Track a Transaction on the Blockchain
Navigating the crypto rabbit hole
If you’ve ever exchanged cryptocurrency before, then you may be wondering what really happens to the original coins you once owned. Afterall, you know that someone somewhere is ending up with your coins — but how does blockchain technology maintain the validity of every single transaction? What exactly is it that makes this a “trustless” network and more importantly how can someone track their own transaction? Let’s take a closer look at blockchain transactions to fully understand how transactions take place.
In this article
Terminology
Before you can dive into the intricacies of how to follow a transaction on the blockchain, it would help to familiarize yourself with key terms used in describing the process. All transactions are recorded on the blockchain network and rely on user verification to be fully authenticated. The transactions executed during a given period of time are recorded into files called blocks. Blocks form the foundation of many cryptocurrency networks, as each new block is linked to the previous block of transactions which form the blockchain network.
Your Bitcoin — or whichever cryptocurrency you are trading — is stored in one of a few different kinds of wallets. However, your wallet doesn’t actually store your cryptocurrency, but rather its public key. The public key address for your cryptocurrency consists of 34 letters and numbers while also having its own corresponding private key, which consists of 64 numbers and letters. Both keys are related to one another but cannot be deciphered simply by knowing one of them.
A transaction is a transfer of cryptocurrency value that is broadcasted to the entire network and collected in blocks, as previously mentioned. The recipient of the transaction is represented by the address, which is a string of 26 to 35 letters and numbers. Once verified using the private (secret) key, these transactions are then recorded on the network ledger — a database where information regarding each transaction is publicly available. The blocks of transaction information make up the blockchain, with each block’s height representing the number of blocks preceding it.
Each block contains a hash of the previous block as part of its data. A block hash is a function that converts an input of letters and numbers into an encrypted output of a fixed length. Each hash is created using an algorithm called a hash function, which results in the same output each time. Thus, if even a single piece of information is modified, you would end with a completely different output (hash). One of the most utilized functions is the SHA — 256 hash function, responsible for generating bitcoin addresses as well as Bitcoin mining. A TxHash (transaction hash) is known as the transaction ID and allows you to track your transaction. Once you find your TxHash under your transaction details, just copy and paste it into the search bar on Etherscan.io and you’ll find all the transaction details.
Ledger
When it all comes to fruition, successfully transacting on the blockchain network results in a public ledger that is available for everyone, thus removing the need for a central authority to serve as a middleman. What makes blockchain technology so revolutionary as a ledger is its secure digital identity, created by utilizing the cryptographic keys (private and public) to verify identity in real time. Together, the public and private keys make up the digital signature of a transaction which allows it to be recorded onto the ledger in real time. So what about loopholes and fraudulent activity?
Well, it turns out that the blockchain network has that covered. You see, the blockchain network as a ledger allows for full accessibility for everyone, thus minimizing and essentially eradicating any form of theft. To better understand why, let’s look at the famous “if a tree falls and nobody is there to see it” analogy to fully appreciate how important the distributed network is.
So if a tree falls and nobody is there to hear it, does it make a sound? Well, what if we had a bunch of cameras set up in the forest before it falls? If that was the case, I’m sure we’d all be fairly certain that the tree fell and did indeed make a sound. Similarly, validators on the blockchain network use mathematical formulas to reach a consensus, much like the cameras in the analogy, that they witnessed the transaction take place at that exact time. As such, the network capitalizes on the use of both cryptographic keys and a public ledger to validate, verify, and record transactions in a way that we’ve never seen before.
Summary: Blockchain’s true potential lies in its ability to utilize both public and private keys to create a fully digital signature, allowing the network to efficiently record each transaction in real time on a database that is accessible to everyone.
Bitcoin & Ethereum Viewers
So where do you go to actually find and track these transactions? Well, there’s actually a variety of resources available to use. Want to check out all the details surrounding Bitcoin and its global transactions including your own? Check out any of these websites which will provide you with the best tools to do so.
Not impressed or still can’t find what you need? Don’t worry, here are some resources that you can use to track your own transactions on other blockchain networks.
Just locate your TxHash and input it into one of these websites to see all the transaction details. Of course, there isn’t one website that is better than the others, so personal preference is definitely still in play.
Summary: There are several websites available to track the transaction details of your own cryptocurrency transaction. Just make sure you have your TxHash and you’ll be able to search any of these resources for your own details.
Start to Finish
Now that you’ve familiarized yourself with the jargon and resources involved, let’s dive into how a cryptocurrency transaction actually takes place from start to finish. Within the blockchain network, there are three components which make up the main “players” responsible for everything: users, nodes, and miners.
It all starts with the cryptocurrency user, who could be anyone that uses a wallet to store their cryptocurrency. Of course, we know that these wallets just hold the public addresses of your assets and not actual cryptocurrency. Anyone with a wallet can start a transaction, but what happens when your transaction is pending? That’s where nodes come in.
Nodes are simply computers using a specific software to connect with other nodes in the network. These are used to validate and sometimes mine coins like Bitcoin, representing the first step towards verifying a transaction. Once a node receives a transaction, it essentially downloads the entire edger history and verifies that the transaction is valid. Once this takes place, that node sends this to all other nodes across the world — acting like the “cameras” in the aforementioned analogy — to fully validate the transaction. Finally, the transaction order is now pending and await the miner to do its job.
Miners can also be anyone with suitable hardware and internet access, playing a pivotal role in the transaction process. In fact, most people with nodes are also miners, as anyone who simply runs a node by itself does so solely to protect the integrity of the blockchain. Pending transactions are sent to miners, who have the ability to choose and verify one of them. Once a miner solves the corresponding hash puzzle, all other miners in the network are notified and the resulting block is sent back to the nodes.
Blockchain’s ability to act as a decentralized ledger means that every single node is working with the resulting block, thus resulting in a “trustless” network. Once the block is approved and saved by the node, it’s attached to the previous block — which is also attached to its previous block — creating a chain of blocks… hence blockchain! Remember that once a block is saved into the chain, nothing can be modified in the existing database of blocks. Otherwise, the entire integrity of the blockchain is compromised and there is no longer full validity in the ledger.
Summary: From start to finish, a transaction on the blockchain is handled by three roles: the user, miner, and node. Once a user starts a transaction, it’s verified by all nodes and is sent in a pool of pending transactions to miners. From there, miners solve a hash puzzle and send the resulting block of transactions along with the hash solution back to the nodes, where the block is approved and saved into the continuously growing chain of blocks…blockchain!
Conclusion
Most cryptocurrency enthusiasts won’t be able to tell you how a transaction on the blockchain network truly occurs, despite having owned or even traded these coins. All that most people understand is that the blockchain network takes care of any issue you may have regarding the verification process — but what about the users, nodes, and miners involved in the process.
Understanding their roles in the transaction process is extremely valuable for anyone who wants to be knowledgeable about their own transactions. Instead of giving up on the elusive rabbit chase, use what you’ve learned to follow it from start to finish.
It’s all there… somewhere…
Can you track your tokens from origin to destination?
Let us know how you do it!
