How Crypto Transactions Work: From MemPool to Confirmation

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3 Dec, 2025

 Cryptocurrency transactions may look fast and effortless, but the actual process behind them is a complex dance of cryptography, validation, network communication, and block creation.

How Crypto Transactions Work: From MemPool to Confirmation

When you press “Send,” the transaction travels through different stages before finally being confirmed on the blockchain.

This guide breaks down each step clearly—so you fully understand how crypto transfers actually work.

1. What Is a Crypto Transaction?

A crypto transaction is the digital process of transferring cryptocurrency from one wallet address to another on a blockchain network.

It includes:

  • Sender address

  • Receiver address

  • Amount

  • Digital signature

  • Gas fee / network fee

  • Other optional data (like smart contract interactions)

But before the transfer becomes final, the network must verify, validate, and record it permanently on the blockchain.

Let’s break down the process step by step.

2. Step 1 — Creating the Transaction

When you send crypto:

  • Your wallet prepares the transaction details

  • It uses your private key to create a digital signature

  • This proves the transaction was created by you and not someone else

But the private key is never shared.
Instead, the digital signature acts as a cryptographic proof.

✔ Why the signature is important

  • Prevents unauthorized transfers

  • Ensures the sender cannot deny the transaction later

  • Confirms ownership of the funds

Once your signature is attached, your wallet broadcasts the transaction to the network.

3. Step 2 — Broadcasting the Transaction

The wallet sends your transaction to:

  • Nodes (computers running blockchain software)

  • Relayers

  • Peers in the decentralized network

Every node checks basic rules:

  • Is the signature valid?

  • Does the sender have enough balance?

  • Does the transaction follow the network format?

  • Is the fee high enough?

If everything looks good, the transaction moves to the next stage:

4. Step 3 — Entering the MemPool (Memory Pool)

The MemPool is like a waiting room or queue where unconfirmed transactions sit until included in a block.

Every node has its own MemPool, and they share transactions with each other.

✔ Why MemPool exists

  • The network receives more transactions than can be processed instantly

  • Block size and speed are limited

  • Miners/validators must choose which transactions to include

✔ What determines priority?

Usually:

  1. Higher fees → faster processing

  2. Network congestion

  3. Complexity of the transaction

This is why during busy times, gas fees rise and transactions slow down.

5. Step 4 — Miners/Validators Select Transactions

This step differs depending on whether the blockchain uses:

PoW (Proof of Work) — Miners

  • Bitcoin

  • Many older blockchains

PoS (Proof of Stake) — Validators

  • Ethereum

  • Solana

  • Cardano

  • Polygon

But the core idea is the same:
They gather transactions from the MemPool and prepare them to be added to a block.

✔ How they choose transactions

Miners/validators maximize their profit, so they usually pick:

  • Higher-fee transactions first

  • Valid and non-conflicting transactions

  • Transactions that fit within the block size limit

6. Step 5 — Adding Transactions to the Block

The miner/validator creates a block containing:

  • A list of valid transactions

  • A reference to the previous block

  • A timestamp

  • A block hash (unique ID)

  • Other metadata

This block is then proposed to the network.

For Proof of Work

Miners must solve a cryptographic puzzle to validate the block.

For Proof of Stake

Validators sign and approve the block.

Once approved, the block is broadcast to the entire network.

7. Step 6 — Block Confirmation

When your transaction is included in a block, you receive the first confirmation.

But many blockchains require multiple confirmations for full security.

Typical confirmation requirements:

  • Bitcoin: 3–6 confirmations

  • Ethereum: 1–2 confirmations

  • BNB Chain: 1 confirmation

  • Solana: near-instant finality

Each new block added on top of your block increases finality.

The more blocks added afterward, the more secure and irreversible your transaction becomes.

8. Why Gas Fees Matter (And Change Constantly)

Gas fees compensate miners/validators for processing your transaction.

Fees increase when:

  • Network is busy

  • Complex smart contracts are used

  • People set high priority fees

  • Bots spam the network

Fees decrease when:

  • Fewer users are active

  • The network has upgraded scaling

  • Layer 2 technologies are used

Gas fees determine your transaction's priority in the MemPool.

9. What Causes Delays or Stuck Transactions?

A few common reasons:

1. Low gas fee

If your fee is too low, miners ignore your transaction.

2. Network congestion

Too many users → slow processing.

3. Large transaction size

Smart contract interactions require more computation.

4. Conflicting nonces

Each transaction uses a unique nonce, and if out of order, later transactions get stuck.

10. MemPool Problems: Pending, Dropped, or Replaced Transactions

Pending

Waiting for a miner/validator.

Dropped

Nodes remove low-fee transactions after waiting too long.

Replaced (Replace-by-Fee)

You can send the same transaction with higher fees to speed it up.

11. How Blockchain Explorers Track Your Transaction

Tools like:

  • Etherscan

  • BscScan

  • Blockchain.com

  • SolScan

They show:

  • Status (pending / confirmed)

  • Block number

  • Gas used

  • Fee paid

  • Sender & receiver

  • Nonce

  • Time taken

This makes blockchain transparent and trustworthy.

12. Finality — When Is a Transaction Truly Irreversible?

A transaction becomes irreversible once:

  • Enough blocks are added afterward

  • Consensus rules finalize the block

  • No reorganizations are likely

Bitcoin finality is slower due to PoW.
Ethereum and newer blockchains achieve faster finality.

Conclusion

Crypto transactions follow a highly secure, structured process:

  1. User creates a transaction

  2. Wallet signs it

  3. It is broadcast to the network

  4. It waits in the MemPool

  5. Miners/validators select it

  6. It gets added to a block

  7. Confirmations secure it

  8. Blockchain achieves finality

Understanding this flow helps you:

  • Send crypto safely

  • Avoid stuck transactions

  • Understand gas fees

  • Read blockchain explorers

  • Learn real blockchain mechanics

This is the foundation of how all blockchains function—making it one of the most important concepts in crypto.

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