Is It Possible To Reverse BitCoin Transactions? Yes, But With Caveats
Bitcoin transactions that are confirmed cannot be reversed, ever. That is one of the keys to having an immutable blockchain and is one of the selling points of blockchain technology.
However, many people have asked a fairly simple question that can't easily be answered… is it possible to reverse a transaction that is not confirmed?
Unconfirmed Transactions… What?
Bitcoin transactions are classified as unconfirmed if they have not been received a confirmation on the blockchain within 24 hours of the transaction taking place. All the transactions are confirmed by miners who do the “work” and three separate confirmations are needed for a transaction to be considered fully confirmed.
So why would a transaction remain unconfirmed on the network, that shouldn't really be possible, right? The first thing that you should take into consideration is that Bitcoin needs at least 10 minutes to confirm a transaction. So if you are querying too soon it might simply not be done – or the transaction might be in the process of getting confirmed.
There is another reason for a transaction not getting processed and it has to do with transactions fees on the Bitcoin network. Miners will automatically choose the highest fees paid for a transaction to be confirmed and if your fee is too low then it might not be in the pipeline, so to speak. So if your transaction has not been confirmed in 24 hours, here's what you can do about it.
Steps For Transaction Reversal
The first thing you need to do is make absolutely, 100% sure that your transaction not confirmed. If you have not received a confirmation, then use a block explorer such as blockchain.com to make triple sure that your transaction has not been confirmed. Take your transaction ID and track it through the block explorer of your choice, this being easy since Bitcoin is a public blockchain.
If your transaction already has one or two confirmations and is still awaiting a third, then you're completely out of luck. You are in the process of getting confirmed and there is no reversing it once there is a single confirmation. You will simply need to wait for the transaction to be validated by a third miner.
If, on the other hand, there are zero confirmations, you can go about reversing the transaction. This can be done in one of two ways. There is the Replace by Fee (RBF) protocol or the Double-spend transaction.
The first thing you need to know is if your wallet supports RBF since not all wallets have that functionality. What RBF does is send your transaction to the Bitcoin network with a higher to make sure that it gets picked by miners, which cancels your previous transaction and starts a new one.
It's as simple as selecting the option in your wallet. Now if your wallet does not have this option, then you need to go with the slightly longer Double-Spend route. This means creating a brand new transaction with the exact amount as the original which went unconfirmed. The only difference would be choosing a higher fee this time around.
Making Sure Your Transactions Are Confirmed
It's best to avoid this problem completely though. The only way to do this is to use the suggested transaction fee that is available in most wallets these days. If you change it manually, you might be selecting a lower transaction fee than the network is currently accepting and that unhappy accident will lead to an unconfirmed transaction. Which is what you want to avoid.
The vast majority of wallets select the fee automatically so that you do not need to worry about waiting for an extended period of time for your transaction to be processed and get stick in the Bitcoin block. It isn't surprising that Bitcoin took a heavy beating in its price when the transaction fees were hiked up some time ago.
It's a good thing that RBF is becoming a new standard as the older double spending method has to lead to some ghastly mistakes being made by people who were careless. The great thing about the RBF protocol is that it will almost always get your transaction confirmed within 24 hours so that you don't need to worry about any problems in the future.