The Economics Of Cryptocurrency Pump And Dump Schemes

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The Bitcoin protocol forces input addresses to devote the precise amount of a previously received transaction (notice that, in Figure 1, there are two input addresses that are precisely the same, which indicates that bitcoins have arrived to this Bitcoin account in two separate transactions). An output that has not been spent is identified as unspent transaction output, or UTXO. Thus, each input have to unambiguously indicate the prior transaction identifier (a transaction is identified in the Bitcoin method by its hash value) and the index of the output where the bitcoins were received. The initially validation can be performed with the information and facts integrated in the transaction itself (field ScriptSig) with each other with the data of the transaction identified in the Preceding output (Index) (field scriptPubKey). Before accepting a payment from a regular transaction, the receiver should(i)validate that the digital signatures are right(ii)validate that the bitcoins of the input addresses are not previously spent. As a consequence, at any offered moment, an output may well be in two states: either currently spent or not but spent.