Bitcoin already uses a data structure known as a merkle tree that allows verifying an element is a member of a set without needing to identify every other member of the

Although this process of paying to a public key hash (P2PKH) may seem convoluted, it allows Alice’s payment to Bob to contain only a 20 byte commitment to his public key instead of the key itself, which would’ve been 65 bytes in the original version of Bitcoin. That’s a lot less data for Bob to have to communicate to Alice.

Wallet applications implementing additional protocols beyond basic Bitcoin support may also need or want to store other data. For example, as of 2023, an increasing number of applications have added support for sending and receiving transactions over the Lightning Network (LN). Although the LN protocol provides a method to recover funds in the

the original Bitcoin client, output and input scripts were concatenated and executed in sequence. For security reasons, this was changed in 2010 because of a vulnerability known as the 1 OP_RETURN bug. In the current implementation, the scripts are executed separately with the stack transferred between the two executions. First, the input script is

The first four bytes of a serialized Bitcoin transaction are its version. The original version of Bitcoin transactions was version 1 (0x01000000). All transactions in Bitcoin must follow the rules of version 1 transactions, with many of those rules being described throughout this book. Version 2 Bitcoin transactions were introduced in the BIP68

Bech32m addresses start with a human readable part (HRP). There are rules in BIP173 for creating your own HRPs, but for Bitcoin you only need to know about the HRPs already chosen,

Transactions are like lines in a double-entry bookkeeping ledger. Each transaction contains one or more inputs, which spend funds. On the other side of the transaction, there are one or more outputs, which receive funds. The inputs and outputs do not necessarily add up to the same amount. Instead, outputs add up to slightly less than inputs and the

Modern wallet applications don’t independently generate keys but instead derive them from a single random seed using a repeatable (deterministic) algorithm.

To protect your privacy, you should generate a new invoice with a new address each time you request a payment.