Today it’s getting more and more common with casinos that are accepting various types of cryptocurrencies. But how do deposits and withdrawals work? What are blockchain transactions, and how long does it take?
What is a blockchain?
A blockchain is a way of recording and securely storing information.
It’s often compared to a digital ledger that stores every transaction made and distributes it across the entire network. Every block in the chain contains a certain number of transactions. Every time a new transaction is made, it’s recorded and added to every ledger in the network.
Transactions are signed with an immutable cryptographic signature called a hash. If a change is made to one of the blocks in the chain, it would instantly reflect on every block across the chain.
This makes the blockchain secure and safe from hackers.
As new blocks are added, the blockchain grows larger. And the bigger the blockchain, the more secure it is.
How does the transacion work?
Cryptographic keys are used to identify a user and provide access to the wallet associated with that specific key. Every user has a private and a public key.
When users have agreed on a transaction, it needs to get authorised. In most cases, this is done when a majority of the computers in the network recognise the transaction as valid.
- Proof of Work
The computers in the network need to solve complex mathematical problems (mining) to add a block to the chain. Upon solving a problem, miners get rewarded, and a block is added.
When a computer or a network of computers solves complex problems, blocks and transactions are added to the blockchain. This process is called “mining”. As the network grows, the problems that need to be solved get more complicated.
A complete transaction on the blockchain requires all the above steps. To make it easier to understand, we take it step by step what the end user does and what it means in a technical matter.
- When Person A decides to send cryptocurrency to Person B, the first thing Person A needs to do is acquire the wallet address of Person B and make sure that the wallet address matches the type of coin sent. Sending, for example, Bitcoin to an Ethereum address will result in lost funds.
- Person A then uses their wallet and fills in Person B’s address and the amount they want to send. The wallet will then ask Person A to sign the transaction (Authentication). Different wallets may use different ways to ask for your signature, such as passwords or fingerprints.
- The details about the transaction are then broadcasted to the memory pool of the network (blockchain).
- Miners will accept the transaction and group it together with other transactions, creating a new block (Mining). Once this new block has been assigned a hash value and mapped into the blockchain, the transaction is public.
- Lastly, the transaction needs to be confirmed. This is done by adding new blocks to the blockchain after the one that contains the transaction we want to confirm. Usually, 1-5 confirmations are needed.
How long does all this take?
Steps one through three above is made instantly. Step four depends on the fee (known as gas) miners require to accept the transaction. Most wallets regulate the fee automatically and set it to a price that miners will accept within a few minutes, while some wallets have an advanced option where you can control the fee yourself (do not change this unless you know what you are doing).
The time it takes to confirm the transaction depends on which blockchain is used. Here is how long it takes to mine a block on the most popular blockchains.
Proof Of Work (PoW) blockchains
Bitcoin – A new block is mined approximately every 10 minutes.
Ethereum – A new block is mined approximately every 10-19 seconds.
Proof of Stake (PoS) blockchains
Binance Smart Chain – A new block is mined approximately every 3 seconds.
Solana – A new block is mined approximately every 1-5 seconds.
A complete transaction, including the confirmations needed, can take from a few seconds up to 30 minutes, depending on the coin you are sending.
You can find more information about blockchains in this article: What is a blockchain?
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