Blockchain Fullness Linked to Enhanced Security and Bitcoin Price

The study establishes a direct link between the “fullness” of a blockchain and its security level. A team of researchers from Florida Atlantic University and the University of Mississippi has shared insights through a study indicating that blockchains with “full” blocks, particularly when transactions are waiting in queue, seem to offer an additional layer of security against malicious actors, money laundering activities, and potential fraud attempts.

Titled “Bitcoin Blocksize, Custodial Security, and Price,” the research paper delves into various cases including the Mt. Gox crash and other incidents where cryptocurrencies were unlawfully taken from exchanges.

The foundational idea of the study is that those engaging in illicit activities are in a hurry to process their laundering transactions as swiftly as possible. The paper suggests: “Our research is guided by this logical assumption: the closer a blocksize gets to its maximum capacity, the higher the probability that the subsequent transaction will be recorded in the next block, not the current one. This is critical for cybercriminals attacking a crypto exchange or shutting down a fraudulently managed one, as they are aiming to quickly launder stolen bitcoins.”

By leveraging historical Bitcoin blockchain data and a crypto exchange scam report, and focusing on the period from 2010 to 2021, the researchers developed a “fullness” score to assess the blocks.

Having set a benchmark, the team proceeded to examine historical data against two key parameters: the influence of block fullness on Bitcoin’s price, and its effectiveness in deterring malicious entities.

Based on their findings, shared in the paper, the team validated their initial assumption that “full Bitcoin blocks serve as a hindrance to hackers and scammers, signalling network congestion.” Additionally, they deduced that full blocks indicate an enhancement in network security, which subsequently reflects in the Bitcoin price, thus affirming their second hypothesis regarding the impact of block fullness on Bitcoin price.

The research highlights that on days marked by cryptocurrency breaches or fraudulent activities, the block fullness is, on average, 20% lower.

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