Cryptocurrency Basics: Sending & Receiving
A fundamental advantage of using cryptocurrencies is the ability to send and receive value across the world in a verified manner without the need for a third party.
There are many different distributed ledger technologies (DLTs) in existence. Depending on the DLT involved and the interface used to shift funds, there may be slight differences in the way that various cryptocurrencies are sent and received.
Daunting as this may first seem, the basic concepts involved are largely applicable across the board. Once these concepts are fully understood, managing cryptocurrencies is actually quite simple since one will be able to adapt to the eccentricities of different DLTs and interfaces.
Before reading on, please pause here if you have not yet read my previous article on cryptocurrency addresses and private keys. The content in this article has been written with the assumption that the reader has a decent understanding of addresses and private keys in relation to DLTs.
Ethereum Network (Example)
Given its popularity and widespread use, the Ethereum network will be used as the example DLT throughout this article. The specific Ethereum-based token that I’ve chosen as an example is CAS. CAS is the native token of Cashaa, an emerging powerhouse with a strong team and potential.
The method used for sending and receiving CAS will also apply to any other Ethereum-based (ERC-20) token.
While going through the steps shown below, you are advised to keep a separate window open to simulate these steps in real time. If you’re uncomfortable about using your real Ethereum wallet, then feel free to use the empty Ethereum address that I’ve created purely for the purposes of practice. For obvious reasons, do not send any real funds to this address.
Address:
0x8235e9d6C152dD0cffD259136f685435742F6D2E
Private Key:
57d70f29c950fc002923e0985726d4cb9ee1015de32904bd7a6998d9679e02a7
As a reminder, all public data on the Ethereum network can be found on the blockchain explorer etherscan.io and access to the funds in an Ethereum address can be made via myetherwallet.com.
These services are free to use and should be exploited as often as is necessary when sending and receiving Ethereum and Ethereum-based tokens. Similar services should be available for other DLTs as well, though admittedly, for the so-called “privacy coins”, these will be far more limited if at all present.
Without further ado, here are the steps for sending and receiving cryptocurrencies!
Receiving Cryptocurrencies
Preparation
(1) Note the DLT compatibility of the coin or token that you’re receiving.
All publicly traded cryptocurrencies are compatible on at least one DLT’s public ledger. Most of the time, they only exist on a single DLT. Find out exactly which DLT the currency you’re receiving is compliant with.
(2) Own at least one address on the public ledger of that coin or token’s compatible DLT.
In order to receive a coin or token, you need to own an address for the sender to send your coin or token to. Create an address on the relevant DLT ledger if you do not already have one.
(3) If you have more than one compatible address, choose the one where you want to receive the funds.
Many cryptocurrency enthusiasts own more than one address on a given DLT’s ledger. If you are one of those enthusiasts, pick the address at which you want to receive the expected funds. It’s important to note that some wallets do not allow you the freedom to withdraw custom tokens even if those tokens have been sent to one of the wallet’s compatible addresses. You should therefore ensure that you’re comfortably able to access and withdraw your new funds from the address that you’re providing.
(4) Double-check this receiving address.
Make absolutely sure that you have the correct receiving address ready. For Ethereum addresses, double-check them quickly by pasting the address on etherscan.
Receiving
(1) Provide the sender with the receiving address.
Give the sender the address that you’d like to receive your funds at. This is the same address that you’ve personally checked multiple times.
(2) Wait patiently for the funds to arrive.
You’ve done everything that you could. It’s up to the sender to send the funds to the correct address now.
Verifying the transaction
(1) Check the receiving address.
If you’re expecting to have received something, then check your own address to see if you’ve actually received it. Unless you’re dealing with a privacy coin, you should not need to access your address or log into your wallet in order to see your balances.
For transactions through the Ethereum network, simply interrogate your own address on etherscan. All balances and transactions should be available there. Other non-privacy DLTs will have their own explorers.
(2) Check the transaction details.
Occasionally, you may be provided with a “transaction hash” by the sender. A transaction hash is typically a sequence of letters and numbers that are unique to a specific transaction on the DLT. It is verifiable proof that the transaction has been successful.
On the Ethereum network, you may use a transaction hash to verify that a payment has been made by simply pasting it into the search box on etherscan.
Try searching for the transaction hash below.
0x804f2177729d24eb8a78eae663189deca6458653fc7cc7250c68d6c183dbab60
If done correctly, you should see a page like this.
