CRYPTOCURRENCY
Ethereum: How does the wallet identify which UTXOs belong to a public address while creating a new transaction?
Understanding How Ethereum Public Addresses Are Identified in New Transactions
As a beginner to blockchain technology, you are probably familiar with the concept of UTXOs (Unspent Transaction Outputs) and how they are used to represent transactions on the Ethereum network. However, when it comes to creating new transactions, one of the puzzling aspects is how Ethereum identifies which UTXOs belong to a public address.
In this article, we will look at how the Ethereum wallet and blockchain identify the public addresses of UTXOs in new transactions.
What are public addresses?
A public address is a unique string of characters assigned to a person or entity on the Ethereum network. It serves as an identifier for the output of a transaction and enables seamless interaction between parties on the network. The most well-known example of a public address is the prefix “0x” followed by a hexadecimal string (for example, 0x1234567890abcdef).
UTXOs in New Transactions
When a new transaction is created, an Ethereum wallet generates a series of UTXOs from scratch. These UTXOs represent the assets or values that will be spent within the transaction.
In the absence of specific public address information for each UTXO, how does Ethereum identify which one belongs to whose public address? This is where things get interesting.
The Role of the Ledger
The Ethereum blockchain stores all transactions in a hierarchical (and ever-growing) database called the “Ledger”. The Ledger contains every transaction that has ever occurred on the network. Within this ledger, each UTXO is assigned a unique identifier – called a “hash”.
When creating a new transaction, your Ethereum wallet uses the hash of the UTXO to create a public address for the output. This is done through a process called “hash generation,” where the wallet combines the public key (a cryptographic secret) and the hash of the UTXO with some additional data.
The lock script
The lock script is another key component in creating a new transaction. It is a complex piece of code that specifies how the funds are to be spent within the transaction. A lock script typically involves a series of actions, such as withdrawing a specific number of coins from an account or moving them to a new wallet.
In Ethereum, a lock script is used to identify which public address belongs to which UTXO. By combining the UTXO hash with the lock script, your Ethereum wallet can create a unique “address mapping” relationship between each UTXO and its corresponding public address.
Summary
In summary, when a new transaction is created on the Ethereum network, the wallet generates a series of UTXOs from scratch. To identify which UTXO belongs to whose public address, the Ethereum wallet uses a combination of hash generation, lock script identification, and address mapping relationships built into the ledger. By leveraging these mechanisms, Ethereum ensures that each UTXO is associated with a unique public address, allowing for seamless interaction between parties on the network.
This article provides a comprehensive overview of how the Ethereum wallet identifies the public addresses of UTXOs in new transactions. As you continue to explore blockchain technology and develop your skills as a developer or enthusiast, this knowledge will undoubtedly be valuable in navigating the complex world of cryptocurrencies and smart contracts.
