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Understanding crypto networks: The backbone of your transactions
Understanding crypto networks: The backbone of your transactions

This article explains the crucial role of crypto networks in sending and receiving your digital assets.

Updated over 3 weeks ago

What is a crypto network?

Choosing the correct network is essential for successful transactions.

Imagine a network of roads that connect different cities. In the world of cryptocurrency, a "crypto network" is a blockchain – a decentralized ledger that records and verifies all transactions. Each cryptocurrency operates on its own (or a compatible) blockchain network. Common examples include:

  • Bitcoin Network (BTC): The original blockchain, primarily used for Bitcoin transactions.

  • Ethereum Network (ETH/ERC20): Powers the Ethereum cryptocurrency and supports numerous other tokens (ERC20 tokens).

  • BNB Smart Chain (BSC/BEP20): A blockchain platform that enables developers to create and deploy smart contracts and decentralized applications (dApps).

  • Polygon (POL): A layer2 scaling solution for Ethereum, designed for faster and cheaper transactions.

  • Solana (SOL): A high-performance blockchain known for its speed and scalability.

  • Litecoin (LTC): A fork of bitcoin, known for its faster transaction speeds.

Why is choosing the correct network important?

Sending cryptocurrency to the wrong network is like sending a letter to the wrong address – it will likely get lost. Here's why selecting the right network matters:

  • Lost Funds: If you send a cryptocurrency to an incompatible network, your funds may be permanently lost. For example, sending Bitcoin to an Ethereum address will result in the loss of your Bitcoin.

  • Transaction Failures: Incorrect network selection can lead to failed transactions, requiring you to contact customer support and potentially incurring fees.

  • Increased Transaction Times: Some networks are faster than others. Choosing an appropriate network can ensure your transactions are processed efficiently.

  • Varying Transaction Fees: Different networks have different transaction fees. Selecting the right network can help you minimize costs.

How to choose the correct network:

  1. Check the receiving wallet/exchange: The most important step is to confirm the network supported by the receiving wallet or exchange. They will typically specify the correct network address and type.

  2. Verify the cryptocurrency: Ensure the cryptocurrency you are sending is compatible with the chosen network. For example, if you are sending Ethereum, you would typically use the Ethereum network (ETH/ERC20). If you are sending a token that is built on the BNB Smart Chain, you would need to use the BEP20 (BSC) network.

  3. Pay attention to network addresses: Network addresses often have distinct prefixes. For example, Ethereum addresses typically start with "0x," while Bitcoin addresses start with "1," "3," or "bc1."

  4. Double-check before confirming: Always double-check the network selection and the receiving address before confirming your transaction. Many exchanges display a warning message if you are about to send to a different network than your withdrawal currency.

  5. Use test transactions (recommended): If you are unsure, send a small test amount first. This allows you to verify that the transaction is successful before sending a larger amount.

Example scenarios:

  • Sending Ethereum (ETH): You would typically select the Ethereum network (ETH/ERC20).

  • Sending a token built on the BNB Smart Chain: You would select the BNB Smart Chain network (BSC/BEP20).

  • Sending Bitcoin (BTC): You would select the Bitcoin network (BTC).

  • Sending a token that is built on Polygon: You would select the Polygon network (POL).

Important considerations:

  • Compatibility: Not all wallets and exchanges support all networks.

  • Cross-Chain Bridges: Some platforms offer cross-chain bridges that allow you to transfer assets between different networks. However, these bridges can be complex and may involve additional fees and risks.

  • Network Congestion: Transaction times and fees can vary depending on network congestion.

If you have any questions about network fees or exchange fees, please start a conversation with our Support team. We're always here to help!

Disclaimer: Cryptocurrency transactions involve risks. Always do your own research and exercise caution when sending and receiving digital assets. Binance.US is not responsible for lost funds due to incorrect network selection.

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