# 7.1: Understanding the Foundation of Transactions

> **NOTE:** This is a draft in progress, so that I can get some feedback from early reviewers. It is not yet ready for learning.

The foundation of Bitcoin is the ability to protect the transactions, something that's done with a simple scripting language.

## Know the Parts of the Cryptographic Puzzle

As described in [Chapter 1](1_0_Introducing_Bitcoin.md), the funds in each Bitcoin transaction are locked with a cryptographic puzzle. To be precise, we said that Bitcoin is made up of "a sequence of atomic transactions: each of which is enabled by the sender with the solution to a cryptographic puzzle that is stored as a script; each of which is locked for the recipient with a new cryptographic puzzle that is stored as a script". Those scripts, which lock and unlock transactions, are written in Bitcoin Script.

_What is Bitcoin Script?_ Bitcoin Script is a stack-based Forth-like language that purposefully avoids loops and is not Turing-complete. It's made up of individual opcodes. Every single transaction in Bitcoin is locked with a Bitcoin Script; when the locking transaction for a UTXO is run with the correct inputs, that UTXO can then be spent.

The fact that transactions are locked with scripts means that they can be unlocked in a variety of different ways. In fact, we've met a number of different unlocking mechanisms to date, each of which incorporates different opcodes:

   * OP_CHECKSIG, which checks a public key against a signature is the basis of a P2PKH address, as will be fully detailed in [7.3: Scripting a P2PKH](7_3_Scripting_a_P2PKH.md).
   * OP_CHECKMULTISIG similarly checks multisigs, as will be fully detailed in [8.2: Scripting a Multisig](8_2_Creating_Multisig_Scripts.md).
   * OP_CHECKLOCKTIMEVERIFY and OP_SEQUENCEVERIFY form the basis of more complex Timelocks, as will be fully detailed in Chapter 9.
   * OP_RETURN is the mark of an unspendable transaction, which is why it's used to carry data.

## Access Scripts In Your Transactions

You may not realize it, but you've already seen these locking and unlocking scripts as part of the raw transactins you've been working with. The best way to look into these scripts in more depth is thus to create a raw transaction, then examine it.

### Create a Test Transaction

This quick raw transaction grabs the first unspent transaction sitting around, and resends it to a change address, minus a transaction fee:
```
$ utxo_txid=$(bitcoin-cli listunspent | jq -r '.[0] | .txid') 
$ utxo_vout=$(bitcoin-cli listunspent | jq -r '.[0] | .vout')
$ recipient=$(bitcoin-cli getrawchangeaddress)
$ rawtxhex=$(bitcoin-cli -named createrawtransaction inputs='''[ { "txid": "'$utxo_txid'", "vout": '$utxo_vout' } ]''' outputs='''{ "'$recipient'": 1.2985 }''')
$ signedtx=$(bitcoin-cli -named signrawtransaction hexstring=$rawtxhex | jq -r '.hex')
```
We're creating it and signing it but not sending it: the goal is simply produce a complete transaction that we can examine.

### Examing Your Test Transaction

You can now examine your transaction in depth by examining the `$signedtx`:
```
$ bitcoin-cli -named decoderawtransaction hexstring=$signedtx
{
  "txid": "7b5f161ff9f9275c94dca38348c91056fe6829a2b768ed82ede4bcf7c7384a68",
  "hash": "7b5f161ff9f9275c94dca38348c91056fe6829a2b768ed82ede4bcf7c7384a68",
  "size": 192,
  "vsize": 192,
  "version": 2,
  "locktime": 0,
  "vin": [
    {
      "txid": "99d2b5717fed8875a1ed3b2827dd60ae3089f9caa7c7c23d47635f6f5b397c04",
      "vout": 0,
      "scriptSig": {
        "asm": "3045022100c4ef5b531061a184404e84ab46beee94e51e8ae15ce98d2f3e10ae7774772ffd02203c546c399c4dc1d6eea692f73bb3fff490ea2e98fe300ac6a11840c7d52b6166[ALL] 0319cd3f2485e3d47552617b03c693b7f92916ac374644e22b07420c8812501cfb",
        "hex": "483045022100c4ef5b531061a184404e84ab46beee94e51e8ae15ce98d2f3e10ae7774772ffd02203c546c399c4dc1d6eea692f73bb3fff490ea2e98fe300ac6a11840c7d52b616601210319cd3f2485e3d47552617b03c693b7f92916ac374644e22b07420c8812501cfb"
      },
      "sequence": 4294967295
    }
  ],
  "vout": [
    {
      "value": 1.29850000,
      "n": 0,
      "scriptPubKey": {
        "asm": "OP_DUP OP_HASH160 371c20fb2e9899338ce5e99908e64fd30b789313 OP_EQUALVERIFY OP_CHECKSIG",
        "hex": "76a914371c20fb2e9899338ce5e99908e64fd30b78931388ac",
        "reqSigs": 1,
        "type": "pubkeyhash",
        "addresses": [
          "mkYMA2i2vzEXjoDn4GfvPoFr3MJ62uUtMx"
        ]
      }
    }
  ]
}
```
The two scripts are found in the two different parts of the transaction.

