MIT 15.S12 Blockchain and Money Note (Lec 5)

Study Questions:

1. How does Bitcoin record transactions? What is unspent transaction output (UTXO)? What is script code embedded in each Bitcoin transaction and how flexible a programming language is it?
2. As many design features pre-date Bitcoin, what was the novel innovation of Santoshi Nakamoto?
3. Who is Satoshi Nakamoto? (Only kidding a bit.)

lock time: It’s a protection mechanism that ensure the transaction time can only happen within this specific time span. It simply works kind of like condition on time.

Transaction Format

Why the transaction fee is not regulated (fixed) ? Market gives you the best price for a transaction fee. this is also how free market works.

Unspent Transaction Output (UTXO)

Set (Bitcoin transaction outputs that have not been spent at a given time)

1. Contains All Currently Unspent Transaction Outputs
2. Speeds up Transaction Validation Process
3. Stored using a LevelDB database in Bitcoin Core called ‘chainstate’

These UTXO data are stored in a distributed nodes, some wallet might be able save the UTXO data but not all the node.

There is only 1 transaction output, which is the spent output, the unspent transaction output is actually not an transaction output conceptually.

Bitcoin Script: A programming code used for transaction

Bitcoin Script (Not Turing Complete)
Programing Code used for Transactions
• Stack-based Code, with no Loops (not Turing-complete)
• Provides a Flexible Set of Instructions for Transaction Validation and
Signature Authentication
• Most Common Script Types in UTXO:
• Transaction sent to Hash of Bitcoin Address – ‘Pay-to-PubkeyHash’ (81%)
• Transaction sent to Hash of Conditional Script – ‘Pay-to-ScriptHash’ (18%)
• Transaction subject to Multiple Signatures – ‘M of N Multisig’ (0.7%)
• Transaction sent to Bitcoin Address – ‘Pay-to-Pubkey’ (0.1%)
(Source: Perez-Sola, Delgado-Segura, et al.)

Hal Finney might be Satoshi Nakamoto because he was an early bitcoin contributor and received the first bitcoin transaction from bitcoin’s creator Satoshi Nakamoto.