If you’re still not sure how crypto transactions work exactly, this is the article for you.
As you may already know, in the crypto world, instead of transporting and exchanging money in the physical world, payments and transfers with cryptocurrencies exist only as digital inputs in a database, responsible for describing specific transactions in a public ledger.
Blockchain Technology exists as a digital distributed ledger and includes details about each cryptocurrency transaction. Thanks to Blockchain Technology, crypto-transactions are safe and trustworthy. There is a public ledger where anyone can see transaction details, unlike banks, where only the client and the bank have access to a limited series of data.
Depending on the cryptocurrency used by the sender, we can check the Blockchain until the money arrives at the recipient. For example, if one sends 5 ETH, we will use the Ethereum Blockchain to find the transaction. Many cryptocurrencies run on the Ethereum Blockchain, so we can see multiple other transactions, such as MANA, SHIB, or USDT.
Why would anyone track transactions?
Before sending any money, the best thing anyone can do is double-check the address and additional details. Those that want to triple-check the transaction can do so by following data about the sum and type of currency, recipient’s and sender’s address, time of arrival, and transaction ID.
These can be tracked using Blockchain websites, but they work with network nodes and electronic wallets too. Cryptocurrency transactions also show if the transfer was successful or not, depending on the number of confirmations it has on The Blockchain. For example, a Bitcoin transaction must be confirmed on The Blockchain to verify its authenticity.
How are the transactions confirmed?
An actual transaction implies that it was included in a block and implicitly in the network. The transaction is now registered and officially verified. The payment or the funds’ transfer is now processed and can’t be canceled.
Transaction validation is a process by which it is established if the transaction complies with a specific set of rules to be considered confirmed. Validators verify if transactions meet diverse protocol requests before adding them to the distributed ledger as part of the validation process. This process is conducted on network nodes.
Generally, the transaction will be validated if the sender has a balance in his or her wallet that’s bigger or equal to the sent sum (including the processing fee). Still, there could also be other rules, depending on the used protocol.
Can transactions get blocked?
Yes, cryptocurrency transactions can get blocked or rejected. This is because each trade flows through a mempool (short from memory pool) before it gets confirmed. If there is a significant activity growth, the mempool may become congested because of idle transactions that wait to be included in the next block. Then, users can observe that transactions are unconfirmed or inactive on the waiting list for a more extended period.
At the same time, these can get rejected for various reasons. The most common one is when insufficient funds are allocated for the fee or none at all. Therefore, it’s crucial to ensure that one has enough funds to cover the processing fee to complete the transaction.
How else can I track transactions?
Transactions can also be tracked using multiple applications created for this sole purpose. For example, many users can have multiple accounts, and such applications designated for cryptocurrency tracking can follow all transactions in real-time and in detail. These applications allow users to track any transaction from the past, their value, and sources.
They can also show the price in real-time of any accepted cryptocurrency. These tracking apps have diverse characteristics and work differently. Most of them allow users to add their wallet addresses, regardless of the hosting Blockchain, so transaction value and cryptocurrency prices can be tracked historically and in real-time.
So, as you can see, crypto transactions are very well tracked thanks to Blockchain technology. This makes the whole concept of investing in cryptocurrencies feel safer and more transparent.
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