How to safely send and receive cryptocurrency
Cryptocurrency has become a popular alternative to centrally-controlled, government-issued currency.
Rather than relying on intermediaries like governments and banks, people are using cryptocurrency to transact value directly between each other.
Every day, millions of people are using cryptocurrency to take back control of their financial freedom as they send and receive payments in a peer-to-peer way.
But, with the freedom that cryptocurrencies deliver also comes responsibility. Knowing how to safely send and receive Bitcoin (BTC) and other cryptocurrencies is an important process for anyone looking to get started in crypto.
For many, one of the most crucial steps to take before sending a crypto transaction is first learning about how it all works.
For that, you can check out our Kraken Learn Center article How do cryptocurrency transactions work?
But, if you are already familiar with this or just want to get started sending transactions, you’ve come to the right place.
Let’s take a closer look at how you can use cryptocurrency to send and receive payments, as well as the steps to consider that will help protect against the loss of your hard-earned funds.
Things to know before sending and receiving cryptocurrency
Just as you do not need to understand how a jet engine works to be a passenger on a plane, you do not need to understand the intricacies of cryptography to send a crypto transaction.
However, if you are interested in diving deeper into the inner workings of cryptocurrencies, you can check out our article How do cryptocurrencies use cryptography?
While having a familiarity with some key concepts and processes associated with blockchain technology may be helpful, anyone in the world can send crypto to another person by simply following a few key steps.
First, let’s cover the most essential concepts to understand before you send or receive your first crypto transaction.
To send or receive cryptocurrencies, you will need a crypto wallet address.
A wallet address is a unique alphanumeric string of characters that acts as your digital identity on the blockchain network. It serves as the destination for the transaction, similar to a bank account number or your postcode when receiving mail.
Each blockchain network has its own unique way of creating crypto addresses, so it's important to use the correct address for the respective cryptocurrency.
Choosing a wallet
There are various types of crypto wallets available to store and manage your cryptocurrencies.
Software wallets can be accessed through mobile or desktop apps, while hardware wallets provide offline storage on a physical device. It's crucial to choose a reputable wallet that offers security features like two-factor authentication, PIN numbered access and encryption to safeguard your funds from unauthorized access.
There are several factors you should consider when it comes to securing your crypto.
Before you send or receive your first crypto, you might want to check out our article How to keep your crypto safe.
When sending cryptocurrency, it is common to encounter transaction fees which some networks call “blockchain gas fee”.
These fees are necessary for the smooth functioning of the blockchain network, and serve various purposes. Principly, fees compensate miners or validators for including your transaction in a block as they help to secure the network.
The price of transaction fees can vary depending on several factors, including network congestion and the specific cryptocurrency being used. During times of high network congestion, such as when there is a surge in transaction activity, transaction fees tend to increase.
Conversely, when the network is less congested, fees may be lower.
It's important to note that the sender typically incurs the transaction fee while the receiver does not.
This means that if you are sending cryptocurrency, you will need to factor in the transaction fee when calculating the total amount you want to send. If you're receiving cryptocurrency from another person, you won't be charged by the network for this transaction.
Transaction fees are a vital component of the cryptocurrency network. They help maintain the integrity and reliability of transactions, while also providing an incentive for miners and validators to continue processing and verifying transactions.
What to consider when sending and receiving bitcoin and other crypto
When sending and receiving bitcoin and other crypto transactions, it is important to consider several factors to guarantee a smooth and secure process.
- All payments are final: It is crucial to understand the irreversible nature of cryptocurrency transactions. Once a transaction is confirmed on the blockchain, it typically cannot be reversed. Therefore, senders must double-check and verify the correct wallet address, amount, and network before confirming the transaction to avoid any potential loss.
- Enter details carefully: For senders, it is crucial to verify the correct wallet address of the recipient. One small mistake in entering the wallet address can result in the funds being sent to the wrong destination, with no way to retrieve them. It is recommended to use the copy-paste method rather than manually typing the address to avoid any errors.
- Specify the correct amount: Additionally, confirming the correct amount before sending a transaction is essential. Make sure that you are sending the intended amount and not incurring excessive transaction fees due to network congestion or other factors.
- Networks can vary: Furthermore, selecting the correct network is vital. Some cryptocurrencies can be represented on multiple different networks. For example, Ether (ETH) can exist on its native Ethereum blockchain, but also on Polygon, Arbitrum and more. Each of these may have different wallet address types, and some wallets may not support these other networks. It is important to choose the appropriate network to avoid any complications.
- Provide the right details: For receivers, it is important to provide the sender with the correct wallet address to receive the crypto. Any mistakes in providing the address could result in the loss of funds, as transactions on the blockchain are irreversible.
- Send a test transaction: Lastly, if this is your first time sending a crypto transaction, or first time sending a transaction to a new wallet, you may want to consider sending a small transaction first. By sending a small amount of crypto first, you can test to make sure you have entered all the information you need to correctly before you send the full amount.
How to send cryptocurrency transactions
To send cryptocurrency, you will need to open your wallet. This may involve entering a PIN number or password to unlock your wallet.
You will then need to select which cryptocurrency asset you wish to send.
From there, an option to send or transfer the chosen cryptocurrency will appear. Clicking this send button will typically take you to a new window where you can enter the amount of cryptocurrency you wish to send. This amount may be in government issued figures like dollars and euros, or could be represented by units of the cryptocurrency itself.
