Version: IOTA

The IOTA network is based on messages and payloads. This section will explain the relationship between messages and payloads and how you can create value transactions.

## Messages​

A message is a data structure broadcast in the IOTA network and represents a node (vertex) in the Tangle graph. It can refer to up to 8 previous messages, and once a message is attached to the Tangle and approved by a milestone, the Tangle structure ensures the content of the message will remain unaltered. Each message has a unique message_id, which is based on a hash algorithm of the binary content of the message. A message is an atomic unit that is confirmed by the network as a whole.

A message is broadcast using a binary format, has an arbitrary size of up to 35 kB, and can hold variable sets of information called payloads. A message can encapsulate any number of payloads, and even a message without a payload is perfectly valid.

A payload represents a layer of concern. Some payloads may change a state of the ledger (ex. transactions), and some may provide extra features to some specific applications and business use cases (ex. indexed data).

There are already implemented core payloads, such as SignedTransaction, MilestonePayload and IndexationPayload. However, the message and payload definitions are generic enough to incorporate any future payload(s) the community agrees upon.

The IOTA network ensures the outer structure of any message is valid and aligned with a network consensus protocol. However, the message’s inner structure is very flexible, future-proof, and offers an unmatched network extensibility.

The current IOTA network incorporates the following core payloads:

#### SignedTransaction​

A payload that describes UTXO transactions that are the cornerstone of value-based transfers in the IOTA network. You can use this payload to sign a message cryptographically. This payload changes the ledger state as old outputs are spent (replaced) and new outputs are created.

Example of a message with a SignedTransaction payload:

{    "message": {        "networkId": "14379272398717627559",        "parentMessageIds": [            "a59a5d11da0944c88b58f9f9c095c11ee4b8b7fd9da47bd25412d39f815bb804",            "c3d42c42eccd25bc3374a0552e3a4b21180facece14f31c36e5ac580e5496ccc",            "dae4a36cef9a3fd03caff5ddbc5c90bc5523477f4e4937837202bfe4bd5b98aa",            "fe188a4f57ecd6a135b05b31913d86617550d9397476ab5bb7445138f782ec34"        ],        "payload": {            "type": 0,            "essence": {                "type": 0,                "inputs": [                    {                        "type": 0,                        "transactionId": "b2b9723c9119f4fb49084472e72821e842ba4779df02e1038f03dd8b25d96730",                        "transactionOutputIndex": 1                    }                ],                "outputs": [                    {                        "type": 0,                        "address": {                            "type": 0,                            "address": "43e80947ebd17637569ba7f90fd2541f50038de731467c45aa5c92d4429c9446"                        },                        "amount": 1000                    },                    {                        "type": 0,                        "address": {                            "type": 0,                            "address": "b4d1e9abfbcf4d2d2f0e042f23301a7d23f6ac1bde0a1fed508de5afec884ba8"                        },                        "amount": 8995995                    }                ],                "payload": null            },            "unlockBlocks": [                {                    "type": 0,                    "signature": {                        "type": 0,                        "publicKey": "27177dd41cc479ed379b8ad2535d66fa58480c119a8a15a7a296f055401ab958",                        "signature": "8403dc1fb949365e960f14cdc19b6b3abb6b0a6bce83f1082a33e3857a30ddd2be1098074b6c261f442db8e59eb640002d24d9a577262fd8152c6fee2d076c0b"                    }                }            ]        },        "nonce": "156106"    },    "messageId": "92f427d68c7008a81fde290b9cb99071373d9893d65718bfc22928273877e041"}

Each transaction includes the following information:

• inputs: A list of valid outputs that should be used to fund the given message. Those outputs will be spent and once the message is confirmed, those outputs are not valid anymore. Outputs are uniquely referenced via transaction_id and inner index. At least one output has to be given with enough balance to source all outputs of the given message.
• outputs: A list of IOTA address(es) and related amount(s) that the input outputs should be split among. Based on this information, new UTXO entities (outputs) will be being created.
• unlockBlocks: Includes a transaction signature(s) (currently based on Ed25519 scheme) that prooves token ownership based on a valid seed. Only the valid seed owner is able to correctly sign the given transaction and proove ownership of the tokens under the given output(s). Each input output has to have a corresponding unblockBlocks entry in case more outputs are used to fund the operation, either using the given signature or as a reference to the existing signature
• payload: Each SignedTransaction(payload type 0) can include additional payload(s) such as an IndexationPayload (payload type 1) for example. This means any value-based messages can also contain arbitrary data and its key index. It is also an example how individual payloads can be encapsulated on different levels of concern

A payload that is emitted by the Coordinator.

A payload that enables adding an index to the encapsulating message, as well as arbitrary data. You can use the index to search for the message(s).

### Unspent Transaction Output (UTXO)​

IOTA uses an unspent transaction output model called UTXO. UTXO is based on an idea to track the unspent amount of tokens using a data structure called output. This model can be explained using a simple example:

• There are 100 tokens recorded in the ledger as Output A, which belongs to Alice. So initial state of ledger: Output A = 100 tokens.
• Alice sends 20 tokens to Paul, 30 tokens to Linda, and keeps 50 tokens at her disposal.
• Her 100 tokens are currently stored as Output A. This means she has to divide (spend) her tokens to create three new outputs:
• Output B with 20 tokens that go to Paul.
• Output C with 30 tokens that go to Linda.
• Output D with the remaining 50 tokens that she keeps for herself.
• The original Output A was spent entirely and can not be used anymore. As it is spent, it becomes irrelevant to the ledger state. The new state of ledger is:
• Output B = 20 tokens.
• Output C = 30 tokens.
• Output D = 50 tokens.
• The total supply remains the same. However, the number of outputs differs, and some were replaced by other outputs in the process.

The key takeaway of the outlined process is that each unique output can only be spent once. Once an output is spent, it can not be used anymore and is irrelevant regarding the ledger state.

So even if Alice still wants to keep the remaining tokens at her fingertips, those tokens have to be moved to completely new output that can still be tied to the same IOTA address Alice used before.

Every output also stores information about an IOTA address it is coupled with. This means addresses and tokens are indirectly coupled via outputs. So basically, the sum of outputs and their amounts under a given address is a balance of the given address, i.e., the number of tokens the address can spend. And the sum of all unspent outputs and their amounts is equal to the total supply.

Outputs are encapsulated in a message as a part of the SignedTransaction payload.