How are Ethereum Transactions Verified?


Like other Proof of Work (POW) blockchain networks, Ethereum also relies on miners to verify transactions, manage network, issue new Ethereum tokens and secure the network.

Ethereum uses Ethhash algorithm as the basis of all network activity. Simply speaking, when a transaction is received on network, miners pick it up and include it in the block, to gain the fees as a reward for processing the transactions. A transaction needs multiple “verifications” or “confirmations” before it can become final and irreversible.

Nature of Ethereum Transactions

An Ethereum transaction includes the address of the receiver, the amount to be transferred, the fees that the sender is willing to pay known as “gas” and the private key authorization to verify the said transaction.

Like Bitcoin (BTC), Ethereum miners also pick up the transactions with the highest fees, meaning that a large amount of gas included in a transaction will make certain that miners will include the transaction on priority to the blockchain and it will get approved faster. Likewise, a transaction with lower fees, increases the time required to confirm a transaction.

Ethereum Transaction Verification Process

When a transaction is sent, it is verified first by the local node before being sent to the main network. During high activity times, the “gas” fees might rise significantly and the low fees transactions might require extremely long time to get confirmed by the network. If a transaction isn’t being confirmed for a long period of time, it can be resent with a higher fees.

Once the miners have chosen and validated certain transactions (most commonly prioritized by highest gas fees) and have created a batch, they are ready to be included in the next block. Afterwards, the miners solve complex mathematical calculations to add the block to the overall blockchain. Eventually, they find the solution to the mathematical puzzle and the blocks gets verified and added to the blockchain.

However, miners can only include a finite number of transactions in the block, owing to the block gas limit. For this reason, the transactions that can processed by the Ethereum network are limited. However, the Ethereum foundation has taken steps to improve the scalability of their network, which increases the number of transactions that can be processed per second.

Ethereum blockchain is public. This ensures all transactions sent and received on the blockchain, since the beginning until now, are viewable through a blockchain explorer. All transaction data such as time, fees, sender and receivers address, block number, transaction id etc are accessible for viewing by all participants and parties willing to acquire that data.

Ethereum 2.0 – The Future

Currently, Ethereum network can process 15 TPS (transactions per second) and are further set to improve with the imminent deployment of Ethereum 2.0 which is set to improve scalability, transaction verification times and bring overall improvements to the network. The network will shift from Proof of Work (POW) to Proof of Stake (POS) and is further slated to introduce sharing which will improve speed by the dividing the network, in a way, to multiple parts, which can process the transactions concurrently.

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Posted By

Taha Zafar


A cryptocurrency and blockchain enthusiast by heart. Taha Zafar has been active in this space since 2017, he has experience with both investing and fundamental analysis of crypto assets. He has also worked extensively with deflationary tokens.


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