How Blockchain Transactions Work: From Initiation to Immutable Confirmation (Part 2)

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There are various scripts available in Bitcoin to handle the value transfer from the source to the destination.

These scripts range from very simple to quite complex depending upon the requirements of the transaction.

From Initiation to Immutable Confirmation (Part 2)

Standard transactions are evaluated using IsStandard() and IsStandardTx() tests and only standard transactions that pass the test are generally allowed to be mined or broadcasted on the Bitcoin network.

However, nonstandard transactions are valid and allowed on the network.

The following are the standard transaction types: Pay to Public Key Hash (P2PKH): P2PKH is the most commonly used transaction type and is used to send transactions to the bitcoin addresses.

The format of the transaction is shown as follows: ScriptPubKey: OP_DUP OP_HASH160 OP_EQUALVERIFY OP_CHECKSIG ScriptSig: The ScriptPubKey and ScriptSig parameters are concatenated together and executed.

An example will follow shortly in this section, where this is explained in more detail.

Pay to Script Hash (P2SH): P2SH is used in order to send transactions to a script hash (that is, the addresses starting with 3) and was standardized in BIP16.

Why This Matters for Blockchain Technology

In addition to passing the script, the redeem script is also evaluated and must be valid.

The template is shown as follows: ScriptPubKey: OP_HASH160 OP_EQUAL ScriptSig: […] MultiSig (Pay to MultiSig): M-of-N MultiSig transaction script is a complex type of script where it is possible to construct a script that required multiple signatures to be valid in order to redeem a transaction.

Various complex transactions such as escrow and deposits can be built using this script.

The template is shown here: ScriptPubKey: [ .

Key Points to Remember

  • Types of transactions There are various scripts available in Bitcoin to handle the value transfer from the source to the destination.
  • These scripts range from very simple to quite complex depending upon the requirements of the transaction.
  • Standard transactions are evaluated using IsStandard() and IsStandardTx() tests and only standard transactions that pass the test are generally allowed to be mined or broadcasted on the Bitcoin network.
  • However, nonstandard transactions are valid and allowed on the network.

Going Deeper: Advanced Concepts

Pay to Pubkey: This script is a very simple script that is commonly used in coinbase transactions.

It is now obsolete and was used in an old version of bitcoin.

The public key is stored within the script in this case, and the unlocking script is required to sign the transaction with the private key.

The template is shown as follows: OP_CHECKSIG Null data/OP_RETURN: This script is used to store arbitrary data on the blockchain for a fee.

Conclusion

Types of transactions represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.

Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.