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BasicsLevel 2Intermediate7 minUpdated Blockchain and transfers
What happens when you press “send”. The address, the transaction fee, confirmations, and why a mistake cannot be undone.
The life cycle of a transfer
A crypto transfer does not go through a bank. It is sent to the network, where thousands of nodes check it, and it ends up in a block only once the network accepts it. The steps are always the same, whatever the amount.
- SignatureThe wallet signs the transfer with the private key. The key never leaves the device. All that goes out to the network is proof that the signer controls it.
- Waiting areaThe transfer waits in the network's queue. The higher the transaction fee you pay, the sooner a miner or validator includes it in the next block.
- Recorded in a blockThe transfer is recorded in a block and the block is added to the chain. From this moment on, the transfer is publicly visible and anyone can check it.
- ConfirmationsEach new block at the end of the chain confirms the transfer again. The more confirmations, the more certain it is that the transfer is final. For larger amounts, people typically wait for more.
Address, network and irreversibility
An address is a string of characters that assets are sent to. A transfer sent to the wrong address cannot be reversed: there is no party that could undo it. The same applies to the wrong network. The same token can exist on several chains, and a transfer sent to the wrong network is often lost.
This is the biggest practical difference from a bank transfer. That is why it makes sense to do your first transfer with a small test amount, and to always check the address at its source, not from the clipboard.
- Check the network: the same ticker can work on several chains with different addresses.
- Test with a small amount before a large transfer.
- Don't trust the clipboard: malware can swap the address when you copy it.
Who maintains the network, and why
Securing the network costs money, and a reward is paid for it. In Bitcoin, miners use computing power (proof of work); in Ethereum, validators lock up their own ether as collateral (proof of stake). In both, cheating does not pay financially: it costs more than it earns.
Public is not anonymous
A blockchain is public. Every transfer, amount and address can be read permanently. An address does not contain your name, but once an address is linked to a person (for example during identity verification), the whole history can be traced backward.
In practice, then, crypto is more transparent than a bank account, not more secret. Regulated service providers identify their customers and report to the authorities just like other financial sector firms.
This content is for information purposes only and should not be construed as investment advice or a recommendation. Investing always involves the risk of losing capital. The value of financial instruments and investments can go up or down, and past performance is no guarantee of future returns.
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