Bitcoin Transactions

Very understandably, given the name, when people visualize the Bitcoin network they often picture individual coins moving around a network. However, when you dig into the software you'll find that the concept of individual coins does not exist in the Bitcoin program. What does exist is software that helps the network to manage a shared ledger, the blockchain. It's a ledger that keeps a track of the inputs and outputs of transactions. The unit that the software calculates transactions in is what has become known as a "satoshi" which is 0.00000001 of what we generally think of as a Bitcoin. 

This chapter covers transactions and starts by explaining transaction inputs and outputs, and unspent transaction outputs, or UTXOs.


Transactions are the most important part of the bitcoin system. Everything else in bitcoin is designed to ensure that transactions can be created, propagated on the network, validated, and finally added to the global ledger of transactions (the blockchain). Transactions are data structures that encode the transfer of value between participants in the bitcoin system. Each transaction is a public entry in bitcoin's blockchain, the global double-entry bookkeeping ledger.

In this chapter, we will examine all the various forms of transactions, what they contain, how to create them, how they are verified, and how they become part of the permanent record of all transactions. When we use the term "wallet" in this chapter, we are referring to the software that constructs transactions, not just the database of keys.

Source: Andreas M. Antonopoulos LLC,
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