Transaction

In an app, a Bitcoin transaction looks like a bank transfer, but it isn’t a booking between accounts. It is a digitally signed message that uses up existing bitcoin ‘coins’ and creates new ones from them.^[1]

Structure

• Inputs: refer to unspent outputs of earlier transactions (UTXOsGlossaryUTXO (Unspent Transaction Output)An output of an earlier transaction that hasn’t been spent yet – like a single banknote in your wallet. Bitcoin has no account balances: your balance is the sum of all the UTXOs you can spend with your keys.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →×) and contain the signature proving you may spend them.
• Outputs: specify who receives how much – usually one for the recipient and one for your change.
• Fee: not a separate line, but the difference between inputs and outputs. It goes to the miner.^[2]

Example: a UTXO is always spent in full.^[2] If you pay 400,000 sats from a UTXO of 500,000 sats, 99,000 sats go back to a new address of yours as change; the remaining 1,000 sats are the fee.

A transaction’s journey

Your wallet signs with your private keyGlossaryPrivate keyA secret, randomly generated number that you use to sign transactions and so control your bitcoin. Anyone who knows the private key can spend the bitcoin that belongs to it – it must never fall into anyone else’s hands.On the learning path: Stage 5 · Step 3 – Backing up your seed phrase →In the glossary →× and sends the transaction to the network. Nodes check it and put it in their mempoolGlossaryMempoolThe buffer in which a node collects valid but still unconfirmed transactions until a miner includes them in a block. There is no central mempool – every node keeps its own.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →×. Once a miner includes it in a block, it has its first confirmationGlossaryConfirmationA transaction has one confirmation as soon as it is in a block; each further block adds one. With every confirmation, it becomes harder to displace the payment after the fact.On the learning path: Stage 5 · Step 4 – First withdrawal →In the glossary →×. You can find it in any block explorer by its ID (TXID).