The Bitcoin scripting language

Continue the previous post thought, I found bitcoin is ready for the escrow-like payments. Read:

You might expect that a Bitcoin transaction is signed simply by including the signature in the transaction, but the process is much more complicated. In fact, there is a small program inside each transaction that gets executed to decide if a transaction is valid. This program is written in Script, the stack-based Bitcoin scripting language. Complex redemption conditions can be expressed in this language. For instance, an escrow system can require two out of three specific users must sign the transaction to spend it. Or various types of contracts can be set up.
The Script language is surprisingly complex, with about 80 different opcodes. It includes arithmetic, bitwise operations, string operations, conditionals, and stack manipulation. The language also includes the necessary cryptographic operations (SHA-256, RIPEM, etc.) as primitives. In order to ensure that scripts terminate, the language does not contain any looping operations. (As a consequence, it is not Turing-complete.) In practice, however, only a few types of transactions are supported.

In order for a Bitcoin transaction to be valid, the two parts of the redemption script must run successfully. The script in the old transaction is called scriptPubKey and the script in the new transaction is called scriptSig. To verify a transaction, the scriptSig executed followed by the scriptPubKey. If the script completes successfully, the transaction is valid and the Bitcoin can be spent. Otherwise, the transaction is invalid. The point of this is that the scriptPubKey in the old transaction defines the conditions for spending the bitcoins. The scriptSig in the new transaction must provide the data to satisfy the conditions.

In a standard transaction, the scriptSig pushes the signature (generated from the private key) to the stack, followed by the public key. Next, the scriptPubKey (from the source transaction) is executed to verify the public key and then verify the signature.

As expressed in Script, the scriptSig is:

PUSHDATA
signature data and SIGHASH_ALL
PUSHDATA
public key data
The scriptPubKey is:
OP_DUP
OP_HASH160
PUSHDATA
Bitcoin address (public key hash)
OP_EQUALVERIFY
OP_CHECKSIG
When this code executes, PUSHDATA first pushes the signature to the stack. The next PUSHDATA pushes the public key to the stack. Next, OP_DUP duplicates the public key on the stack. OP_HASH160 computes the 160-bit hash of the public key. PUSHDATA pushes the required Bitcoin address. Then OP_EQUALVERIFY verifies the top two stack values are equal – that the public key hash from the new transaction matches the address in the old address. This proves that the public key is valid. Next, OP_CHECKSIG checks that the signature of the transaction matches the public key and signature on the stack. This proves that the signature is valid. Full article