Follow Maya’s payment.

Use an old amount to create new amounts

An earlier Bitcoin payment leaves amounts with rules for spending them later. Each of these amounts is called an output. If an output has not yet been spent, it is an unspent transaction output, or UTXO. Maya’s wallet adds up the relevant unspent outputs to display her balance.

For this example, her wallet chooses one output worth 80,000 sats. That whole output will be used up in the new payment. An old output used this way becomes an input to the new transaction.

The new transaction creates 50,000 sats for her friend and 29,000 sats as change for Maya. Add those two new outputs: 50,000 + 29,000 = 79,000 sats. The remaining 1,000 sats is the fee.

Now account for the full starting amount: 80,000 = 50,000 + 29,000 + 1,000. The fee is the difference between the total coming in and the new outputs going out. No sats are missing from the calculation.

The change is created in the same transaction under Maya’s control. Her friend does not send it back. If one old output is not enough for a payment, a wallet can combine several inputs.

Approve the request, then send it for checking

Maya checks the destination, amount, and fee. Her signing key makes a signature that, in this ordinary payment, commits to those payment details. The signed message can be sent while the secret key stays with her signer.

The wallet sends the transaction to connected nodes. Sending it into the network is called broadcasting. Full nodes check the required spending conditions, whether the inputs are still available in the history they are checking, and whether the amounts follow the rules.

A correct signature is only one check. Maya cannot spend the same old output a second time in the same accepted history. She also cannot create another 10,000 sats by typing a bigger amount for the recipient.

A miner can choose the request for a block

A node may keep an acceptable request while it waits for inclusion in a block. That local collection of unconfirmed transactions is called a mempool. Different nodes can have different collections and different rules for passing requests along.

There is no single waiting line that reserves Maya a place. A miner chooses transactions for a proposed block and may choose hers. Space is limited, so the fees offered by competing transactions can affect selection.

The miner searches for proof of work for its proposed block. Other full nodes still check that block against their own rules. Meeting the work target does not make an invented amount or a forbidden spend acceptable.

A block gives the payment its first confirmation

Suppose nodes accept the miner’s block and follow the chain containing it. Maya’s payment now has one confirmation. When another block is built after that block, the payment has two confirmations. Sending, inclusion, and later confirmations happened at different times.

Two valid blocks can appear close together and leave nodes temporarily following different branches. They use the valid history with the most accumulated work, not the one supported by the most usernames. If recent accepted blocks are replaced by another valid branch, that change is called a reorganization.

More confirmations generally make replacement harder because an attacker must compete with more work. This depends on the network’s security assumptions. No confirmation count makes the risk vanish unconditionally.

The recipient decides how many confirmations fit the payment and the risk they are taking. Bitcoin aims for an average of about ten minutes between blocks. That average does not promise when Maya’s request will be chosen.