Anatomy of a Bitcoin Transaction

Transactions are the most important aspect of the Bitcoin network. Everything else is built and designed to ensure transactions can be effectively broadcast, validated, and confirmed. Transactions are made up of inputs and outputs; inputs are what go into a transaction (roughly speaking, inputs make up what is being sent), and outputs are what come out (making up what is being received). The outputs of one transaction can then be spent as the inputs of another one. To read a more in-depth explanation of inputs and outputs, visit our article on change addresses.

Nodes track spendable transaction outputs, or outputs that have not yet been used in another, subsequent transaction. These are known as unspent transaction outputs (UTXOs). When you view your transaction on the Explorer, you will see the transaction inputs on the left and the outputs on the right. Each output will have either a red or a green icon next to it. Red means the output has already been spent in a subsequent transaction, and cannot be spent again. Green means the output is a UTXO, and is available for spending. Hover over the icon to see if an output is spent or unspent.

The only exception to the output and input chain is the coinbase transaction, which is the first transaction in every block. This transaction creates brand-new bitcoin by paying out the block reward to the miner that added the block to the blockchain. The input of this transaction is not a UTXO from a previous transaction, but rather a special type of input called the coinbase. This is also the process by which the bitcoin money supply increases until it hits the cap of 21 million bitcoin.

Although most transactions are structured as payments to addresses (based on a script called Pay-to-Public-Key-Hash, or P2PKH), bitcoin transactions can use other types of scripts as well, and include additional data besides addresses and amounts. On the Explorer, these will be listed at the bottom of the transaction page under the Outputs header.

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