How Bitcoin Fees Work
Why fees vary, how miners prioritize transactions, and how to avoid overpaying.
Bitcoin Basics
How Bitcoin Transactions Work
From wallet broadcast to network confirmation—what happens when you send Bitcoin.
Overview
When you send Bitcoin, your wallet builds a transaction that references coins you already own, signs it with your private key, and broadcasts it to the network. Miners include it in a block after validating that the signature is valid and inputs have not been spent before.
Confirmations accumulate as new blocks are added. Exchanges and merchants often wait for several confirmations before treating a payment as final. Always verify the recipient address and amount before you confirm—on-chain transfers cannot be reversed.
Building a transaction
When you spend Bitcoin, your wallet selects previous outputs you received—called inputs—and specifies new outputs for recipients and change. The wallet calculates an appropriate fee based on size and network demand.
After you approve, the wallet signs with your private key and broadcasts to peer nodes until miners include it in a block.
Confirmation and finality
Each new block on top of the block containing your transaction adds one confirmation. Many services wait for multiple confirmations before crediting deposits, especially for large amounts.
Finality is probabilistic but strengthens quickly in practice. For very large transfers, waiting for additional confirmations is reasonable caution.
What to verify every time
Check the recipient address character by character, ideally using a QR code you trust. Malware has swapped clipboard addresses to redirect funds.
Save the transaction ID. On-chain payments are irreversible once confirmed—accuracy at send time is your only remedy.
