How Crypto Transactions Are Confirmed
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?
Bitcoin has a network difficulty setting, which dictates that each new block will be mined 10 minutes after the last one on average. Even if you paid the highest possible fee, you must still wait for the following block to be mined. When selecting which transactions to include in the next block, miners will always select those paying the biggest fees. Why? Because the fees are a part of their mining reward rate.
Once an issued transaction is successfully added to a created block, it automatically receives a confirmation. The number of confirmations a transaction goes through is dependent on a number of factors. By a general rule of thumb, the larger the amount of Bitcoin you transact, the greater the number of necessary transactions.
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.
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?
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.