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 in Detail

The block explorer application shows a transaction from Alice's "address" to Bob's "address". This is a much simplified view of what is contained in a transaction. In fact, as we will see in this chapter, much of the information shown is constructed by the block explorer and is not actually in the transaction.

Figure 1. Alice's transaction to Bob's Cafe