How blockchain works, step by step

If you haven't yet, read what a blockchain is first. This guide follows a single payment through the network, from creation to finality.

A transaction says, in effect, "move this amount from my address to that address." The wallet signs it with the sender's private key. Anyone can check the signature against the sender's public key, but nobody can forge one without the private key — and the key itself is never revealed.

The signed transaction is broadcast to nearby nodes, which pass it on. Each node independently checks that the signature is valid, that the sender really has the funds, and that the same funds aren't being spent twice. Invalid transactions are dropped immediately.

Valid ones wait in a pool of pending transactions, the mempool. When a network is busy, senders attach a higher fee to get picked sooner — the network fee, paid in the chain's native coin (ETH, BNB, TRX and so on). See how Payaries's gas station handles it.

Someone has to decide which pending transactions go into the next block, and in what order, so that every node ends up with the same history. That is the job of the consensus mechanism. The two main designs:

Either way, the proposed block is broadcast, other nodes verify every transaction inside it and its link to the previous block, and the chain grows by one. Honest nodes always follow the valid chain with the most accumulated work or backing.

Once your transaction is in a block, it has one confirmation. Each block added after it is another. Occasionally two blocks are produced at nearly the same time and the network briefly disagrees; one branch is later abandoned and its transactions return to the mempool. That is why a single confirmation is not proof of payment on every chain, and why the number needed varies by network.

Deeper blocks are exponentially harder to replace. Merchants therefore wait for a chain-specific number of confirmations before treating a payment as final — the logic behind crypto payment confirmations.

• Signatures make forging a payment impractical.
• Hash links make rewriting history detectable.
• Independent verification means each node checks everything itself, rather than taking someone's word.
• Economic cost — work or staked coins — makes attacking the network more expensive than it is worth on large chains.

A merchant doesn't need to run nodes or watch mempools. A crypto payment gateway does that work across several chains and tells your backend when a payment has reached its required confirmations.