Understanding Blockchain Transactions: What Happens Behind the Scenes?
Understanding Blockchain Transactions: What Happens Behind the Scenes?
Blockchain has become a buzzword today, with lots of hype surrounding cryptocurrencies and the technology powering them. Though blockchain is not only about BTC, ETH, and plenty of other crypto coins, it’s still closely associated with cryptocurrencies. Thus, understanding how a blockchain works is part and parcel of every crypto enthusiast’s self-education.
Here is a detailed guide that will introduce you to the key terminology surrounding blockchain transactions and explain the mechanisms involved in cryptocurrency movement, mining, and burning.
What Is a Blockchain Transaction?
First things first, so it makes sense to start the discussion with a definition of a blockchain transaction. This operation is referred to as a digital transfer of value recorded on a decentralized, distributed ledger of that specific project. There is a BTC ledger for Bitcoins, an ETH ledger for Ether, etc. Due to the use of a decentralized node network and the absence of intermediary oversight, all blockchain transactions happen on a peer-to-peer (P2P) basis and are:
Secure. All transactions are automatic and anonymized, thus guaranteeing ultimate security for all participants.
Immutable. As soon as the transaction is complete, it is recorded in the blockchain and becomes a part of the block. The ‘chain’ part of the technology’s name also stands for the hash data in the block, which should coincide at the end of the previous block and the start of the next one. This way, blockchain can’t be manipulated and changed.
Verified. Independent nodes dispersed around the globe and working on transaction validation have to verify the transaction before it’s completed.
Transparent. Apart from a couple of private, permissioned blockchains, the majority of blockchain systems are public. This means that every user can double-check the movement of funds on the blockchain in open resources.
The Basics Behind Technology
Now, let’s illustrate how a blockchain transaction takes place to give you a better idea of this technology in action.
Initiation. Mike has decided to send 1 BTC to Nelly. Mike types Nelly’s BTC wallet address in his crypto wallet and stipulates the sum he wants to send. Once it’s done, Mike should confirm the transaction with his private key (similar to a password or secret key in a digital wallet or bank).
Network verification. After the transaction is initiated, it should be verified. The BTC blockchain uses a PoW consensus mechanism, which means that miners solve a cryptographic puzzle to earn rewards in BTC. Once the puzzle is successfully resolved, a new block is generated with Mike’s transaction data in it.
Confirmation and finalization. The BTC blockchain requires six confirmations for the transaction to be completed. Once they are finalized, the transaction is confirmed, completed, and finalized without any option for reversal. At this moment, Nelly can see 1 BTC arriving in her wallet.
The Role of Transaction IDs in Blockchain
Like with any other financial transaction, a transfer of crypto funds via a blockchain is assigned a unified identifier – a blockchain transaction ID. This ID, also referred to as TXID or TX Hash, is a unique string containing numbers and letters that simplifies the transaction’s verification and tracking.
It’s hard to underestimate the importance of TXID, as it helps the sender and the recipient verify and track all crypto transactions from and to their accounts. The identifier is used to:
Prevent fraud and disputes.
Ensure security by tracking funds sent to wrong or fraudulent addresses.
Check the transaction’s status in real-time with a blockchain transaction tracker.
Address customer inquiries.
Monitor gas fees and transaction speed for technical purposes.
How to Find a Transaction ID
Your ability to find a blockchain transaction ID quickly and accurately is your life-saving vest in the crypto space. Let’s illustrate this process with an example.
How to find a transaction ID for USDT transfer? Your step-by-step algorithm will include:
In a crypto wallet – you should open the app, go to the “Transaction History” section, and choose the transfer you’re having trouble with. Copy its TXID and paste it into the respective blockchain’s tracker.
On a crypto exchange – log in to your account, go to the “Transaction History” section, and find the transfer’s TXID. You can either click on it to see the exchange’s real-time data on the transfer’s status or copy and paste it into the blockchain tracker resource.
On the network – you need to determine which network you used to send your USDT first. If it was ERC-20 USDT, you will need EtherScan to track the TXID, and for TRC-20 USDT transfers, you will use TRONScan, and so on.
