LogoLogo
LogoLogo
  • 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
Powered by GitBook
On this page
  • General Idea
  • Extrapolation
  • Common Push Back
  • Rebuttal

Was this helpful?

Edit on GitHub
Export as PDF
  1. Network Topology
  2. SPV Wallet

Key Concepts

How SPV works in a practical sense.

General Idea

Your business should be able to validate the transactions it receives without having to keep all block data and validate every transaction to ever have existed.

You can achieve this by listening to block announcements from peers on the bitcoin network, inspecting each header to verify that it contains a reference to the last, forming a hash chain back to the well-known genesis block.

Third parties need only send you:

  • A transaction

  • A Merkle path connecting that transaction to a particular block header

With that data alone you can validate the transaction. First you hash it, and run a Merkle proof to get the root hash. If that Merkle root is contained in the block header at the specified height then the transaction is proven to be contained in that block.

Extrapolation

You may have noticed that in the above scenario, the transaction had been broadcast in advance.

For small casual payments we need to be able to run SPV without either party waiting for a transaction to be mined first. This is possible by extrapolating the idea. We stipulate that the sender must include:

  • A transaction

  • Each transaction which contains an output we are spending in the new transaction.

  • A Merkle path for each of those input transactions.

It is possible to iterate this recursively so long as every transaction always has parent transactions or a Merkle path associated with it.

With this extrapolated approach, we must also validate each transaction which doesn't have a Merkle path. The validation should confirm that the unlocking scripts evaluate to TRUE, the satoshi amounts are as expected, and the transaction is generally well formed without error. This way we know that when we broadcast it will be accepted by the nodes.

Common Push Back

"How do you know that the outputs in question haven't been spent already elsewhere?"

What we are able to factually determine is that the scripts all evaluate to TRUE, the satoshi amounts are all as expected, the structure of the transaction is valid, and that the sender (at least at one point) owned the outputs being spent. What we cannot know without broadcasting the transaction to miners is whether the outputs have been spent by another transaction already.

Rebuttal

It is a good question, but misses the point:

  1. There is a high cost to faking this data because a hypothetical scammer would have to create genuine spendable outputs with which to attempt to trick someone.

  2. The recipient would find out within a fraction of a second of broadcast if the tx is a double spend attempt. Nodes have callback services for this exact purpose.

  3. The recipient would then have signed evidence that the counterparty they were doing business with attempted to defraud them.

  4. Payments are negotiated after KYC and AML checks have been completed by each counterparty, so prosecution would be trivial.

In conclusion - SPV works for the same reason Bitcoin itself works - the incentive models guide the behavior of participants.

PreviousQuickstartNextAWS Deployment

Last updated 4 months ago

Was this helpful?