Bitcoin (technical)

Merry Christmas everyone. I looked in the table with contents because I’m pretty sure there was a thread on bitcoin specifically, but I could not find it. Will I be tarred and feathered for posting it here? I hope not. I’ve had a little bit of interest in bitcoin for some time, but never had a really good understanding of it all. Mainly, I’ve been watching videos on bitcoin consensus, but none of them really explain it in a way that I can understand. So I wanted to put forth this scenario to see if I can make some sense of it all.

Let’s say that someone were to pay two different people 10 bitcoin each, when they only had 10 bitcoin in their public wallet. And let’s say that 4 other people on the bitcoin network agreed that both the 10 bitcoin transactions were legitimate. Then the person that tried to transfer the extra 10 bitcoin would split the 10 bitcoin amount with the 5 people involved. But since a massive amount of people on the network would see that the person tried to transfer 10 bitcoin that they didn’t have, the second 10 bitcoin transfer, (since each transfer is timed stamped) would be invalidated by the massive amount of people that didn’t have consensus that the transaction was valid. So the false 10 bitcoin transfer wouldn’t make it into the block.

Is this essentially how consensus works?

You have sats inside UTXO's that you control the keys for. You can then sign a transaction to send 10 bitcoin to A and broadcast that to the network nodes. You also sign a transaction to send 10 bitcoin to B and broadcast that to the nodes. Nodes will add those transactions to a mempool. The miners can only include 1 transaction that is spending the sats in that UTXO inside a block. The miner will likely choose the highest fee transaction. If fees are equal the miners will include the first transaction that is valid. The sats in your UTXO either go to A or B and then the sats are no longer in your UTXO (because they are spent) so the second transaction is rejected.

In other words, you can make it look like you're paying both A and B but once one of them gets paid and a miner confirms it, in the next block there's no longer sats inside that UTXO for the other person to receive and the miner rejects the transaction. That's why confirmation is somewhat important for larger amounts.

Thread name changed to Bitcoin (technical), to reflect that this is for deeper questions and discussion.

For the original (general) thread, see https://wizardofvegas.com/forum/gambling/online/13594-bitcoin/