In a recent research paper, European mathematicians Cyril Grunspan and Ricardo Pérez-Marco[1] demonstrated through calculus and game theory that, thanks to the robust network security and relatively high BTC price, small bitcoin transactions may not need the six confirmations typically required by merchants and exchanges.
Published[2] on the computer science and cryptography section of Cornell University’s arXiv library, the paper takes on the calculations of Satoshi Nakamoto, as presented in subchapter 11 of the Bitcoin white paper[3].
“Our new paper combines two main previous results,” Pérez-Marco told Bitcoin Magazine. “The first one is the exact computation of the probability of success [of a double spend attack] ("Double spend races[4]," 2017) and the second one takes into account the exact model for profitability that we developed for analyzing selfish mining strategies ("On profitability of selfish mining[5]," 2018).”
In a nutshell, this new research paper asks: “How profitable is it to double-spend a transaction and how many network confirmations are really enough to financially incentivise honest mining?”
When Double Spending Isn’t Worth It
According to the findings presented, in order to double spend 0.01 bitcoin after one confirmation has been made, the cost would be 50 coinbases (currently 625 BTC and 312.5 after the 2020 halving). For two confirmations, the double spend cost is 1,666 coinbases, according to the research.
“What we compare is the profitability of the double spend and honest mining,” Pérez-Marco explained. “For a small transaction, any major miner with high hashrate has no interest in engaging into a minor double spend. And in the case of small miners who possess less than 1 percent of the hashrate, only a big amount can justify a double spend from the profitability point of view.
