Basics of Transactions on the Blockchain

Released on

Mar 23, 2020

So we know a few things about cryptocurrencies and the blockchain. First, that cryptocurrency is digital money that is secure and difficult to spoof, because they are made of transactions on a blockchain.

Second, that when we say we own bitcoin, it basically means that the transactions point to my public address as the rightful owner of said bitcoin.

These tools give you a completely transparent view of the blockchain and the transactions that take place. 🔎

Blockchain Explorer for Bitcoin

For bitcoin we like to use Blockchain Explorer, which is as literal as its name. It lets you look at things like address, transaction, or block. Let's go into more details for each of these terms.

What is a blockchain address?

Searching a bitcoin public address on Blockchain Explorer will show you a summary plus the actual details of the transactions that have taken place on the address – also known as 'wallet':

Blockchain explorer for bitcoin TenX

This is the public address where your cryptocurrency is stored. If someone wanted to send you some crypto, you would share this public address with them – sort of like your bank account number.

Why look at a cryptocurrency transaction?

You'll typically search a bitcoin transaction to check if you've successfully sent or received some bitcoin.

Searching a transaction lets you see if the transaction has gone through, the fees involved, when it was confirmed, and the block it was part of.

What is a block?

Think of it as one page in a huge record book of all transactions that have ever taken place on the bitcoin blockchain. It's like looking at historical records! Take a look at a block here.

Fun fact: A new block is created and added to the bitcoin blockchain every ten minutes or so on average!

Etherscan for Ethereum

Etherscan can be used for Ether and other tokens that are built on the Ethereum network. You'll find it similar to Blockchain Explorer as you can search using addresses, transactions, and blocks.

Because there are so many tokens built on Ethereum, you'll also find that you can search for tokens on Etherscan.

This gives you complete transparency over:

  • Total supply of the token
  • Total number of addresses that are holding the token
  • Total number of transfers that have taken place

The importance of blockchain for money: cryptocurrency vs existing digital money

For the bulk of us who have access to digital banking, sending money through digital transactions is a familiar concept. You can do it using an app, or physically at an ATM.

Think about this scenario: you're splitting the dinner bill with a friend, so you need to pay them $40. 💸

Paying using existing digital money

You decide to transfer them the money through your banking app. You enter their bank account details, you confirm the transfer, and you get a transaction number. You wait a couple of minutes, possibly a couple of hours if they're using a bank that doesn't play well with yours.

You just have to trust that the transfer goes through. 🤞 After all, you don't know what actually goes on behind-the-scenes.

Paying using cryptocurrency

Here's where an important difference between cryptocurrencies and existing digital money comes in: cryptocurrency transactions are entirely verifiable – blockchain records are transparent and cannot be spoofed. You don't need to trust a bank or a third-party, you can see the underlying technology that is the blockchain.

If you pay someone in bitcoin, you can use Blockchain Explorer, for example, to check if your transaction has been confirmed. You can see the money, and you can learn how it works. 👌