How a Bitcoin transaction works — a practical example
Let's say Alice wants to send 0.001 BTC to her friend Bob.
Bob shares his Bitcoin address
Bob opens his wallet and finds his receiving address. He copies it and sends it to Alice via email or QR code.
Alice sends Bitcoin
Alice opens her wallet, clicks "Send," pastes Bob's address, enters the amount, reviews the details, and clicks "Confirm."
The network verifies the transaction
Thousands of computers around the world check that Alice actually owns the funds. This happens automatically in the background.
Bob receives the funds
Within a few minutes, Bob's wallet shows: +0.001 BTC received. The transaction gets "confirmed" by the blockchain.
Key concepts
Public address
Like an email address — safe to share with anyone who wants to send you money.
Private key / seed phrase
Like your ATM PIN, but more critical. Never share this with anyone. It gives complete access to your funds.
Network fee
A small amount paid to miners who process your transaction.
Confirmations
Each block added after your transaction is a "confirmation." 6 confirmations is standard for high-value transactions.
Common mistakes to avoid
- Sending to the wrong address. Crypto transactions are irreversible. Always double-check the full address before confirming.
- Sending the wrong type of coin. Sending Bitcoin to an Ethereum address may result in permanent loss. Make sure the coin and network match.
- Sharing your seed phrase. No legitimate wallet, exchange or support team will ever ask for your seed phrase.
Start small. Make your first transaction with a tiny amount to get comfortable with the process.
Test yourself
Select your answer for each question, then see if you're right.
Q1. What information do you need from someone to send them cryptocurrency?
A public address is like an email address -- safe to share and all that's needed to receive funds. Never ask for private keys or seed phrases.
Q2. If you accidentally send Bitcoin to the wrong address, what can you do?
Blockchain transactions cannot be undone. There is no intermediary to reverse a payment. Always double-check the full address before confirming.
Q3. What is a 'network fee' in a crypto transaction?
Network fees go to the miners or validators who process and verify your transaction. They vary depending on how busy the network is.
Q4. What does it mean when a Bitcoin transaction has '6 confirmations'?
Each new block added after your transaction counts as one confirmation. Six confirmations is the standard for high-value transactions to be considered final.