BA-00 · LESSON 02

Transactions, outputs, locks, keys, and addresses

KEY DEFINITIONS

Terms used in this lesson

Outpoint: A transaction ID plus output number that identifies one exact prior output.
Witness: Signatures, scripts, or other data supplied to satisfy a Bitcoin output’s spending condition.

Build one payment from spendable outputs and follow how an address becomes a locking script, a key authorizes an input, and change becomes a new output.

45 min Difficulty 1/5 Not started

VISUAL MODEL

See the whole mechanism before going step by step

Use the diagrams to orient yourself. Then the guided explanation below teaches every part in depth.

4 explanatory views

CONCEPT-SPECIFIC MAP · payment stateAn address becomes a balanced output transitionSelect any state to inspect its exact role.

RELATIONSHIP MAPInputs, rule, and outputs

01
ADDRESSbc1q destination
Decode network, checksum, witness version, and program before building Bob's ScriptPubKey.
02
INPUTS70k + 45k sats
Each input identifies and consumes one complete prior output.
03
OUTPUTS80k pay + 33.8k change
Payment and change are newly created outputs rather than edits to earlier ones.
04
FEE1,200 sats
Fee is total input value minus total output value.
05
NODE RESULTAuthorize and accept
Availability, authorization, scripts, encodings, and conservation all must pass.

Rule shown: Addresses communicate scripts, keys authorize exact inputs, and nodes consume whole prior outputs only when the complete transaction balances.

STAGE 1 OF 5ADDRESS: bc1q destination

Decode network, checksum, witness version, and program before building Bob's ScriptPubKey.

Governing relationship: Addresses communicate scripts, keys authorize exact inputs, and nodes consume whole prior outputs only when the complete transaction balances. Complete path: 1. ADDRESS, bc1q destination. Decode network, checksum, witness version, and program before building Bob's ScriptPubKey. 2. INPUTS, 70k + 45k sats. Each input identifies and consumes one complete prior output. 3. OUTPUTS, 80k pay + 33.8k change. Payment and change are newly created outputs rather than edits to earlier ones. 4. FEE, 1,200 sats. Fee is total input value minus total output value. 5. NODE RESULT, Authorize and accept. Availability, authorization, scripts, encodings, and conservation all must pass.

1. State transitionWhat exists, what changes, and what results

BEFORE

Alice pays Bob 80,000 satoshis from outputs of 70,000 and 45,000, with a 1,200 satoshi fee.

MECHANISM

Bob shares a mainnet address. Alice's wallet checks its network and checksum, decodes its witness version and program, and builds the exact output script. The address text is…

AFTER

Addresses communicate output conditions, keys authorize inputs, and nodes enforce the complete output replacement.

Text equivalent: Starting from Alice pays Bob 80,000 satoshis from outputs of 70,000 and 45,000, with a 1,200 satoshi fee. The mechanism begins when Bob shares a mainnet address. Alice's wallet checks its network and checksum, decodes its witness version and program, and builds the exact output script. The address text is not written into the transaction. The resulting lesson is Addresses communicate output conditions, keys authorize inputs, and nodes enforce the complete output replacement.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 5

Decode the payment instruction

Bob shares a mainnet address. Alice's wallet checks its network and checksum, decodes its witness version and program, and builds the exact output script. The address text is not written into the transaction.

Complete path: 1. Decode the payment instruction: Bob shares a mainnet address. Alice's wallet checks its network and checksum, decodes its witness version and program, and builds the exact output script. The address text is not written into the transaction. 2. Select complete outputs: Alice's wallet selects spendable outputs worth 70,000 and 45,000 satoshis. Each input names one transaction identifier and output index. An input cannot consume only part of its referenced output. 3. Create payment, change, and fee: The transaction creates 80,000 satoshis for Bob and 33,800 satoshis of change for Alice. Inputs total 115,000, outputs total 113,800, so the implicit fee is 1,200 satoshis. 4. Authorize the inputs: Alice's signer checks the destination, values, fee, and change, then creates signatures for the input commitment. A signature authorizes the specified transaction data. It does not prove that an output is still unspent. 5. Let full nodes enforce the transition: Each node checks outpoint availability, amount conservation, Script, signatures, field encodings, and applicable consensus rules. Acceptance consumes the old outputs and creates the new outputs atomically.

3. Rule and failure boundaryWhat accepts the result and where it can stop

ACCEPTED PATH

The transaction is accepted only when each input exists, each authorization succeeds, output value plus fee does not exceed input value, and every field follows the active rules.

CHANGED CONDITION

A valid signature cannot rescue an already spent outpoint, a network mismatch, an underfunded transaction, or an output script different from the one the signer reviewed.

Important distinction: An address is a Bitcoin account number and the private key logs into it. An address helps construct a locking script. Value exists in individual outputs, and a key can authorize only outputs whose conditions it satisfies.

Text equivalent: The accepted path is enforced by The transaction is accepted only when each input exists, each authorization succeeds, output value plus fee does not exceed input value, and every field follows the active rules. If the required condition changes, A valid signature cannot rescue an already spent outpoint, a network mismatch, an underfunded transaction, or an output script different from the one the signer reviewed.

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Learn the idea

A Bitcoin payment does not move a balance between protocol accounts. It consumes one or more existing outputs and creates replacement outputs. The receiver shares an address that a wallet decodes into a locking script. The sender proves authorization with a signature from the matching key, while full nodes check that every referenced output is available and every value balances.

GUIDED EXPLANATION1/5 ideas inspected

Decode the payment instruction

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“An address is a Bitcoin account number and the private key logs into it.”

An address helps construct a locking script. Value exists in individual outputs, and a key can authorize only outputs whose conditions it satisfies.

FINISH LEARNING FIRST

The questions unlock after every required learning activity

Inspect every guided idea, open the worked example, rebuild its mechanism, and complete the deterministic lesson tool. Your progress is saved automatically.