Transactions
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A transfer of value or data recorded on a blockchain, verified by network participants, and permanently added to the distributed ledger.
Unlike traditional bank transfers that happen behind closed doors, crypto transactions are verified publicly and stored permanently on a blockchain. Once confirmed, they cannot be reversed, deleted, or altered.
How Crypto Transactions Work
When you send cryptocurrency:
- You initiate - You sign the transaction with your private key (like a digital signature)
- Network verifies - Miners or validators check that you have the funds and the signature is valid
- Gets recorded - Once verified, the transaction is added to a block on the blockchain
- Permanent - It stays on the blockchain forever
What's Different from Banks?
Bank Transfer
- Processed by the bank
- Can be reversed or canceled
- Takes hours or days internationally
- Private - only you and the bank see it
- Closed on weekends and holidays
Crypto Transaction
- Verified by network participants
- Irreversible once confirmed
- Settles in minutes (or seconds)
- Public on the blockchain (identities are pseudonymous)
- 24/7/365 - never closes
Types of Transactions
Simple Transfers
Sending Bitcoin or Ethereum from one wallet to another. The most basic type.
Smart Contract Interactions
Transactions that execute code on the blockchain - like swapping tokens on a DEX, minting an NFT, or staking coins.
Multi-Signature
Requiring multiple parties to approve before funds move - used by companies or DAOs for security.
Transaction Costs
Most blockchains charge a transaction fee (called "gas" on Ethereum) to compensate validators and prevent spam. Fees vary:
- Bitcoin: $1-$50+ depending on congestion
- Ethereum: $2-$100+ depending on gas prices
- Solana: Fractions of a cent
- Lightning Network: Pennies
Transaction Speed
Confirmation time varies by blockchain:
- Bitcoin: ~10 minutes per block (wait 30-60 minutes for security)
- Ethereum: ~12 seconds per block (1-2 minutes recommended)
- Solana: ~400 milliseconds
- Ripple: 3-5 seconds
Why Transactions Matter
Crypto transactions enable:
- Peer-to-peer payments without banks
- Cross-border transfers in minutes, not days
- Programmable money via smart contracts
- Transparency - anyone can audit the blockchain
- Censorship resistance - no authority can block valid transactions
The Catch
Irreversibility is both a feature and a risk:
- Send to the wrong address? Funds are gone forever
- Victim of a scam? No chargeback available
- Lose your private keys? Crypto is inaccessible
Double-check addresses before sending. "Not your keys, not your coins."
Real-World Use
Transactions power practical applications:
- Remittances - Workers sending money home across borders
- Stablecoin payments - Businesses settling invoices in USDC or USDT
- DeFi - Lending, borrowing, trading without intermediaries
- NFT purchases - Buying digital art, music, collectibles
- Payroll - Some companies pay employees in crypto
Related Terms
- Blockchain - The distributed ledger where transactions are recorded
- Smart Contract - Self-executing code that processes complex transactions
- Gas Fees - The cost to process transactions on networks like Ethereum
- Mining - The process of verifying and adding transactions to the blockchain
- Wallet - Software that stores your keys and lets you send/receive transactions