What Is A Cryptocurrency Transaction
This blog post will cover:
- What is a confirmation of a cryptocurrency transaction?
- What is a cryptocurrency transaction hash?
- How to cancel a cryptocurrency transaction?
What do you understand by the word transaction? Probably, you imagine a bank transaction with some operations that are happening during the time while money goes from one account to another one. This is correct.
Now, what do you imagine when you think about a transaction in a blockchain? It can not be called the same thing compared to a bank transaction, as blockchain transactions have their own features and characteristics as well as the method of work.
To help you to understand more about the transactions, let’s take an example of the Bitcoin blockchain as it is the most popular blockchain in the world.
Transactions are the heart of Bitcoin, and an important part of the blockchain's work is to keep transactions in a safe and secure way so that no one can modify them after they were created.
Let’s imagine that you want to send BTC from your wallet to a friend. To do so, a new transaction must be created and put into a block. Before going to the block, all transactions go to so-called Mempool (Memory pool) where they meet thousands of other unconfirmed transactions.
After the transaction appears in the Mempool, it is waiting until a miner chooses this exact transaction to create a block. How fast your transaction will be chosen depends on the commission that you offer a miner for his work. The higher commission the quicker your transaction will be “caught”.
Once a miner has chosen your transaction, he starts creating a block. The size of one Bitcoin block is about 1-2 Mb. The block can fit not only your transaction but some other transactions as well. When the block is created, it is being attached to the existing blockchain. Since then, your BTC are successfully received by your friend.
What is a confirmation of a cryptocurrency transaction?
At the time when a transaction gets into the block, it can be said that the transaction is confirmed. In other words, the transaction has found a permanent place in a blockchain. A number of transaction confirmations mean the number of blocks that were added to the blockchain after the first confirmation. To be sure that the transaction is included in the blockchain and that recipient got the coins, it is recommended to have a certain amount of confirmations (one confirmation is equal to one block). This means that minimum of that exact amount of blocks needs to be added to the blockchain after the block with the initial transaction. Then you can be 99% sure that the coins you sent will hit the target. The number of confirmations is various for different blockchains. For some of them a few transactions is enough while others require to have more.
What is a cryptocurrency transaction hash?
When you send your cryptocurrency you want to follow the transaction and understand what stage it is at. To be able to do it, you receive a unique identifier that usually consists of a random set of numbers and letters. This is called a transaction hash. Simply defined, you can consider transaction hash as a tracking number for your transaction.
How to cancel a cryptocurrency transaction?
As soon as a transaction has been made and added in a block it can not be replaced or canceled. Transactions are getting into the whole blockchain process extremely fast and there is simply no time to make any cancellations. That is why it is recommended to check several times all the transaction details and make sure that they are correct before you click the “Send” button.
Hope this article was useful and informative. We want you to know as much as you can about the cryptocurrency. Stay with us and you will get more in our next articles.