Tracking Your Funds. Do You Need to Care About Internal Transactions?
Sometimes the more information we receive, the less we know what is going on. Talk about white noise, huh?
Some crypto concepts can be very important but not always clear who should be familiar with them. At the end of the day, you just want to have control of your funds with your crypto wallet and seamlessly conduct transfers, when suddenly you are made to suspect that there is more going on with your transactions than you can tell at first glance.
Let's clearly point out the elephant in the room before it gets its trunk in our face. In this day and age of fintech services providing instant and easy phone payments within DeFi, we seem to overcomplicate things when interacting with new products through smart contracts. So, what are we doing wrong?
A smart contract is an address, or an account, from the user’s perspective. In that sense, it doesn’t differ much from a transfer address except that it’s not used just for “transfers”. The major difference is that they are accounts with a logic behind them that perform assigned actions with the funds sent there. Therefore, it is unfair to compare a simple instant transfer from a fintech service with a smart contract.
Furthermore, why do we need these programmable contracts? They are the biggest revolution in modern finance because they automatically and independently do what was previously done by a few centralized entities. For the average investor, the backstreet saver accessing investment products from intermediary financial services was utterly out of reach — and smart contracts are what makes them accessible.
They are the magic behind DeFi and a gateway to financial services that were conveniently hidden from you. Maybe the elephant was not the one we thought it was.
Logic on the Move
Smart contracts are structured with a series of functions that often do things to each other. For example, when you liquidate funds held in a liquidity mining pool, the contract may have programmed a portion of the tokens that have been liquidated to be burned. This operation is done by calling a function of the contract’s code.
These interactions between (or among) contracts are done through a type of transaction that does not carry funds but information. This helps to make the calls to the internal functions they work with.
The "financial" transactions that we can make with a wallet indicate only the address, the amount, the signature, and some administrative fields for the Ethereum blockchain. Internal transactions also make use of a data field that is ordinarily empty in token transactions.
This field is what contracts communicate with each other. The transfer doesn’t need to specify any transaction value, only the functions that an ETH address asks a contract to execute if the request is valid. These are the transactions we call internal...
Since this type of transaction does not affect the funds in the wallet, it does not provide any information to the user. Moreover, monitoring this type of transaction is quite a heavy process for a wallet. Only full nodes keep track of this type of transaction.
You can access internal transactions in the popular explorer Etherscan.io. However, to get the maximum information in this case, it is better to use ethq.app. In this explorer, you can clearly see the difference between token transactions and data (internal) transactions.
Now that we have given you all the information, you can decide for yourself if that information is relevant to you at some point and where you can find it.
And speaking of finding things, we can't end the article without reminding you where to find the crypto wallet that always makes it as easy as possible to find the important things.
You will not see hidden transactions in your Eidoo wallet as only full nodes keep track of this data.
Download your Eidoo wallet now — a small click for you, but a big step for your tokens.