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Public vs Private Keys

💸 Moving Money on the Blockchain

Discover how transactions transfer value without banks or intermediaries

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💸 Blockchain Transactions

Transactions are the heartbeat of blockchain - they move value between addresses, record state changes, and create an immutable history of all activity.

🎯 What is a Transaction?

A blockchain transaction is a cryptographically signed message that transfers value or executes code. Think of it as a digital instruction that says "I authorize moving X coins from my address to yours."

Core Components:
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From Address: The sender's public key/address
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To Address: The recipient's public key/address
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Amount: How much value to transfer
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Signature: Proof you own the private key
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Nonce: Transaction counter (prevents replay)
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Fee: Payment to miners/validators

🎮 Transaction Model Comparison

Blockchains use two main transaction models. Toggle between them to understand the differences:

📦

UTXO Model (Bitcoin)

Unspent Transaction Output

How It Works:

Like physical cash - you spend entire "bills" and get change back.

1.You have unspent outputs (UTXOs) from previous transactions
2.To send 50 BTC, you might use a 100 BTC UTXO
3.Transaction creates: 50 BTC to recipient, 49.9 BTC change to you, 0.1 BTC fee
4.Original 100 BTC UTXO is now "spent" (destroyed)
Example Transaction:
Inputs: [UTXO_1: 100 BTC]
Outputs: [50 BTC → Bob, 49.9 BTC → Alice(change)]
Fee: 0.1 BTC (implicit)
✅ Pros:
  • • Better privacy (new addresses per tx)
  • • Parallel transaction processing
  • • No account state to track
❌ Cons:
  • • More complex to implement
  • • Larger transaction sizes
  • • Must track all UTXOs
💡 Used by: Bitcoin, Cardano, Litecoin

⚡ Transaction Lifecycle

1
Creation

User creates transaction in wallet, signs with private key

2
Broadcast

Transaction sent to network nodes via peer-to-peer protocol

3
Mempool

Nodes validate and add to mempool (waiting area for transactions)

4
Mining/Validation

Miners select transaction (usually highest fee), include in block

5
Confirmation

Block added to chain, transaction now immutable (more blocks = more secure)

🔢 Transaction Fees Explained

Fees incentivize miners/validators to include your transaction. Higher fees = faster confirmation.

Your Transaction Amount:50 ETH
Low Priority
0.050 ETH
~10-30 minutes
Medium Priority
0.250 ETH
~3-5 minutes
High Priority
0.500 ETH
~30 seconds
💡 Pro Tip: During network congestion, fees can spike 10-100x. Use gas trackers to optimize timing!