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  • Intro
    • Welcome
    • The Benefits of BSV Blockchain
    • What Can I Do?
    • Overview of GitHub repositories
    • Quick Start
  • Protocol
    • Introduction
    • BSV Blockchain
      • Blocks
      • Transactions
      • Proof of Work
      • Capabilities
      • Economic Model of Governance
      • Digital Asset Recovery
    • Network Policies
      • High-Level Architecture
      • Mining
      • Standard and Local Policies
      • Consensus Rules
      • Local Policies
    • Node Operations
      • Node Software
      • Bitcoin Server Network (BSN)
      • ChainTracker
      • Transaction Validation
      • UTXO Storage
      • Mempool
      • Block Assembler
      • Block Validation
      • Mining Software
      • Pruning transactions
      • Responsibilities of a Node
    • SPV Wallets, Overlays and SPV Processes
      • Simplified Payment Verification (SPV)
      • Instant Payments
      • Integrity Checks
      • SPV Wallets & Overlays
    • Transaction Lifecycle
      • Transaction Inputs and Outputs
      • Script
      • Transaction Flow
      • Constructing a transaction
      • Sequence Number and Time Locking
      • Transaction Templates
      • Transaction Processing
      • Opcodes used in Script
    • Privacy
      • Keys and Identity
      • Private vs Anonymous
      • Digital Signatures
      • Privacy on the Public Blockchain
  • Network Access Rules
    • Rules
      • Table of Contents
      • Background to the Rules
      • PART I - MASTER RULES
      • PART II - GENERAL RULES
      • PART III - ENFORCEMENT RULES
      • PART IV - DISPUTE RESOLUTION RULES
      • PART V - INTERPRETIVE RULES
    • FAQs
      • Miners
      • Professionals
      • Users
  • Important Concepts
    • High Level
      • Web3
      • Timestamping
      • SPV
      • UTXO vs Account Based
      • Linked Keys
      • Smart Contracts
    • Details
      • Hash Functions
      • Merkle Trees
      • Sighash Flags
      • Script
      • SPV
        • Deep Dive
        • Payments Flow
        • Data Models
        • Broadcasting
  • Network Topology
    • Mandala Upgrade
    • Nodes
      • SV Node
        • Architecture
        • System Requirements
        • Installation
          • SV Node
            • Configuration
            • AWS Volumes Setup
            • DDOS Mitigation
            • Docker
            • Genesis Settings
            • GetMiningCandidate
            • GKE
            • Network Environments
              • Regtest
              • STN
              • Testnet
        • Alert System
          • Alert Messages
          • Running the Alert System
            • Startup Script
          • Webhooks
        • RPC Interface
          • RPC Methods
        • Frequently Asked Questions
          • Blocks
          • Initial Block Download
          • Transactions
          • Log File Warnings
          • Safe Mode
          • Bug Bounty
        • Chronicle Release
      • Teranode
    • Overlay Services
      • Overlay Example
    • SPV Wallet
      • Quickstart
      • Key Concepts
      • AWS Deployment
        • Installation
        • Manage & Maintain
        • Update
        • Delete
      • Components
        • SPV Wallet Server
        • Storage
        • Web Admin
        • Block Headers Service
        • Web App & API
      • Who is it for?
      • Functionality & Roadmap
      • Contribute
      • Developers Guide
        • SPV Wallet
          • Authentication
          • Configuration
          • Notification
        • Go Client
          • Authentication
        • JS Client
          • Authentication
        • Admin
        • Keygen
        • Block Headers Service
          • Authentication
          • Configuration
      • Additional Components
  • paymail
    • Overview
    • BRFC Specifications
      • Specification Documents
      • BRFC ID Assignment
    • Service Discovery
      • Host Discovery
      • Capability Discovery
    • Public Key Infrastructure
    • Payment Addressing
      • Basic Address Resolution
      • Sender Validation
      • Receiver Approvals
      • PayTo Protocol Prefix
    • Verify Public Key Owner
    • Recommendations
  • Guides
    • Local Blockchain Stack
      • Mockchain Stack
    • Business Use Cases
      • Creating a Tranche of Event Tickets
    • SDKs
      • Concepts
        • BEEF
        • Fees
        • SPV
        • Transactions
        • Op Codes
        • Script Templates
        • Signatures
        • Verification
      • TypeScript
        • Node, CommonJS
        • React
        • Low Level
          • Verification
          • ECDH
          • Numbers & Points
          • Signatures
          • 42
          • ECDSA
          • Hmacs
          • Keys
          • Scripts
        • Examples
          • Creating a Simple Transaction
          • Verifying a BEEF Structure
          • Creating Transactions with Inputs, Outputs and Templates
          • Creating the R-puzzle Script Template
          • Message Encryption and Decryption
          • Message Signing
          • Building a Custom Transaction Broadcast Client
          • Verifying Spends with Script Intrepreter
          • BIP32 Key Derivation with HD Wallets
          • Using Type 42 Key Derivation for Bitcoin Wallet Management
          • Creating a Custom Transaction Fee Model
          • Building a Pulse Block Headers Client
