Transactions consist of one or more inputs and one or more outputs

Transactions are defined using a Forth-like scripting language.^{[7]: ch. 5} Transactions consist of one or more inputs and one or more outputs. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain.^[45] The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction. As in a cash transaction, the sum of inputs (coins used to pay) can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer.^[45] Any input satoshis not accounted for in the transaction outputs become the transaction fee.^[45]

Though transaction fees are optional, miners can choose which transactions to process and prioritize those that pay higher fees.^[45] Miners may choose transactions based on the fee paid relative to their storage size, not the absolute amount of money paid as a fee. These fees are generally measured in satoshis per byte (sat/b). The size of transactions is dependent on the number of inputs used to create the transaction and the number of outputs.^{[7]: ch. 8}

The blocks in the blockchain were originally limited to 32 megabytes in size. The block size limit of one megabyte was introduced by Satoshi Nakamoto in 2010.^{[clarification needed]} Eventually, the block size limit of one megabyte created problems for transaction processing, such as increasing transaction fees and delayed processing of transactions.^[46] Andreas Antonopoulos has stated Lightning Network is a potential scaling solution and referred to lightning as a second-layer routing network.^{[7]: ch. 8}

Ownership

Simplified chain of ownership as illustrated in the bitcoin whitepaper.^[3] In practice, a transaction can have more than one input and more than one output.^[45]

In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address requires nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse, computing the private key of a given bitcoin address, is practically unfeasible.^{[7]: ch. 4} Users can tell others or make public a bitcoin address without compromising its corresponding private key. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key pair that is already in use and has funds. The vast number of valid private keys makes it unfeasible that brute force could be used to compromise a private key. To be able to spend their bitcoins, the owner must know the corresponding private key and digitally sign the transaction.^[d] The network verifies the signature using the public key; the private key is never revealed.^{[7]: ch. 5}

If the private key is lost, the bitcoin network will not recognize any other evidence of ownership;^[42] the coins are then unusable, and effectively lost. For example, in 2013 one user claimed to have lost ₿7,500, worth $7.5 million at the time, when he accidentally discarded a hard drive containing his private key.^[49] About 20% of all bitcoins are believed to be lost—they would have had a market value of about $20 billion at July 2018 prices.^[50]

To ensure the security of bitcoins, the private key must be kept secret.^{[7]: ch. 10} If the private key is revealed to a third party, e.g. through a data breach, the third party can use it to steal any associated bitcoins.^[51] As of December 2017, around ₿980,000 have been stolen from cryptocurrency exchanges.^[52]

Regarding ownership distribution, as of 28 December 2022, 9.62% of bitcoin addresses own 98.51% of all bitcoins ever mined.^[53] The largest of these addresses are thought to belong to exchanges, which are keeping their bitcoin in cold storage.^[54]

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