10.5 How Crypto Transactions Work
A step-by-step explanation of what happens when you send or receive cryptocurrency.
§Transaction Initiation
When you send USDT to another wallet, your wallet creates a transaction containing the recipient's address, the amount to send, and a digital signature created using your private key. This signature proves that you authorized the transaction without revealing your private key.
The transaction is then broadcast to the blockchain network. Nodes (computers running the blockchain software) receive the transaction and verify that it is valid. They check that your signature is correct, that you have sufficient balance, and that the transaction follows the network's rules.
§Transaction Confirmation
After validation, the transaction is included in a new block by a validator (or miner, depending on the blockchain's consensus mechanism). The block is added to the chain, and the transaction is considered confirmed.
Different blockchains have different confirmation requirements. On Polygon, transactions are typically confirmed within a few seconds. On Tron, confirmation takes one to two minutes. On BNB Chain, blocks are produced every three seconds.
Once confirmed, the sender's balance is reduced and the recipient's balance is increased. This update is reflected across all nodes in the network simultaneously.
§Transaction Finality
Finality refers to the point at which a transaction is considered permanent and irreversible. Once a blockchain transaction reaches finality, it cannot be undone by anyone, including the sender, the recipient, or the network operators.
This is fundamentally different from traditional banking where transactions can be reversed through chargebacks, disputes, or bank interventions. On the blockchain, a confirmed transaction is permanent.
For P2P trading, this means that once escrow is released and the USDT is sent to the buyer, the transaction cannot be reversed. This is why payment verification before releasing escrow is so critical.
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