The UTXO is exactly what you will get whenever someone pays you some Bitcoin. The output of these deal could be the cash they paid for your requirements. And whilst it sits in your wallet, it really is, clearly, unspent. Thus unspent transaction output.
To help you think about the present state associated with the Bitcoin system to be an enormous pool of UTXOs: all of the payments that have already been received by Bitcoin users which they have never yet invested:
Every payment which includes perhaps perhaps perhaps not itself been spent is modeled into the Bitcoin system as a unspent transaction output. Generally speaking, each UTXO can just only be invested because of the owner of this address to which it had been delivered (not at all times, and also this may be the true point; see later). And every UTXO posseses an identifier (the deal it starred in and its own place into the variety of outputs of the deal) and a value: exactly just how bitcoins that are many represented by that UTXO.
But just what individuals frequently miss is these UTXOs are in reality tiny small computer programs that go on the ledger, control usage of bitcoins and run in response to specific incoming events. Smart Contracts, in the event that you shall. Plus the best way you’re able to invest the cash managed by that agreement is that it returns if you can provide some input data that allows every node on the system to execute the program and check TRUE
You get to say what happens to the funds if you can make the program return TRUE. If you cant, then you dont.
Therefore, when you need to expend your hard earned money, right right heres everything you do:
Your wallet computer computer software writes only a little computer system for you personally after which delivers it in to the bitcoin system. It effortlessly states to your community: Please run this program that is little simply offered you. Then please find a program (smart contract?) on the working platform with this particular ID in my situation. Whenever youve done that, feed the production from my system into system you just located. Which means this is a two action procedure: you offer your personal small system together with output of this is given to your UTXO program that you would like to invest.
How you spend some money in Bitcoin will be ask the working platform to operate a little computer system which you provide and feed the production of this system towards the smart contract that is keeping the funds you intend to invest. Whenever you can get this to second system run effectively, you are free to invest the funds. In Bitcoin terminology, this program you offer is scriptSig plus the UTXO program is scriptPubKey. Your aim is always to give a scriptSig whose production could be given into scriptPubKey to produce it get back TRUE
Just what exactly are these programs that are little? Within the typical instance, theyre really easy. The UTXO program just claims: provide me personally by having a digital signature that demonstrates you own the key linked to the following Bitcoin address (and please additionally demonstrate that you understand the public key that corresponds to your bitcoin target). Thats why it is called the scriptPubKey.
As well as the system you offer is ways to make sure the bitcoin system delivers this evidence to the scriptPubKey system within the way that is right. Its a means of supplying a signature that is digital fetlife. Hence it is called the scriptSig
Then you cant generate the right signature and so you cant create the input necessary to get the smart contract (scriptPubKey) to run successfully and you dont get to spend the funds if you dont know the private key. And this, apparently complex model, is simply an approach to make certain that the actual only real individual who can spend some money at address 1abcde could be the one who understands the personal key just as we might desire.
Exactly why is it this complex?
