Whether it's a 7-figure purchase or simply buying a slice of pizza, crypto lets users make transactions of all sizes without a third-party intermediary. Using blockchain technology, bitcoin and other cryptocurrencies make it possible to send money directly to anyone with an internet connection—no credit card company or bank needed.
How to send and receive bitcoin and other cryptocurrencies
The most common ways to send crypto are through a crypto exchange, traditional investment platform, or third-party wallet. In all cases, the process is relatively similar and is done through the Send function (in some crypto exchanges, it may be labeled Withdraw).
However, be sure to double- and even triple-check each step before proceeding, as making a mistake could mean losing access to your assets forever. Specifically, pay close attention to the following:
- Recipient address: You'll need to enter the wallet address you're sending crypto to. Wallet addresses are typically strings of letters and numbers that can be over 40 characters long. If the address is off by even one character, your assets may be sent to the wrong location, and there's a good chance you won't be able to recover them. Check that the recipient address is correct before clicking Send. Note: Some exchanges allow you to scan a QR code, which helps simplify the process of entering an address.
- Network: If you're using a crypto exchange, you may be prompted to choose a network. Make sure to select the same network as your recipient's wallet. Failure to do so will likely result in losing access to your assets forever. Many exchanges allow you to generate new wallet addresses based on the network, so when in doubt, consider asking your recipient to create a new wallet.
- Amount: Be certain you've entered the right amount to send. Unlike credit card payments, there is no central authority that can refund faulty transactions. If you're on the receiving end of the transaction, your primary task is to make sure the wallet address you've provided to the sender is accurate.
Do I need to pay a transaction fee when sending crypto?
The receiver does not incur any transaction fees, but the sender typically does. Transaction fees are built into the transfer process for bitcoin and other cryptocurrencies to pay miners and stakers for updating the blockchain.
Transaction fees are usually displayed by the platform you're using before you confirm and hit Send. They can vary based on factors including how congested the blockchain network is (i.e., how many people are also trying to make a transaction at the same time) and which cryptocurrency network you're using.
How do bitcoin and other crypto transactions technically work?
First, recall that the amount of crypto each person owns is recorded and updated on the cryptocurrency's blockchain, which is like a giant, public spreadsheet that keeps track of everyone's accounts.
Now let's look at a hypothetical transaction. Suppose Jane wants to send 1 bitcoin to John. When Jane clicks Send, her digital wallet notifies the Bitcoin network she has sent John 1 bitcoin.
This information isn't immediately updated on the blockchain. Instead, it gets held in a waiting room until it's picked up by a bitcoin miner,* who shares it with other bitcoin miners to verify accuracy before adding it to the blockchain. Transactions on the Bitcoin network are typically processed in around 10 minutes. Other cryptocurrencies run on networks that can be much faster, with some averaging near-instant processing times.
One analogy for this process is sending physical mail. When you send someone a letter, it gets pooled along with other letters in a post office, where it then gets picked up and sent to its final destination. The blockchain process follows a similar flow.
How long does it take to send and receive bitcoin and other crypto?
This varies depending on the cryptocurrency. Each cryptocurrency runs on its own network, and transaction speeds vary depending on how the network operates. As mentioned earlier, bitcoin transactions currently average roughly 10 minutes. Ethereum transactions average roughly 12 seconds as of early 2023, while other cryptocurrencies are often processed in speeds ranging from near-instantaneously to hours.
There are also innovations that can help speed up transaction times for slower cryptocurrencies. For example, the Lightning Network enables bitcoin transactions to be processed in under a minute, if not milliseconds. It does this by collecting transaction data on a separate database that periodically ports the data over to the Bitcoin network.
Note that it's possible for certain transactions to take as long as days to process if the network is particularly congested (i.e., too many people are trying to send coins at once).
What to consider when sending and receiving bitcoin and other crypto
Remember that crypto has no customer service team. If you send coins to the wrong address, or enter the wrong amount, there is no way to reverse your transaction. This is true even if you're sending payments through a centralized exchange or platform.
In light of this, senders should make certain they've entered a) the correct wallet address, b) the correct amount, and c) the correct network before confirming the transaction. Receivers should make certain that they've provided the sender with the correct wallet address.
Keeping these factors in mind before sending or accepting crypto may help reduce the chance of losing access to your coins forever.