How are crypto transactions verified?
Whenever a cryptocurrency transaction is sent from one address to another, it incurs a mining fee paid by the sender to a miner. There are many different blockchain networks on the market; some of them are faster, while others have longer confirmation time. To understand how the process works, we’ll take Bitcoin transaction confirmation as an example.
How does a Bitcoin transaction get confirmed?
When a Bitcoin transaction is broadcasted to the network, it gets propagated to network participants responsible for verifying the transaction history and securing the network. These individuals are known as Bitcoin nodes. After successful verification, the transaction is sent to the mempool (or memory pool). The mempool is where all unconfirmed transactions wait to get picked up by miners and included in a new block. When your transaction gets selected and becomes a part of the next block, it receives its first confirmation and is considered confirmed.
Why is there a waiting time for confirmations?
Waiting time for crypto transaction confirmations exists primarily due to the underlying mechanics of blockchain technology.
1. Consensus Mechanism
Blockchain networks use consensus mechanisms to validate and confirm transactions. The most common mechanisms are Proof of Work (PoW) and Proof of Stake (PoS).
- Proof of Work (PoW): In PoW, miners compete to solve complex mathematical problems to add a new block to the blockchain. This process takes time and resources, ensuring that the transaction is valid and preventing double-spending. Bitcoin is a notable example of a PoW-based cryptocurrency.
- Proof of Stake (PoS): In PoS, validators are chosen to create new blocks based on the number of coins they hold and are willing to "stake" as collateral. This method is generally faster than PoW but still requires some time to ensure the selected validators are legitimate and the transactions are valid. Ethereum has transitioned to PoS with Ethereum 2.0.
2. Block Time
Each blockchain has a specific block time, which is the time it takes to generate a new block. For example:
- Bitcoin: Approximately 10 minutes per block.
- Ethereum: Roughly 12-14 seconds per block.
This block time dictates how quickly transactions can be processed and confirmed.
3. Network Congestion
The number of transactions waiting to be processed can affect confirmation times. When there is high demand on the network (e.g., during price spikes or major news events), the blockchain can become congested. Miners or validators prioritize transactions with higher fees, leading to longer waiting times for those with lower fees.
4. Number of Confirmations
Many services require multiple confirmations to ensure the transaction is fully validated and irreversible. Each confirmation represents an additional block added to the blockchain after the block containing your transaction. For instance, an exchange might require six confirmations for a Bitcoin transaction, which could take around 60 minutes.
5. Security and Irreversibility
Multiple confirmations help secure the network against attacks such as double-spending. Each additional block added to the blockchain makes it exponentially more difficult for an attacker to alter previous transactions, ensuring the security and integrity of the blockchain.
6. Geographical and Network Latency
Network latency and the geographical distribution of nodes can also introduce delays. Propagating a transaction across a globally distributed network of nodes can take time, especially if some nodes are slow or located far from the sender.
Summary
In summary, the waiting time for crypto transaction confirmations is due to:
- The consensus mechanism of the blockchain (PoW or PoS).
- The inherent block time of the blockchain.
- Network congestion and transaction prioritization based on fees.
- The requirement for multiple confirmations to ensure security.
- Geographical and network latency.
Understanding these factors can help users better manage their expectations and optimize their transactions, such as by adjusting transaction fees during times of high network congestion.
While 1 or 2 confirmations are usually enough for payments less than $1000, as much as 6 to 10 confirmations are required for transactions above $10,000 and above sixty for payments more than a million dollars.
How to select an appropriate fee?
If you are in a hurry and want a quick confirmation, you should pay a higher network fee. If your transaction is not urgent, you can select a lower one. Each Bitcoin transaction has a size denominated in vMBs (virtual Megabytes). Miners prefer transactions with a higher fee rate. A fee rate is a number of satoshis (smallest bitcoin unit) the sender is ready to pay per vByte.
Bitcoin wallets, such as NOW Wallet or Guarda Wallet, have a fee estimator in the software. That can be used when selecting the appropriate fees.
To get a better overview of the current state of the mempool and a more precise fee estimator, we suggest using Mempool.Space. Use the high priority suggestion when you need a quick confirmation, or stick with the low or medium priority estimations when your transactions aren’t time-sensitive.
How much time does a confirmation take?
Different blockchains have different transaction confirmation speed. Among popular cryptos, Bitcoin is one of the slowest networks. Check out the graph that reflects it’s confirmation time/fee relation.
crypto transaction confirmation time
Can ChangeNOW somehow lower the confirmation time for my transaction?
Not really. But remember that the higher the fee, the faster the transaction is confirmed.
My transactions are often stuck. What can I do about it?
You are probably using a poorly managed wallet. Try NOW Wallet instead.
We designed this lightweight mobile wallet so you can enjoy secure crypto storage in an intuitive interface. The wallet is available for Android and iOS devices and allows you to access your crypto 24/7. In NOW Wallet, you can buy or store crypto together with 550+ other digital assets. We constantly increase the number of available coins and improve the wallet in general by adding new features such as staking, NFT storage, and many others.
How do I know my transaction is confirmed?
To track Bitcoin transaction go to this or this website and check your transaction status using transaction ID. Remember that it's important to use trusted Bitcoin transaction tracker.
I was exchanging on ChangeNOW and my transaction got stuck. What should I do?
Please address your problem to our 24/7 tech support team.
Tips to Lower the Network Fees
Don’t send Bitcoin or Ethereum during high network congestion (unless it’s urgent) when the fees spike, causing difficulties in getting a quick confirmation. Congestions usually occur when the value of bitcoin rises or drops significantly.
Consolidate your small inputs (the different bitcoin transactions you received throughout times) into a single input during cycles when the transaction fees are low. The more inputs and outputs (the addresses you send to) your transaction has, the more you’ll have to pay in fees. Spending coins from 1 input requires much lower costs than spending from 5 different inputs, no matter the number of coins that are being transferred.
