Block Depth

Block depth refers to the number of blocks that have been added to the blockchain on top of a specific transaction. It is a common metric used to determine the probability that a transaction will not be reversed due to a chain reorganization.

The greater the block depth, the more secure the transaction is considered to be. Many financial institutions and exchanges set a minimum block depth requirement before they credit a deposit to a user's account.

This is a practical approach to managing the risks of probabilistic finality. As the chain grows, the computational or economic effort required to rewrite the history becomes exponentially higher.

Block depth is a simple yet effective way to quantify the risk associated with a transaction in a non-deterministic system. It is a fundamental concept for anyone interacting with blockchains that do not offer instant finality.

By waiting for sufficient block depth, participants can achieve a high level of confidence in the permanence of their transactions. It is a basic but essential tool for risk management in digital asset transfers.