From this screen, you will also see a blank box for inputting the recipient’s wallet address.
It's essential to double-check the address before starting the transaction to avoid sending funds to the wrong address. You’ll also need to have sufficient funds to transfer and cover the network fees associated with sending the transaction.
Once you’re happy with the information you’ve submitted, you can click “send.” Your crypto wallet may ask you to confirm the transaction fees before the transfer is complete.
Remember, once the transaction is confirmed on the blockchain network, it cannot be reversed.
Because crypto transactions can rarely be retrieved if they are sent with mistakes, many people choose to send a small test transaction first. This helps them make sure that they have entered the address correctly and everything is working as expected before sending the full amount of cryptocurrency they wish to send.
At this point, the transaction is then broadcasted to all the nodes that help to maintain the blockchain network. Each node independently verifies the transaction and all others within the same new block. The new block is then affixed to the blockchain.
The number of confirmations represents the number of blocks that have been added to the blockchain after the block containing your transaction.
The number of confirmations required before a transaction is considered final varies depending on the blockchain used.
Your crypto wallet will provide you with the transaction ID of your transfer. You can think of this like the unique fingerprint that can be used to identify this specific transaction.
You can copy and paste this transaction ID into a block explorer to track your transaction’s progress. Finding the right block explorer is as easy as typing the name of your crypto asset into Google along with the word “block explorer.”
Can I send bitcoin and other cryptocurrencies to someone without a crypto wallet?
No, you cannot send bitcoin or any other cryptocurrency to someone who doesn't have a crypto wallet.
Cryptocurrency wallets are an essential part of securely sending, receiving and storing digital assets. A wallet is essentially what connects an individual to the blockchain and allows you to send and receive crypto transfers.
Before you can send any crypto to someone, it is important that they download crypto wallet software.
There are plenty of software options available, and people can choose which service best suits their preferences and needs.
Signing up for a wallet usually involves downloading the software, creating an account and generating a wallet address. The latter step may be done automatically for you depending on the service.
This wallet address serves as a unique identifier for the wallet and is necessary to receive bitcoin or cryptocurrency.
You can learn even more about crypto wallets and which type may best suit your needs with our Kraken Learn Center article What are custodial and non-custodial crypto wallets?
Once the receiver has a wallet and provides you with their wallet address, you can begin the process of sending crypto to them.
This involves specifying the receiver's wallet address in the transaction details.
How to receive cryptocurrency transactions
Receiving cryptocurrency transactions is a much more straightforward process, and simply involves sharing your public crypto wallet address with the sender. This can be done via QR code in-person, or by sending your address details across via an online messaging service.
The main point to remember here is to only share your public wallet address with the sender and NOT your private keys. Remember, sharing your public keys is like sharing your email address, while sharing your private keys is like sharing the password to your email address.
You should also ask the sender to share the transaction ID so that you can track the transfer yourself and make sure that they input your details correctly.
Receive crypto from another wallet or exchange
To receive crypto from another wallet or exchange, you need to follow a few simple steps.
First, make sure that you have a crypto wallet where you want to receive the crypto. This could be a cold storage wallet, a software wallet or a wallet provided by a trusted service.
Next, check if the wallet or exchange that you are receiving crypto from supports withdrawals for the specific crypto you are expecting. You can usually find this information on their website or in the wallet itself.
If you aren’t sure ,you can check by contacting the wallet provider's customer support. To not lose the funds, it's essential to verify that the crypto you are looking to receive is supported by that wallet before the transaction is sent.
To receive the crypto, you can either scan a QR code or manually enter the wallet address provided by the sender. If using a QR code, open your wallet app and navigate to the receive section. Tap on the option to scan QR code and align your phone's camera with the QR code displayed by the sender. If entering the address manually, copy the provided address and paste it into the indicated address field in your wallet app.
Remember to exercise caution when sharing your wallet address and verify the sender's information to minimize the risk of any mistakes or fraudulent activity.
But if you take care while following these steps, you can easily receive crypto from another wallet or exchange.
How long does it take to send and receive bitcoin and other crypto?
The time it takes to send and receive crypto can vary depending on several factors.
One of the primary factors is the transaction speed of the specific blockchain being used.
For example, the average transaction time for Bitcoin is around ten minutes to one hour (depending on fees attached).
This means that it can take about 10 minutes for a Bitcoin transaction to receive a single confirmation and be added to the blockchain.
On the other hand, Ethereum has a much faster transaction speed, with an average transaction time of around 12 seconds.
Transaction speed is just one of many differences between the world’s two largest blockchain networks, so you can learn even more about their differences with our article Ethereum vs. Bitcoin.
Innovations like the Lightning Network have been introduced to speed up Bitcoin transaction times.
By leveraging the Lightning Network, users can enjoy near-instant transactions with lower fees compared to executing those transactions directly on the Bitcoin blockchain.
Check out our Kraken Learn Center article What is Lightning Network? to learn more about how it works and what impact it has on the Bitcoin network.
Get started with Kraken
Kraken makes it easy to send and receive cryptocurrency.
Whether you are looking to send your friend their first digital asset or get paid in crypto for your services, Kraken makes it easy.
Kraken offers trading on the most popular cryptocurrencies in the market. Get started by signing up for your account today.