The `scriptSig` is located in the `vin`. This is the _unlocking_ script. It's what's run to unlock the UTXO being used to fund this transaction. There will be one `scriptSig` per UTXO in a transaction.

The `scriptPubKey` is located in the `vout`. This is the _locking_ script. It's what locks the new output from the transaction. There will be one `scriptPubKey` per output in a transaction.

To be precise: the `scriptSig` of this transaction will unlock the previous UTXO; this new transaction's output will then be locked with the `scriptPubKey`, which can in turn be unlocked by the `scriptSig` of the transaction that reuses that UTXO.

### Read The Scripts in Your Transaction

Note that each of these scripts includes two different representations: the `hex` is what actually gets stored, but the more readable assembly language (`asm`) can sort of show you what's going on.

So, here's your first look at what Bitcoin Scripting looks like.

The unlocking script is:
```
"3045022100c4ef5b531061a184404e84ab46beee94e51e8ae15ce98d2f3e10ae7774772ffd02203c546c399c4dc1d6eea692f73bb3fff490ea2e98fe300ac6a11840c7d52b6166[ALL] 0319cd3f2485e3d47552617b03c693b7f92916ac374644e22b07420c8812501cfb"
```
As it happens, that mess of numbers is a private-key signature followed by the associated public key. Or at least hopefully that's what it is, because that's what's required to unlock the P2PKH UTXO that this transaction is using.

The locking script is:
```
OP_DUP OP_HASH160 371c20fb2e9899338ce5e99908e64fd30b789313 OP_EQUALVERIFY OP_CHECKSIG
```
That in turn is the standard method in Bitcoin Script for locking a P2PKH transaction.

[7.3: Scripting a Pay to Public Key Hash](7_3_Scripting_a_Pay_to_Public_Key_Hash.md) will explain how these two scripts go together, but first you will need to know how Bitcoin Scripts are evaluated.

## Examine a Different Sort of Transaction

Before we leave this foundation behind, however, we're going to look at a different type of locking script. 

Here's the `scriptPubKey` from the multisig transaction that you created in §6.2: 
```
      "scriptPubKey": {
        "asm": "OP_HASH160 babf9063cee8ab6e9334f95f6d4e9148d0e551c2 OP_EQUAL",
        "hex": "a914babf9063cee8ab6e9334f95f6d4e9148d0e551c287",
        "reqSigs": 1,
        "type": "scripthash",
        "addresses": [
          "2NAGfA4nW6nrZkD5je8tSiAcYB9xL2xYMCz"
        ]
      }
```

Compare that to the `scriptPubKey` from your new P2PKH transaction:
```
      "scriptPubKey": {
        "asm": "OP_DUP OP_HASH160 371c20fb2e9899338ce5e99908e64fd30b789313 OP_EQUALVERIFY OP_CHECKSIG",
        "hex": "76a914371c20fb2e9899338ce5e99908e64fd30b78931388ac",
        "reqSigs": 1,
        "type": "pubkeyhash",
        "addresses": [
          "mkYMA2i2vzEXjoDn4GfvPoFr3MJ62uUtMx"
        ]
      }
```

These two transactions are _definitely_ locked in different ways. Bitcoin recognises the first as `scripthash` (P2SH) and the second as `pubkeyhash` (P2PKH), but you should also be able to see the difference in the different `asm` code: `OP_HASH160 babf9063cee8ab6e9334f95f6d4e9148d0e551c2 OP_EQUAL` versus `OP_DUP OP_HASH160 371c20fb2e9899338ce5e99908e64fd30b789313 OP_EQUALVERIFY OP_CHECKSIG`. This is the power of scripting: it can very simply produce some of the dramatically different sorts of transactions that you learned about in the previous chapters.

## Summary: Understanding the Foundation of Transactions

Every Bitcoin transaction includes at least one unlocking script (`scriptSig`), which solves a previous cryptographic puzzle, and at least one locking script (`scriptPubKey`), which creates a new cryptographic puzzle. There's one `scriptSig` per input and one `scriptPubKey` per output. Each of these scripts is written in Bitcoin Script, a Forth-like language that further empowers Bitcoin.

_What is the power of scripts?_ Scripts unlock the full power of Smart Contracts. With the appropriate opcodes, you can make very precise decisions about who can redeem funds, when they can redeem funds, and how they can redeem funds. More intricate rules for corporate spending, partnership spending, proxy spending, and other methodologies can all be encoded within a Script, and that Script can be used as the redemption condition for specific funds.