Why it matters
Until a withdrawal reaches finality, you do not have bitcoin. You have a claim against a custodian. The distinction matters because claims can be dishonored, reversed, frozen, or delayed. On-chain settlement with sufficient confirmations provides certainty that cannot be revoked.
How it works
Transaction broadcast: The custodian creates and broadcasts a transaction sending bitcoin to your address. At this point, the transaction exists but is not confirmed.
Confirmation: The transaction is included in a block by miners. Each subsequent block adds another confirmation, making reversal increasingly impractical.
Finality: After sufficient confirmations (typically 6 for large amounts), the transaction is considered irreversible. The bitcoin is now fully under your control.
What affects finality
On-chain vs internal transfers: Internal ledger transfers between accounts at the same custodian are not final in the bitcoin sense. The custodian can reverse them. Only on-chain transactions to addresses you control achieve true finality.
Confirmation depth: More confirmations means stronger finality. For large amounts, waiting for 6 confirmations is standard practice.
Network conditions: High mempool congestion can delay confirmation. Low-fee transactions may wait longer or require fee bumping.
Why custodians matter
A custodian's "withdrawal complete" status is not the same as blockchain finality. Verify on-chain:
- Transaction broadcast to the network
- Inclusion in a block
- Sufficient confirmations for your risk tolerance
Related terms
- Exitability
- Counterparty risk
- Full-reserve custody
- Bitcoin custody provider
- Withdrawal policy
- On-chain settlement
