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SubscribeHow does the network verify previous transactions when transferring BTC between two users?
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#1
How does the network verify previous transactions when transferring BTC between two users?
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#2
A transaction consumes inputs, and creates outputs (new 'unspent transaction outputs' or UTXOs). For the transaction to be valid, each input must be a valid UTXO that exists on the network. Full nodes keep a continually updated index of all valid UTXOs, that they can check against incoming transactions.
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#3
A transaction input will reference the transaction which created it, via the transaction ID and the output index. So a full node will just look up that entry in the UTXO index, ensuring it exists and is being used validly.
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