We will discuss the top eight reasons why your crypto transactions could be delayed and how you can prevent these issues.
Cryptocurrencies are often lauded for revolutionising financial transactions with their decentralised and fast-processing nature. Blockchain technology, the foundation of cryptocurrencies, offers transparency, security, and autonomy that traditional banking systems struggle to match. However, despite these advantages, crypto transactions are not always instant. There are multiple reasons that can cause delays, making users anxious, especially when significant sums or crucial transactions are involved.
What is Crypto Transactions
A cryptocurrency transaction is the process of transferring digital currency between two parties using blockchain technology. Cryptocurrencies, such as Bitcoin, Ethereum, and others, are decentralized digital assets that operate on a peer-to-peer network without intermediaries like banks or financial institutions.
Key Concepts in Crypto Transactions
- Blockchain Technology
- Public and Private keys
- Wallets
Blockchain Technology
The blockchain is a decentralized and distributed digital ledger at the core of cryptocurrency transactions. Every transaction that occurs in a cryptocurrency network is recorded in the blockchain.
The ledger is managed by a network of computers, known as nodes, that collectively validate and confirm each transaction through a consensus mechanism. Once confirmed, the transaction becomes part of a “block,” once enough blocks are added, it becomes part of the “chain,” hence the term blockchain.
Public and Private Keys
Each participant in a crypto transaction has a pair of cryptographic keys: a public key and a private key. The public key is like a bank account number; it is used to receive funds and can be shared with anyone.
The private key is akin to a password or PIN, used to sign transactions and authorize funds transfer. Only the person with access to the private key can initiate a transaction, making security-critical in crypto management.
Wallets
Users need a digital wallet to save, send, and receive cryptocurrencies. Crypto wallets can be hardware-based (like USB devices) or software-based (like mobile apps or desktop applications).
Wallets store users’ private keys and interact with the blockchain to track balances and enable transactions. There are different wallets, consisting of custodial wallets (where a third party holds the private keys) and non-custodial wallets (where users have private keys).
How Crypto Transactions Work
The basic flow of a cryptocurrency transaction involves the following steps:
- Initiation
- Broadcasting
- Mining and Validation
- Confirmation
Initiation
The sender inputs the recipient’s public address (the public key) and the amount of cryptocurrency they want to send. The sender then signs the transaction using their private key to confirm they are authorized to make the transfer.
Broadcasting
Once the transaction is signed, it is broadcast to the entire cryptocurrency network. Nodes within the network pick up the transaction and begin validating it. Validation ensures that the sender has enough balance to complete the transaction and that they haven’t tried to double-spend their funds.
Mining and Validation
In proof-of-work blockchains like Bitcoin, miners validate transactions by solving complex mathematical problems and adding the transaction to a block.
In proof-of-stake blockchains like Ethereum 2.0, validators are chosen based on the cryptocurrency they hold and are willing to “stake” as collateral. Once the block is validated, it is added to the blockchain.
Confirmation
After the transaction is included in a block, the network must confirm it. Depending on the cryptocurrency, multiple confirmations may be required to ensure the transaction is irreversible and fully processed.
Once confirmed, the recipient’s wallet reflects the updated balance, completing the transaction.
Benefits of Crypto Transactions
Decentralization
Unlike traditional transactions that rely on centralized financial institutions, crypto transactions are decentralized, meaning a single entity does not control them.
Security
Cryptography ensures that transactions are secure and that funds can only be retrieved by the rightful owner.
Low Fees
Compared to conventional banking or money transfer services, crypto transactions often have lower fees, especially for cross-border transfers.
Speed
Crypto transactions can be completed much faster than traditional banking methods, particularly for international transfers.
Challenges of Crypto Transactions
Volatility
The value of cryptocurrencies can vary wildly, posing risks for users.
Irreversibility
Once a crypto transaction is confirmed, it cannot be undone, which can be problematic if funds are sent to the wrong address.
Regulatory Uncertainty
Cryptocurrency regulations vary by country, leading to legal and compliance challenges for users and businesses.
Reasons why your Crypto Transactions are Delayed
Below are some common reasons why a crypto transaction might be delayed:
Network Congestion
Blockchain networks, particularly Bitcoin and Ethereum, function on a decentralized foundation. It means that transactions are processed by miners (in Proof of Work systems) or validators (in Proof of Stake systems).
