If you are new to bitcoin you probably have a lot of questions. Throughout this article you will learn about what the transactions are, how long they take, and more.
What is a Bitcoin Transaction?
We all know what a financial transaction is, but cryptocurrency transactions are a slightly different animal. After all, cryptocurrency is, in essence, “imaginary” money. Therefore, the mechanisms by which transactions are recorded — especially how this information goes to the blockchain — are more complex.
First off, what exactly do we mean when we refer to a Bitcoin transaction?
In this case, a Bitcoin transaction is an action that trades a value between two accounts, a value included in the blockchain. These transfers are marked by a piece of data called a private key or seed.
This key is a digital signature providing proof of the origin of the transfer. Once the transaction is complete, the key also ensures that no one can alter the details. The blockchain records all these transactions within 10-20 minutes using a system called mining.
How Does a Transaction Work?
When a transaction occurs, the system records the source and destination of this transfer. This process goes on the blockchain as input-amount-output.
What exactly does this mean? When you send an amount to someone else, the system records your wallet as the transaction output. The address you send it to is the transaction input. The value of the transaction also goes to the blockchain.
When the person you sent the value to sends it on to someone else, their wallet becomes the transaction output.
This whole process uses a system called mining. Mining confirms pending transactions by recording them into the blockchain in chronological order. These transactions organize into blocks, which must process in chronological order. If any one of the blocks is modified after processing, the system invalidates all subsequent blocks. That ensures that no single party can alter processed blocks to suit their personal needs.
Factors That Decide Transaction Time
Bitcoin transactions can take anywhere from 10 minutes to 24 hours to complete. The length of time depends on a few factors. On average, a transaction takes about an hour. The main factors that affect this process are the amount of network activity and any transaction fees involved.
Amount of Network Activity
The amount of network activity can affect how long it takes for a transaction to process. Remember that Bitcoin transactions need to follow a strict protocol, putting blocks into chronological order. If there is more network activity, you will wait longer for your block to process. In simple terms, you need to wait your turn.
Although this strict protocol can be frustrating for individuals, it is vital to ensure network neutrality and proper processing of all transactions.
The other thing that affects the processing time for transactions is associated fees. Mining takes unique technology and extra effort. More Bitcoin users have found that they have the opportunity to pay fees to have their transactions moved to the front of the queue. These fees are not required. But they are an incentive for the system to process your transaction faster, usually in the next queue or block. That usually ensures that your transaction processes in the next 30 minutes.
What is The Set Standard of Bitcoin Transactions to be Considered Complete?
Every Bitcoin transaction goes through six confirmations. This refers to the network process of confirming a transfer, ensuring that it is valid, and keeping it secure. While one or two confirmations would leave a transaction open to hackers, each extra layer increases the amount of security. Six layers are considered an appropriate level of security.
How Long Can Transaction Confirmation Take?
In general, Bitcoin transaction confirmations arrive in between 10 minutes to an hour. In extreme cases where there is a large amount of network activity, this can take up to 24 hours. But this is not common and you will usually see a confirmation notice in a much shorter period.
Do Altcoins Have a Shorter Transaction Time?
Altcoin is a term referring to any cryptocurrency other than Bitcoin. These vary in transaction time, with some Altcoins completing much faster on average than Bitcoin.
Dash, one of the oldest cryptocurrencies on the market, has an average transaction time of just under three minutes. Other quick Altcoins include:
- Monero (average of two minutes)
- PIVX (one minute)
- NEO (15 seconds)
- Nano (5-10 seconds)
- Ethereum (14-17 seconds)
However, in return for shorter transaction times, users may sacrifice some layers of security. Remember that Bitcoin’s slightly longer transaction times are due to increased network neutrality and extra security checks. It is up to each person to decide if this swap is worth it. That is not to say that other cryptocurrency forms are not secure. But they have different security methods and protocols. This, like anything else, has its advantages and disadvantages.
Bottom Line: it Varies
The bottom line is that there is no definite way to say how long a Bitcoin transaction will take. On average, users will receive confirmation within an hour. However, in extreme cases, it may take up to 24 hours. This long wait time is to ensure that every transaction remains secure and fair.
If you are looking into buying cryptocurrency, it doesn’t have to be a complicated process. Many people who are complete novices in the crypto world can get their start in buying Bitcoin or Altcoins without extensive preparation. To find out more, check out a guide on buying cryptocurrency for beginners.