How To Send Bitcoin to Another Wallet
| KEY TAKEAWAYS: |
| — Sending Bitcoin requires the recipient’s BTC wallet address and the amount you wish to send. — The tech behind sending BTC is a little more complicated than it seems: the Bitcoin network doesn’t use middlemen and is completely permissionless. It also incurs a network fee. — Sending Bitcoin is much quicker than an international transaction and allows you to cross borders. However, depending on the fee you pay, it may still take a few hours to process. |
Created in 2008 by Satoshi Nakamoto, Bitcoin (BTC), is the first and most popular crypto asset. It changed the entire financial market: offering peer-to-peer, cross-border payments for a fraction of the cost and double the speed of traditional financial institutions. With its impressive history, BTC is often the first digital asset most people buy.
But of course, buying Bitcoin is just the beginning. Once you’ve got a secure place to store your newly bought funds, you may be wondering how to transfer it to another wallet. If that’s why you’re here, fear not! This article will explain everything you need to know about how sending Bitcoin works and how to send BTC yourself.
Let’s get started!
How To Send Bitcoin to Another Wallet
Sending BTC to another wallet involves setting up a Bitcoin wallet and loading it with BTC. From there you have to initiate the transaction by filling in the details of how much you want to send and specifying the recipient’s address. Once you confirm the transaction, you no longer need to worry: the network will handle the rest.
But of course, it’s a more complicated process behind the scenes. So, let’s dive into the underlying tech behind sending your friend some BTC.
What Is a Bitcoin Wallet Address?
To send or receive BTC, you’ll need a Bitcoin wallet address. A Bitcoin address is a string of characters that makes the account uniquely identifiable. These addresses each have 26-35 characters and start with either ‘1’,’3’, or ‘bc1’.
But it’s not as simple as that. To explain, each Bitcoin account is controlled by a key pair: a public key, ensuring it is uniquely identifiable; and a private key, allowing you to sign transactions. Your Bitcoin wallet address is simply a shorter and more user-friendly translation of your public key.
If you’re familiar with the Bitcoin blockchain, you might have noticed that your wallet address changes each time you transact. This is completely normal: it’s a feature designed to protect your privacy. While your previous receiving addresses will still work, it’s advised to use a new one for each transaction to ensure the security of your wallet, especially if you’re using a wallet that signs transactions online. Since online wallets store private keys online, signing a transaction could potentially expose your private keys—which could allow a hacker to access your wallet. Thus, most Bitcoin wallets will automatically create a new address for you for each new transaction.
Understanding How Sending Bitcoin Works on the Blockchain
Sending Bitcoin Starts With a Bitcoin Account
Sending Bitcoin starts with a Bitcoin wallet for sending, receiving, and securing BTC. The wallet’s primary function is allowing you to generate and store your private keys, the keys that give you control over your Bitcoin accounts. Most wallets, unless you opt for a paper wallet, also offer some sort of interface; allowing you to create and confirm transactions and then execute them on the Bitcoin blockchain.
A software wallet interface operates on your smartphone or laptop: the same device you sign transactions with. As mentioned, this poses a risk, as bad actors could intercept your private keys via your internet connection. Conversely, a hardware wallet signs transactions offline on a device isolated from your internet connection. Next, it sends the already signed transaction to the blockchain using your smartphone or laptop. This keeps your private keys safe from online threats.
Initiating the Transaction
Initiating a transaction with your Bitcoin wallet usually means specifying the amount of BTC you would like to send, and specifying the address you’d like to send it to. From there, it will present you with the intent; a sort of digital proposal. The proposal will include all of the proposed transaction’s details, although some wallets will display more detailed information than others. At this point, you’ll have the chance to reject or confirm the transaction.
Signing a Bitcoin Transaction
When you click confirm, your Bitcoin wallet uses the account’s private key to sign the transaction. Signing a transaction is like giving a digital seal of approval: it tells the miners you agree to the proposal’s terms. Once signed, the transaction is sent to the Bitcoin network’s nodes. Once it is verified, a miner will include the transaction in a block and it will be added to the chain.
Sending Bitcoin Means Sending an Entire UTXO
It’s important to note that the Bitcoin network uses the UTXO model to handle transactions. To explain, UTXOs (unspent transaction outputs) are essentially like the Bitcoin blockchain’s version of change.