Verification in such a manner should negate disputes over whether or not a specific transaction has been made on the public ledger.
Sending Cryptocurrencies
Preparation
(1) Note the DLT compatibility of the coin or token that you’re sending.
As with receiving cryptocurrencies, make sure that you know exactly what DLT your coin or token is compatible with.
(2) Find out the receiving address that you’re sending the funds to.
You need a receiving address to send funds to.
(3) Double-check this receiving address.
Check to see if the receiving address is on the same DLT as the coin or token that you’re trying to send.
Check the address itself if possible. If this address is Ethereum-based, you may, once again, do the check on etherscan. Simply paste the receiving address on etherscan and check the transactions and funds that are already there. Make sure that there is nothing suspicious about the receiving address.
(4) Log into your address or wallet.
Unlike when receiving funds, you do need to access your address or wallet before sending cryptocurrencies. For our example of the Ethereum DLT, we will utilise myetherwallet.com and access the contents of the address directly using a private key.
After unlocking an Ethereum address on myetherwallet, you’ll see something like this.
Sending
(1) Prepare the transaction.
Much like the process of putting contents into an envelope, sealing it, and placing a stamp on it if one wishes to send a physical letter by snail mail, there may be a degree of preparation for an intended transaction depending on the DLT and the interface used.
The demonstration here is for a token on the Ethereum blockchain.
In order for your interface to recognise the token that you want to send, you’ll first need to go to the “Token Balances” section.
In this example, the CAS token has already been loaded as you can see at the bottom of the picture below. Unfortunately, these custom token balances don’t usually appear automatically if you’re accessing your address on a new browser for the first time.
As alluded to above, you’ll need to load the token that you wish to send. You may do this by either choosing the relevant token on a list or by adding it to the interface manually.
Click “Show All Tokens”.
This will bring up a list of Ethereum-compliant tokens in alphabetical order. Scroll down until you see the token that you want and press “Click to Load”. In the picture below, I’ve already clicked and loaded the CAS token. My personal balance is now displayed to me.
Occasionally, you won’t see your token in the list above. In this case, you’ll need to click “Add Custom Token”.
Next, fill in the “Token Contract Address”, “Token Symbol” and “Decimals”. These are the various identifiers for your Ethereum-based token on the Ethereum blockchain. If you don’t know what these are for your token, you can find out by going back to the official information issued by the token’s managing organisation or by simply asking an official representative of the organisation directly. The identifiers shown below are for the CAS token.
After you’ve filled these in, click “Save”.
Now that you’ve loaded your tokens on the interface, you can start populating the information necessary to generate the transaction that you wish to send.
First, paste the receiving address into the “To Address” box.
Next, click the grey drop-down list to the right of the “Amount to Send” box and select the token that you wish to send. Ethereum is there by default since it is the native coin of this network. If you wish to send Ethereum, simply select Ethereum at this stage. If you can’t see the custom token that you wish to send in this drop-down list, then you may not have loaded it correctly. Go back and repeat the steps above.
Once the cryptocurrency is selected, input the amount of that cryptocurrency that you wish to send into the “Amount to Send” box.
Gas is what drives every transaction on the Ethereum network (think of it like fuel money for a car, but calculated and paid for in Ethereum instead of fiat). The more you pay, the faster your transaction goes through. Do note, however, that transaction speed also varies depending on how busy the network is at a given time.
Two parameters are used to determine how much you’re agreeing to pay for your transaction — “Gas Price” and “Gas Limit”. “Gas Price” is the amount of Ethereum that you’re willing to pay per unit of gas and is the main determinant of speed. “Gas Limit” is the number of units of gas that you’re willing to expend. Therefore, the final maximum transaction fee equates to “Gas Price” multiplied by “Gas Limit”.
Alter the “Gas Price” by toggling the slider in the drop-down box on the top right of the page. The recommended price is usually much higher than what is necessary, and I personally go for about 6 Gwei for less important transactions and 11 Gwei for more important transactions.
Gwei is a denomination of Ethereum. 1 Ethereum = 1000,000,000 Gwei.
Input the “Gas Limit” if you wish, although this box should be automatically filled in with a recommended “Gas Limit” after you’ve populated all the other values. I usually find it best to go with this default recommendation.
