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<pre>
BIP: ?
Layer: API/RPC
Title: Compressed Transactions RPC
Author: Tom Briar <tombriar11@protonmail.com>
Comments-URI: https://github.com/bitcoin/bitcoin/pull/29134
https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2023-August/021924.html
Status: Draft
Type: Standards Track
Created: 2024-02-01
License: BSD-3-Clause
</pre>

== Introduction ==

=== Abstract ===
This document proposes a serialization scheme for compressing Bitcoin transactions. The compressed Bitcoin transactions can reach a serialized size of less than 50% of the original serialized transaction. One method for compressing involves reducing the transaction outpoints in a potentially lossy way. Therefore, it is an optional path for compression. Compressing the outpoints is necessary for compressed transactions to reach less than 70% of the original size.

=== Motivation ===
Typical Bitcoin transactions usually contain a large amount of white space and padding due to specific fields that are often one of a minimal number of possibilities. We can use this fact and a few similar methods to create an encoding for 90% of Bitcoin transactions that are roughly 25-50% smaller.

=== Rational ===

The four main methods to achieve a lower transaction size are:

1. Packing transaction metadata before it and each of its inputs and outputs to determine the following data structure.

2. Replacing 32-bit numeric values with either variable-length integers (VarInts) or compact integers (CompactSizes).

3. Using compressed signatures and public key recovery upon decompression.

4. Replacing the 36-byte txid/vout pair with a block height and index.

=== Specification ===

==== Primitives ====

{| class="wikitable" style="margin:auto"
|-
! Name !! Width !! Description
|-
| CompactSize || 1-5 Bytes || For 0-253, encode the value directly in one byte. For 254-65535, encode 254 followed by two little-endian bytes. For 65536-(2^32-1), encode 255 followed by four little-endian bytes.
|-
| CompactSize Flag || 2 Bits || 1, 2, or 3 indicate literal values. 0 indicates that a CompactSize encoding of the value will follow.
|-
| VarInt || 1+ Bytes || 7-bit little-endian encoding, with each 7-bit word encoded in a byte. The highest bit of each byte is one if more bytes follow, and 0 for the last byte.
|-
| VLP-Bytestream || 2+ Bytes || A VarInt Length Prefixed Bytestream. It uses the prefixed VarInt to determine the length of the following byte stream.
|}

==== General Schema ====

{| class="wikitable" style="margin:auto"
|-
! Name !! Width !! Description
|-
| Transaction metadata || 1 Bytes || Information on the structure of the transaction. See [[#transaction-metadata|Transaction Metadata]]
|-
| Version || 0-5 Bytes || If present according to the metadata field, a CompactSize encoding of the transaction version.
|-
| Input Count || 0-5 Bytes || If present according to the metadata field, a CompactSize encoding of the transaction input count.
|-
| Output Count || 0-5 Bytes || If present according to the metadata field, a CompactSize encoding of the transaction output count.
|-
| LockTime || 0-5 Bytes || If present according to the metadata field, a CompactSize encoding of the transaction LockTime.
|-
| Minimum Blockheight || 1-5 Bytes || A VarInt that contains the minimum block height of the transaction's LockTime and all its inputs that have a compressed block height. The transaction's LockTime and its compressed inputs are encoded as an offset from this value.
|-
| Input Metadata+Output Metadata || 1+ Bytes || An encoding containing the metadata for all the inputs followed by all the outputs of the transaction. For each input, see [[#input-metadata|Input Metadata]], and for each output, see [[#output-metadata|Output Metadata]].
|-
| Input Data || 66+ Bytes || See [[#input-data|Input Data]].
|-
| Output Data || 3+ Bytes || See [[#output-data|Output Data]].
|}

<span id="transaction-metadata"></span>
==== Transaction Metadata ====

{| class="wikitable" style="margin:auto"
|-
! Name !! Width !! Description
|-
| Version || 2 Bits || A CompactSize flag for the transaction version.
|-
| Input Count || 2 Bits || A CompactSize flag for the transaction input count.
|-
| Output Count || 2 Bits || A CompactSize flag for the transaction output count.
|-
| LockTime || 2 Bits || A boolean to indicate if the transaction has a LockTime.
|}

