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
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 $1,000, 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.
My Transactions Are Often Stuck. What Can I Do About it?
If your crypto transaction is stuck on 'pending,' it usually means it is still awaiting confirmation on the blockchain. While most transactions confirm within minutes, high network congestion or low network fees can sometimes cause temporary delays.
There is no need to panic. You can easily check the real-time status of your transfer by entering your transaction ID (TXID) into a blockchain explorer.
For a detailed breakdown of exactly why transactions get stuck, how blockchain confirmations work, and what you can do to resolve the issue, check out this comprehensive guide.
Tips to Lower Network Fees
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Wait out network congestion: Avoid sending Bitcoin or Ethereum during major price swings unless it’s urgent. When the market is highly volatile, the network gets crowded, fees spike, and confirmations take much longer.
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Consolidate small Bitcoin deposits: Take advantage of times when network fees are cheap to combine your smaller deposits into one large chunk. Bitcoin fees are based on the data size of a transaction (how many separate deposits you pull from), not the dollar amount. Spending from one consolidated chunk costs significantly less than piecing together the exact same amount from five separate deposits.
