If you've ever sent or received a crypto transaction, you may be familiar with the concept but not knowing the details. Crypto transactions require no middleman, no consent from anybody, and complete much faster than a bank transfer. How is this even possible? In this article, we will go through the details of crypto transactions and how they work.
The concept of crypto transactions might not be as difficult as it appears at first sight. They basically follow the same schematics of any other type of digital or online transactions. Follow the rest of this article to learn all about crypto transactions and how they work.
Crypto transactions are pretty much similar to any other type of online and digital transactions except that the currencies are transferred through the world wine web and using softwares. That software is basically a crypto wallet that is a form of online wallet that works with a key to initiate transactions.
Crypto transactions are encrypted, meaning that they are publicly recorded on a distributed ledger. Despite being publicly recorded, crypto transactions are known to be anonymous, which means that no one knows who initiated or received the transaction. This makes them a safe option for those who want to safeguard their information from being publicly revealed to their clients and customers.
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Bitcoin transactions are initiated as easily as entering some numbers and pushing a button. Crypto transactions work through a system of public and private keys. In order to transfer cryptocurrencies participants are given pairs of public keys and private keys through which they can control pieces of crypto assets they own.
A public key is a series of letters and numbers that a user must share in order to receive funds, while a private key must be kept secretly. Using a private key, users can sign transactions and consequently transfer the value to a new owner. The transaction is then transferred to the blockchain to be processed and made.
Crypto transactions are certainly traceable. In the blockchain technology there is complete transparency and transactions are recorded on a distributed ledger as mentioned before. That’s why you can find information about the transactions on the blockchain, such as how much crypto was sent and which addresses it is sent to or from.
There are a number of countries and organizations which are implementing KYC (know your customer) rules. This requires you to share your personal data to centralized trading platforms or online exchanges. This makes crypto transactions a lot easier to trace. If you want to make your crypto transactions completely anonymous, you can do this by creating many crypto wallets and using one at a time.
In general, crypto transactions can take something between seconds to over 60 minutes, depending on the type of transaction, currency, blockchain and the crypto exchange you are using. However, the average consumed time for crypto transactions is somewhere between 10 to 20 minutes.
Make sure your transaction fee is high enough for a sufficient number of miners to prioritize it over other, lesser price transactions if you want your crypto transaction to be done as quickly as possible.
There are three types of fees associated with crypto transactions, exchange fees, network fees and wallet fees. Transaction fees that are similar to fees charged by traditional market exchanges. Network fees are specific fees determined for each blockchain, in other words they vary from one network to another. Finally, wallet fees are fees that the crypto wallets charge you in return for storing your money.
🔶See also: Custodial vs. non-custodial wallets
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