Hand-encoding a Bitcoin Transaction

Bitcoin is a decentralized, open-source cryptocurrency that allows users to create and send transactions without having to use intermediaries such as banks. One of the most important components of a Bitcoin transaction is the Sig script, which is used to verify the identity of the sender and ensure the integrity of the transaction.

In this article, we will walk through the process of hand-encoding a Bitcoin transaction in a standard format according to the Bitcoin protocol.

Transaction Format

A Bitcoin transaction consists of the following components:

• prevhash: The hash of the previous block

• index: The index of the previous transaction (0-indexed)

• scriptSig: The script signature used to verify the identity of the sender and ensure the integrity of the transaction

• vsize: The size of the transaction data

• vpri: The public key of the sender

• data: The transaction data

Script Signatures

A script signature is a series of numbers preceded by the “OP_” character. Each number represents an operation performed on the sender’s balance. The most common operations are:

• OP_1: Set the sender’s balance to 0

• OP_2: Increase the sender’s balance by the value given in the transaction data below

Here is an example of a script signature:

4a76a51c7f9b6a6a000000000000000000000000000000000000000000000000000000000001e80fe2004a5ef6d6

The script signature means that the sender’s balance should be set to 0. In this example, the transaction data “OP_2” has the value 100.

Manually encode a Bitcoin transaction

To manually encode a Bitcoin transaction, we need to create a new block and add the necessary components to it.

Here is an example of manually encoding a Bitcoin transaction:

Input:
Previous tx: f5d8ee39a430901c91a5917b9f2dc19d6d1a0e9cea205b009ca73dd04470b9a6
Index: 0
ScriptSign:
4a76a51c7f9b6a6a0 ... 3047023278d0782e2bfc35d41ed29cdab4ea5ef6dc
Data:
OP_1: 0
OP_3: f5d8ee39a430901c91a5917b9f2dc19d6d1a0e9cea205b009ca73dd04470b9a6

This block consists of:

• prevhash: The hash of the previous block, set to 0 (since we are starting from scratch)

• index: The index of the previous transaction, which is 0

• scriptSig: The script signature that sets the sender’s balance to 0 and increases their balance by 100 using OP_2

• vsize: The size of the transaction data, set to 20 bytes (data only transaction)

• vpri: The sender’s public key, in this example set to a hardcoded value

• data: The script signature that increases the sender’s balance by 100 at OP_2

Signing and verifying the transaction

To sign a transaction we need to create a new Bitcoin wallet and load it with our public key. We can then use the wallet signature API to generate a digital signature for the transaction.

Here is an example of how to sign a transaction:

import bitcoins





Load a wallet
wallet = bitcoin.new_wallet()

Create a new block
block = bitcoin.NewBlock()

Set the previous hash and index
previous_hash = '0'
index = 0

Add a script signature and data to the block
block.set_script Sig(4a76a51c7f9b6a6a0 ... 'f5d8ee39a430901c91a5917b9f2dc19d6d1a0e9cea205b009ca73dd04470b9a6', 100)

Sign block
signature = wallet.sign_block(block)

Print signed block
print(bitcoin.PrintBlock(block, signature))

This code creates a new Bitcoin wallet and loads it with our public key. Then it configures a new block and adds the necessary script signatures and data to it. Finally, it signs the block using the wallet signature API and prints the signed block.