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}; transaction["prev-owner-signature"] = sign(privateKeyA, transaction); return transaction; } An interesting thing to note is that we have defined transactions IDs as simply the hash of their binary representation. In other words, a transaction ID is simply its hash (using an, at this point, unspecified hashing algorithm). This is convenient for several reasons we will explain later on. For now, it is just one possible way of doing things. Let’s take the code apart and write it down step-by-step: 1. A new transaction is constructed pointing to the previous transaction (the one that holds A’s 50 coins) and including B’s public signature (new transaction = old transaction ID plus receiver’s public key). 2. A signature is produced using the new transaction and the previous transaction owner’s private key (A’s private key). That’s it. The signature in the new transaction creates a verifiable link between the new transaction and the old one. The new transaction points to the old one explicitly and the new transaction’s signature can only be generated by the holder of the private-key of the old transaction (the old transaction explicitly tells us who this is through the owner-pubkey field). So the old transaction holds the public-key of the one who can spend it, and the new transaction holds the public-key of the one who received it, along with the signature created with the spender’s private-key. 9PDF Image | Intro to Ethereum and Smart Contracts
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