Blockchain Transactions: How Do They Work and How to Track Them?

blockchain transactions

Satoshi Nakamoto, the creator of Bitcoin, published an article “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008 and introduced a fundamentally new way of exchanging money. From that moment on, the need for a third party, like a bank or other financial institution, simply disappeared. In fact, this has become a new financial revolution.

Today we will talk how blockchain transactions are conducted from a technical point of view, how reliable they are, what features they have and how they can be tracked.

Contents:
(please, click the topic to scroll down to it)

  1. How does blockchain work in general?
  2. How are transactions organized?
  3. What features do blockchain transactions have?
  4. How to test a blockchain transaction?
  5. The reasons why transactions can freeze
  6. Conclusion

1. How does blockchain work in general?

We should start with the fact that Bitcoin is the first ever completely digital currency. Unlike electronic money, it does not exist even as a digital file. It is a huge stream of data about all the transactions that have ever been conducted. Blockchain is presented in the form of a giant accounting book, which is available to all network participants.

Each transaction is not stored separately, the information is placed in the blocks. Different networks have different block sizes, for example, until recently one block in the network of Bitcoin “weighed” 1 MB. But the BitMEX report says that after the introduction of the new SegWit protocol, the average size of one block has increased to 1.06 MB, and some have reached 2 MB.

In order to obtain a new block, there are different mechanisms for consensus. The most widespread ones are:

  • PoW (proof of work). Here, the miners need to solve a complex cryptographic equation. After that, a new block is added, for which the system rewards the finder with a certain number of coins.
  • PoS (proof of stake). This mechanism involves adding a new block to a user who has a certain number of coins. The more coins a user has, the more likely he/she will generate a new block.

Each subsequent block stores information about the previous one. Another important feature of blockchain is its decentralization, since information is simultaneously stored by all participants of the system (miners, master nodes). Thus, after the block is added to blockchain, it can not be changed or deleted.

2. How are blockchain transactions organized?

As it was mentioned above, transactions that are carried out in the network of blockchain do not require the participation of a third party. Let’s see how this happens in practice.

Let’s say you want to transfer 0.5 BTC to another person. Before the system recalculates the wallets’ balances (not transfer, namely, the recalculation), this transaction will fall into the so-called Memory Pool – the operational memory of all the miners connected to the network. After this, the blockchain transaction must be confirmed by at least 6 different miners. They (miners) should check the correctness of the transaction:

  • the amount of commission for each byte of information;
  • the physical possibility of adding a transaction to an existing block (if there is too little space left in the block, the transaction is transferred to the next one that still needs to be found).

After these actions, the data on the operation are permanently entered in the blockchain, and the coins are credited to the wallet of the recipient.

3. What features do blockchain transactions have?

Based on the abovementioned information, it is worth highlighting a number of features that are typical for blockchain transactions:

  • Irreversibility. Since the blockchain system is a decentralized system, it is not possible to affect the data that has already been entered in the register. Therefore, it is impossible to mark the already completed operation.
  • Lack of regulation. Due to the absence of the center from which the system is managed, it is impossible to completely prohibit and shut down cryptocurrencies. To do this, you must destroy all the computers of miners.
  • Anonymity. Each blockchain has its own level of anonymity, but in any case, even in pseudonymous anonymous networks, such as Bitcoin, for example, the names and surnames of users are never used for transactions.
  • Reliability. The network algorithm fixes the balance of all the wallets at the same time, but only a user who has a private key can make a transaction from a particular wallet. Subject to observance of elementary security rules, it is not possible to crack the wallet. You can lose your coins only because of your own fault. For example, if you send them to the wrong wallet, infect your computer or smartphone with a virus or somehow let scammers get private keys.

4. How to test a blockchain transaction?

Transactions in the Bitcoin network can be tracked on the site www.blockchain.info. In order to see information about a particular transaction, you need to go to this site and enter a unique transaction hash in the search bar. Then the system displays the actual information.

In this service you can also see information about a particular wallet:

  • transactions in the history (by dates);
  • the total number of coins that passed through the wallet;
  • the list of all addresses which there have ever been interactions with (incoming or outgoing operations);
  • current balance.

5. The reasons why transactions can freeze

The main problem of Bitcoin and many other coins is the speed of blockchain transactions. As for  BTC, this indicator reaches a mark of 7 operations per second. Previously, when the total number of users was small, this was enough. But now, with the growing popularity of the industry, the “line” for the transaction can turn into tens and even hundreds of thousands of unconfirmed operations. You can view the current list, which is updated in real time, on this service.

Some transactions may even freeze in the Memory Pool for a long period of time (up to 72 hours). What factors affect the speed of transaction confirmation?

  • Total pool load.
  • A very small commission. Miners confirm transactions with a larger commission in the first place.
  • The transaction weight is too big, and it simply does not fit into the almost completely filled block. In this case, it will be automatically transferred to the next one.

6. Conclusion

Cryptocurrencies have made a real revolution in the financial sector, on a scale that we still can not comprehend. The number of blockchain transactions is growing every year. In order for everyone to be able to use Bitcoin at the same time (like Visa, for example), it is necessary to solve the problem with bandwidth.

Blockchain transactions have both their advantages: the absence of intermediaries, small commissions, anonymity, security, and their shortcomings: irreversibility, low throughput.

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WordPress Launches Beta Version of Publishing Blockchain Platform

WordPress is planning to develop and launch a special publishing resource that will work on the blockchain technology. It is already known that the developers will call the platform Newspack. It will be free to post materials. The creators of the platform are confident that the use of blockchain in this case will affect the development of journalism.

