How do crypto transactions work?
A crypto transaction is sending cryptocurrency from one wallet to another using the crypto network (cryptocurrencies such as Bitcoin, Ethereum, Bitcoin Cash, etc.)
How are transactions processed?
Let's look at an example:
Client A wants to send 0.05 bitcoin to client B.
In this case, the following elements are involved:
- Inputs. It's an address from which the client sends money. In this example, it's the bitcoin address of client A.
- Outputs. Output is an address that receives the funds. In this case, it's the bitcoin address of client B.
- Amounts. The number of bitcoins that client A wants to send.
- Identifier. Each completed transaction has its hash. This value allows you to identify the transaction uniquely in the blockchain.
- Keys. Key — is a set of letters and numbers used to transfer cryptocurrency. Each participant has public/private key pairs that control their funds.
The public key is the one that the user must share to receive funds to their crypto wallet.
On the contrary, the private key should be kept secret because it allows spending any funds received with the associated public key.
They are unique and unrepeatable, as they guarantee that no person has identical keys and is an essential part of security.
Although another person may have your public key, this doesn't affect your wallet's security.
For client A to send 0.05 bitcoin to client B, A must sign the message with the transaction details using their private key. The message contains input, output, and amount as described above. A transaction record is then stored online in the cryptocurrency network. It verifies whether client A's private key can access the input (verifying that client A's private key matches the public key they own).
Transaction fee/commission
For each transaction made in the cryptocurrency network, the user must pay a commission. The speed of sending/receiving cryptocurrencies depends on the size of the commission; thus, the higher the commission rate, the faster the transaction is processed. You can learn more about what a commission is and how you can calculate it in this article.
Why did my crypto address change?
To ensure the safety of funds, after each transaction you make, or when funds move between your wallet and a storage system (for example, blockchain), the system generates a new address for you. This procedure is necessary for protecting privacy so that third parties cannot view all other transactions associated with your account by using a blockchain explorer.
Please be noted that all addresses created for your account will forever remain associated with your account. It's safe to reuse them to receive future payments. Refer to this article if you want to know which address you need to use for withdrawal.