What Happens When You Initiate a Blockchain Transaction?

Here’s the step-by-step low-down.
 

Cryptocurrencies like Bitcoin or Ethereum allow you to transact digital assets on a decentralized network. Let’s dive into the basics and walk through the process step by step.

What’s a Transaction, Anyway?

A transaction is just a fancy way of saying you’re transferring value from one place to another—like sending money, but digital. It’s an agreement between parties on how the transfer will happen, and it can range from super simple (paying for coffee) to highly complex (multi-party deals with lots of conditions).

How Crypto Transactions Work

Crypto transactions move value from one wallet to another on a decentralized network. Here’s how it happens:

Creating and Signing the Transaction:

• Create: You specify the recipient’s address, the amount, and the transaction fee.
• Sign: Your private key generates a digital signature, which verifies you’re the legit sender. Bonus: no one sees your private key.
• Secure: This signature ensures no one can mess with the transaction without invalidating it.

Broadcasting to the Network:

• Send It Out: The signed transaction is broadcast to the network.
• Verify: Miners (Proof of Work) or validators (Proof of Stake) check if it’s legit—ensuring you have the funds and haven’t double-spent.
• Add to Blockchain: Once verified, it’s grouped into a block and added to the blockchain, making it official and irreversible.

Real-World Example: Jon Sends BTC to Mary

• Jon enters Mary’s address, the amount (0.5 BTC), and sees the transaction fee.
• He signs the transaction with his private key to authorize it.
• He broadcasts it to the network, where miners verify and add it to the blockchain.
• Mary’s wallet receives the BTC after confirmation.

No intermediaries, just a secure and straightforward way to send value on the blockchain.