Welcome back friends,
Did you know, if I wanted to send money from my bank account to my friends in Mexico it could take anywhere from 2-4 business days? Not only that, but the bank will want a good reason as to why I’m sending the money. Also, I will most likely be limited to the amount I can send. That is wild given the fact it is my money. Not to mention the outrageous additional fees tacked on by the bank.
One of the most beneficial aspects of owning crypto is the ease and quickness of sending and receiving currency between wallets from anywhere in the world. It allows the users to simply complete transactions in a P2P (peer-to-peer) interaction. It gives them complete control over their funds. I mean, thats why most of us are here anyway right? There are no banks, no 3rd parties, no intermediaries. Only two parties, completing a transaction in minutes.
Below we dive into how to send and receive crypto between wallets as well as how transactions are verified on the blockchain. Please remember to always do your own research. This is in no way financial advice.
Thank you for reading and have a fantastic day!
- BJ
1. Sending/Receiving Cryptocurrency Overview
Before we jump into how to send and receive crypto, it’s important to understand the inner workings of each transaction.
🔐 Public Key, Private Key & Wallet Address 🔐
As we know, a wallet has one public and one private key, which can be roughly compared to your account number and passcode. When we send cryptocurrency, we are essentially transferring it between public wallet addresses on the blockchain (decentralized ledger). The wallet address is a randomly generated string of numbers and letters that represent your wallet on the blockchain. For example, a user can setup multiple addresses in their wallet if they wanted. Different cryptocurrencies can be stored under different addresses but the wallet will only ever have one public and one private key.
⛓ Transactions on the Blockchain ⛓
In order to receive cryptocurrency, the user must share their public address with the sender. When a user decides to send crypto, they are essentially creating an encrypted transaction on the relevant blockchain network. The transaction is then added to the current queue, along with other users transactions, which is eventually added to the public ledger. The queued transactions are then added in bulk by miners to the public ledger representing a “block” or “chain” of transactions. Before the blocks can be added to the ledger, they must be sent to and validated by the “nodes” across the entire network. Nodes are computers that record a copy of the ledger for the whole network. There are thousands of nodes across the world. These nodes will verify or reject the blocks provided by the miners in seconds. This process ensures every transaction is secure.
📝 NOTE: Each transaction is considered “pseudo-anonymous”, meaning each one flows back to a distinctive set of keys.
⛏ Miners ⛏
Miners are people who run hardware and software to verify transactions through mathematical puzzles on specific blockchains. They are generally rewarded in the blockchain’s native currency for adding completed transaction blocks to the ledger. Once a transaction is verified, it cannot be undone unless supported by at least 51% of the network. The more miners validating transactions, the more secure the network.
📝 NOTE: a wallet can only be accessed with both the public and private keys. It’s important to never give away your private key.
2. Sending & Receiving Cryptocurrency from a Hosted Wallet (Ex. Coinbase, Gemini or Kraken)
⬅️ SENDING ➡️
From the exchange’s homepage, select TRANSFER or PAY. Each exchange may have a slightly different process.
Next select SEND or WITHDRAW.
Enter the cryptocurrency and amount you would like to send.
Provide the crypto address to the sender.
Review and confirm the transaction is complete.
📝 NOTE: Once a transaction between wallet addresses is complete, it cannot be reversed.
➡️ RECEIVING ⬅️
From the exchange’s homepage, select TRANSFER or PAY. Each exchange may have a slightly different process.
Next select RECEIVE or DEPOSIT.
Enter the cryptocurrency token that is being received.
Following, a QR code and wallet address will be generated for the chosen currency.
Copy and send the QR code and/or the wallet address to the sender.
Review and confirm the transaction is complete.
3. Sending & Receiving Cryptocurrency from a Non-Custodial Wallet (Ex. MetaMask or Dharma Wallets)
⬅️ SENDING ➡️
Start by opening up your crypto wallet in the browser extension or app.
Locate the wallet address.
In MetaMask, for example, open the app and click on ACCOUNT DETAILS for the wallet address.
the wallet address will be a string of numbers and letters such as:
“0xf3c67C4A29d0sBd6Ccc536187aAD87D51ea1066v”
Next, choose the token you would like to sell or send.
Provide the wallet address to the other party completing the transaction.
Select the amount you would like to send.
OPTIONAL: the gas price and gas fee can be adjusted to preference.
Review the transaction details and click CONFIRM
Visit the ACTIVITY tab to confirm the transaction is either being processed or complete.
⛽️ GAS FEE: a required fee charged to successfully complete transactions on the Ethereum blockchain. The fee is decided by the Ethereum network. The more transactions competing for block space, the higher the gas fees.
➡️ RECEIVING ⬅️
Start by opening up your crypto wallet in the browser extension or app.
Locate the wallet address.
Provide your wallet address to the other party completing the transaction.
Once the transaction is confirmed, it may take a few minutes to receive depending on network activity.
In order to view the received cryptocurrency, depending on the type of token, the token profile may need to be added to your wallet first. (Simple tutorial found HERE)
📚 Additional Sources To Read/Watch:
Coin Telegraph: How Does Blockchain Work
Coin Desk: How Ethereum Mining Works
Coinbase: How to Send & Receive Cryptocurrency
MetaMask: Sending Tokens From MetaMask
🌅 ON THE HORIZON: Next week we take a look at a few opportunities in the DeFi space including borrowing, lending and exchanging tokens. Thank you for reading and please feel free to provide any feedback, comments or concerns!