Bitcoin transaction

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What is a transaction

The word transaction comes from the English word transaction, which means a deal or contract. That is, an event, as a result of which something happens, some actions are performed, someone receives rights or, conversely, is endowed with responsibilities.

An event either occurs, and then the transaction is considered complete, or it does not occur and the transaction is considered imperfect. There is no event partially occurring or occurring halfway, just as a transaction cannot be partially performed.

Bank transaction

A bank transaction is an event that triggered a change in a client’s bank account. Any action that a client has taken with his account is a bank transaction.

Opened a client account – opening an account is a bank transaction, since an action has occurred as a result of which a client account has appeared.
The client replenished his previously opened account – this is a new transaction, since replenishment of the account is a separate action, which is reflected in the register of banking documents.
The client tied a bank card to his account – again a bank transaction, since an action was performed, as a result of which a bank card was activated.
Thus, a banking transaction is not necessarily related to cash flows. Some action must be taken.

For example, opening a bank account per se is not necessarily related to cash transactions. You can simply open an account but not deposit money into it. But opening an account will be a banking transaction.

As well as receiving and activating a bank card is an action that is not necessarily associated with depositing money on the card. You draw up a card, but you can not deposit money on it. But the fact of receiving a bank card will be recorded in the register of bank documents, and this card will be associated with your name and your bank account. All of these actions are bank transactions.

If you buy products with a credit card in a store, the fact of payment is a bank transaction. In the receipt you received from the store it will be written: transaction completed – payment has passed.

The bank records your payment in bank documents. You can also get an account statement where your payment will be displayed. Each such payment, which resulted in a change in the account, is a bank transaction.

If you decide to close your bank account, closing a bank account is also a bank transaction, although this action is not directly related to money. But the status of your account will change. Before closing it was active and money could be transferred to it, after closing the account will cease to exist and money cannot be transferred to it already.

Thus, a bank transaction is any event that somehow affects the state of the bank account of a bank client. And this event is not always associated with money. Although in most cases, a bank transaction reflects cash flows.

Database Transactions

Banking transaction is one of the narrow varieties of transactions in databases. A bank transaction only applies to the customer’s bank account. But the application of transactions is much wider than only in the banking sector.

Transactions exist wherever there are databases, registries, reporting, accounting.

Practically in any company there are accounting programs, stock keeping programs, various registers. These programs are updated daily.

Goods are sold and bought, come and go to the warehouse, cash flow is carried out. Each of these operations is displayed in the corresponding registry.

A transaction is each of these operations. The goods arrived at the warehouse – this is a transaction that is reflected in the inventory register. The buyer bought the goods and took it out of stock. These are two whole transactions: the first transaction for payment, the second transaction for the export of goods.

These actions may be reflected in different registries and records. Payment for goods in accounting, export of goods from the warehouse in the warehouse. But any of the committed actions, although they are reflected in different accounts, is a transaction.

Hiring a person for work is also a transaction, as it reflects an event – the beginning of work. From this moment, a person begins to fulfill his labor duties and begins to receive wages for work. Therefore, it is very important to clearly reflect each of these transactions.

If a person is not hired, the personnel officer will forget to note this fact and record it in the register, in the future the employee will have problems with salary. Therefore, it is very important to reflect all existing transactions in a timely manner, since the data of many registries are interconnected.

The register of employees of the enterprise, which is maintained by the personnel department, is connected with the payroll that accrues accounting. Data warehouse accounting associated with the work of accounting. If problems arise in warehouse accounting, then accounting may sell goods that are not actually there. Each of these operations must be reflected in the appropriate registry and is a transaction.

What is Bitcoin Transaction

A bitcoin transaction is in many ways similar to a bank transaction. This is an event that affects, that is, makes a change to the registry, that is, to the Bitcoin blockchain. But if a bank transaction makes changes to the bank account of a specific person – a bank client, then a Bitcoin transaction makes changes to the blockchain.

Any transaction, i.e. a money transfer from a cryptocurrency wallet, goes to the general blockchain. Bank transactions are stored on a separate server of the bank, transactions in Bitcoin are stored on the blockchain.

