Crypto Transaction Basics

Hey, everyone. Welcome to Fireblocks Academy. My name is Chris Jameson. I’m the director of enterprise programs here at Fireblocks. And in this video, we’re gonna take you through at a very high level how a crypto transaction works.

Now, again, this is gonna be a very high level discussion and overview. And I think what we really wanna do is highlight the differences between a traditional financial markets transaction and a crypto transaction, both from the number of intermediaries involved as well as the settlement times. So why don’t we go ahead and dive in? We’re gonna start with an actual very simplified and basic view of a traditional, equities transaction.

And essentially what happens here is let’s just say I want to buy a hundred shares of Apple.

I go ahead and enter an order into my, you know, portal of choice, whether it’s on my phone, maybe it’s on my desktop. This order then gets routed to a trading desk, which then sends it to an exchange where the orders are essentially, buy until orders are matched up. My order is actually executed, and confirmations will be sent to the buyer and seller.

This is confirmations.

Then the exchange will send the order details to the clearinghouse, which will then settle the trade and send settlement instructions to the buyer, custodian, and the seller custodian.

This is settlement.

And this process, in general, takes about two days or t plus two.

Now, in a very simplified crypto transaction, Separate it out here.

Let’s just go to my crypto transaction. Let’s say I wanna buy one Bitcoin.

So I can pull up my, let’s just say, mobile app.

And this could actually be directly, you know, on, using an exchange app, say, like Coinbase or Voyager or this could be a third party app, say, you know, using someone like a Revolut.

But essentially what I do is I put my order in, I then my order is then matched, executed, and then I get settlement and confirmation directly.

And this process typically takes minutes.

So the main things we want to highlight here in terms of the differences are that if you notice, there are a number of different intermediaries that are actually involved in a traditional, traditional finance capital markets transaction.

And there are very few, if any, in a crypto transaction.

The other thing that I wanna highlight here is that the settlement time for a traditional, just say, equities trade can be up to two days.

And in crypto, you could settle a transaction in minutes.

So from a high level summary standpoint, what we really want to call out here is that from a traditional financial markets perspective, there are typically many intermediaries that are involved in getting transactions done. In the crypto side of things, we tend to think of things as being much more efficient. There’s few intermediaries, if any, which then leads to much faster settlement times and, a better potential customer experience.

Thanks so much for joining today. And for more educational content, please join us at Fireblocks Academy. Thanks.