When you send BTC, you send the intended recipient an entire UTXO and then receive a smaller UTXO back as change. When you want to buy something else, you can send the previous smaller UTXO and receive your change back in a new even smaller UTXO. Essentially, you can’t transact on the Bitcoin network without sending the entire UTXO. This solves the “double-spending” challenge cryptocurrencies face. Every time a transaction is executed, the input is deleted and a new output (or UTXO) is created.
UTXOs are much like banknotes you use in everyday life. To understand how this works, let’s use an example.
Imagine you want to buy some bread that costs $1 but you only have a $20 note in your pocket. You must hand over the full $20 note to the shopkeeper. In return, the shopkeeper will need to give you your change. In this example, you receive your $19 change as a single banknote. To explain, since Bitcoin is a digital currency it doesn’t require physical denominations for people to carry around. As such, you receive your change back in one sum; in the form of a UTXO.
How To Send Bitcoin in 3 Simple Steps
Bitcoin can be sent in three easy steps, which are as follows:
1. Retrieve and Enter the Recipient’s Bitcoin Address
To send BTC you’ll need to have a bitcoin wallet address to send it to. Make sure you copy it down correctly! Bitcoin transactions are irreversible so it’s important to triple-check that the Bitcoin wallet address you entered is correct.
2. Enter the Amount of Bitcoin To Transfer
Sending Bitcoin also requires you to specify the amount of BTC that you wish to send. Of course, this must be smaller than the total amount of Bitcoin you have in your account, otherwise the transaction will be rejected. You must also pay a network fee to send the transaction, so you’ll need enough to cover that too.
3. Confirm and Send Your Bitcoin
As you hit confirm on the proposal, your wallet uses your private key to sign the transaction. From there it sends the already-signed transaction to the blockchain nodes, which verify and execute the request.
Of course, the process of sending BTC may vary depending on the type of Bitcoin wallet you are using.
Is Sending Bitcoin Free?
Most of the time, sending Bitcoin is not free. That’s because every action taken on the Bitcoin blockchain incurs a network fee, also known as a gas fee. However, some centralized wallet providers may allow you to send Bitcoin to another wallet on the same platform. That said, using centralized exchange wallets means you don’t have true ownership of your crypto. Plus, anytime you use a centralized wallet to send transactions to the blockchain you still have to pay the network fee.
What Is the Bitcoin Network Fee?
The Bitcoin network fee is the amount of BTC you pay to process your transaction on the Bitcoin network. The fee goes to miners, who execute your transaction. Every action you take on the Bitcoin network will incur a fee: it’s a necessary part of every transaction. If you don’t have enough BTC to pay the fee, your transaction may even fail.
How Much Does It Cost To Send Bitcoin?
The cost to send Bitcoin depends on the size of the transaction and the network usage at the time. Of course, the price of Bitcoin also fluctuates, so the equivalent price you may pay for a Bitcoin transaction in dollars or euros can vary greatly.
The average all-time transaction fee is almost $2. And you might think that doesn’t sound too bad at all. The problem is that when the Bitcoin network is congested, fees for sending BTC tend to rise dramatically.
For example, during the bull market, the Bitcoin network tends to see more users and thus more transactions. The demand drives up the price of bitcoin, while the surge in transactions congests the network. As a result, network fees in the bull market can be much higher than the $2 average. At the end of 2017, the average cost of a transaction was an incredible $55.17. Then, in April 2021 it surged to almost $60. At the time of writing, a Bitcoin transaction costs between $10 and $30.
If you want to calculate how much you might spend on a transaction, it’s a good idea to look up the current average price using a network fee calculator tool. A quick Google search will give you plenty of tools to choose from.
Why Is There a Bitcoin Network Fee?
Firstly, Bitcoin network fees protect the blockchain from spam. Since flooding the network with transactions slows it down, Bitcoin uses this mechanism to discourage people from creating frivolous transactions.
Next, the network fee functions as an incentive for Bitcoin’s network participants. Operating a Bitcoin node requires a lot of energy and upkeep costs since it relies on maintaining high-functioning computers. The network fee goes to these participants as a reward for their work and guarantees the network can continue operating without middlemen. When you pay for a transaction, you’re just doing your bit to keep the network running
How Are Bitcoin Fees Determined?
Bitcoin network fees depend on a few factors and you can decide to pay a higher or lower fee depending on what you’re comfortable with. While you can opt for a lower fee, your transaction may get stuck for hours or days if you set the fee too low. And if the transaction gets canceled, you’ll have to send it again.
The basic formula to calculate your fees is: Transaction Fee = Transaction Size × Fee Rate
The fee rate is essentially the fee per kilobyte that you are willing to pay. Admittedly, if you’re new to the Bitcoin network, that might seem too complicated. If that sounds like you, checking an online tool that estimates current prices might be a better option.
