LeoGlossary: Transaction

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A completed agreement between two parties to exchange goods, services, or financial products.

Within cryptocurrency, this is an exchange that takes place on a blockchain. Each transaction is recorded using the distributed ledger technology. The transactions are decentralized meaning that no central bank or other banking entity is involved in the process which is the case with fiat currency.

Individuals are able to send cryptocurrency directly from one wallet to another using this peer-to-peer (P2P) technology. This is done using the private key that each wallet has. Each is encrypted before being broadcast to the distributed ledger.

All transactions are contained in blocks. These are agreed upon via consensus, regardless of what mechanism is used (Proof-of-Work, Proof-of-Stake, or Delegated Proof-of-Stake).

On a public blockchain, all transactions can be viewed using a block explorer.

In the monetary system, the banks are the ones responsible for keeping the ledger of financial transactions. Within private institutions, such as Visa or Mastercard, they maintain their own transactions.


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