Transactional finality refers to the guarantee that once a transaction is confirmed and added to a blockchain, it cannot be reversed or modified. It ensures that the transaction is considered as settled and irrevocable.
In traditional centralized systems, financial transactions often rely on trusted intermediaries or third parties to validate and enforce the finality of the transaction. However, in decentralized systems like blockchain, transactional finality is achieved through consensus mechanisms.
Different blockchain consensus mechanisms provide varying levels of transactional finality. For example, in proof-of-work (PoW) blockchains like Bitcoin and Ethereum, the consensus is reached when a sufficient number of miners agree on the validity of the transaction and include it in a block. Once the transaction is included in a block and several subsequent blocks are added to the blockchain, it becomes practically irreversible.
On the other hand, some newer consensus mechanisms, such as Avalanche® or BFT-based algorithms, can provide near-instant finality. These consensus mechanisms leverage a different approach to achieve consensus, often involving a smaller set of nodes that reach agreement on transaction ordering and validity more quickly.
Transactional finality is a crucial characteristic of blockchain networks, as it provides trust and certainty in the integrity of the data and the validity of the transactions.
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