More on Bitcoin Transactions

To understand why digital signatures are integral to Bitcoin transactions, you'll need to learn a bit about the structure of Bitcoin transactions. This chapter will introduce you to what's happening "Behind the Scenes" in these transactions. We'll discuss this more in Unit 5.

Transaction Outputs and Inputs

Transaction serialization – outputs

When transactions are transmitted over the network or exchanged between applications, they are serialized. Serialization is the process of converting the internal representation of a data structure into a format that can be transmitted one byte at a time, also known as a byte stream. Serialization is most commonly used for encoding data structures for transmission over a network or for storage in a file. The serialization format of a transaction output is shown in Transaction output serialization.

Table 1. Transaction output serialization

Size Field Description

8 bytes (little-endian)


Bitcoin value in satoshis (10-8 bitcoin)

1–9 bytes (VarInt)

Locking-Script Size

Locking-Script length in bytes, to follow



A script defining the conditions needed to spend the output


Most bitcoin libraries and frameworks do not store transactions internally as byte-streams, as that would require complex parsing every time you needed to access a single field. For convenience and readability, bitcoin libraries store transactions internally in data structures (usually object-oriented structures).

The process of converting from the byte-stream representation of a transaction to a library's internal representation data structure is called deserialization or transaction parsing. The process of converting back to a byte-stream for transmission over the network, for hashing, or for storage on disk is called serialization. Most bitcoin libraries have built-in functions for transaction serialization and deserialization.

See if you can manually decode Alice's transaction from the serialized hexadecimal form, finding some of the elements we saw previously. The section containing the two outputs is highlighted in Alice's transaction, serialized and presented in hexadecimal notation to help you:

Example 1. Alice's transaction, serialized and presented in hexadecimal notation

0100000001186f9f998a5aa6f048e51dd8419a14d8a0f1a8a2836dd73 4d2804fe65fa35779000000008b483045022100884d142d86652a3f47 ba4746ec719bbfbd040a570b1deccbb6498c75c4ae24cb02204b9f039 ff08df09cbe9f6addac960298cad530a863ea8f53982c09db8f6e3813 01410484ecc0d46f1918b30928fa0e4ed99f16a0fb4fde0735e7ade84 16ab9fe423cc5412336376789d172787ec3457eee41c04f4938de5cc1 7b4a10fa336a8d752adfffffffff0260e31600000000001976a914ab68025513c3dbd2f7b92a94e0581f5d50f654e788acd0ef800000000000

Here are some hints:

  • There are two outputs in the highlighted section, each serialized as shown in Transaction output serialization.
  • The value of 0.015 bitcoin is 1,500,000 satoshis. That's 16 e3 60 in hexadecimal.
  • In the serialized transaction, the value 16 e3 60 is encoded in little-endian (least-significant-byte-first) byte order, so it looks like 60 e3 16.
  • The scriptPubKey length is 25 bytes, which is 19 in hexadecimal.