          • Using ECIES Encryption
      • Go
        • Examples
          • Simple Tx
          • Keys
          • Encryption
          • Broadcasting
          • Inscribing
          • Data Markers
          • Linked Keys
          • ECIES
          • Fees
          • HD Keys
          • Headers
          • Secure Messages
          • Merkle Path Verification
      • Python
        • Examples
          • Simple Tx
          • Verifying BEEF
          • Complex Tx
          • Script Templates
          • Encryption
          • Message Signing
          • Building A Custom Broadcaster
          • HD Wallets
          • Linked Keys
          • Fees
          • Merkle Path Verification
          • ECIES
  • BSV Academy
    • Getting Started
    • BSV Basics: Protocol and Design
      • Introduction
        • Bit-Coin
      • The BSV Ledger
        • The Ledger
        • Triple Entry Accounting
        • Example
      • Coins and Transactions
        • Coins
        • Transactions
        • Transaction Fees
      • Theory
      • Conclusion
    • BSV Enterprise
      • Introduction
      • About BSV Blockchain
        • Introduction
        • Safe, Instant Transactions at a Predictably Low Cost
          • Reliably Low Fees
          • Comparison to Legacy Transaction Systems
          • Payment Channels
        • Scalability to Accommodate Global Demand
          • Big Blocks Show Big Potential
        • A Plan for Regulatory Acceptance
          • Ready-made Compliance
          • The Open BSV License
        • Protocol Stability
          • Building Foundations on a Bedrock of Stone
      • Technical Details
        • The Network
          • The Small World Network
          • Robust In Its Unstructured Simplicity
        • The Bitcoin SV Node Client
          • Teranode - The Future of BSV
        • The Protocol - Simple, Robust and Unbounded
          • What is the BSV Protocol?
        • Proof of Work
          • The Algorithm
          • Efficiency of Proof of Work
        • Privacy and Identity
        • Permissions and Privacy
      • Resources and Tools
        • The Technical Standards Comittee
          • TSC Principles
          • Standard Development Process
          • Status of Current and In-progress Standards
        • The Working Blockchain
          • Pruning to Create a Working Blockchain
          • Building a Working Blockchain from a List of Block Headers
          • A World View Backed by Proof of Work
    • Hash Functions
      • What are Hash Functions?
        • The Differences Between Hashing and Encryption
        • The Three Important Properties of Hash Functions
        • The Hash Functions Found in BSV
      • Base58 and Base58Check
        • What is Base58 and Why Does Bitcoin use it?
        • What is Base58 and How Does BSV use it?
      • SHA256
        • BSV Transactions and SHA-256
        • BSV Blocks and SHA-256
        • Proof-of-Work and HASH-256
      • Walkthrough Implementation of SHA-256 in Golang
        • Overview of SHA-256
        • SHA-256 Input and Processing
        • SHA-256 Compression
        • SHA-256 Final Value Construction and Output
      • RIPEMD-160
        • BSV Addresses & WIFs
      • Walkthrough Implementation of RIPEMD-160 in Golang
        • Overview of RIPEMD-160
        • RIPEMD-160 Input and Processing
        • RIPEMD-160 Compression
        • RIPEMD-160 Final Value Construction and Output
      • Doubla Hashing and BSV's Security
        • Why is Double Hashing Used in BSV
        • Hash Functions and BSV's Security Model
    • Merkle Trees
      • The Merkle Tree
        • What is a Merkle Tree?
        • Why use a Merkle Tree?
        • Merkle Trees in Action
      • Merkles Trees in BSV
        • The Data Elements
        • Transaction Merkle Trees
        • Transaction Merkle Trees in Action
      • Merkle Trees and the Block Header
        • What is the Block Header
        • The Hash Puzzle
        • Proof-of-Work in Action
      • Merkle trees and Verifying Proof of Work
        • Broadcasting the Block
        • The Coinbase Transaction
        • Data Integrity of the Block
        • Saving Disk Space
      • Standarised Merkle Proof
        • What is a Merkle Proof?
        • The BSV Unified Merkle Path (BUMP) Standard
        • Simple and Composite Proofs
      • Merkle Trees and Simplified Payment Verification
        • SPV
        • Offline Payments
    • Digital Signatures
      • What are Digital Signatures
        • Background
        • Introduction
        • Digital Signatures Protocol
        • Properties of Digital Signatures
      • ECDSA Prerequisites
        • Disclaimer
        • Modular Arithmetic
        • Groups, Rings and Finite Fields
        • Discrete Logarithm Problem
        • Elliptic Curve Cryptography (ECC)
        • Discrete Logarithm Problem with Elliptic Curves
      • ECDSA
        • Introduction
        • ECDSA
        • Further Discussion
      • BSV and Digital Signatures
        • Introduction
        • BSV Transaction
        • ECDSA (secp256k1) for BSV Transaction
        • Summary
        • Signed Messages
        • Miner Identification and Digital Signatures
    • BSV Theory
      • Abstract
        • Peer-to-Peer Cash
        • Digital Signatures and Trusted Third Parties
        • Peer-to-Peer Network
        • Timechain and Proof-of-Work
        • CPU Power
        • Cooperation in the Network
        • Network Structure
