A transaction refers to the transfer and exchange of cryptocurrencies on a blockchain network.
Transactions are compiled together to make a block, which has a pre-designed capacity and is queued up to be added to the blockchain once it reaches its capacity.
A block represents a record of transactions, alongside their timestamps, chained together by a series of complex mathematical solutions. Typically, a transaction starts with a sender cryptographically signing a transfer request of cryptocurrency (by providing a private key) from the sender’s public wallet address to the receiver’s public wallet address upon confirmation and validation by miners on the network.
Blockchain Transaction Validation
The validation of a transaction by miners simply ensures that the sender’s address has the specified amount requested to be transferred and that it is not being “double-spent” anywhere else on the network.
Most blockchains are publicly distributed ledgers and transactions can be viewed by anyone using a block explorer, however, the anonymity of both parties (the sender and the receiver) is guaranteed to a large extent.
Each transaction comes with a fee, usually paid by the sender, which serves as a reward for the confirmation, validation, and authentication services provided by miners on the network. Also, miners offer a kind of priority-transaction-processing-based model that allows traders to pay a premium to fast-track their transactions.