<span id="input-metadata"></span>
==== Input Metadata ====

{| class="wikitable" style="margin:auto"
|-
! Name !! Width !! Description
|-
| Compressed Signature | | 1 Bit | | Signature compression flag. The signature is only compressed for P2TR on a key spend and for P2SH when it is a wrapped P2SH-WPKH.
|-
| Standard Hash || 1 Bit || A flag to determine if this input's signature hash type is standard (0x00 for Taproot, 0x01 for Legacy/Segwit).
|-
| Standard Sequence || 2 Bits || A CompactSize flag for this input's sequence. Encode literal values as follows: 1 = 0x00000000, 2 = 0xFFFFFFFE, 3 = 0xFFFFFFFF.
|}

<span id="output-metadata"></span>
==== Output Metadata ====

{| class="wikitable" style="margin:auto"
|-
! Name !! Width !! Description
|-
| Encoded Script Type || 3 Bits || [[#script-type-encoding|Encoded Script Type]].
|}

<span id="script-type-encoding"></span>
==== Script Type Encoding ====

{| class="wikitable" style="margin:auto"
|-
! Script Type !! Value
|-
| Uncompressed Custom Script || 0b000
|-
| Uncompressed P2PK || 0b001
|-
| Compressed P2PK || 0b010
|-
| P2PKH || 0b011
|-
| P2SH || 0b100
|-
| P2WPKH || 0b101
|-
| P2WSH || 0b110
|-
| P2TR || 0b111
|}

<span id="input-data"></span>
==== Input Data ====

{| class="wikitable" style="margin:auto"
|-
! Name !! Width !! Description
|-
| Sequence || 0-5 Bytes || If present due to a non-standard sequence, a VarInt encoding of the sequence.
|-
| Txid Blockheight || 1-5 Bytes || A VarInt encoding containing 0 if this is an uncompressed input or the offset from the Minimum Blockheight for this Txid.
|-
| Txid/Signature Data || 65+ Bytes || Txid/Signatures are determined to be uncompressed either by the output script of the previous transaction or if the Txid's block height is zero. For compressed inputs [[#compressed-data|Compressed Txid/Signature Data]]. See [[#uncompressed-data|Uncompressed Txid/Signature Data]] for uncompressed inputs.
|}

<span id="compressed-data"></span>
==== Compressed Txid/Signature Data ====

{| class="wikitable" style="margin:auto"
|-
! Name !! Width !! Description
|-
| Txid Block Index || 1-5 Bytes || A VarInt containing the flattened index from the Txid block height for the Vout.
|-
| Signature || 64 Bytes || Contains the 64 Byte signature.
|-
| Hash Type || 0-1 Bytes || An Optional Byte containing the Hash Type if it was non-standard.
|}

<span id="uncompressed-data"></span>
==== Uncompressed Txid/Signature Data ====

{| class="wikitable" style="margin:auto"
|-
! Name !! Width !! Description
|-
| Txid || 32 Bytes || Contains the 32 Byte Txid.
|-
| Vout || 1-5 Bytes || A CompactSize Containing the Vout of the Txid.
|-
| Signature || 2+ Bytes || A VLP-Bytestream containing the signature.
|}

<span id="output-data"></span>
==== Output Data ====

{| class="wikitable" style="margin:auto"
|-
! Name !! Width !! Description
|-
| Output Script || 2+ Bytes || A VLP-Bytestream containing the output script.
|-
| Amount || 1-9 Bytes || A VarInt containing the output amount.
|}

==== Ideal Transaction ====

The compression scheme was designed to be optimal for a "typical" transaction, spending a few close-in-age inputs and having one or two outputs. Here are size
values for such a transaction, which demonstrate the effectiveness of the compression.

{| class="wikitable" style="margin:auto"
|-
! Field !! Requirements !! Savings Up To
|-
| Version || Less than four || 30 Bits
|-
| Input Count || Less than four || 30 Bits
|-
| Output Count || Less than four || 30 Bits
|-
| LockTime || 0 || 30 Bits
|-
| Input Sequence || 0x00, 0xFFFFFFFE, or 0xFFFFFFFF || 62 Bits For Each Input
|-
| Input Txid || Compressed Outpoint || 23 - 31 Bytes For Each Input
|-
| Input Vout || Compressed Outpoint || (-1) - 3 Bytes For Each Input
|-
| Input Signature || Non-custom Script Signing || 40 - 72 Bytes For Each Legacy Input
|-
| Input Hash Type || 0x00 for Taproot, 0x01 for Legacy || 7 Bits For Each Input
|-
| Output Script || Non-custom Scripts || 2 - 5 Bytes For Each Output
|-
| Output Amount || No Restrictions || (-1) - 7 Bytes For Each Output
|}

