockchain permanent and immutable. In traditional finance systems, the chance of a transaction being reversed is not uncommon, but blockchain systems seek to mitigate this discrepancy through block finality.
Block finality is achieved differently in proof-of-work (PoW) and proof-of-stake (PoS) networks. In PoW chains like Bitcoin, block finality is achieved through a distributed consensus mechanism that follows the “longest chain” rule. When multiple miners simultaneously broadcast the same block, the main chain splits into different forks. However, once one chain validates a block before another, it becomes the longest chain, and transactions on the shorter chains are discounted. This achieves block finality as transactions on the rejected chain are included in blocks on the longer chain.
In PoS chains, such as Ethereum’s Casper FFG, validators confirm the validity of the chain after every few blocks. A block is finalized after the approval of a certain percentage of validators. In the Cosmos network, which uses Tendermint, finality is achieved when a block receives a certain percentage of pre-votes and pre-commits. These mechanisms ensure block finality in PoS networks.
There are four main types of blockchain finality, classified based on the levels of certainty and permanence they offer. Probabilistic finality is the most common type, where the probability of a transaction being reversed decreases as more blocks are added to the chain. Economic finality is achieved through financial incentives, making it expensive to revert transactions. Absolute finality ensures zero chance of tampering or reversal, and instant finality refers to transactions being confirmed and made irrevocable instantaneously.
Different blockchain protocols employ various consensus mechanisms to achieve finality. Ripple and Stellar use federated consensus, relying on trusted validators to confirm blocks and secure the network, achieving absolute finality. Cosmos and Algorand also use consensus mechanisms to achieve absolute finality. However, instant finality is challenging to achieve and requires fundamental changes in how blockchains perform consensus and process transactions.
Overall, block finality is a crucial aspect of blockchain networks as it ensures the permanence and immutability of transactions. Different consensus mechanisms and types of finality are employed to achieve this goal, providing varying levels of certainty and permanence. As blockchain technology continues to evolve, achieving instant finality with a high level of certainty remains a goal for decentralized protocols.