This Hot Topics discussion will focus on how cryptocurrency transactions are executed on the Blockchain and why a transaction can be found in ‘processing’ mode for an extended period of time.
Firstly, let us start off with a beginner’s detail to note, which is that the entire structure and integrity of the Blockchain are built on transaction confirmation. Each and every single transaction, from purchases and sales to exchanges (applies for DEX tokens only) and transfers, needs to undergo a routine ‘check up’ in order for Miners to deem the transaction plausible and make a record of it on the Blockchain by adding it to a block.
In the majority of cases, transactions on chains are executed speedily, however, some chains may take notably longer. For example, the Bitcoin Blockchain is typically the slowest to execute transactions, due to the confirmation process taking a long time, especially when there is congestion on the network.
Traffic on the Blockchain
Blockchain congestion is very real and very possible, especially for some of the most sought-after cryptocurrencies. Higher volumes of transactions mean that the confirmation process done by Miners is extended, therefore, it takes longer for your transaction to be included in a block. This can be caused by increase in supply and demand on the market due to price changes; important market events taking place; or changes in a cryptocurrency’s availability/liquidity.
In such cases, our Technical department will disable any pending transactions and return the assets to the user’s wallet, whereby the user may try to execute the transaction once more or at a later time.
The role of Miners in this entire process is far more important than you might think. For each transaction that is identified and confirmed on the Blockchain, Miners receive compensation by adding what is known as a Miner’s fee. Miner's fees are determined by how crowded the network is with transactions. When there are lots of transactions waiting to be processed, the fees for getting your transaction through become higher. Miners, who validate these transactions, prioritize those with higher fees because they want to earn more money. In some cases, the fees you pay to miners can be much higher than the actual amount you're transferring in the transaction. If you have executed a transaction that is a significantly lower sum than the roster of other transactions awaiting confirmation at that precise moment, it is likely that Miners will put your transaction on the back burner for a while. This might seem unfair, however, it is simply the way of the Blockchain - hefty funds take priority. Transactions will still be confirmed successfully in these cases, just not instantaneously.
Just like any other technologically advanced system, the Blockchain will see its own network upgrades or forks, such as a hard fork or a software update, during which transaction processing can be temporarily disrupted or slowed down. Our team will likely know of such updates in advance or will execute the appropriate checks during the evaluation of the stuck transaction.
Address validation error
Entering incorrect details when executing a transaction, especially concerning cryptocurrency transfers, can also lead to a stall. A recurring example of this is XRP transfers, which require a Destination Tag. A complete validation of the Tag is more or less impossible and that always leaves room for the user to enter wrong information, which causes the transaction to fail upon being submitted to the Blockchain.
Such cases are always escalated to our Technical department, which will then conduct all necessary evaluations to either execute the transaction manually whenever possible or disable it and return the user’s assets to their Kriptomat account.
During this evaluation is when our Technical department will also conduct a thorough internal investigation, which will shed light on any systematic errors that may have occurred within our own platform. Although considerably uncommon, our team implements round-the-clock monitoring of our systems to prevent and/or resolve any such incidents.
How reliable is the Blockchain?
The Blockchain - theoretically - cannot make an error on its Ledger; the possibilities are minimal because of the countless transaction confirmations that are happening in the background for a single transaction. Delays can occur when nodes are late communicating with each other, however, this is something that our team is fully equipped to handle and requires no worry whatsoever on your behalf!
We hope that this has relieved some of your qualms about delayed transactions and provided you with helpful insight into some of the complexities of Blockchain transactions.
Nevertheless, we are here to assure you that the brunt of the hard work will always fall on us and we are merely an email or live chat away to assist you with any difficulties you might encounter!
We appreciate your feedback and would like to hear what Hot Topics you would like us to explore!
Don’t be shy! Drop us a line at [email protected]. Your question may be the headline of our next Hot Topic. 🚀 🧑🚀