Verifying Bitcoin Transactions: A Step-by-Step Guide
Bitcoin, the world’s first decentralized digital currency, is built on a peer-to-peer network that relies on cryptography and complex mathematical algorithms to secure transactions. Essentially, verifying the input and output of a Bitcoin transaction involves several key steps that exclude access to the blockchain. In this article, we’ll explore the process of verifying these transactions using the example above as an example.
1. Step 2: Extract the transaction data
Start by extracting the relevant information from the transaction data. The “Vin” (verifiable entry) list contains a single transaction with the following information:
txid: A unique identifier for the transaction.
vout: A list of outputs associated with the transaction.
The first output (vout[0]) is the one we’ll focus on. It represents the amount being sent from the sender’s wallet.
Step 2: Calculate Output
To verify the input, calculate the output based on the sender’s balance and the fees paid for the transaction. The formula involves multiplying the sender’s balance by the per-byte fees (not shown in the submitted data) and then dividing by the total byte length of the transaction.
The resulting output value (“out”).
Step 3: Calculate Fees
Calculate the fees associated with the transaction, which include the gas price and any mining or network fees. The formula involves multiplying the per-byte fees by the total byte length of the transaction.
The resulting compensation amount (“compensation”).
Step 4: Check the output
Ensure that the output matches the expected value based on the sender’s balance and the payment calculation from Step 2. If the outputs do not match, the transaction is considered invalid and cannot be validated.
If the check passes, update the “blockchain” (not shown in this example) with the confirmed input and output values.
Step 5: Update the transaction hash
Update the transaction hash values by recalculating them using the updated inputs and outputs. The formula involves taking a cryptographic hash of the entire transaction data.
The resulting updated transaction hash (‘hash’).
Examples
Assuming we have the following transaction data:
- “txid”: 1d8f38f6a5fbc7951568f64f3b9320a4ebd1053dce4641a5c5526d3cd7a805e1
vout[0]: 10 BTC (value: 100000.00 USD)
- Per-byte Payments: $50.00
Using the above example, we calculate:
- Out Value (
out): 100000.00 USD
- Payment Amount: 5000.00 USD
- Updated Transaction Hash (“hash”): 1d8f38f6a5fbc7951568f64f3b9320a4ebd1053dce4641a5c5526d3cd7a805e1 + $50.00 (fuel price) = 1d8f38f6a5fbc7951568f64f3b9320a5c5526d3cd7a805e1 + $50.00 (fuel price) = 1d8f38f6a5fbc7951568f64 1053dce4641a5c5526d3cd7a805e1+$5000.00
Conclusion
Verifying the income and output of a Bitcoin transaction requires several key steps, aside from accessing the blockchain. By following these steps, using an example like the one shown in this article, you can understand how to confirm transactions on the Bitcoin network without needing to know the details of the blockchain.
