Cryptionary: Transaction - Definition

concept

In blockchain systems, a transaction is a fundamental unit of data exchange that represents a transfer of value or information. Each transaction is cryptographically signed by the sender, broadcast to the network, verified by nodes, and eventually included in a block as part of the blockchain's permanent ledger.

Example 1.1

"When Alice sends 0.1 BTC to Bob, she creates a transaction that includes the amount, Bob's address, transaction fees, and a digital signature proving she controls the sending address."

structure

Transactions have different structures depending on the blockchain, but generally include:

Inputs: References to previous transactions that provide the funds being spent (in UTXO models) Outputs: The addresses receiving funds and their amounts Digital Signature: Cryptographic proof that the transaction creator controls the sending address Transaction Fee: Payment to miners/validators for processing the transaction Additional Data: Optional fields like timestamps, smart contract code, or memos

Example 2.1

"In a Bitcoin transaction with multiple recipients, the outputs section lists each recipient address along with the specific amount they'll receive, while a change output returns any remaining balance to the sender."

lifecycle

A transaction typically goes through several stages:

Creation: A user creates and signs a transaction using their wallet
Broadcast: The transaction is sent to the peer-to-peer network
Mempool: The transaction waits in nodes' mempools to be selected for inclusion in a block
Confirmation: Miners/validators include the transaction in a block
Additional Confirmations: More blocks are added on top, increasing security
Finality: After sufficient confirmations, the transaction is considered irreversible

Example 3.1

"After John sent the transaction, it remained in the mempool for 15 minutes before receiving its first confirmation. Most exchanges require 3-6 confirmations before considering Bitcoin transactions final."

types

Different blockchains support various transaction types:

Simple Value Transfers: Basic movement of cryptocurrency between addresses Smart Contract Interactions: Executing code on platforms like Ethereum Token Transfers: Moving tokens that exist on top of a base blockchain Multi-signature Transactions: Requiring approval from multiple private keys Time-locked Transactions: Only valid after or before specific times Data Storage: Including small amounts of arbitrary data in the blockchain

Example 4.1

"While Bitcoin primarily supports value transfer transactions, Ethereum transactions can include complex smart contract interactions, such as swapping tokens on decentralized exchanges or minting NFTs."