Cryptocurrency transactions are exchanges of cryptocurrencies between two parties, made over a blockchain. Since the blockchain is a public and decentralized ledger, each crypto transaction is performed directly from the sender’s wallet to the recipient’s wallet, without the aid of any (central or intermediary) bank.
This means that you, as the sender, are solely responsible for the validity of the payment details and the successful settlement of the transaction. It is extremely important to ensure that the payment details are correct, because transactions signed on the blockchain are immutable. This means that once the transaction is processed, it cannot be reverted or undone.
Example of a crypto transaction
In this example we have two parties, Alice and Mark. Alice wants to send 1 BTC to Mark, so what Alice needs is Mark’s wallet address.
Once Alice has Mark’s wallet address, she can open her own wallet and enter Mark’s wallet address, and allow her private key to sign the transaction. At this point, the BTC transaction from Alice’s wallet is sent to the next open block of the Bitcoin blockchain. The validators (miners for Bitcoin) will check Alice’s balance to make sure she can afford to transfer the requested amounted, and if everything is good, add the transaction to the block and complete the transaction. By doing this, the validators have officially declared that Alice has sent 1 BTC to Mark’s wallet address.
From this moment on, the transaction will be stored on the Bitcoin blockchain indefinitely, with all the details to confirm that this transaction happened:
- transaction amount
- sender’s wallet address
- recipient’s wallet address
- transaction ID
- block ID
- processing fee
Considering this it becomes more clear why a completed transaction cannot be reversed. If Alice has made a mistake, in the amount for example, she can only hope that Mark will return the funds to her. However, if Alice has entered a wrong or non-existent wallet address instead of Mark’s, her funds will be lost and she’ll be unable to recover her funds.
Crypto transactions and SwissBorg
Cryptocurrency transactions are quite simple when the two involved parties are private entities, like two people for example.
However, when one of the parties is a business offering financial services, the structure can be more complex due to efficiency and security.
A business can deal with thousands of crypto transactions each day, which means this business needs to be fast while avoiding mistakes and safeguarding the funds at the same time. For this reason many businesses, including SwissBorg, partner up with third party companies that are specialized in keeping crypto assets safe.
The partner chosen by SwissBorg is Fireblocks, which implements a unique system to keep your crypto funds safe at all time, called MPC.
It is important to mention that, despite the state-of-the-art level of security offered by Fireblocks, we cannot prevent human mistakes. As we’ve seen in the example of Alice and Mark, even when interacting with the SwissBorg ecosystem, it is important to make sure you are sending the funds to the correct wallet address, using the correct details and network.
Since tokens can be supported on different networks and blockchains, it is important that you select the blockchain protocol that supports both the sender’s and receiver’s wallet address, in order for the transaction to be processed successfully.
More information can be found here: Supported tokens and networks
A full list of tokens supported on SwissBorg, and the blockchain protocol that should be used to send or receive them, can be found here: Crypto Assets supported on SwissBorg
Article is closed for comments.