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Creating Bitcoin transactions

Bitcoin

Unspent transaction outputs (UTXOs) are used as inputs to build a Bitcoin transaction. Every Bitcoin transaction spends one or more UTXOs and in return creates new UTXOs. A UTXO exists until it is used as input for a future transaction. In order to create a Bitcoin transaction, you need to:

  1. Get the available UTXOs corresponding to a Bitcoin address controlled by your ICP smart contract using the bitcoin_get_utxos API endpoint.

  2. Calculate an appropriate transaction fee using the bitcoin_get_current_fee_percentiles API endpoint.

  3. Select a subset of the available UTXOs to spend that covers the transaction amount and fee.

  4. Create a transaction that spends the selected UTXOs and creates new UTXOs. You will need at least one for the recipient and, in most cases, one to collect the change.

A UTXO has the following structure:

/// An unspent transaction output.
public type Utxo = {
    outpoint : OutPoint;
    value : Satoshi;
    height : Nat32;
};

/// A reference to a transaction output.
public type OutPoint = {
    txid : Blob;
    vout : Nat32;
};

Get available UTXOs​

The following snippet shows how to get the available UTXOs corresponding to own_address. Note that an ICP smart contract can control multiple addresses and each one can have multiple UTXOs associated with it.

To create a transaction that sends X satoshis to a destination address, you need to select a subset of the available UTXOs that cover the amount X plus the transaction fee.

To implement the following code snippets in your dapp, you will need to setup a local development environment and create a project.

motoko/basic_bitcoin/src/basic_bitcoin/src/BitcoinApi.mo
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Calculate transaction fee per byte​

The transaction fee of a Bitcoin transaction is calculated based on the size of the transaction in bytes. An appropriate fee per byte can be determined by looking at the fees of recent transactions on the Bitcoin mainnet. The following snippet shows how to estimate the fee per byte for a transaction using the bitcoin_get_current_fee_percentiles API endpoint and choosing the 50th percentile.

motoko/basic_bitcoin/src/basic_bitcoin/src/BitcoinApi.mo
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Build the transaction​

Now the transaction can be built. Since the fee of a transaction is based on its size, the transaction has to be built iteratively and signed with a mock signer that adds the respective size of the signature. Each selected UTXO is used as an input for the transaction and requires a signature.

The following snippet shows a simplified version of how to build a transaction that will be signed by a P2PKH address:

motoko/basic_bitcoin/src/basic_bitcoin/src/P2pkh.mo
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