Ethereum: How does the wallet identify which UTXOs belong to a public address while creating a new transaction?

Understanding Ethereum Public Address Identification for New Transactions

As a beginner to blockchain technology, you are probably familiar with the concept of UTXO (Unspent Transaction Output) and how they are used to represent transactions on the Ethereum network. However, when it comes to creating new transactions, one aspect that can be puzzling is how Ethereum determines which UTXOs belong to a public address.

In this article, we will explore how the Ethereum wallet and blockchain determine public UTXO addresses for new transactions.

What are public addresses?

A public address is a unique string of characters assigned to an individual or organization on the Ethereum network. It is used as an identifier for the output of a transaction and allows for seamless communication between parties on the network. The most well-known example of a public address is the prefix “0x” followed by a hexadecimal sequence (e.g. 0x1234567890abcdef).

UTXO in New Transactions

When creating a new transaction, an Ethereum wallet generates an array of UTXOs from scratch. These UTXOs represent the assets or values ​​that will be spent in the transaction.

Without specific information about the public address of each UTXO, how does Ethereum determine 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. In this ledger, each UTXO has a unique identifier associated with it – called a “hash”.

When creating a new transaction, an Ethereum wallet uses the hash of the UTXO to generate a public output address. This is done using a process called “hash generation,” where the wallet combines a public key (a cryptographic secret) and a hash of the UTXO along with some additional data.

Lock script

The lock script is another important component when creating a new transaction. It is a complex code that specifies how the funds will be spent in the transaction. A lock script typically involves several operations, such as withdrawing a certain number of coins from an account or transferring them to a new wallet.

The Ethereum lock script is used to determine which public address belongs to which UTXO. By combining the UTXO hash with the lock script, an Ethereum wallet can create a unique “address mapping” relationship between each UTXO and its corresponding public address.

To summarize

To summarize, when creating a new transaction on the Ethereum network, the wallet generates a series of UTXOs from scratch. To determine which UTXO belongs to which public address, the Ethereum wallet uses a combination of hash generation, lock script identification, and address mapping relationships created in the ledger. Using these mechanisms, Ethereum ensures that each UTXO has a unique public address associated with it, ensuring smooth interaction between parties on the network.

This article provides a detailed understanding of how the Ethereum wallet identifies public UTXO addresses when performing new transactions. As you continue to explore blockchain technology and hone your skills as a developer or enthusiast, this knowledge will undoubtedly be valuable in navigating the complex world of cryptocurrencies and smart contracts.