        • Messaging Between Nodes
      • Introduction
        • Commerce on the Internet
        • Non Reversible Transactions
        • Privacy in Commerce
        • The Paradigm of Fraud Acceptance
        • What is Needed...
        • Protecting Sellers From Fraud
        • Proposed Solution
        • Security and Honesty
      • Transactions
        • Electronic Coins
        • Spending a Coin
        • Payee Verification
        • Existing Solutions
        • First Seen Rule
        • Broadcasting Transactions
        • Achieving Consensus
        • Proof of Acceptance
      • Timestamp Server
        • Timestamped Hashes
        • A Chain of Timestamped Hashes
      • Proof of Work
        • Hashcash
        • Scanning Random Space
        • Nonce
        • Immutable Work
        • Chain Effort
        • One CPU, One Vote
        • The Majority Decision
        • The Honest Chain
        • Attacking the Longest Chain
        • Controlling the Block Discovery Rate
      • Network
        • Running the Network
        • The Longest Chain
        • Simultaneous Blocks
        • Breaking the Tie
        • Missed Messages
      • Incentive
        • The Coinbase Transaction
        • Coin Distribution
        • Mining Analogy
        • Transaction Fees
        • The End of Inflation
        • Encouraging Honesty
        • The Attacker's Dilemma
      • Reclaiming Disk Space
        • Spent Transactions
        • The Merkle Tree
        • Compacting Blocks
        • Block Headers
      • Simplified Payment Verification
        • Full Network Nodes
        • Merkle Branches
        • Transaction Acceptance
        • Verification During Attack Situations
        • Maintaining an Attack
        • Invalid Block Relay System
        • Businesses Running Nodes
      • Combining and Splitting Value
        • Dynamically Sized Coins
        • Inputs and Outputs
        • A Typical Example
        • Fan Out
      • Privacy
        • Traditional Models
        • Privacy in Bitcoin
        • Public Records
        • Stock Exchange Comparison
        • Key Re-Use
        • Privacy - Assessment 2
        • Linking Inputs
        • Linking the Owner
      • Calculations
        • Attacking the Chain
        • Things the Attacker Cannot Achieve
        • The Only Thing an Attacker Can Achieve
        • The Binomial Random Walk
        • The Gambler's Ruin
        • Exponential Odds
        • Waiting For Confirmation
        • Attack Via Proof of Work
        • Vanishing Probabilities
      • Conclusion
        • Conclusion Explained
    • Introduction to Bitcoin Script
      • Chapter 1: About Bitcoin Script
        • 01 - Introduction
        • 02 - FORTH: A Precursor to Bitcoin Script
        • 03 - From FORTH to Bitcoin Script
        • 04 - Bitcoin's Transaction Protocol
        • 05 - Transaction Breakdown
        • 06 - nLockTime
        • 07 - The Script Evaluator
      • Chapter 2: Basic Script Syntax
        • 01 - Introduction
        • 02 - Rules Around Data and Scripting Grammar
        • 03 - The Stacks
      • Chapter 3: The Opcodes
        • 01 - Introduction
        • 02 - Constant Value and PUSHDATA Opcodes
        • 03 - IF Loops
        • 04 - OP_NOP, OP_VERIFY and its Derivatives
        • 05 - OP_RETURN
        • 06 - Stack Operations
        • 07 - Data transformation
        • 08 - Stack Data Queries
        • 09 - Bitwise transformations and Arithmetic
        • 10 - Cryptographic Functions
        • 11 - Disabled and Removed Opcodes
      • Chapter 4: Simple Scripts
        • 01 - Introduction
        • 01 - Pay to Public Key (P2PK)
        • 02 - Pay to Hash Puzzle
        • 03 - Pay to Public Key Hash (P2PKH)
        • 04 - Pay to MultiSig (P2MS)
        • 05 - Pay to MultiSignature Hash (P2MSH)
        • 06 - R-Puzzles
      • Chapter 5: OP_PUSH_TX
        • 01 - Turing Machines
        • 02 - Elliptic Curve Signatures in Bitcoin
        • 03 - OP_PUSH_TX
        • 04 - Signing and Checking the Pre-Image
        • 05 - nVersion
        • 06 - hashPrevouts
        • 07 - hashSequence
        • 08 - Outpoint
        • 09 - scriptLen and scriptPubKey
        • 10 - value
        • 11 - nSequence
        • 12 - hashOutputs
        • 13 - nLocktime
        • 14 - SIGHASH flags
      • Chapter 6: Conclusion
        • Conclusion
    • BSV Infrastructure
      • The Instructions
        • The Whitepaper
        • Steps to Run the Network
        • Step 1
        • Step 2
        • Step 3
        • Step 4
        • Step 5
        • Step 6
      • Rules and their Enforcement
        • Introduction
        • Consensus Rules
        • Block Consensus Rules
        • Transaction Consensus Rules
        • Script Language Rules
        • Standard Local Policies
      • Transactions, Payment Channels and Mempools
      • Block Assembly
      • The Small World Network
        • The Decentralisation of Power
        • Incentive Driven Behaviour
        • Lightspeed Propagation of Transactions
        • Ensuring Rapid Receipt and Propagation of New Blocks
        • Hardware Developments to Meet User Demand
        • Novel Service Delivery Methods
        • MinerID
      • Conclusion
  • Research and Development
    • BRCs
    • Technical Standards
  • Support & Contribution
    • Join Our Discord
    • GitHub
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  1. BSV Academy
  2. Merkle Trees
  3. Merkle Trees and Simplified Payment Verification

