@ -64,15 +64,15 @@ You may also notice a lot of strange and indecipherable fields and hexadecimal s
((("transactions", "outputs and inputs", id="Tout06")))((("outputs and inputs", "outputs defined")))((("unspent transaction outputs (UTXO)")))((("UTXO sets")))((("transactions", "outputs and inputs", "output characteristics")))((("outputs and inputs", "output characteristics")))The fundamental building block of a bitcoin transaction is a _transaction output_. Transaction outputs are indivisible chunks of bitcoin currency, recorded on the blockchain, and recognized as valid by the entire network. Bitcoin full nodes track all available and spendable outputs, known as _unspent transaction outputs_, or _UTXO_. The collection of all UTXO is known as the _UTXO set_ and currently numbers in the millions of UTXO. The UTXO set grows as new UTXO is created and shrinks when UTXO is consumed. Every transaction represents a change (state transition) in the UTXO set.
((("balances")))When we say that a user's wallet has "received" bitcoin, what we mean is that the wallet has detected a UTXO that can be spent with one of the keys controlled by that wallet. Thus, a user's bitcoin "balance" is the sum of all UTXO that user's wallet can spend and which may be scattered among hundreds of transactions and hundreds of blocks. The concept of a balance is created by the wallet application. The wallet calculates the user's balance by scanning the blockchain and aggregating the value of any UTXO the wallet can spend with the keys it controls. Most wallets maintain a database or use a database service to store a quick reference set of all the UTXO they can spend with the keys they control.
((("balances")))When we say that a user's wallet has "received" bitcoin, what we mean is that the wallet has detected an UTXO that can be spent with one of the keys controlled by that wallet. Thus, a user's bitcoin "balance" is the sum of all UTXO that user's wallet can spend and which may be scattered among hundreds of transactions and hundreds of blocks. The concept of a balance is created by the wallet application. The wallet calculates the user's balance by scanning the blockchain and aggregating the value of any UTXO the wallet can spend with the keys it controls. Most wallets maintain a database or use a database service to store a quick reference set of all the UTXO they can spend with the keys they control.
((("satoshis")))A transaction output can have an arbitrary (integer) value denominated as a multiple of satoshis. Just as dollars can be divided down to two decimal places as cents, bitcoin can be divided down to eight decimal places as satoshis. Although an output can have any arbitrary value, once created it is indivisible. This is an important characteristic of outputs that needs to be emphasized: outputs are _discrete_ and _indivisible_ units of value, denominated in integer satoshis. An unspent output can only be consumed in its entirety by a transaction.
((("change, making")))If a UTXO is larger than the desired value of a transaction, it must still be consumed in its entirety and change must be generated in the transaction. In other words, if you have a UTXO worth 20 bitcoin and want to pay only 1 bitcoin, your transaction must consume the entire 20-bitcoin UTXO and produce two outputs: one paying 1 bitcoin to your desired recipient and another paying 19 bitcoin in change back to your wallet. As a result of the indivisible nature of transaction outputs, most bitcoin transactions will have to generate change.
((("change, making")))If an UTXO is larger than the desired value of a transaction, it must still be consumed in its entirety and change must be generated in the transaction. In other words, if you have an UTXO worth 20 bitcoin and want to pay only 1 bitcoin, your transaction must consume the entire 20-bitcoin UTXO and produce two outputs: one paying 1 bitcoin to your desired recipient and another paying 19 bitcoin in change back to your wallet. As a result of the indivisible nature of transaction outputs, most bitcoin transactions will have to generate change.
Imagine a shopper buying a $1.50 beverage, reaching into her wallet and trying to find a combination of coins and bank notes to cover the $1.50 cost. The shopper will choose exact change if available e.g. a dollar bill and two quarters (a quarter is $0.25), or a combination of smaller denominations (six quarters), or if necessary, a larger unit such as a $5 note. If she hands too much money, say $5, to the shop owner, she will expect $3.50 change, which she will return to her wallet and have available for future transactions.
Similarly, a bitcoin transaction must be created from a user's UTXO in whatever denominations that user has available. Users cannot cut a UTXO in half any more than they can cut a dollar bill in half and use it as currency. The user's wallet application will typically select from the user's available UTXO to compose an amount greater than or equal to the desired transaction amount.
Similarly, a bitcoin transaction must be created from a user's UTXO in whatever denominations that user has available. Users cannot cut an UTXO in half any more than they can cut a dollar bill in half and use it as currency. The user's wallet application will typically select from the user's available UTXO to compose an amount greater than or equal to the desired transaction amount.
As with real life, the bitcoin application can use several strategies to satisfy the purchase amount: combining several smaller units, finding exact change, or using a single unit larger than the transaction value and making change. All of this complex assembly of spendable UTXO is done by the user's wallet automatically and is invisible to users. It is only relevant if you are programmatically constructing raw transactions from UTXO.
@ -171,7 +171,7 @@ Here are some hints:
To build a transaction, a wallet selects from the UTXO it controls, UTXO with enough value to make the requested payment. Sometimes one UTXO is enough, other times more than one is needed. For each UTXO that will be consumed to make this payment, the wallet creates one input pointing to the UTXO and unlocks it with an unlocking script.
Let's look at the components of an input in greater detail. The first part of an input is a pointer to a UTXO by reference to the transaction hash and an output index, which identifies the specific UTXO in that transaction. The second part is an unlocking script, which the wallet constructs in order to satisfy the spending conditions set in the UTXO. Most often, the unlocking script is a digital signature and public key proving ownership of the bitcoin. However, not all unlocking scripts contain signatures. The third part is a sequence number, which will be discussed later.
Let's look at the components of an input in greater detail. The first part of an input is a pointer to an UTXO by reference to the transaction hash and an output index, which identifies the specific UTXO in that transaction. The second part is an unlocking script, which the wallet constructs in order to satisfy the spending conditions set in the UTXO. Most often, the unlocking script is a digital signature and public key proving ownership of the bitcoin. However, not all unlocking scripts contain signatures. The third part is a sequence number, which will be discussed later.
Consider our example in <<transactions_behind_the_scenes>>. The transaction inputs are an array (list) called +vin+:
@ -359,7 +359,7 @@ Eugenia's wallet application will calculate the appropriate fee by measuring the
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=== Transaction Scripts and Script Language
((("transactions", "scripts and Script language", id="Tsript06")))((("scripting", "transactions and", id="Stransact06")))The bitcoin transaction script language, called _Script_, is a Forth-like reverse-polish notation stack-based execution language. If that sounds like gibberish, you probably haven't studied 1960s programming languages, but that's ok—we will explain it all in this chapter. Both the locking script placed on a UTXO and the unlocking script are written in this scripting language. When a transaction is validated, the unlocking script in each input is executed alongside the corresponding locking script to see if it satisfies the spending condition.
((("transactions", "scripts and Script language", id="Tsript06")))((("scripting", "transactions and", id="Stransact06")))The bitcoin transaction script language, called _Script_, is a Forth-like reverse-polish notation stack-based execution language. If that sounds like gibberish, you probably haven't studied 1960s programming languages, but that's ok—we will explain it all in this chapter. Both the locking script placed on an UTXO and the unlocking script are written in this scripting language. When a transaction is validated, the unlocking script in each input is executed alongside the corresponding locking script to see if it satisfies the spending condition.
Script is a very simple language that was designed to be limited in scope and executable on a range of hardware, perhaps as simple as an embedded device. It requires minimal processing and cannot do many of the fancy things modern programming languages can do. For its use in validating programmable money, this is a deliberate security feature.
kristen@oreilly.com
6 years ago