A Deeper Look into Transactions
In the realm of blockchain and Bitcoin, transactions are the lifeblood that enables the movement of digital currency between participants, so it's time to explore the intricacies of blockchain transactions.
Transaction Structure
Once again, a Bitcoin transaction is a digital message that specifies how bitcoins are "moved" (they aren't actually, their ownership changes) from one address to another. At its core, a transaction contains the following components:
Here is a real transaction you can explore (available here):
As shown here, the transaction includes 7 inputs and 4 outputs, each associated with a unique address. The total amount of input bitcoins is greater than the total amount of output bitcoins. This difference appears because the transaction also includes fees, which must be taken into account.
The amount is equal to the sum of output bitcoins, and amount + fees is equal to the sum of input bitcoins.
Transaction Verification
Before a transaction is added to a block and recorded on the blockchain, it must be verified by the network. This verification process ensures that the transaction is valid and conforms to the network's rules. Here are the key aspects of transaction verification:
As explained in the previous chapter, once a transaction is verified, it is placed in the mempool, where it waits for a miner to select it for inclusion in the next block. After the block is created, it is broadcast to the network and verified. If the block passes validation, it is added to the blockchain, and all transactions inside it are considered confirmed.
Additional Confirmation
Returning to the transaction example, opening the provided link reveals the following:
The first confirmation occurs when a transaction is included in a block. Each additional block added on top of the block containing that transaction counts as an extra confirmation. The more confirmations a transaction has, the lower the risk of it being reversed.
In practice, it is common to wait for six confirmations before treating a Bitcoin transaction as final. At this depth, reversing the transaction would require an extraordinary amount of computational power, making it effectively irreversible.
1. What component of a Bitcoin transaction proves that the sender has the right to transfer the bitcoins?
2. What is the primary reason for waiting for multiple confirmations after a Bitcoin transaction is included in a block?
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In the realm of blockchain and Bitcoin, transactions are the lifeblood that enables the movement of digital currency between participants, so it's time to explore the intricacies of blockchain transactions.
Transaction Structure
Once again, a Bitcoin transaction is a digital message that specifies how bitcoins are "moved" (they aren't actually, their ownership changes) from one address to another. At its core, a transaction contains the following components:
Here is a real transaction you can explore (available here):
As shown here, the transaction includes 7 inputs and 4 outputs, each associated with a unique address. The total amount of input bitcoins is greater than the total amount of output bitcoins. This difference appears because the transaction also includes fees, which must be taken into account.
The amount is equal to the sum of output bitcoins, and amount + fees is equal to the sum of input bitcoins.
Transaction Verification
Before a transaction is added to a block and recorded on the blockchain, it must be verified by the network. This verification process ensures that the transaction is valid and conforms to the network's rules. Here are the key aspects of transaction verification:
As explained in the previous chapter, once a transaction is verified, it is placed in the mempool, where it waits for a miner to select it for inclusion in the next block. After the block is created, it is broadcast to the network and verified. If the block passes validation, it is added to the blockchain, and all transactions inside it are considered confirmed.
Additional Confirmation
Returning to the transaction example, opening the provided link reveals the following:
The first confirmation occurs when a transaction is included in a block. Each additional block added on top of the block containing that transaction counts as an extra confirmation. The more confirmations a transaction has, the lower the risk of it being reversed.
In practice, it is common to wait for six confirmations before treating a Bitcoin transaction as final. At this depth, reversing the transaction would require an extraordinary amount of computational power, making it effectively irreversible.
1. What component of a Bitcoin transaction proves that the sender has the right to transfer the bitcoins?
2. What is the primary reason for waiting for multiple confirmations after a Bitcoin transaction is included in a block?
Thanks for your feedback!