How to Track a Blockchain Transaction in Real-Time
As all major blockchains are open, public ledgers with permissionless access to all users, their transactions can be easily monitored online in real-time. Here is the blockchain transaction tracker list for checking the status of your transaction or finding data about specific transactions of interest:
Multi-chain blockchain track transaction resources and DeFi trackers – BscScan, Polygonscan, Snowtrace, Solscan, FtmScan, TRONScan, etc.
What Is Blockchain Transaction Confirmation?
Though the process of blockchain transaction confirmation may look simple and intuitive at first glance, it couldn’t be further from the truth. In reality, the process of sending crypto from one wallet to another involves intricate cryptographic processes. The algorithm usually works as follows (as shown in the example of a BTC transaction):
Upon initiation, the transaction gets broadcast to the network. There, it enters the mempool – a waiting area where all pending transactions await their turn for confirmation.
At the validation point, nodes have to check whether the sender has enough funds to send, whether the digital signature is valid, and whether the funds awaiting transfer are still in the wallet and aren’t in progress of being sent elsewhere.
Once one miner manages to solve the cryptographic puzzle, they add the new block with the transaction to the BTC blockchain and propagate it for all other nodes’ confirmation.
Every new block added after the block containing the specific transaction increases its confirmation score. For BTC transfers, one to three blocks are needed to guarantee a minimal level of security, while 6+ blocks are regarded as the highest level of transaction confirmation safety.
This is how the PoW mechanism works, which is currently rarely used and mostly unique to BTC. The majority of modern cryptocurrencies, including ETH, use the Proof of Stake (PoS) consensus mechanism, which doesn’t involve mining as a necessary precondition for acting as a node. ETH nodes stake their ETH assets to be randomly selected for transaction confirmation. Those who are selected include the transaction into a block after its validation and broadcast it to the network. Other validators have to re-check the transaction data and also confirm it. The ETH blockchain relies on 32 blocks before finalizing the transaction, which ensures a high level of security.
As you can see, the process of blockchain transaction confirmation is an advanced, complex procedure that acts as a shield for user funds. Due to this mechanism, blockchain transactions exhibit a high degree of transparency and immutability, thus being trusted by millions of crypto users worldwide.
Common Blockchain Transaction Issues and How to Fix Them
Not everything goes as planned, even on a technically advanced and superior platform like blockchain. Thus, you need to be prepared to handle some potential blockchain track transaction issues, such as:
Delays. Delayed validation may occur in highly congested blockchains, such as Bitcoin and Ethereum. To speed up the completion of your transaction, you may pay higher gas fees to get a priority status. Another option is to wait for reduced congestion.
Failed or reverted transaction. This issue is common for the ETH blockchain, with funds returning to the sender’s balance but the gas fees still being deducted. The solution is to reserve a bit more money for gas fees and double-check all details before repeating the transaction.
High gas fees. In some blockchains, gas fees are fixed (e.g., Tron or Solana), but in others (e.g., ETH), they are tied to network congestion. Thus, you should trace the congestion rates to avoid too expensive transactions or choose layer-2 blockchains for minimal commissions.
Wrong wallet address. Unfortunately, this problem can be resolved only if you have access to the recipient’s address or can contact its owner and ask them to return the funds. Given that blockchain transactions are irreversible, no other remedies are possible.
Wrong blockchain selection. If you send assets via the wrong chain, the problem may be fixed by adding the needed blockchain manually (see instructions in multi-chain wallets like MetaMask or Trust Wallet). If that’s not an option, you can recover the funds with the help of technical support, though some extra fees from the recovery may be deducted.
This is not an exhaustive list of blockchain transaction confirmation issues, as the technology is still new and largely unexplored. Some users also report double-spending attempts, transactions not revealing in the recipient’s wallets, incorrect balance displays, and blacklisted or frozen transactions. Each of them may be addressed by referring to customer support and technical assistants, provided you did everything correctly and legally.
Navigating Blockchain Transactions with Confidence
As you can see, understanding the basics of a blockchain transaction is your key to confidence and security in the crypto space. By studying the mechanics of blockchains you’re using, you are sure to make safer and more informed decisions about the movement of funds, trace the current status of your funds via a suitable blockchain transaction tracker, and resolve any emerging issues in a timely manner.
*This article is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Cryptocurrency involves risks and regulatory considerations, crypto investments are subject to risks and regulations vary by location.
Understanding Blockchain Transactions: What Happens Behind the Scenes?
