Introduction

https://player.vimeo. com/video/648429274

As we have seen previously, Bitcoin is a timestamping service. Transactions arrive, and are immediately put into pools ready to be evaluated. Node systems give node operators freedom of choice in transaction processing, allowing them to pool transactions of similar types for the most cost effective processing, using properties such transaction size, fees paid, number of inputs, number of outputs and more, acting as inputs to the processing selection system. Transactions can be put immediately into a node’s next block, set aside or rejected entirely depending on a node’s setup parameters.

Transactions can also be submitted in a non-final state as part of what is called a payment channel. These payment channels can be used to deliver services including streaming video, or large data transfers inside a bitcoin transaction, leaving only a final payment action recorded on-chain.

In this section we will look at how a transaction is built, what happens when it is received by a node, and how the form of a transaction may influence how a node operator processes it, in the context of the local rules.