CS120: Bitcoin for Developers I

The vast majority of transactions processed on the bitcoin network spend outputs locked with a Pay-to-Public-Key-Hash or "P2PKH" script. These outputs contain a locking script that locks the output to a public key hash, more commonly known as a bitcoin address. An output locked by a P2PKH script can be unlocked (spent) by presenting a public key and a digital signature created by the corresponding private key (see Digital Signatures (ECDSA)).

For example, let's look at Alice's payment to Bob's Cafe again. Alice made a payment of 0.015 bitcoin to the cafe's bitcoin address. That transaction output would have a locking script of the form:

OP_DUP OP_HASH160 <Cafe Public Key Hash> OP_EQUALVERIFY OP_CHECKSIG

The Cafe Public Key Hash is equivalent to the bitcoin address of the cafe, without the Base58Check encoding. Most applications would show the public key hash in hexadecimal encoding and not the familiar bitcoin address Base58Check format that begins with a "1."

The preceding locking script can be satisfied with an unlocking script of the form:

 <Cafe Signature> <Cafe Public Key>

The two scripts together would form the following combined validation script:

 <Cafe Signature> <Cafe Public Key> OP_DUP OP_HASH160
 <Cafe Public Key Hash> OP_EQUALVERIFY OP_CHECKSIG

When executed, this combined script will evaluate to TRUE if, and only if, the unlocking script matches the conditions set by the locking script. In other words, the result will be TRUE if the unlocking script has a valid signature from the cafe's private key that corresponds to the public key hash set as an encumbrance.

Figures #P2PubKHash1 and #P2PubKHash2 show (in two parts) a step-by-step execution of the combined script, which will prove this is a valid transaction.

Figure 6. Evaluating a script for a P2PKH transaction (part 1 of 2)

Figure 7. Evaluating a script for a P2PKH transaction (part 2 of 2)