=== Reference Implementation ===

This reference implementation adds two new RPC endpoints, compressrawtransaction and decompressrawtransaction. The first accepts a raw hex-encoded transaction and returns a compact hex-encoded transaction; also included in the output is a list of warnings to help ensure there are no unexpected uncompressed values. The second accepts a compact hex transaction and returns the uncompressed raw hex-encoded transaction.

https://github.com/bitcoin/bitcoin/pull/29134

=== Test Vectors ===

==== Taproot ====

===== Uncompressed =====
<code>020000000001017ad1d0cc314504ec06f1b5c786c50cf3cda30bd5be88cf08ead571b0ce7481fb0000000000fdffffff0188130000000000001600142da377ed4978fefa043a58489912f8e28e16226201408ce65b3170d3fbc68e3b6980650514dc53565f915d14351f83050ff50c8609495b7aa96271c3c99cdac1a92b1b45e77a4a870251fc1673596793adf2494565e500000000</code>

===== Compressed =====
<code>16b1ec7f2d01b0218ce65b3170d3fbc68e3b6980650514dc53565f915d14351f83050ff50c8609495b7aa96271c3c99cdac1a92b1b45e77a4a870251fc1673596793adf2494565e58efefefe7d2da377ed4978fefa043a58489912f8e28e162262a608</code>

==== P2WPKH ====

===== Uncompressed =====
<code>0200000000010144bcf05ab48b8789268a7ca07133241ad654c0739ac7165015b2d669eadb10ea0000000000fdffffff0188130000000000001600142da377ed4978fefa043a58489912f8e28e16226202473044022043ab639a98dfbc704f16a35bf25b8b72acb4cb928fd772285f1fcf63725caa85022001c9ff354504e7024708bce61f30370c8db13da8170cef4e8e4c4cdad0f71bfe0121030072484c24705512bfb1f7f866d95f808d81d343e552bc418113e1b9a1da0eb400000000</code>

===== Compressed =====
<code>16b1ec712d01932643ab639a98dfbc704f16a35bf25b8b72acb4cb928fd772285f1fcf63725caa8501c9ff354504e7024708bce61f30370c8db13da8170cef4e8e4c4cdad0f71bfe8efefefe7d2da377ed4978fefa043a58489912f8e28e162262a608</code>

==== P2SH-P2WPKH ====

===== Uncompressed =====
<code>0200000000010192fb2e4332b43dc9a73febba67f3b7d97ba890673cb08efde2911330f77bbdfc00000000171600147a1979232206857167b401fdac1ffbf33f8204fffdffffff0188130000000000001600142da377ed4978fefa043a58489912f8e28e16226202473044022041eb682e63c25b85a5a400b11d41cf4b9c25f309090a5f3e0b69dc15426da90402205644ddc3d5179bab49cce4bf69ebfaeab1afa34331c1a0a70be2927d2836b0e8012103c483f1b1bd24dd23b3255a68d87ef9281f9d080fd707032ccb81c1cc56c5b00200000000</code>

===== Compressed =====
<code>16b1ec7c3d01981641eb682e63c25b85a5a400b11d41cf4b9c25f309090a5f3e0b69dc15426da9045644ddc3d5179bab49cce4bf69ebfaeab1afa34331c1a0a70be2927d2836b0e87a1979232206857167b401fdac1ffbf33f8204ff8efefefe7d2da377ed4978fefa043a58489912f8e28e162262a608</code>

==== P2PKH ====

===== Uncompressed =====
<code>02000000015f5be26862482fe2fcc900f06ef26ee256fb205bc4773e5a402d0c1b88b82043000000006a473044022031a20f5d9212023b510599c9d53d082f8e07faaa2d51482e078f8e398cb50d770220635abd99220ad713a081c4f20b83cb3f491ed8bd032cb151a3521ed144164d9c0121027977f1b6357cead2df0a0a19570088a1eb9115468b2dfa01439493807d8f1294fdffffff0188130000000000001600142da377ed4978fefa043a58489912f8e28e16226200000000</code>

===== Compressed =====
<code>16b1ec7c2d01981431a20f5d9212023b510599c9d53d082f8e07faaa2d51482e078f8e398cb50d77635abd99220ad713a081c4f20b83cb3f491ed8bd032cb151a3521ed144164d9c8efefefe7d2da377ed4978fefa043a58489912f8e28e162262a608</code>

== Acknowledgements ==
Thank you to Andrew Poelstra, who helped invent and develop the ideas in the proposal and the code for reference implementation.

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