How Do I Set the BTC Network Fee?
Before we dive in, it’s important to note that not all Bitcoin wallets will allow you to set the network fee. Plus, even when you can set the fee yourself, it’s not recommended for beginners. If you don’t do it correctly, the transaction may get stuck. What’s more, canceling the transaction can be just as complicated. For more experienced Bitcoin users with wallets that support this function, you’ll notice the process varies slightly from wallet to wallet. but typically you will follow these general steps:
- Find your wallet’s transaction fee settings or transaction details section and find the option to set the transaction fee.
- Select the fee type based on your needs; you may find options like low, medium, or high. Some wallets may even allow you to manually set the fee amount (in satoshis per byte).
- In the next stage, simply review the transaction details and confirm it.
Some wallets also allow you to add to your network fee while the transaction is pending to speed up the process. This function is usually found in your wallet interface’s unconfirmed transaction section.
How Long Does It Take To Transfer Bitcoin Between Wallets?
On average, it can take 60 minutes to send Bitcoin from one wallet address to another.
Currently, the Bitcoin network can process about five transactions per second (TPS), with transactions logged in the blockchain about every 10 minutes. Then it takes around six confirmations for most transactions to be considered secure. This process usually takes around an hour but can vary greatly depending on the activity of the Bitcoin network and the amount of BTC you pay as a network fee.
The more transactions submitted to the network, the more choices miners have. Naturally, they favor transactions with better pay. Thus, if you offer a smaller network fee to the miners, they will prioritize other transactions and you may be waiting much longer than just an hour.
Sending Bitcoin Is Easy Within the Ledger Ecosystem
If you’re looking to secure, manage, and send Bitcoin, the Ledger ecosystem has all of the tools to help. To explain, managing your cryptocurrencies effectively is important: with innovations come new risks. Unfortunately, hackers are vying for your Bitcoin, and they prey on the uninformed.
Before you start sending your Bitcoin anywhere, you should make sure you are storing it somewhere secure. Using a hardware wallet, you can guarantee that your Bitcoin wallet address is safe: the private key you use to sign transactions is offline at all times and cannot be intercepted. The Ledger security model guarantees your accounts stay completely secure each time you transact. Not only that, but its cutting-edge technology, such as its secure element chip and custom OS BOLOS makes sure a Ledger device is also safe from physical hacking. Furthermore, Ledger Live, your device’s companion app facilitates your transfer of any crypto, including Bitcoin. Ledger Live is both powerful and user-friendly: initiating a Bitcoin transaction is easy—even for your grandma!
So what are you waiting for? Arm yourself with a Ledger device and benefit from the wider ecosystem. With Ledger, you can start sending out your Bitcoin with confidence and full control.
Frequently Asked Questions About Sending Bitcoin
Can You Send Bitcoin for Free?
Mostly, you can’t send Bitcoin for free. Every action on the Bitcoin blockchain, including sending BTC, incurs a network fee. Some centralized exchanges will allow you to send Bitcoin between their own custodial wallets. However, this doesn’t occur on the blockchain, plus, using these types of wallets means you don’t have true ownership of your crypto. Thus, sending the Bitcoin you own isn’t free.
Can You Send Money Using Bitcoin?
Yes, you can send money using Bitcoin. Bitcoin is a great store of value, often dubbed “digital gold”. Not only that, but bitcoin transactions are completely decentralized and permissionless: there are no middlemen involved meaning you can send money to and from anyone without limits. This functionality also reaches across borders, making it easier to reach those in places with less financial freedom.
How Do I Receive Bitcoin?
Every crypto-related task requires a wallet. To receive Bitcoin from someone, you’ll need a Bitcoin wallet address to share with them. But to get a Bitcoin wallet address, you need to get a crypto wallet that supports BTC and generate a new account. From there, you should be able to find your receiving address within your wallet’s interface. Make sure you copy down the correct address though as if you record it incorrectly, the funds will be sent to a wallet you don’t control, thereby creating a lost bitcoin wallet.
Can I Send Bitcoin to Someone Without a Wallet?
Not really, as you need a wallet to send crypto, and in the case of Bitcoin, you are going to need the recipient’s Bitcoin wallet address that identifies where the BTC should go.
Some services will allow you to send Bitcoin to someone using fiat, but they are few and far between. Typically, both you and the recipient must have a Bitcoin wallet.