Transaction Scripting

Transaction scripting is the programmable logic embedded within blockchain transactions that defines the conditions under which the funds can be spent. In the UTXO model, these scripts act as a set of rules that must be satisfied before an output can be used as an input in a future transaction.

Common scripts include requirements for digital signatures from specific private keys or multi-signature arrangements. Advanced scripting can enable complex financial instruments like hashed time-locked contracts, which are used for atomic swaps and off-chain payment channels.

This programmability allows blockchains to move beyond simple value transfer and support sophisticated financial applications. It is the core feature that enables the creation of decentralized financial derivatives and smart contracts.