On-Chain Transfers: Networks, Gas and Confirmations
Moving coins from an exchange to your wallet or to a friend: pick the right network, check the address, pay the gas fee and wait for block confirmations. There's no undo button if you get it wrong.
Risk warning: forex, CFDs, options, futures and crypto assets usually involve leverage or high volatility, and you can lose more than you put in. This lesson only teaches the concepts; all numbers are for illustration and are not investment advice.
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Text version · Crypto Basics, lesson 8: “On-Chain Transfers: Networks, Gas and Confirmations”
Moving coins from an exchange to your wallet or to a friend: pick the right network, check the address, pay the gas fee and wait for block confirmations. There's no undo button if you get it wrong.
The network must match
The same coin can circulate on several chains. The network you pick when withdrawing must match what the recipient supports; pick the wrong one and the coins may never arrive and be hard to recover.
Gas fee: the higher the bid, the faster
A transaction first waits in the mempool, and block builders pick the highest-fee ones first. The gas fee goes to the network and has nothing to do with the amount you're sending.
After inclusion, wait for confirmations
Getting into a block is only the 1st confirmation. Exchanges usually wait for a certain number of confirmations before crediting you, because the more confirmations, the harder a transaction is to reverse.
There's no undo button
Once confirmed, an on-chain transfer can't be reversed. After pasting an address, check the first and last few characters (to catch clipboard malware swapping it), and send a small test before a large amount.
Key takeaways
- Before transferring, make sure the networks match: sender and receiver must be on the same chain.
- The gas fee goes to the network. The higher you bid, the sooner you're included in a block, regardless of the amount you send.
- After a transaction is included in a block, it still needs to build up confirmations; exchanges usually credit you only after a set number.
- On-chain transfers can't be reversed: after pasting an address, check the first and last characters, and test with a small amount before sending a large one.
Try it yourself
You can do these exercises in this lesson's interactive simulation:
- Keep 20 gwei and press ▶: which block is it expected to be included in? About how many dollars is the fee?
- Set gas to 40 gwei and play again: how many transactions are "Ahead in line" now? How many times higher is the fee?
- Lower gas to 1 gwei: why does the transaction stay stuck in the mempool?
- Switch to "Other network" or the address below and play to the end: what's the final message? Why can't it be reversed?
Quiz and explanations
- 1. An ETH transfer uses 21,000 gas at a gas price of 30 gwei (1 gwei = 0.000000001 ETH). What's the fee?
- Answer: 0.00063 ETH.21,000 × 30 = 630,000 gwei = 0.00063 ETH.
- 2. When withdrawing, you pick a network that doesn't match the receiver's. What's the most likely result?
- Answer: The funds may never arrive and are hard to recover.The transaction completes on the chain you chose, but the receiver doesn't support it, so the funds may be stuck for a long time.
- 3. Why does an exchange wait for several block confirmations before crediting you?
- Answer: The more confirmations, the harder the transaction is to reverse.The more blocks stacked on top, the harder it is to rewrite the transaction.
Terms in this lesson
- confirmation (Confirmation): Each block added after the one containing your transaction is another confirmation; more confirmations make it harder to reverse, and exchanges often require a certain number before crediting you.
- gas fee (Gas Fee): The fee paid to the network for a blockchain transfer; bidding more usually gets you into a block faster.
- mempool (Mempool): The waiting room for transactions that have been broadcast but not yet included in a block; block producers usually pick the highest fees first.
- network (Network): The blockchain a token is sent on (such as Ethereum or Tron); sender and receiver must pick the same network.
- wallet address (Address): A receiving account generated from the public key, safe to share with others.