When a bitcoin transaction is added in a block to the blockchain, that transaction gets one confirmation. With each block added every 10 minutes on average, the depth of that transaction or number of confirmation increases.
When a bitcoin transaction is made, it is broadcast to the network to be validated by miners and included in blocks that are created every 10 minutes on so.
Every subsequent block after that consist a hash of its previous block and makes the transaction deeper in the blockchain and thus “more” confirmed.
A bitcoin that is just sent has 0 confirmation i.e. pending, and can still be reversed. A single confirmation is usually enough for most transactions, although the more confirmations there are, the better.
- 0 confirmation: For transactions up to USD10. Good enough for most casual transactions (e.g. between friends).
- 1 confirmation: For transactions up to USD100.
- 3 confirmations: For transactions up to USD1,000.
- 6 confirmations: For transactions up to USD100,000.
- 30 confirmations: For transactions up to USD1 million and beyond.
Note that the above is only a guide. A transaction with 1 confirmation is already considered complete, just that a higher number of confirmation (and hence the deeper it is within the blockchain) makes it virtually impossible for a bad actor in the network to manipulate the blocks and data, or reverse the transaction.
Example: A merchant may be OK with 0 confirmation for selling a pack of cigarettes or chewing gum, but an online retailer may want to wait for at least 3 confirmations before shipping that $800 camera out.
How long does it take to reach 3 confirmations? Each block takes on average about 10 minutes in the mining process, so 3 confirmations would take roughly 30 minutes. Depending on the difficulty adjustments, sometimes a block may take as long as an hour, or as short as a minute.
To see how to check for bitcoin transactions, see Checking Transactions.