Transaction

A transaction is an instruction to transfer value or change data. In crypto, this could mean sending coins.

What is a transaction?

For a standard crypto transfer, your crypto wallet creates an instruction that includes the amount and the recipient’s address. You authorize it with a digital signature. This proves you’re allowed to make the transaction without revealing your private key.

The network checks whether the instruction follows the rules and whether the crypto is available. The transaction can then be included in a block. A block isn’t the same as a transaction: one block can contain multiple transactions.

Many networks charge transaction fees for processing. The rules, fees, and confirmation times vary by blockchain.

An example of a transaction

Alice sends 0.01 bitcoin to Bob’s Bitcoin address. Her crypto wallet creates the transaction, signs it, and sends it to the network. Alice also pays transaction fees.

Once the transaction is included in a block, it has one confirmation. This example shows that sending crypto isn’t just a matter of pressing a button: the network has to check and process the instruction first.

Why are transactions important in crypto?

Transactions make it possible to send crypto and use blockchain applications, for example, to exchange or lend tokens. In the news, you’ll often see the word used when a network is busy, fees are high, or deposits and withdrawals are delayed.

A transaction that’s been sent isn’t always final right away. On some blockchains, additional confirmations reduce the chance that it will be reversed. A transaction can also remain pending or be rejected.

You usually can’t cancel a transaction once it’s been permanently recorded. So always check the address and make sure you’re using the right network. The network only checks the technical rules; it doesn’t prove that the recipient is trustworthy or that a payment is a good idea.