Picture this. It’s your first time purchasing Bitcoin and you’re eagerly waiting for it to pop-up in your digital wallet. Five minutes pass, then 30… and then an hour. You start to panic and check if you’ve done everything correctly and you have. So what’s taking so long? Did you do something wrong? Don’t worry! We’ve all been there. In all honesty, there is no fixed time frame that takes to buy a bitcoin, bitcoin transactions can take up to a couple hours to a day before it shows up in your digital wallet depending upon the method of transaction.
If you use peer to peer exchange platforms like Paxful or Coincorner to name a few, you may get your bitcoins almost instantly as these exchanges handle transactions internally. But if you use more conventional ways like bank transfer, it will take any time between 1-3 days as there is a lengthy verification process in between. Barring the verification process, there are also other technical factors that impact the transaction speed.
The following factors contribute to the transaction time of a bitcoin
There are thousands of bitcoin transactions happening in a day and only a limited number of miners to confirm these daily transactions. The speed of how long they take to convert it also depends on their mining rigs’ hash power which in turn affects the overall time it takes for a bitcoin transfer to be confirmed.
To give you a little overview of how bitcoin mining works here’s an example: Imagine a spelling bee where different people all over the world compete to get the right answer. They try different combinations of letters until one person gets the right combination of letters that would read as the word they are trying to spell. That person then gets 1 point for getting it right first. Bitcoin mining works in a similar way wherein miners use their computers to solve difficult equations in order to solve a bitcoin block. The first miner to do so confirms the transaction and is awarded bitcoin as a reward.
A Peek Into the World of Miners
Through the years, the mining community has grown dramatically and in return, the Bitcoin system increased its difficulty so as not to let miners solve transactions too quickly. In light of this, bitcoin miners often work in mining pools.
Mining pools are a group of bitcoin miners working together to solve one block. Once a block is solved, the reward will be split between all the members of that mining pool. This method has a higher chance of solving a block rather than miners who want to work alone but get to keep the reward all to themselves.
Mining pools should not exceed over 51% of the hashing power of the network. If it does, then that entity will have the power to control 50% of a cryptocurrency network’s computing power. A “51% Attack” could allow attackers to reverse transactions, make double-spend transactions, prevent confirmations or even prevent miners from solving blocks. This could corrupt the entire blockchain system. However, this is all theoretical and has never been done before.
Fun Fact: A mining pool called GHash.io nearly hit this percentage back in 2014 and miners were urged to leave the mining pool.
Currently, a new block is created and added to the blockchain every 10 minutes. A transaction is only considered truly confirmed when it is permanently included in the blockchain. It is also worth noting that every block comes with a fee and miners prioritize transactions with higher fees so the speed at which your bitcoin gets confirmed would also depend on this.
As mentioned earlier the blocks with higher fees get prioritized first, so what happens to the ones with lower fees? They remain unconfirmed in what’s called a Mempool. Think of it as a waiting room for your bitcoin. Once confirmed it is recommended to wait for 6 confirmations to be sure it’s successful. As a general rule, the bigger the amount you have transacted, the more confirmations you should wait for.
There are several reliable websites wherein you can check the status of your bitcoin transactions and see how many confirmations it has. Here are the top 3:
1. Blockchain.com – One of the most popular block explorer services. It also provides a digital wallet for your bitcoin, bitcoin cash or ethereum. They also provide Bitcoin data charts, statistics, and market information.
2. OXT – It stands for Open eXploration Tool. OXT provides a set of statistics and interactive visual tools easing the exploration of the blockchain.
3. BTC.com – Other than providing a block explorer it also publishes an Android and iOS wallet, a bitcoin API and a mining pool.
What is a Bitcoin Transaction?
In order to truly understand what causes these delays, it’s important to understand the root of the matter – the transactions themselves. What exactly is a bitcoin transaction? It is the transfer of value from one bitcoin wallet to another. Each wallet contains a public key. This enables the public to know that this is your wallet and how much bitcoin it contains. However, they cannot access this without private keys which is a “secret” code of numbers that allow you to spend your bitcoins. These are very important and need to be kept secure. Often they are kept on computer files or sometimes printed on paper. Private keys are what keep your digital wallets safe and secure.
Bitcoin transactions consist of three main parts:
1. Input – This is the bitcoin address from which the money was sent.
2. Amount – This is how much you are going to send.
3. Output – This is the bitcoin address that the amount will be sent to.
Following this process, when the person receives the bitcoin, their wallet address then becomes the transaction input and the next person’s bitcoin address that they will send it to will be the transaction output.
This method allows people to be able to trace bitcoin transactions all the way back. It also allows us to understand who sent it to whom at any point in time. Thus, why the blockchain is known as a “public ledger”.
How Bitcoins Are Transferred
The process of sending the bitcoins is a form of verification wherein the participants in the blockchain network confirm the validity of the funds. Once this is done the transaction is added and recorded into a block. That block is then attached to the last block in the chain of blocks – which is where the term Blockchain was derived from. Each block is connected in a chronological order of every bitcoin transaction ever done.
To wrap it all up, the Bitcoin network is a legit new generation payment platform that is constantly growing. Yes, there are a couple of things that need improvement such as transaction times. Hopefully, in the future, the system will get past these setbacks. Globally, it is something that everyone is slowly starting to adapt. By the time that we fully do, the pros will outweigh the cons.