Bitcoin uses a scripting system for transactions. Forth-like, Script is simple, stack-based, and processed from left to right. It is purposefully not Turing-complete, with no loops.

A script is essentially a list of instructions recorded with each transaction that describe how the next person wanting to spend the Bitcoins being transferred can gain access to them. The script for a typical Bitcoin transfer to destination Bitcoin address D simply encumbers future spending of the bitcoins with two things: the spender must provide

1. a public key that, when hashed, yields destination address D embedded in the script, and
2. a signature to show evidence of the private key corresponding to the public key just provided.

Scripting provides the flexibility to change the parameters of what's needed to spend transferred Bitcoins. For example, the scripting system could be used to require two private keys, or a combination of several, or even no keys at all.

A transaction is valid if nothing in the combined script triggers failure and the top stack item is true (non-zero). The party who originally sent the Bitcoins now being spent, dictates the script operations that will occur last in order to release them for use in another transaction. The party wanting to spend them must provide the input(s) to the previously recorded script that results in those operations occurring last leaving behind true (non-zero).

The stacks hold byte vectors. When used as numbers, byte vectors are interpreted as little-endian variable-length integers with the most significant bit determining the sign of the integer. Thus 0x81 represents -1. 0x80 is another representation of zero (so called negative 0). Positive 0 is represented by a null-length vector. Byte vectors are interpreted as Booleans where False is represented by any representation of zero, and True is represented by any representation of non-zero.

Words

This is a list of all Script words (commands/functions). Some of the more complicated opcodes are disabled out of concern that the client might have a bug in their implementation; if a transaction using such an opcode were to be included in the chain any fix would risk forking the chain.

True=1 and False=0.

Constants

When talking about scripts, these value-pushing words are usually omitted.

Flow control

Stack

Splice

If any opcode marked as disabled is present in a script, it must abort and fail.

Bitwise logic

If any opcode marked as disabled is present in a script, it must abort and fail.

Arithmetic

Note: Arithmetic inputs are limited to signed 32-bit integers, but may overflow their output.

If any input value for any of these commands is longer than 4 bytes, the script must abort and fail. If any opcode marked as disabled is present in a script - it must also abort and fail.

Crypto

Pseudo-words

These words are used internally for assisting with transaction matching. They are invalid if used in actual scripts.

Reserved words

Any opcode not assigned is also reserved. Using an unassigned opcode makes the transaction invalid.

Scripts

This is a list of interesting scripts. Keep in mind that all constants actually use the data-pushing commands above. Note that there is a small number of standard script forms that are relayed from node to node; non-standard scripts are accepted if they are in a block, but nodes will not relay them.

Standard Transaction to Bitcoin address (pay-to-pubkey-hash)

scriptPubKey: OP_DUP OP_HASH160 <pubKeyHash> OP_EQUALVERIFY OP_CHECKSIG
scriptSig: <sig> <pubKey>

To demonstrate how scripts look on the wire, here is a raw scriptPubKey:

  76       A9             14
OP_DUP OP_HASH160    Bytes to push

89 AB CD EF AB BA AB BA AB BA AB BA AB BA AB BA AB BA AB BA   88         AC
                      Data to push                     OP_EQUALVERIFY OP_CHECKSIG

Note: scriptSig is in the input of the spending transaction and scriptPubKey is in the output of the previously unspent i.e. "available" transaction.

Here is how each word is processed:

Standard Generation Transaction (pay-to-pubkey)

OP_CHECKSIG is used directly without first hashing the public key. By default the reference implementation uses this form for coinbase payment, and scriptPubKeys of this transaction form are recognized as payments to user. The disadvantage of this transaction form is that the whole public key needs to be known in advance, implying longer payment addresses, and that it provides less protection in the event of a break in the ECDSA signature algorithm.

scriptPubKey: <pubKey> OP_CHECKSIG
scriptSig: <sig>

Checking process:

Provably Unspendable/Prunable Outputs

The standard way to mark a transaction as provably unspendable is with a scriptPubKey of the following form:

 scriptPubKey: OP_RETURN {zero or more ops}

OP_RETURN immediately marks the script as invalid, guaranteeing that no scriptSig exists that could possibly spend that output. Thus the output can be immediately pruned from the UTXO set even if it has not been spent. eb31ca1a4cbd97c2770983164d7560d2d03276ae1aee26f12d7c2c6424252f29 is an example: it has a single output of zero value, thus giving the full 0.125BTC fee to the miner who mined the transaction without adding an entry to the UTXO set. You can also use OP_RETURN to add data to a transaction without the data ever appearing in the UTXO set, as seen in 1a2e22a717d626fc5db363582007c46924ae6b28319f07cb1b907776bd8293fc; P2Pool does this with the share chain hash txout in the coinbase of blocks it creates.

Note that this mechanism is not yet a standard transaction type, and thus will not be relayed by nodes on mainnet.

Anyone-Can-Spend Outputs

Conversely a transaction can be made spendable by anyone at all:

 scriptPubKey: (empty)
 scriptSig: OP_TRUE

With some software changes such transactions can be used as a way to donate funds to miners in addition to transaction fees: any miner who mines such a transaction can also include an additional one after it sending the funds to an address they control. This mechanism may be used in the future for fidelity bonds to sacrifice funds in a provable way.

Anyone-Can-Spend outputs are currently considered non-standard, and are not relayed on the P2P network.

Transaction puzzle

Transaction a4bfa8ab6435ae5f25dae9d89e4eb67dfa94283ca751f393c1ddc5a837bbc31b is an interesting puzzle.

scriptPubKey: OP_HASH256 6fe28c0ab6f1b372c1a6a246ae63f74f931e8365e15a089c68d6190000000000 OP_EQUAL
scriptSig: 

To spend the transaction you need to come up with some data such that hashing the data twice results in the given hash.

This transaction was successfully spent by 09f691b2263260e71f363d1db51ff3100d285956a40cc0e4f8c8c2c4a80559b1. The required data happened to be the Genesis block, and the given hash was the genesis block hash. Note that while transactions like this are fun, they are not secure, because they do not contain any signatures and thus any transaction attempting to spend them can be replaced with a different transaction sending the funds somewhere else.