Mastering Bitcoin, 3rd Edition

Chapter 9. Transaction Fees

The digital signature we saw Alice create in Chapter 8 only proves that she knows her private key and that she committed to a transaction that pays Bob. She can create another signature that instead commits to a transaction paying Carol—a transaction that spends the same output (bitcoins) that she used to pay Bob. Those two transactions are now conflicting transactions because only one transaction spending a particular output can be included in the valid blockchain with the most proof of work—the blockchain that full nodes use to determine which keys control which bitcoins.

To protect himself against conflicting transactions, it would be wise for Bob to wait until the transaction from Alice is included in the blockchain to a sufficient depth before he considers the money he received as his to spend (see “Confirmations”). For Alice’s transaction to be included in the blockchain, it must be included in a block of transactions. There are a limited number of blocks produced in a given amount of time, and each block only has a limited amount of space. Only the miner who creates that block gets to choose which transactions to include. Miners may select transactions by any criteria they want, including refusing to include any transactions at all.

Note

When we say “transactions” in this chapter, we refer to every transaction in a block except for the first transaction. The first transaction in a block is a coinbase transaction, described in “Coinbase Transactions” ...