Exercise: Look Up a Transaction on a Blockchain Explorer
Now that you have an idea of what Bitcoin is doing, let's go see it in action! In this quick exercise, we'll learn how to use a blockchain explorer to find the status of a transaction on the network.
In this exercise, we'll learn how to use blockchain explorers, and how to look up transactions and determine their status on the network.
A blockchain explorer keeps a complete copy of the blockchain and upon request retrieves transaction information and displays it in a human-readable fashion via the web.
As Bitcoin is a public, open system, anyone connected to the network can see every transaction ever recorded in the blockchain. And this is what a blockchain explorer is doing for you. It is connected to the Bitcoin network and retrieves transaction data on request.
As this information is available to anyone on the network, you don't need a blockchain explorer, you can find this information yourself if you're running the Bitcoin software. These explorers just add some convenience to the process as you can find transaction information quickly via your web browser and in an easy-to-read format.
Some popular blockchain explorers include:
Using an explorer
Generally what you'll see when you visit an explorer is a list of recently mined blocks. As blocks are collections of transactions, when you click on a block shown on the explorer it will take you to a list of the transactions included in that block.
On most of these sites, the first transaction listed in a block is a special transaction type called a coinbase transaction. This is the transaction that gives the miner their mining reward + all of the transaction fees from the transaction included in that block. As of May 11, 2020, the block reward is 6.25BTC per block. With the transaction fees included, these coinbase transactions are generally worth ~7BTC. We'll cover mining and transaction fees in more detail later in the course.
Inputs and outputs
Remember that bitcoins aren't actually "coins", they are transaction inputs and outputs recorded in a public ledger, and that structure is reflected in these explorers. As you view transaction details you'll see the transaction inputs listed on the left-hand side and transaction outputs on the right-hand side.
Usually, a transaction will have at least two outputs, one which is the bitcoin being sent and the other which is likely being sent back to the sender as change.
Browse through the transactions and notice how some will have many inputs combined into a few outputs, and some will have only a few inputs that are split up into many outputs.
If you compare the sum of the inputs to the sum of the outputs you'll find that the bitcoin included in the inputs is always greater than or equal to the outputs. Generally, the inputs are just a little bit greater than the outputs. This difference is the transaction fee that is given to the miner in the coinbase transaction. We'll cover fees a bit more in depth when we dive into mining.
Finding the status of a transaction
One of the more common uses of blockchain explorers is to check on the status of a transaction. Let's learn how to do that by looking through the transactions included in a block and viewing the details of one of those transactions.
You'll want to find the transaction hash which functions as the transaction ID. This hash will be a 64 character alphanumeric string generally found near the top of the transaction data shown. Find this hash in one explorer, copy it, and paste it into the search bar in another explorer.
Note: Most Bitcoin wallets will show you the hash of any transactions created or received by the wallet, some will even provide a link that will take you directly to the transaction data in a blockchain explorer.
Once you've located the transaction data you'll want to look for a "status" field. This will show either "unconfirmed" or show the number of "confirmations" from 0 up to hundreds of thousands.
When a transaction is first broadcast to the network all the nodes on the network may have seen and validated it, but if it has not yet been included in a block and been entered into the blockchain we say that the transaction is "unconfirmed" or has zero confirmations.
Once that transaction has been included in a block on the blockchain, it now has one confirmation. Roughly 10 minutes later when another block is mined, that transaction now has two confirmations.
While we'll get more in depth on mining soon, it's important to note that each block builds on top of the previous blocks and in doing so strengthens the security or "immutability" of the transactions in those blocks.
As a general rule, a transaction is considered complete and secure after it has achieved 6 confirmations.
Have a look at some transactions from the most recent block and from some older blocks and note how many confirmations they have.
Source: Saylor Academy
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