You also have the option of choosing the network through which you wish to send the transaction by clicking on the grey drop-down box next to “Gas Price” at the top right of the screen. However, it is rarely necessary to alter this.
Lastly, click “Generate Transaction”.
You should now see a proposed “Raw Transaction” and “Signed Transaction” generated.
The “Send Transaction” button should also now appear at the bottom.
(2) Send the transaction to the network.
Click “Send Transaction”.
A pop-up box should appear asking for one final confirmation as shown below. Check all the details carefully.
Once you’re sure, click the big blue “Yes, I am sure! Make transaction.” button.
After you’ve done this, the pop-up box will disappear and a new green pop-up box will appear at the bottom of the page. This does not mean that the transaction has been successfully sent yet.
Save your transaction hash if you can. You may also provide this transaction hash to your intended recipient.
Verifying the transaction
(1) Check the receiving address.
Transactions usually take a while to get through, so it’s advisable to give it a few minutes at least before checking to see if it’s been a success. Sometimes, if the network is particularly busy and you’ve set a low “Gas Price”, transactions may even take a good few hours.
Once you’re ready to verify the transaction, always check the receiving address first. If the receiving address has received the tokens that you’ve sent, then that’s all that matters.
As with usual address interrogation via etherscan, search for the recipient’s address on the DLT ledger. It should appear as shown.
Cast your eyes to overview.
If you’ve sent Ethereum, you should already be able to see the current Ethereum balance. If you’ve sent a token, then look at “Token Balance” and click the grey drop-down list to view the various token balances present.
Since you’ve interrogated the receiving address prior to sending your transaction, a new increase in the recipient’s token count matching the amount that you’ve sent would very likely mean that your transaction has been successful at first glance.
To further verify this, the transactions are also listed on the page.
The “Transactions” tab displays Ethereum transactions only.
The “ERC20 Token Txns” tab displays Ethereum-based token transactions only. As can be seen in the image above, the details of the transaction of the Cashaa tokens in our example is clearly recorded.
(2) Check the transaction details.
Another way to confirm the transaction details is by checking the transaction itself. This can be done by clicking the links in the green pop-up box that you should have seen right after sending the transaction.
Click “Verify Transaction” for a direct link to the status of the transaction on etherscan.
This exact same page is also accessible if you manually paste the transaction hash into the search box on etherscan.
You may also click “Check TX Status” to confirm the status of a transaction.
Once you’re taken to the next page, you’ll have to click on the blue “Check TX Status” button again. Your transaction details should have been automatically populated in the box above this button.
If successful, you’ll see various details of the transaction as shown below.
Congratulations! You’ve successfully transferred value through the Ethereum network!
At this stage, it is advisable to hold on to your transaction hash as proof that you’ve made the transaction. However, even if you lose your transaction hash or indeed never saved it to begin with, you can always find it again by interrogating the receiving address on etherscan and going through the incoming transactions there.
Again, there should be absolutely no dispute over whether or not a specific transaction has been made given the availability of verification.
Additional Considerations
The demonstration above involved using private keys to access the contents of an Ethereum address directly. I feel obliged to state at this point that this is not a secure way of repeatedly accessing your wallet. Hardware wallets are far more secure. If you wish to continue utilising private keys, then make sure you’re very careful about where you paste them. Don’t get phished!
On the topic of hardware wallets, there are extra verification steps needed when sending funds from hardware wallets even if using myetherwallet as an interface. Instructions may vary from wallet to wallet and it’s best to consult the manufacturer directly if in doubt.
Once a transaction is sent and successful, it is irreversible. Ample checks are therefore absolutely necessary before committing to a transaction.
DLT explorers should be free to use — so use them to do your checks! Exploit them regularly if need be. Keep checking addresses and transaction hashes as much as you need to.
When using a new DLT’s public ledger, make sure you start by transacting small amounts first in order to get used to that DLT’s eccentricities. The same applies when faced with new wallets and interfaces.
As you gain experience in transacting on DLT ledgers, you may find yourself starting to skip some of the steps above. You may even find that some of the steps do not apply to the DLT or interface that you’re dealing with. Skipping steps and taking shortcuts aren’t necessarily bad things as they imply a natural progression in competence and confidence on your part. However, always keep the first point that I’ve made in this section at the back of your mind.
Transactions that have been successfully processed cannot be reversed!
Good luck, stay safe, and have fun!
