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In Txin, there is a double hash of the previous transaction.

Why? What purpose does that serve? How is this data used later?

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I believe it is one of the principles of Bitcoin, to make transactions you first have to have a valid transaction it stems from. If the previous transaction is not valid than the first transaction isn't valid as well.

  • It's hashed as to provide a summary of the entire transaction, sort of like an id. The hash can be used to verify that whatever transaction in plaintext you have is indeed the hash the person claims. You could put the full transaction in but that's not efficient. – John T Jan 2 '14 at 0:05
  • Referenced by id? The txid of a transaction is the double hash. – John T Jan 2 '14 at 0:15
  • @Gracchus It's due to efficiency and ease of checking. The Bitcoin network would get slowed down by massive transactions that had thousands of addresses linked to it whenever one node simply wanted to check if another node had the transaction if there where no hashed txid. – John T Feb 18 '14 at 2:20
  • There can be thousands of addresses in a transaction, a txid hash will always be 64 characters. – John T Feb 18 '14 at 19:59

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