BIP: 68
  Title: Relative lock-time using consensus-enforced sequence numbers
  Author: Mark Friedenbach 
          BtcDrak 
          Nicolas Dorier 
          kinoshitajona 
  Status: Final
  Type: Standards Track
  Created: 2015-05-28

enum {
    /* Interpret sequence numbers as relative lock-time constraints. */
    LOCKTIME_VERIFY_SEQUENCE = (1 << 0),
};
    
/* Setting nSequence to this value for every input in a transaction
 * disables nLockTime. */
static const uint32_t SEQUENCE_FINAL = 0xffffffff;

/* Below flags apply in the context of BIP 68*/
/* If this flag set, CTxIn::nSequence is NOT interpreted as a
 * relative lock-time. */
static const uint32_t SEQUENCE_LOCKTIME_DISABLE_FLAG = (1 << 31);

/* If CTxIn::nSequence encodes a relative lock-time and this flag
 * is set, the relative lock-time has units of 512 seconds,
 * otherwise it specifies blocks with a granularity of 1. */
static const uint32_t SEQUENCE_LOCKTIME_TYPE_FLAG = (1 << 22);

/* If CTxIn::nSequence encodes a relative lock-time, this mask is
 * applied to extract that lock-time from the sequence field. */
static const uint32_t SEQUENCE_LOCKTIME_MASK = 0x0000ffff;

/* In order to use the same number of bits to encode roughly the
 * same wall-clock duration, and because blocks are naturally
 * limited to occur every 600s on average, the minimum granularity
 * for time-based relative lock-time is fixed at 512 seconds.
 * Converting from CTxIn::nSequence to seconds is performed by
 * multiplying by 512 = 2^9, or equivalently shifting up by
 * 9 bits. */
static const int SEQUENCE_LOCKTIME_GRANULARITY = 9;

/**
 * Calculates the block height and previous block's median time past at
 * which the transaction will be considered final in the context of BIP 68.
 * Also removes from the vector of input heights any entries which did not
 * correspond to sequence locked inputs as they do not affect the calculation.
 */
static std::pair CalculateSequenceLocks(const CTransaction &tx, int flags, std::vector* prevHeights, const CBlockIndex& block)
{
    assert(prevHeights->size() == tx.vin.size());

    // Will be set to the equivalent height- and time-based nLockTime
    // values that would be necessary to satisfy all relative lock-
    // time constraints given our view of block chain history.
    // The semantics of nLockTime are the last invalid height/time, so
    // use -1 to have the effect of any height or time being valid.
    int nMinHeight = -1;
    int64_t nMinTime = -1;

    // tx.nVersion is signed integer so requires cast to unsigned otherwise
    // we would be doing a signed comparison and half the range of nVersion
    // wouldn't support BIP 68.
    bool fEnforceBIP68 = static_cast(tx.nVersion) >= 2
                      && flags & LOCKTIME_VERIFY_SEQUENCE;

    // Do not enforce sequence numbers as a relative lock time
    // unless we have been instructed to
    if (!fEnforceBIP68) {
        return std::make_pair(nMinHeight, nMinTime);
    }

    for (size_t txinIndex = 0; txinIndex < tx.vin.size(); txinIndex++) {
        const CTxIn& txin = tx.vin[txinIndex];

        // Sequence numbers with the most significant bit set are not
        // treated as relative lock-times, nor are they given any
        // consensus-enforced meaning at this point.
        if (txin.nSequence & CTxIn::SEQUENCE_LOCKTIME_DISABLE_FLAG) {
            // The height of this input is not relevant for sequence locks
            (*prevHeights)[txinIndex] = 0;
            continue;
        }

        int nCoinHeight = (*prevHeights)[txinIndex];

        if (txin.nSequence & CTxIn::SEQUENCE_LOCKTIME_TYPE_FLAG) {
            int64_t nCoinTime = block.GetAncestor(std::max(nCoinHeight-1, 0))->GetMedianTimePast();
            // NOTE: Subtract 1 to maintain nLockTime semantics
            // BIP 68 relative lock times have the semantics of calculating
            // the first block or time at which the transaction would be
            // valid. When calculating the effective block time or height
            // for the entire transaction, we switch to using the
            // semantics of nLockTime which is the last invalid block
            // time or height.  Thus we subtract 1 from the calculated
            // time or height.

            // Time-based relative lock-times are measured from the
            // smallest allowed timestamp of the block containing the
            // txout being spent, which is the median time past of the
            // block prior.
            nMinTime = std::max(nMinTime, nCoinTime + (int64_t)((txin.nSequence & CTxIn::SEQUENCE_LOCKTIME_MASK) << CTxIn::SEQUENCE_LOCKTIME_GRANULARITY) - 1);
        } else {
            nMinHeight = std::max(nMinHeight, nCoinHeight + (int)(txin.nSequence & CTxIn::SEQUENCE_LOCKTIME_MASK) - 1);
        }
    }

    return std::make_pair(nMinHeight, nMinTime);
}

static bool EvaluateSequenceLocks(const CBlockIndex& block, std::pair lockPair)
{
    assert(block.pprev);
    int64_t nBlockTime = block.pprev->GetMedianTimePast();
    if (lockPair.first >= block.nHeight || lockPair.second >= nBlockTime)
        return false;

    return true;
}

bool SequenceLocks(const CTransaction &tx, int flags, std::vector* prevHeights, const CBlockIndex& block)
{
    return EvaluateSequenceLocks(block, CalculateSequenceLocks(tx, flags, prevHeights, block));
}

bool CheckSequenceLocks(const CTransaction &tx, int flags)
{
    AssertLockHeld(cs_main);
    AssertLockHeld(mempool.cs);

    CBlockIndex* tip = chainActive.Tip();
    CBlockIndex index;
    index.pprev = tip;
    // CheckSequenceLocks() uses chainActive.Height()+1 to evaluate
    // height based locks because when SequenceLocks() is called within
    // ConnectBlock(), the height of the block *being*
    // evaluated is what is used.
    // Thus if we want to know if a transaction can be part of the
    // *next* block, we need to use one more than chainActive.Height()
    index.nHeight = tip->nHeight + 1;

    // pcoinsTip contains the UTXO set for chainActive.Tip()
    CCoinsViewMemPool viewMemPool(pcoinsTip, mempool);
    std::vector prevheights;
    prevheights.resize(tx.vin.size());
    for (size_t txinIndex = 0; txinIndex < tx.vin.size(); txinIndex++) {
        const CTxIn& txin = tx.vin[txinIndex];
        CCoins coins;
        if (!viewMemPool.GetCoins(txin.prevout.hash, coins)) {
            return error("%s: Missing input", __func__);
        }
        if (coins.nHeight == MEMPOOL_HEIGHT) {
            // Assume all mempool transaction confirm in the next block
            prevheights[txinIndex] = tip->nHeight + 1;
        } else {
            prevheights[txinIndex] = coins.nHeight;
        }
    }

    std::pair lockPair = CalculateSequenceLocks(tx, flags, &prevheights, index);
    return EvaluateSequenceLocks(index, lockPair);
}

    // 0 <= nHeight < 65,535 blocks (1.25 years)
    nSequence = nHeight;
    nHeight = nSequence & 0x0000ffff;
    
    // 0 <= nTime < 33,554,431 seconds (1.06 years)
    nSequence = (1 << 22) | (nTime >> 9);
    nTime = (nSequence & 0x0000ffff) << 9;