Compact Size (also known as CompactSize or var_int) is a variable-length integer encoding used in Bitcoin to efficiently represent numbers while minimizing space usage. It's primarily used in transaction data and network messages to indicate:

• Number of inputs/outputs in a transaction
• Script sizes
• Number of witness elements
• Length of upcoming data fields

Structure

The encoding uses a prefix byte to determine how to read the subsequent bytes:

How to Read It

Let's analyze real Bitcoin transactions to understand compact size encoding:

1. Transaction with 1 Input -> 5e6e1a9b4ce3f9f...fedc9a758fe614

   • Looking at input count: 01
   • Since 1 < 252, it's a direct value
   • Meaning: Transaction has 1 input
   • Total bytes used: 1

2. ScriptSig of 107 bytes -> c27c4d2236fce2a...99c3102ccb45ef

   • Looking at scriptsig size: 6b
   • Since 107 (0x6b) < 252, it's a direct value
   • Meaning: ScriptSig is 107 bytes long
   • Total bytes used: 1

3. ScriptPubKey of 4,026 bytes -> e411dbebd2f7d64...347abee1e1a455

   • Looking at scriptpubkey size: fd ba 0f
   • First byte is 0xFD, so read next 2 bytes
   • Next bytes: ba 0f (in little-endian)
   • Convert from little-endian: 0fba = 4,026 in decimal
   • Meaning: ScriptPubKey is 4,026 bytes long
   • Total bytes used: 3

Implementation

Here's a Python implementation for reading and writing compact size integers:

def read_varint(s):
    '''Reads a variable integer from a stream
    
    The first byte determines the format:
    - If < 0xfd: directly contains the number
    - If 0xfd: next 2 bytes contain number
    - If 0xfe: next 4 bytes contain number 
    - If 0xff: next 8 bytes contain number
    '''
    i = s.read(1)[0]
    if i == 0xfd:
        return int.from_bytes(s.read(2), 'little')
    elif i == 0xfe:
        return int.from_bytes(s.read(4), 'little')
    elif i == 0xff:
        return int.from_bytes(s.read(8), 'little')
    else:
        return i

def encode_varint(i):
    '''Encodes an integer as a compact size
    
    Returns bytes object with the encoded number
    '''
    if i < 0xfd:
        return bytes([i])
    elif i < 0x10000:
        return b'\xfd' + i.to_bytes(2, 'little')
    elif i < 0x100000000:
        return b'\xfe' + i.to_bytes(4, 'little')
    else:
        return b'\xff' + i.to_bytes(8, 'little')

Common Uses in Bitcoin

1. Transaction Structure
   • Input count
   • Output count
   • ScriptSig size
   • ScriptPubKey size
   • Witness element count

2. Block Data

   • Number of transactions in a block

3. Network Messages

   • Length of upcoming message data
   • Number of inventory items

This variable-length integer encoding plays a crucial role in keeping transaction and block data compact while maintaining flexibility for larger values when needed.