OP_RETURN: Data Embeds

Not every transaction output is meant to be spent. Bitcoin allows for a special type of ScriptPubKey called OP_RETURN, which is used to store arbitrary data on the blockchain.

1. How it Works

The OP_RETURN opcode terminates script execution immediately.

• The Rule: If a script starts with OP_RETURN, it can never be spent.

• The Benefit: Because the node knows these coins can never be spent, it doesn't need to store this output in the UTXO Set (Chainstate). This prevents "UTXO bloat."

2. Storing Data

Any data pushed after the OP_RETURN opcode is saved on the blockchain forever.

• Limit: Standard policy allows for 80 bytes of data.

• Cost: You must pay a transaction fee based on the size of the data, and the satoshis sent to this output are burned (lost forever).

3. Common Use Cases

1. Timestamping: Proving a document existed at a certain time by hashing it and storing the hash in OP_RETURN.

2. Omni / Tether: Early versions of Tether used OP_RETURN to track token transfers on top of the Bitcoin ledger.

3. Colored Coins: Assigning external value to specific Bitcoin outputs.

4. Hex Structure

An OP_RETURN script usually looks like this in hex: 6a (OP_RETURN) + [Push Data Opcode] + [Actual Data]

Example: Storing the text "Hello" 6a (OP_RETURN) + 05 (Push 5 bytes) + 48656c6c6f ("Hello" in hex)

Feature	OP_RETURN Output
Spendable?	No
UTXO Set?	No (Prunable)
Data Limit	80 Bytes (Standard)
Opcode Hex	0x6a

In the next section, we will discuss the Serialization and Address relationship.