Finality

Finality is a guarantee that, at a certain point, a particular transaction is confirmed and recorded on the blockchain, and cannot be reversed, modified, or canceled.

What Is Finality in Blockchain?

In the context of blockchain, the term “finality” refers to the point at which a transaction or a block of transactions becomes irreversible or unchangeable as it is confirmed and added to the blockchain. Different blockchains achieve this through different consensus mechanisms, such as proof-of-work (PoW) and proof-of-stake (PoS). 

The time to achieve finality (time-to-finality) dictates how fast transactions can be completed and added to the network. However, the finality is often not immediate because it is dependent on the underlying blockchain’s latency. Latency measures the duration or time taken to confirm a transaction after its submission. In other words, blockchains with low latency typically reach finality faster.

This confirmation time is essential in ensuring that once a transaction is validated and recorded on the blockchain as “spent,” it cannot be used again. As a result, it precludes occurrences that undermine the network’s security and integrity, such as double-spending.

Types of Block Finality

Blockchain finality can be probabilistic, instant, economic, unconditional, or related to the blockchain’s entire state.

• Probabilistic finality – Transactions or blocks become final as more and more blocks or transactions are confirmed. For example, a Bitcoin transaction becomes practically immutable and irreversible after 6 confirmations (60 minutes).
• Economic finality – Often related to PoS networks. In economic finality, a transaction becomes final when reversing it would be financially unfeasible, since it hurts the validators financially to act maliciously.
• Unconditional transaction finality –  A transaction becomes completely and unconditionally final when it reaches finality without any conditions. In other words, the transaction cannot be reversed under any circumstances.
• State finality – In some protocols, finality means the entire blockchain achieves finality rather than being limited to transactions or a block of transactions. This implies that the blockchain’s state becomes irreversible once a state transition is complete.

Instant finality – Refers to when a transaction achieves near-instant finality, i.e., the transaction becomes irreversible immediately after it is confirmed and recorded on the blockchain.