Understanding blockchain transactions is essential for navigating the crypto world with confidence. This guide breaks down how transactions work, how to track them, and how to resolve common issues, helping beginners grasp the fundamentals of blockchain technology.
Blockchain has become a buzzword today, with lots of hype surrounding cryptocurrencies and the technology powering them. Though blockchain is not only about BTC, ETH, and plenty of other crypto coins, it’s still closely associated with cryptocurrencies. Thus, understanding how a blockchain works is part and parcel of every crypto enthusiast’s self-education.
Here is a detailed guide that will introduce you to the key terminology surrounding blockchain transactions and explain the mechanisms involved in cryptocurrency movement, mining, and burning.
What Is a Blockchain Transaction?
First things first, so it makes sense to start the discussion with a definition of a blockchain transaction. This operation is referred to as a digital transfer of value recorded on a decentralized, distributed ledger of that specific project. There is a BTC ledger for Bitcoins, an ETH ledger for Ether, etc. Due to the use of a decentralized node network and the absence of intermediary oversight, all blockchain transactions happen on a peer-to-peer (P2P) basis and are:
Secure. All transactions are automatic and anonymized, thus guaranteeing ultimate security for all participants.
Immutable. As soon as the transaction is complete, it is recorded in the blockchain and becomes a part of the block. The ‘chain’ part of the technology’s name also stands for the hash data in the block, which should coincide at the end of the previous block and the start of the next one. This way, blockchain can’t be manipulated and changed.
Verified. Independent nodes dispersed around the globe and working on transaction validation have to verify the transaction before it’s completed.
Transparent. Apart from a couple of private, permissioned blockchains, the majority of blockchain systems are public. This means that every user can double-check the movement of funds on the blockchain in open resources.
The Basics Behind Technology
Now, let’s illustrate how a blockchain transaction takes place to give you a better idea of this technology in action.
Initiation. Mike has decided to send 1 BTC to Nelly. Mike types Nelly’s BTC wallet address in his crypto wallet and stipulates the sum he wants to send. Once it’s done, Mike should confirm the transaction with his private key (similar to a password or secret key in a digital wallet or bank).
Network verification. After the transaction is initiated, it should be verified. The BTC blockchain uses a PoW consensus mechanism, which means that miners solve a cryptographic puzzle to earn rewards in BTC. Once the puzzle is successfully resolved, a new block is generated with Mike’s transaction data in it.
Confirmation and finalization. The BTC blockchain requires six confirmations for the transaction to be completed. Once they are finalized, the transaction is confirmed, completed, and finalized without any option for reversal. At this moment, Nelly can see 1 BTC arriving in her wallet.
The Role of Transaction IDs in Blockchain
Like with any other financial transaction, a transfer of crypto funds via a blockchain is assigned a unified identifier – a blockchain transaction ID. This ID, also referred to as TXID or TX Hash, is a unique string containing numbers and letters that simplifies the transaction’s verification and tracking.
It’s hard to underestimate the importance of TXID, as it helps the sender and the recipient verify and track all crypto transactions from and to their accounts. The identifier is used to:
Prevent fraud and disputes.
Ensure security by tracking funds sent to wrong or fraudulent addresses.
Check the transaction’s status in real-time with a blockchain transaction tracker.
Address customer inquiries.
Monitor gas fees and transaction speed for technical purposes.
How to Find a Transaction ID
Your ability to find a blockchain transaction ID quickly and accurately is your life-saving vest in the crypto space. Let’s illustrate this process with an example.
How to find a transaction ID for USDT transfer? Your step-by-step algorithm will include:
In a crypto wallet – you should open the app, go to the “Transaction History” section, and choose the transfer you’re having trouble with. Copy its TXID and paste it into the respective blockchain’s tracker.
On a crypto exchange – log in to your account, go to the “Transaction History” section, and find the transfer’s TXID. You can either click on it to see the exchange’s real-time data on the transfer’s status or copy and paste it into the blockchain tracker resource.
On the network – you need to determine which network you used to send your USDT first. If it was ERC-20 USDT, you will need EtherScan to track the TXID, and for TRC-20 USDT transfers, you will use TRONScan, and so on.
