Bitcoin: What specific verifications are done on a fresh Bitcoin TX and in what order?

Understanding the Bitcoin Transaction Verification Process

Bitcoin transactions are verified through a multi-step process that ensures the integrity and security of the network. In this article, we’ll dive into the specific checks performed on a new Bitcoin transaction (TX) and the order in which they occur.

Verification Steps:

• Transaction Verification: The first step is to verify the validity of the transaction itself. This involves checking that:

• The sender has enough funds to send the specified amount.

• The transaction is valid according to the rules of the Bitcoin protocol (e.g. amounts, denominations).

• UTXO Set Verification: Next, a node checks its UTXO set to ensure that all required coins are present at the coinbase address. This verification step helps prevent spam attacks by ensuring that transactions only include valid coins.

• Mempool Validation: After verifying the transaction and its dependencies (e.g. witnesses), a node typically checks its mempool to verify that the transaction is valid for inclusion on the main chain. This involves checking that:

• The transaction has not been rejected by any previous node.

• The transaction complies with the rules of the Bitcoin protocol.

• Relay

  : Once verified, the transaction is relayed across the network by multiple nodes. This step ensures that the transaction is propagated to the entire network and can be verified by nodes at the end of each block.

Node Order:

The order in which these steps occur varies depending on the node configuration, but a typical workflow follows this:

• UTXO Set Verification: The node starts with this step, ensuring that all required coins are present.

• Transaction Verification: The node checks the transaction against its own rules and UTXO set to ensure validity.

• Mempool Validation: If the transaction passes validation, it is added to the mempool for rebroadcast.

Basic Low-Resource Checks:

Your initial statement about basic low-resource checks being done first is partially correct. While not explicitly mentioned in this article, these checks are in fact performed before other verification steps. However, their primary function is to detect and prevent spam attacks by ensuring that transactions do not contain excessive or invalid amounts.

In summary, the Bitcoin transaction verification process involves a multi-step validation sequence that ensures the integrity and security of the network. The order of verification and the specific checks performed are critical to preventing spam attacks and maintaining community trust.