Blockchain Transactions

The english term transaction has many different meanings depending on the context. Bitcoin sits at the intersection of finance and computer science, but both of these fields use the term “transaction” to refer to different concepts:

• In finance a transaction means the transfer of some asset between accounts or entities
• In computer science (and state management specifically), a transaction refers to a group of state changes that happens atomically and (usually) in isolation.

A transaction in a blockchain system refers to the computer science definition: an atomic global state transition, and may not necessarily represent a financial transaction (eg a payment). Likewise, not all cryptocurrency financial transaction (payments) have to take place in the form of a blockchain transaction. The [[ Lightning Network ]] provides good examples of both of these:

• Opening a [[ State Channel ]] between two nodes is a type of Bitcoin transaction, but does not transfer funds
• Routing an [[ HTLC ]] (a payment) through the lightning network will transfer bitcoin between two parties, without broadcasting any data to the blockchain network (and is therefore not a bitcoin transaction)

Conflation between these two types of transactions has lead to widespread misinformation about a “per-payment cost” of bitcoin (see Bitcoin Energy Usage)