Sending And Receiving Cryptocurrency
When you have a way to store cryptocurrency, you can also send and receive it. How does that work and what do you need to keep an eye on?
Once you have bought some crypto and have a wallet, learning how to send and receive it is the next thing. In this lesson, you will learn:
- What's needed to send and receive crypto
- How to send and receive it
- What to do if you get the address or network wrong
What you need to send and receive crypto
Sending and receiving crypto is probably the simplest lesson of your crypto learning curve. All you need is a wallet, coins you want to send, and the recipient's address. You can use any wallet, whether it's a mobile wallet, an exchange wallet, or even a hardware wallet. In the latter case, you will use a desktop application when sending your coins.
Your wallet contains all the information needed for the transaction from your side: your public key (your address) and your private key (to confirm it). If you’re using a mobile wallet, the public key works as a PIN you enter when confirming the transaction. For a desktop wallet, you simply confirm the transaction when you’re logged in, without any additional PINs.
You also need the wallet address where to send the crypto to. This will be an alphanumeric string such as J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy. Don't worry, these addresses can be easily copy-pasted to prevent typos. Alternatively, it can also be a QR code the recipient generated that you can scan with your mobile wallet.
Recently, a service called Ethereum Name Service has also popped up for Ethereum addresses. It lets users generate a website with an easily recognizable name that displays an address and a QR code. However, this may facilitate discovering and tracking your wallet address. If you weren't careful with the name you chose, your identity could be discovered from this information. Therefore, it's better to stick to using the alphanumeric string or QR code.
How to send and receive crypto
We'll go through this part using a Bitcoin transaction as an example. However, it works the same for any cryptocurrency. Copy the address or scan the QR code of the wallet that is to receive your coins. Make sure to thoroughly check that it matches the address your coins should be going to. Wallets always have an option to copy-paste the address, which you should use. Since transactions to wrong addresses cannot be reversed, this is crucially important.
Then, you need to decide on the transaction fees you want to pay. Bitcoin transactions get added to a memory pool (mempool) and miners choose which transactions they process first. You don’t see this on the front end, but transactions with lower fees have to wait to get picked up by miners. Depending on the wallet, this may simply appear in the form of estimated transaction time on the user’s end. Hit send and your transaction will be processed by the network. Other currencies might have no or much lower fees. In that case, all of this is irrelevant.
Receiving is just as easy, only that you are sharing your wallet's QR code or address.
Example Metamask (popular for Ethereum and BSC tokens):
Click on the “Send” button in the middle.
Paste the address you want to send your coins to.
Choose how much you want to send and the transaction fees you want to pay, then hit send.
Click on the wallet in the top row to get to this screen. Click send.
Paste the correct address and choose how much you want to send, then hit send.
What happens if you send crypto to the wrong address or the wrong network
Two distinct user errors can happen: sending coins to the wrong address and sending coins to the wrong network.
If you send coins to the wrong address, you must have sent them to a valid address. You cannot send crypto to an invalid address because the network will automatically reject the transaction. In other words, if you have a typo in the address (although all wallets provide the option to copy and paste the long string), the transaction will not be processed. If you sent coins to the wrong address and the transaction was processed, there is no way to retrieve the coins. Blockchain transactions are immutable, meaning there is no chargeback or reverting transactions. If a coin offers that option, it is not a true cryptocurrency.
You could also send crypto to the wrong network. For instance, you might want to send Ethereum to another Ethereum wallet but accidentally send it to a Binance wallet. In that case, you can retrieve the funds if you control the wallet, i.e., if it is non-custodial. You can then either use a bridge to transfer the coins to the correct network, for instance, you can bridge Ether from Binance to Ethereum. Alternatively, you will need to import the seed phrase of the faulty wallet to another wallet that supports both Ethereum and Binance Smart Chain (the Binance blockchain).
If you accidentally send coins to a custodial wallet on the wrong network, they are most likely lost. That would be if you send coins to an exchange, and your only chance would be asking the exchange for assistance in that case (with doubtful chances of success).
The bottom line is you need to use extreme care when sending your crypto to make sure you have the right network and the right address.
Sending and receiving crypto is incredibly simple as long as you pay attention to who you are sending money to. As so often with crypto, all the responsibility is with the users themselves.