The development of modern blockchain blogs

Now the developers are preparing the beta version of the platform for launch, which is planned for the middle of this year. However, anyone can already put the resource to the test. The feature of Newspack is that it will have its own version of CMS, which will allow editing content directly on blockchain. This will not affect CMS negatively, but vice versa will expand possibilities for ordinary users.

Until launch of the platform, the project will be financed by Automattic, and after all the users will be charged $ 1-2 thousand per month. There will also be a free version available, which will have limited functionality. The end of the platform development including the integration of all additions is scheduled till January 2020.

According to the information posted on the WordPress blog, Google will finance the platform, investing more than $ 1.2 million in its development. Civil Media’s progress is supposed to be used in order to use various plugins for CMS blockchain version.

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WWF Will Handle the Supply Chain with the Help of Blockchain

The Australian division of World Wildlife Fund has decided to integrate the blockchain technology into its supply chains in order to track down and store data on various kinds of food.

WWF partnered up with the company BCG Digital Ventures to create a blockchain-based platform called OpenSC and bring the plan into reality.

According to the official announcement of WWF Australia:

OpenSC enables businesses to track their products – anything from food to tissue paper – by adding a unique blockchain code at the product’s point of origin, such as the moment a fish is caught at sea.”

Moreover, OpenSC will allow its users to scan a special QR-code on the food they want to buy in order to see the information on a specific product: from its properties to how it traveled in the supply chain.

This is not the first time an organization or company of a global scale is turning to the blockchain technology. We remind you:

Ford Will Fight Child Labor in Africa Using Blockchain

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BitPay Transactions Surpasses $1B in 2018, B2B Payments Records 225% Increase

BitPay is a US-based bitcoin payment provider which has recently announced its financial results of the past year. The company has processed over $1 billion in transactions alone. Moreover, its B2B payments record 225% increase in compare to 2017.

The main reason of such a lift-off is that Bitpay added a lot of new clients, like Dish Networks, HackerOne, and the State of Ohio, as well as many other law firms, data center providers, and IT vendors.

The CEO of BitPay, Stephen Pair, commented on this development:

“BitPay’s B2B business continues to grow rapidly as our solution is cheaper and quicker than a bank wire from most regions of the world. To process over a $1 Billion for the second year in a row despite Bitcoin’s large price drop shows that Bitcoin is being used to solve real pain points around the world.”

BitPay mostly supports Bitcoin transactions, however, it also supports payments with Bitcoin Cash, Gemini, and Paxos. During that year a lot of companies had to lay off their employees due to the market situation, yet, Bitpay conversely increased its manpower by 78 percent in the past year.

In addition, BitPay is attractive to the investors, in 2018, it raised $40 million in Series B funding round taking the total raised capital to $70 million.

We remind you

Two European Finance Regulators Urge the EU To Adopt Crypto and ICO Rules

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Is Bank of America Going to Cooperate with Ripple?

As we all know, the crypto market is still in a deep recession. The collapse of cryptocurrencies at the end of last year negatively influenced all coins, however, some of them suffer less than others.

One of such coins was Ripple. Not only did it manage to outrun Ethereum in the rating, its blockchain platform keeps being implemented widely by the world’s largest companies in various spheres.

We remind you:

Ripple: 13 Financial Institutions Have Joined RippleNet, Surpassing 200 Customers All Over The World

Recently, there appeared rumors on the Internet, saying that the second largest financial institution, Bank of America, might be considering forming a partnership with Ripple Labs and incorporating the blockchain technology into its system, according to Fintech News.

Currently, the bank is using SWIFT technology for international transactions, which proved to be quite inconvenient, slow and insecure.

It is still unclear whether Bank of America wants to fully apply Ripple technology or create a similar app, but its main intention is to let the customers make transaction between various banks in a safer and easier way.

Neither of the sides have officially commented on the matter so far.

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Ford Will Fight Child Labor in Africa Using Blockchain

According to the report made by Reuters, an American major car manufacturer Ford is partnering up with such giants as IBM, LG Chem and Huayou Cobalt to create a joint blockchain platform which will track down cobalt coming from Congo.

This project is aimed at helping children who are working at cobalt mines in Congo against their will and against any human rights.

The blockchain platform is going to analyze the supplies of cobalt coming from Congo to be later utilized to produce lithium-ion batteries (which can actually be found in Ford cars) and, if it is coming from mines where child labor is applied, make sure it never makes its way into the world market.

Moreover, the future plans in this direction involve using AI chemical analysis in order to identify cobalt from other metals in the supplies, since they often merge together naturally, making it impossible to distinguish between them.

This important step in fighting child labor in Africa has been in the making since the December of last year, however, the companies taking part in its implementation chose to keep it quiet until recently. The trials of the platform that will soon be conducted are going to track cobalt form Huayou mines to LG chemical plants and finally to Ford vehicles.

We remind you:

The UN Will Use Blockchain to Develop Healthcare in Africa

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A Video Gamer Received a 20-Bitcoin Donation on Twitch

A video game player under the nickname Sick Nerd received a donation from an anonym in the amount of 20 Bitcoins when playing the game RuneScape and streaming it on the platform Twitch.

Sick Nerd mentioned this on his Twitter:

At first, the streamer received only 4 BTC. He didn’t take it seriously right away, but kept receiving new donations in cryptocurrency. Overall, Sick Nerd became richer by over 20 BTC during his streaming session.

This is the largest crypto donation sent to a video game player ever, and, of course, the largest donation ever received by Sick Nerd (more than 70 thousand dollars).

Cryptocurrency keeps making its way into every sphere of human activity, and video games are no exception. We remind you:

Cryptocurrency Games: Bitcoin Game Review

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