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 financial institutions, such as Visa or Mastercard, they maintain their own transactions.

We also see the same thing in real estate. A transaction here included the selling of a property to another. In this industry, this involved a closing whereby all the financial arrangements are put in place and the deed transferred.

The key in a financial transaction is that some kind of payment is made.

  • Within the retail sector, a buyer much pay for the goods or service, either in cash or with a credit card.
  • In financial markets, payments are made out of brokerage accounts immediately at the time of the transaction even though settlement can take a couple days.
  • As mentioned, a check is issued during a real estate closing, completely the transaction.

Within social media, a transaction can come in the form of a post, comment, vote, or some other activity. With platforms like Twitter, we see the number of transactions done daily enter the hundreds of millions.

Blocktivity is a site that tallies up the number of transactions made on different blockchains. It does this by parsing the different block explorers correlated to each network.



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