How to Track a Blockchain Transaction in Real-Time
As all major blockchains are open, public ledgers with permissionless access to all users, their transactions can be easily monitored online in real-time. Here is the blockchain transaction tracker list for checking the status of your transaction or finding data about specific transactions of interest:
Multi-chain blockchain track transaction resources and DeFi trackers – BscScan, Polygonscan, Snowtrace, Solscan, FtmScan, TRONScan, etc.
What Is Blockchain Transaction Confirmation?
Though the process of blockchain transaction confirmation may look simple and intuitive at first glance, it couldn’t be further from the truth. In reality, the process of sending crypto from one wallet to another involves intricate cryptographic processes. The algorithm usually works as follows (as shown in the example of a BTC transaction):
Upon initiation, the transaction gets broadcast to the network. There, it enters the mempool – a waiting area where all pending transactions await their turn for confirmation.
At the validation point, nodes have to check whether the sender has enough funds to send, whether the digital signature is valid, and whether the funds awaiting transfer are still in the wallet and aren’t in progress of being sent elsewhere.
Once one miner manages to solve the cryptographic puzzle, they add the new block with the transaction to the BTC blockchain and propagate it for all other nodes’ confirmation.
Every new block added after the block containing the specific transaction increases its confirmation score. For BTC transfers, one to three blocks are needed to guarantee a minimal level of security, while 6+ blocks are regarded as the highest level of transaction confirmation safety.
This is how the PoW mechanism works, which is currently rarely used and mostly unique to BTC. The majority of modern cryptocurrencies, including ETH, use the Proof of Stake (PoS) consensus mechanism, which doesn’t involve mining as a necessary precondition for acting as a node. ETH nodes stake their ETH assets to be randomly selected for transaction confirmation. Those who are selected include the transaction into a block after its validation and broadcast it to the network. Other validators have to re-check the transaction data and also confirm it. The ETH blockchain relies on 32 blocks before finalizing the transaction, which ensures a high level of security.
As you can see, the process of blockchain transaction confirmation is an advanced, complex procedure that acts as a shield for user funds. Due to this mechanism, blockchain transactions exhibit a high degree of transparency and immutability, thus being trusted by millions of crypto users worldwide.
Common Blockchain Transaction Issues and How to Fix Them
Not everything goes as planned, even on a technically advanced and superior platform like blockchain. Thus, you need to be prepared to handle some potential blockchain track transaction issues, such as:
Delays. Delayed validation may occur in highly congested blockchains, such as Bitcoin and Ethereum. To speed up the completion of your transaction, you may pay higher gas fees to get a priority status. Another option is to wait for reduced congestion.
Failed or reverted transaction. This issue is common for the ETH blockchain, with funds returning to the sender’s balance but the gas fees still being deducted. The solution is to reserve a bit more money for gas fees and double-check all details before repeating the transaction.
High gas fees. In some blockchains, gas fees are fixed (e.g., Tron or Solana), but in others (e.g., ETH), they are tied to network congestion. Thus, you should trace the congestion rates to avoid too expensive transactions or choose layer-2 blockchains for minimal commissions.
Wrong wallet address. Unfortunately, this problem can be resolved only if you have access to the recipient’s address or can contact its owner and ask them to return the funds. Given that blockchain transactions are irreversible, no other remedies are possible.
Wrong blockchain selection. If you send assets via the wrong chain, the problem may be fixed by adding the needed blockchain manually (see instructions in multi-chain wallets like MetaMask or Trust Wallet). If that’s not an option, you can recover the funds with the help of technical support, though some extra fees from the recovery may be deducted.
This is not an exhaustive list of blockchain transaction confirmation issues, as the technology is still new and largely unexplored. Some users also report double-spending attempts, transactions not revealing in the recipient’s wallets, incorrect balance displays, and blacklisted or frozen transactions. Each of them may be addressed by referring to customer support and technical assistants, provided you did everything correctly and legally.
Navigating Blockchain Transactions with Confidence
As you can see, understanding the basics of a blockchain transaction is your key to confidence and security in the crypto space. By studying the mechanics of blockchains you’re using, you are sure to make safer and more informed decisions about the movement of funds, trace the current status of your funds via a suitable blockchain transaction tracker, and resolve any emerging issues in a timely manner.
*This article is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Cryptocurrency involves risks and regulatory considerations, crypto investments are subject to risks and regulations vary by location.
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