In essence, blockchain networks are characterized by their decentralized nature. In situations when a large number of users are attempting to submit transactions at the same time, the network may get congested.
If there is congestion, transactions are arranged in a queue in response to the situation. Miners and validators prioritize transactions according to the fees linked to them.
People ready to pay more outstanding fees are more likely to have their transactions handled sooner, leaving transactions with lower fees waiting to be processed when completed.
Effect: Transactions may take significantly longer to confirm during busy periods, mainly when the markets are turbulent or when an event that has been anticipated (such as a token airdrop) is taking place. The delay might last anywhere from a few minutes to many hours, depending on the severity of congestion.
How to avoid
Use “gas trackers” or network explorers to determine the present load on the network. Consider raising the transaction charge, particularly when the network is experiencing a high traffic volume. Whenever it is practicable, try to schedule your transactions during off-peak hours.
Low Transaction Fees
The transaction costs associated with the blockchain, sometimes called “gas fees” on Ethereum, are an essential system component. Miners or validators process transactions in return for these fees.
There is a direct correlation between the charge you pay and the speed at which your transaction is picked up and completed.
It works because miners and validators may deprioritize your transaction if you specify a lower transaction fee than they would generally recommend.
These nodes often prefer transactions with more outstanding fees since they are motivated to maximize their profits due to the circumstances.
Effect: Transactions with low fees have the potential to linger in the mempool, which is a location where pending transactions are held for a considerable amount of time.
Some systems even let these transactions “timeout,” meaning that the transaction is left unconfirmed and is finally removed from the system.
How to avoid
Do some research on the typical costs that are associated with the network that you are utilizing before beginning a transaction. Make use of fee estimators or wallet services that can automatically recommend the most appropriate cost levels after taking into account the present state of the network. You should only manually establish fees if you have prior expertise working with blockchain
networks.
Problems with the Wallet Service or Exchange
It is important to note that the blockchain is not the sole source of delays. Sometimes, the wallet you use to send the transaction can be responsible for the issue. Wallet services, particularly third-party custodial wallets, may have their internal processing timeframes, which might result in delays.
For the transaction to be broadcast to the network, wallet providers may be required to do so. The amount of time it takes to do so may vary depending on how they operate internally.
Furthermore, the procedure may be considerably more sluggish if the wallet makes use of methods that are not part of the blockchain or if it relays transactions via various networks.
There is a possibility that transactions that are launched using particular wallets will display as pending or will not appear on the blockchain explorer immediately.
This latency may be made worse by the interface of the wallet, which may not accurately show the data that is being shared on the blockchain in real-time.
How to avoid:
Utilize wallets that have a status for having processing times that are pretty short. Choose wallets that do not provide custodial functions and instead communicate directly with the blockchain. Check the support or help area of the wallet to see if there are any reported problems or delays.
Blockchain Forks and Network Upgrades
The maintenance and improvement of blockchain networks require the use of blockchain forks and network upgrades, both of which are vital. However, these processes can also result in delays.
When the protocol of a blockchain is modified, a fork takes place, which results in the creation of two parallel copies of the chain. Likewise, network upgrades bring about the introduction of new functions, which may momentarily interrupt the routine operations of the network.
During a fork or network upgrade, miners or validators may temporarily cease transaction processing in order to update their systems. It is how the system works. Users seeking to transfer or receive payments will experience delays as a consequence.
Transactions that are made during a fork have the potential to be rejected or even stranded in limbo if the fork affects the rules that govern which transactions are allowed on the network.
The length of time that delays occur as a result of upgrades might range anywhere from a few minutes to many hours, according to the magnitude of the change.
How to avoid
By monitoring official channels or participating in blockchain community updates, you may ensure that you are aware of any forthcoming network upgrades or splits. In the vicinity of known update timings, you should avoid conducting transactions. By utilizing a blockchain explorer, you can ensure that your transaction is proceeding as anticipated following the upgrade.
The bloat of the system
The blockchain has the potential to get bloated as more users join a blockchain network and as more data is contributed to the network. The term “bloat” refers to a scenario in which the size of the blockchain grows to the point that it takes significantly more time to execute transactions.
Transactions are included in the restricted amount of data that is contained within each block on the blockchain. It is how the system operates.
