How Does Blockchain Money Transfer Work?

Blockchain technology

Traditionally, when you transfer funds, money goes from one bank to another, and then to the recipient’s account. The bank acts as an intermediary for your transfer. They’ll have all your information (and often collect data about your spending habits), whether you like it or not.

Blockchain money transfer

Here’s an illustration of how blockchain money transfer works:


  1. Imagine that you want to send money to XYZ business.
  2. The new transaction is configured into a “block” and is shown online
  3. The new transaction block is sent to everyone in the network
  4. Everyone in the network helps validate the transaction to ensure it is accurate
  5. Once approved by the majority, the block is added to a chain of recorded transactions in a public ledger, the block is then added to the chain which provides a permanent, non-disputable and transparent record of the transaction
  6. XYZ receives your money

Key takeaways

To summarise, in this scenario, you and XYZ are transferring funds to each other directly; no one acts as an intermediary. Those in the network validating the transaction – are seeing data relating to the code of the transaction, not your personal data, or XYZ’s.