What is a Transaction?

A blockchain transaction is a digitally signed instruction that transfers assets between addresses, executes smart contract functions, or records data on the distributed ledger, serving as the fundamental unit of activity that changes the state of the blockchain network.

Each transaction typically contains several key components: the sender's address, recipient address, amount being transferred, transaction fee (gas) to compensate validators, digital signature proving the sender's authorization, and potentially additional data for smart contract interactions or metadata purposes.

Before being added to a block, transactions enter a memory pool (mempool) where they await selection by miners or validators based primarily on the fees offered, creating a market-based prioritization system where users can choose between faster confirmation by paying higher fees or waiting longer with lower fees.

Once included in a validated block and confirmed by the network, transactions become immutable parts of the blockchain's history, making them effectively irreversible after sufficient confirmations and providing the permanence and censorship resistance that makes blockchain valuable for financial and data applications.

Transaction capabilities vary significantly across different blockchain platforms, from Bitcoin's relatively simple value transfers to Ethereum's complex smart contract interactions, with ongoing innovations in areas like zero-knowledge proofs, rollups, and state channels continuously expanding the efficiency, privacy, and functionality of blockchain transactions.