Immutability is the property of a blockchain in which a transaction is permanently recorded after verification. The feature helps establish trust in an otherwise trustless environment.
Satoshi Nakamoto made immutability a core feature of Bitcoin, where once a transaction is recorded, it remains on the Bitcoin blockchain forever. The feature was essential to Bitcoin’s ability to prevent double-spending. It is from immutability that the blockchain decides how much crypto exists on an address.
Definition
Immutability in Bitcoin refers to the feature that ensures transactions are permanent once added to the blockchain.
This finality comes after a certain number of blocks are added to the blockchain after the initial block. Each block contains multiple verified transactions.
Significance
Immutability ensures that once a transaction is done, it cannot be reversed. If a transaction is reversed after it is confirmed, Bitcoin would fail to be adopted as a replacement for fiat currency.
In traditional financial systems, each currency unit (say, a dollar) exists as either a unique note or a digital token controlled by a centralized entity. This entity ensures that money is spent only once by serving as the accountant for all currency holders.
In Bitcoin, there is no centralized entity; instead, transactions are verified by a collection of nodes. These transactions must be permanent so that a person who spends Bitcoin to purchase a service or product does not feel cheated.
How does it work in Bitcoin?
In Bitcoin, a transaction is added only after a certain number of miners have completed verification. The transaction is then added to a block, which is then added to the Bitcoin blockchain.
Once a block is added to the chain, the network must add six more blocks before the initial block is considered final.
#NOTE: If you receive Bitcoin, you must wait for all six blocks to be added after your transaction to spend the BTC.
Advantages
Immutability breeds trust in a decentralized network like Bitcoin, where otherwise no one would trust others. A permanent transaction would ensure that no one loses their funds after receiving it.
Limitations
The only drawback of immutability is that if a hack occurs on the network, like the Ethereum DAO hack, the event might not be reversed and could result in a permanent loss.
