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LESSONS

Transactions, addresses and confirmations

To get paid you share an address; to pay you sign a transaction. It waits in the mempool, a miner includes it, and each block after that is a confirmation.

6 MIN READ
A payment flows from address sharing to signing, the mempool, a block and confirmations.
LEVEL · Beginner
IN THIS LESSON · 5 OF 8
BY THE END YOU WILL BE ABLE TO ANSWER
  • What can an address do?
  • What is a confirmation?
  • How are fees calculated?

Then prove it: a 3-question quiz. The lesson marks itself complete at 100%.

Addresses

To receive bitcoin you give the sender an address: a string such as bc1q... (SegWit) or bc1p... (Taproot), usually shown as a QR code. Your wallet makes a new one for every payment, which is better for privacy. An address is derived from your keys; it can receive but it cannot spend.

Transactions

To pay, your wallet builds a transaction: it takes some of your coins as inputs, creates outputs (the amount to the recipient and change back to you) and signs it with your private key. The signature proves you authorised exactly this transaction and nothing else.

The mempool and the fee

The signed transaction is broadcast to nodes, which check it and hold it in their mempool until a miner includes it in a block. You attach a fee, priced per byte of transaction data, not per dollar sent. When blocks are busy, higher fees go first.

Confirmations

Once your transaction is in a block it has one confirmation. Each block built on top adds one more. One confirmation is fine for coffee; six is the common standard for large amounts. After that, reversal is practically impossible.

Irreversible

There is no chargeback. Send to the wrong address and it is gone. Check the first and last characters, send a small test first for large amounts, and never type an address by hand.

How the Bitcoin network works · RiverWatch on YouTube ↗
CHECK YOURSELF
1/3 What can an address do?
2/3 What is a confirmation?
3/3 How are fees calculated?
pick an answer for each question
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