Mastering Bitcoin, 3rd Edition

Chapter 6. Transactions

The way we typically transfer physical cash has little resemblance to the way we transfer bitcoins. Physical cash is a bearer token. Alice pays Bob by handing him some number of tokens, such as dollar bills. By comparison, bitcoins don’t exist either physically or as digital data—​Alice can’t hand Bob some bitcoins or send them by email.

Instead, consider how Alice might transfer control over a parcel of land to Bob. She can’t physically pick up the land and hand it to Bob. Rather there exists some sort of record (usually maintained by a local government) that describes the land Alice owns. Alice transfers that land to Bob by convincing the government to update the record to say that Bob now owns the land.

Bitcoin works in a similar way. There exists a database on every Bitcoin full node that says that Alice controls some number of bitcoins. Alice pays Bob by convincing full nodes to update their database to say that some of Alice’s bitcoins are now controlled by Bob. The data that Alice uses to convince full nodes to update their databases is called a transaction. This is done without directly using either Alice’s or Bob’s identities, as we’ll see in Chapter 7.

In this chapter we’ll deconstruct a Bitcoin transaction and examine each of its parts to see how they facilitate the transfer of value in a way that’s highly expressive and amazingly reliable.

A Serialized Bitcoin Transaction

In “Exploring and Decoding Transactions”, we used Bitcoin Core with the ...