Theoretically, each owner of a heavy wallet on which the complete blockchain is recorded is the custodian of the blockchain and all transactions that are recorded in it.

Banking transactions are carried out – bank employees confirm, the banking transaction can also be confirmed by the user himself, for example, by entering a PIN code when purchasing goods using a bank card.

There are certain cases clearly stipulated by the terms of the bank when bank transactions are confirmed automatically. But not every banking transaction is confirmed. Some transactions may be discarded. For example, if there is no funds on the bank card or credit limits are exceeded, the bank rejects such a transaction and the payment is considered imperfect.

A similar situation occurs with Bitcoin transactions. They are confirmed. Bitcoin transactions are only confirmed not by bank employees, but by miners.

Initially, the transaction is confirmed by the sender of the transaction – the owner of the Bitcoin wallet, when he enters the wallet using his private key and generates the transaction in the wallet. After that, the generated transaction goes to the general blockchain, where it is accumulated in the general transaction queue for confirmation. Miners confirm transactions. They collect all transactions in the block that they process. Only the transaction processed by the miner is considered confirmed.

If a bank transaction is confirmed by a bank employee or the automatic system of the bank only once, after which it is considered finally confirmed, then the Bitcoin transaction is confirmed by the miners many times. A Bitcoin transaction is considered finally confirmed after receiving 6 confirmations from various miners, after which the payment is considered perfect. But even after receiving 6 confirmations on the network, the transaction continues to be confirmed.

A payment in the Bitcoin network is considered perfect after receiving 6 confirmations.

Such a system of multiple verification and confirmation is necessary to ensure the smooth functioning of the entire system, which consists of many independent centers. Only with such a number of confirmations and checks, a clear and uninterrupted existence of the whole mechanism is possible.

Although many experts argue that the existence of so many confirmations makes no practical sense. This is just a waste of extra resources and electricity for repeated confirmations.

As experience shows, already after the first confirmation by the miner, the payment is considered perfect and subsequent miners also confirm this payment. If the payment is fake, then the first manner will fix the error and refuse to process the payment.

Currently, many exchangers consider the payment perfect after receiving three confirmations, and sometimes after the first confirmation by the miner, without waiting for subsequent confirmations.

Why unconfirmed transactions occur

After the wallet user generates a transaction in the wallet, it is automatically sent to the general blockchain, where it is queued for confirmation by miners.

In order to receive confirmation, the transaction must fall into the block. But the block size is limited. Therefore, not all transactions get there. Those transactions that did not fall into the block are waiting in line. The block is formed 10 minutes. That is, if the transaction did not fall into the block, then it needs to wait 10 minutes before the formation of the new block and so on.

Some transactions are waiting for confirmation for too long. The wait time largely depends on the network load and the size of the transaction fee. The fact is that transactions do not enter the queue in the order of appearance on the network, but depending on the size of the commission.

First of all, those transactions that have a higher commission are processed. They push back low-commission transactions that have to wait until network congestion drops.

 Commission for a transaction in the Bitcoin network

Miners primarily process transactions with a higher commission.

The size of the commission is determined by the sender of the Bitcoin transfer. Moreover, the size of the commission does not depend on the amount of payment. If you send 100 BTC or 0.001 BTC, the transaction for payment will be the same. The miner takes money for processing a certain amount of information, and the transaction weight of 100 BTC and 0.001 BTC is the same for the miner and the work on processing such payments is the same.

If the Bitcoin blockchain is busy, making small money transfers is not profitable, since the commission can be large.

Therefore, if you need to make a small payment in Bitcoin, and the blockchain is very busy at this moment, you will either have to agree to pay a large commission or wait until the blockchain is released.

Checking and tracking Bitcoin transactions

To check Bitcoin transactions, there is a site https://www.blockchain.com/explorer

In the search field you can enter the Bitcoin wallet address, block number or transaction hash. The transaction is fully considered completed after receiving 6 confirmations over the network. Thus, the Bitcoin transaction passes control by the miners 6 times.

Many consider this control to be redundant. Therefore, many exchangers, and sellers accepting Bitcoin, perform their services or deliver the goods after receiving the first confirmation, without waiting for 6 confirmations to be received. But it all depends on the specific service provider.

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