The amount of time necessary to validate and attach a new block grows as the blockchain becomes bloated with transactions that involve a lot of data or smart contracts. Because of this, the network as a whole may lag behind.
Impact: Blockchain bloat typically impacts networks that have a high usage rate, such as Ethereum, where smart contracts and decentralized applications (dApps) generate a tremendous amount of data burden. It is possible that the processing of transactions will become noticeably slower as a consequence.
How to avoid
Choose networks that have a lower use rate or those that employ Layer 2 scaling solutions, such as rollups or side chains, before making your selection.
Reduce the complexity of transactions wherever it is possible to do so by eliminating interactions with smart contracts that are not essential.
Insufficient mining power
Cryptocurrencies such as Bitcoin are dependent on miners to ensure the integrity of the network and processing transactions. A decrease in the number of miners or the processing capacity (hashrate) of miners might potentially slow down the amount of time it takes for transactions to be completed.
Mining is a process in which miners are responsible for solving difficult cryptographic riddles in order to authenticate business transactions.
When there are fewer miners or when the total mining power diminishes (for example, owing to miners quitting the network or migrating to more profitable networks), transaction processing slows down because fewer blocks are being added to the chain. This is because there are less blocks being added more often.
Due to the decrease in mining power, the duration of transaction times has increased. This is most obvious during times when the difficulty of mining changes upward, but the hashrate does not increase in accordance with the adjustment.
How to avoid
By utilizing blockchain explorers or analytics services, you can keep track of the hashrate of the network. Choose networks that have a strong mining or validation involvement throughout the whole network.
Transactions that span many chains
As blockchain technology continues to advance, an increasing number of users are participating in cross-chain transactions. These transactions include the transfer of assets across multiple blockchains.
For example, these transactions involve moving tokens from Ethereum to Binance Smart Chain. A significant number of these transactions are dependent on bridges or services provided by third parties, which might result in delays.
The operation of cross-chain transactions often necessitates the utilization of specific protocols that involve the locking of tokens on one chain and the issuance of equal tokens on another chain.
There may be a number of phases involved in this process, one of which is waiting for confirmations on both chains, which might cause delayed completion.
Impact: Transactions that take place over many chains may take much more time than typical transactions that take place inside a single chain, depending on the chains that are involved. In the event that either network experiences congestion or technical difficulties, delays may become even more severe.
How to avoid
Choose bridges or cross-chain protocols that have a solid reputation and have been shown to be reliable. When engaging in cross-chain swaps, it is essential to be aware of the expected delay times for transactions.
When speed is of the utmost importance, it is recommended to make use of Layer 2 or multi-chain platforms, which provide speedier interoperability.
Malicious Attacks on Blockchain Security
In general, blockchain networks are occasionally vulnerable to assaults, such as distributed denial of service (DDoS) attacks or 51% attacks, which can cause disruptions in the processing of transactions. These attacks are relatively uncommon, but they can occur.
The way it works is that a 51% assault takes place when a malevolent entity takes control of more than fifty percent of the mining or validation power of the network. It gives them the ability to halt transactions or reverse them entirely.
Likewise, distributed denial of service assaults (DDoS) overwhelm network nodes, which can result in sluggish processing times or complete outages.
The impact of this is that if there is a security breach, the entire blockchain might be rendered inoperable until the problem is fixed. During the time when attackers are flooding the network, users may experience transactions that are blocked indefinitely or network congestion as a result of increased traffic.
How to avoid
Make sure you are up to date on the security measures of the network you are utilizing. Make use of blockchains that have a robust security architecture and a decentralized mining and validation structure in order to reduce the likelihood of a 51% assault on your cryptocurrency.
It would help if you thought about spreading your assets across a number of different networks in order to reduce the impact of an assault on any of those networks.
Conclusion
For users of cryptocurrencies, gaining an understanding of the factors that contribute to delays in transactions can assist them in making better choices and avoiding potential hazards.
Although it may be impossible to exert control over certain circumstances, such as network congestion or blockchain updates, users may take action to reduce the likelihood of experiencing delays. These actions include changing fees, utilizing dependable wallets, and maintaining awareness regarding the state of the network.
Keeping yourself educated and proactive will allow you to maximize the efficiency of your cryptocurrency transactions and provide a more pleasant experience overall.
