Aaradhya Textile Industry
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 uses cryptography and complex mathematical algorithms to secure transactions. At its core, verifying the inputs and outputs of a Bitcoin transaction involves several key steps, in addition to accessing the blockchain. In this article, we’ll dive into the process of verifying these transactions, using the example provided as an illustration.
Step 1: Get the transaction details
First, extract relevant information from the transaction data. The vin list (verified input) contains a single transaction with the following data:
txid: a unique transaction identifier.
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 that will be sent from the sender’s wallet.
Step 2: Calculate the 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 fee per byte (not included in the data provided) and then dividing by the total length of the transaction bytes.
The output value received (“out”).
Step 3: Calculate the fees
Calculate the fees associated with the transaction, which include the gas price and any other fees paid to the miner or network. The formula involves multiplying the fee per byte by the total length of the transaction bytes.
The amount of the fee received (“fee”).
Step 4: Verify the output
Verify that the output matches the expected value based on the sender’s balance and the fee calculation from step 2. If the output is not the same, the transaction is considered invalid and cannot be confirmed.
If the verification is successful, update the blockchain (not shown in this example) with the verified input and output values.
Step 5: Update the transaction hash
Update the transaction hash by recalculating using the updated input and output data. The formula involves obtaining a cryptographic hash of all transaction data.
Received updated transaction hash (“hash”).
Example of a step-by-step guide
Let’s assume we have the following transaction data:
txid: 1d8f38f6a5fbc7951568f64f3b9320a4ebd1053dce4641a5c5526d3cd7a805e1
Vout[0]: 10 BTC (value: $100,000.00)
- Fee per byte: $50.00
Using the above example, we calculate:
- Output value (“out”): $100,000.00
- Fee amount: $5,000.00
- Updated transaction hash (“hash”): 1d8f38f6a5fbc7951568f64f3b9320a4ebd1053dce4641a5c5526d3cd7a805e1 + $50.00 (gas price) = 1d38afc3b696f65afc35b 1053dce4641a5c5526d3cd7a805e1+$5000.00
Conclusion
Verifying the inputs and outputs of a Bitcoin transaction requires several key steps, in addition to accessing the blockchain. By following these steps using an example like the one in this article, you will be able to understand how to verify transactions on the Bitcoin network without knowing the details of the blockchain.