How is a Transaction Verified on a Cryptocurrency Network

Krutika Adani

Initiating the Transaction

  • When a user sends crypto, the transaction is broadcasted to the network.

  • It contains sender & receiver addresses, amount, and a digital signature for security.

Transaction Validation

  • Nodes (computers on the network) verify if the sender has sufficient balance.

  • Cryptographic algorithms ensure authenticity and prevent fraud.

Consensus Mechanism

  • Transactions are confirmed through Proof-of-Work (PoW) or Proof-of-Stake (PoS).

  • Miners/validators validate and bundle transactions into a block.

Block Addition & Finalization

  • The verified block is added to the blockchain permanently.

  • The transaction becomes immutable, ensuring security and transparency.

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