How blockchain verifies transaction amount is valid - bitcoin

Question

I'm new to blockchain. I understand that blockchain keeps records of all transactions and each transaction is signed with private key. However, why cannot anyone enter an arbitrary amount of Bitcoin transaction? Say, address a only has 1 Bitcoin, but its owner can create a transaction of 100 Bitcoins and still sign it. What is Bitcoin's mechanism to verify the outgoing and incoming amounts of a transaction?

Answer 1

Bitcoin's blockchain contains a historical record of all transactions which have ever occured on it. Clients can certainly choose to store less, and the blockchain can be pruned by not storing transactions which have already been spent long-ago.
Bitcoin addresses don't technically have a "balance" in the sense of a traditional bank ledger. Instead, an address has the ability to spend transactions which were sent to it.
To delve into technical details, let's look at the address 1PkCAVKjPz1YK7iJwT8xTLxBXR1av8dL98 (which I own).
I received a very small transaction of 0.004 BTC recently, in the transaction with the TxID 432794be2e056275cafb0eeb7ab59a24444dd4c9e00cd9702a49c2a655a3e705.
The (hex-encoded) raw data of this transaction is: 0100000001e9a24c1d1b8d10b13482cdcbbb90d894577292c4d0c0c1427411fb9d82ea710c010000006b483045022100d9a5433c1381b39b7e02b0b0f042990e7c16cfea252b05ccfef2e85c2dab2a6f022057c7def782fe3b0d7e5e0eae277d2a5890844da7d72309817a2dac22a6307c6001210390d78cb0c1d34d4417db7e0a9a9f125a689dc29dc2197a01a5f827a20f870f62ffffffff01801a0600000000001976a914f97df8f593e0056d337c274fd81a163f47a17d3788ac00000000
Which in its human-readable form is:
{
"txid": "432794be2e056275cafb0eeb7ab59a24444dd4c9e00cd9702a49c2a655a3e705",
"size": 192,
"version": 1,
"locktime": 0,
"vin": [
{
"txid": "0c71ea829dfb117442c1c0d0c492725794d890bbcbcd8234b1108d1b1d4ca2e9",
"vout": 1,
"scriptSig": {
"asm": "3045022100d9a5433c1381b39b7e02b0b0f042990e7c16cfea252b05ccfef2e85c2dab2a6f022057c7def782fe3b0d7e5e0eae277d2a5890844da7d72309817a2dac22a6307c60[ALL] 0390d78cb0c1d34d4417db7e0a9a9f125a689dc29dc2197a01a5f827a20f870f62",
"hex": "483045022100d9a5433c1381b39b7e02b0b0f042990e7c16cfea252b05ccfef2e85c2dab2a6f022057c7def782fe3b0d7e5e0eae277d2a5890844da7d72309817a2dac22a6307c6001210390d78cb0c1d34d4417db7e0a9a9f125a689dc29dc2197a01a5f827a20f870f62"
},
"sequence": 4294967295
}
],
"vout": [
{
"value": 0.00400000,
"n": 0,
"scriptPubKey": {
"asm": "OP_DUP OP_HASH160 f97df8f593e0056d337c274fd81a163f47a17d37 OP_EQUALVERIFY OP_CHECKSIG",
"hex": "76a914f97df8f593e0056d337c274fd81a163f47a17d3788ac",
"reqSigs": 1,
"type": "pubkeyhash",
"addresses": [
"1PkCAVKjPz1YK7iJwT8xTLxBXR1av8dL98"
]
}
}
]
}
So the address 1PkCAVKjPz1YK7iJwT8xTLxBXR1av8dL98 is able to "spend" the transaction 432794be2e056275cafb0eeb7ab59a24444dd4c9e00cd9702a49c2a655a3e705.
The output value of that transaction is 0.004 BTC, so I can't make a Bitcoin transaction which attempts to spend more. However, let's try to do it anyway.
I'll create a raw transaction which attempts to output 0.01 BTC to 1MgLu9L7ftmGQM84xhKYKw8pTXiSANwggs from the transaction with an output balance of 0.004 BTC:
bitcoin-rpc createrawtransaction '[{"txid":"432794be2e056275cafb0eeb7ab59a24444dd4c9e00cd9702a49c2a655a3e705","vout":0}]' '{"1MgLu9L7ftmGQM84xhKYKw8pTXiSANwggs":0.01}'
Returns the raw transaction:
010000000105e7a355a6c2492a70d90ce0c9d44d44249ab57aeb0efbca7562052ebe9427430000000000ffffffff0140420f00000000001976a914e2d3595bd0a55c16f4b19f5cd996568dd7e811f688ac00000000
I can then sign the transaction:
bitcoin-rpc signrawtransaction 010000000105e7a355a6c2492a70d90ce0c9d44d44249ab57aeb0efbca7562052ebe9427430000000000ffffffff0140420f00000000001976a914e2d3595bd0a55c16f4b19f5cd996568dd7e811f688ac00000000
which returns:
{
"hex": "010000000105e7a355a6c2492a70d90ce0c9d44d44249ab57aeb0efbca7562052ebe942743000000006b483045022100ce3fad8ccdee48f1fe9060ef81624d3bbe721293feb8ee06a96751e65b9c423e0220106a3e80d5fdf93df5dbf037d8cfd32af70a405586e12294c937308a3c57b10e012102f2acb810346866908108dd86462ee5400b15786739f5e908711d2d15d9dd2238ffffffff0140420f00000000001976a914e2d3595bd0a55c16f4b19f5cd996568dd7e811f688ac00000000",
"complete": true
}
And I can take that returned hex, which is a validly-formatted transaction, and submit it to the network:
bitcoin-rpc sendrawtransaction 010000000105e7a355a6c2492a70d90ce0c9d44d44249ab57aeb0efbca7562052ebe942743000000006b483045022100ce3fad8ccdee48f1fe9060ef81624d3bbe721293feb8ee06a96751e65b9c423e0220106a3e80d5fdf93df5dbf037d8cfd32af70a405586e12294c937308a3c57b10e012102f2acb810346866908108dd86462ee5400b15786739f5e908711d2d15d9dd2238ffffffff0140420f00000000001976a914e2d3595bd0a55c16f4b19f5cd996568dd7e811f688ac00000000
Which gives me the error:
66: insufficient priority (code -26)
This is a client-side error, but if I were to successfully broadcast the raw transaction to the network, other peers would simply look up the referenced (or "spent") transaction 432794be2e056275cafb0eeb7ab59a24444dd4c9e00cd9702a49c2a655a3e705 and see that the output total of my new transaction is greater than the output total of the transaction I'm attempting to spend.
There is one exception to this rule: coinbase transactions generate Bitcoins for miners, and thus are allowed to output the correct block subsidy (originally 50 BTC, but currently 12.5 BTC after the halving about a month and a half ago) plus the transaction fees of all of the transactions contained within the block.

Answer 2

I know this post is already old but there is a complete list for validating a bitcoin transcation:
https://en.bitcoin.it/wiki/Protocol_rules#.22tx.22_messages

Answer 3

Maybe this link on how bitcoin transactions work will help you. Look at the section called "What if the input and output amounts don’t match?"
Also, since Blockchain uses a distributed ledger, all nodes will validate a transaction before it is accepted. Furthermore there should be auditors on the chain that make sure fraudulent activities don't happen. Hope this helps.