Offline Payments

PreviousSPVNextDigital Signatures

Last updated 4 months ago

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BSV also has the capacity for offline payments. A merchant can present an invoice template to the customer for goods or services and then through the use of key pairs on an NFC device or bluetooth/WLAN connectivity, the customer then simply adds their signed UTXOs, change address and an additional data envelope with proofs for the Merkle path. The merchant performs a Merkle path Authentication Proof against their locally stored block headers to verify the UTXO came from a validly mined block of a suitable depth in the blockchain. The merchant then broadcasts this and the relevant Merkle proofs to the network. The SPV check is performed shortly after and if the transaction sits validated with some other nodes on the network, then it is safe to assume the transaction will be included in a later block in the longest proof of work chain.

The only risks would be that of an earlier spend of the same funds in the current mempool of another node that are yet to be included in a block or if the chain is under an attack that is promoting an invalid chain tip that may not include a previous transaction that spent the funds. The former is mitigated by querying other random nodes shortly after the transaction has been broadcast by the merchant to see if they have deemed it the valid first-time funds are spent while the latter relies on honest nodes being able to alert the network of such an attack through minerID, callback functions from mAPI, or an alert system of sorts.

The above illustration shows Alice trying to double spend UTXO (J) and (K) that have already been spent, while a dishonest chain tip that excludes those earlier spends is being extended by a malicious node with a majority of hashpower.

In effect, SPV is a post-broadcast check on a transaction to verify that it has been or will be included in a block. It is still important for a merchant to understand that without the proper tools they could be unknowingly connected to a version of the ledger that is promoted under an attack from a dishonest node with a majority of hash power, which may not include a recent spend of the funds you are receiving. An example of this can be seen in the above diagram where if Bob is not checking minerID or using mAPI call back, he gets a correct valid result for the Merkle authentication proof he performs, but a fake valid result from the SPV check because he is unaware that he is connected to an attacker's longer chain tip. Therefore, Alice can spend funds from UTXOs that have already been used as inputs in transactions recorded to the valid version of the chain maintained by the honest nodes. When Bob employs the additional measures of mAPI call back from minerID identifiable nodes, the Merkle Authentication Proof may yield a valid result, yet the SPV check will alert him to the attack and that they will not be including the invalid transaction from Alice.

Merchants who accept a lot of transactions should consider running at least a transaction listener or subscribing to an alert system where any ambiguity around which is the honest version of the chain can be announced. Such an attack as illustrated above can only be sustained for as long as a dishonest node can expend enough energy to extend their chain tip beyond the legitimate one and through the use of minerID and mAPI callback, once the attack ceases the legitimate chain will catch up and extend beyond the attackers, while that tip can then be used as incriminating evidence for the attempted double spends upon merchants. An additional protective measure is the block maturity rule which prevents a node from being able to transfer coinbase rewards until 100 blocks have been built upon the one the reward came from. This means that if an attacker is attempting to extend the chain for some kind of gain, they will have to continue to expend hash power to do so, yet will be unable to spend their renumeration for 100 blocks having the effect of increasing the cost of maintaining their attack.