Bitcoin Script powers every transaction by defining spending rules, making Bitcoin not just digital money but truly programmable money.
Bitcoin is often described as “digital money,” but beneath its surface lies something more powerful — it is programmable money. At the heart of this programmability is Bitcoin Script, a simple, stack-based programming language that allows each transaction to carry specific rules for spending. In essence, every transfer of Bitcoin is governed by a miniature program that dictates how and under what conditions coins can move.
How Bitcoin Script Works
Each Bitcoin transaction functions as a small program built from two parts:
|| Locking script (scriptPubKey): The condition that must be met to spend the output.
||. Unlocking script (scriptSig): The proof provided by the spender that satisfies the condition.
When a transaction is broadcast, network nodes run this program. If the unlocking script fulfills the locking conditions, the transaction is accepted; if not, it is rejected. This mechanism ensures that Bitcoin can only be spent according to the precise rules encoded in each transaction output.
A Stack-Based Language
Bitcoin Script operates using a stack — a last-in, first-out data structure. Data such as signatures, public keys, and hashes are pushed onto the stack, while opcodes (instructions) manipulate or compare them.
For example, a simplified sequence might involve pushing a value onto the stack, hashing it, then comparing it with an expected hash. If they match, the transaction is valid. If not, it fails.
This structure makes Script both predictable and secure, as all operations are deterministic and non-Turing complete (preventing infinite loops or overly complex logic).
Common Transaction Types
1. Pay-to-Pubkey (P2PK):
The earliest form of Bitcoin transactions. Coins are locked to a public key and unlocked with a valid signature.
Notably, Satoshi’s first transaction to Hal Finney was a P2PK.
2. Pay-to-Pubkey-Hash (P2PKH):
The most widely used format. Instead of locking coins to a full public key, they are locked to its hash (the familiar Bitcoin address). To spend, the user provides both the signature and the public key, which must match the hash.
3. Pay-to-Script-Hash (P2SH):
Here, outputs are locked to the hash of a script rather than directly to a key. The spender must reveal and satisfy the full script when spending. This approach simplifies the use of complex features such as multisignature transactions.
4. Segregated Witness (SegWit):
Introduced to improve scalability, SegWit moves signatures outside the main transaction data into a separate “witness” field. This reduces transaction size and fees.
P2WPKH: The SegWit version of P2PKH, cleaner and more efficient.
P2WSH: The SegWit equivalent of P2SH, with witness data holding the signatures.
Why It Matters
Bitcoin Script transforms Bitcoin from simple digital currency into programmable money. With Script, users can set conditions such as:
1. Requiring a specific key to unlock funds.
2. Allowing multiple keys (multisig) for security.
3. Defining custom rules, such as time delays or conditional spending. These capabilities form the foundation of Bitcoin’s flexibility and security, ensuring funds move only according to the encoded instructions.
Conclusion
Bitcoin transactions are not mere transfers of value; they are executions of code. Bitcoin Script provides the framework that secures funds, enables complex transaction types, and establishes Bitcoin as programmable money. Far from being “boring,” this underlying system shows how Bitcoin functions as both digital cash and a programmable platform for financial rules.
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