diff --git a/src/mempool.zig b/src/mempool.zig
index bfb575f..cfe0cf7 100644
--- a/src/mempool.zig
+++ b/src/mempool.zig
@@ -1,12 +1,28 @@
 const std = @import("std");
 const Config = @import("config.zig").Config;
+const tx = @import("transaction.zig");
 
-/// Transaction mempool.
-/// The mempool is a collection of transactions that are pending for confirmation.
-/// The node can implement different mempool strategies.
+const Transaction = struct {};
+
+/// Transaction descriptor containing a transaction in the mempool along with additional metadata.
+const TxDesc = struct {
+    tx: *tx.Transaction,
+    added_time: i64,
+    height: i32,
+    fee: i64,
+    fee_per_kb: i64,
+    starting_priority: f64,
+};
+
+/// Mempool for validating and storing standalone transactions until they are mined into a block.
 pub const Mempool = struct {
     allocator: std.mem.Allocator,
     config: *const Config,
+    pool: std.AutoHashMap(tx.Hash, *TxDesc),
+    orphans: std.AutoHashMap(tx.Hash, *tx.Transaction),
+    orphans_by_prev: std.AutoHashMap(tx.OutPoint, std.AutoHashMap(tx.Hash, *tx.Transaction)),
+    outpoints: std.AutoHashMap(tx.OutPoint, *tx.Transaction),
+    last_updated: i64,
 
     /// Initialize the mempool
     ///
@@ -15,20 +31,191 @@ pub const Mempool = struct {
     /// - `config`: Configuration
     ///
     /// # Returns
-    /// - `Mempool`: Mempool
+    /// - `Mempool`: Initialized mempool
     pub fn init(allocator: std.mem.Allocator, config: *const Config) !Mempool {
         return Mempool{
             .allocator = allocator,
             .config = config,
+            .pool = std.AutoHashMap(tx.Hash, *TxDesc).init(allocator),
+            .orphans = std.AutoHashMap(tx.Hash, *tx.Transaction).init(allocator),
+            .orphans_by_prev = std.AutoHashMap(tx.OutPoint, std.AutoHashMap(tx.Hash, *tx.Transaction)).init(allocator),
+            .outpoints = std.AutoHashMap(tx.OutPoint, *tx.Transaction).init(allocator),
+            .last_updated = 0,
         };
     }
 
     /// Deinitialize the mempool
+    pub fn deinit(self: *Mempool) void {
+        self.pool.deinit();
+        self.orphans.deinit();
+        self.orphans_by_prev.deinit();
+        self.outpoints.deinit();
+    }
+
+    /// Add a transaction to the mempool
     ///
     /// # Arguments
-    /// - `self`: Mempool
-    pub fn deinit(self: *Mempool) void {
-        // Clean up resources if needed
+    /// - `transaction`: Transaction to add
+    /// - `height`: Current blockchain height
+    /// - `fee`: Transaction fee
+    ///
+    /// # Returns
+    /// - `?*TxDesc`: Added transaction descriptor or null if not added
+    pub fn addTransaction(self: *Mempool, transaction: *tx.Transaction, height: i32, fee: i64) !?*TxDesc {
+        const hash = transaction.hash();
+
+        // Check if the transaction is already in the pool
+        if (self.pool.contains(hash)) {
+            return null;
+        }
+
+        // Create a new transaction descriptor
+        const tx_desc = try self.allocator.create(TxDesc);
+        tx_desc.* = TxDesc{
+            .tx = transaction,
+            .added_time = std.time.milliTimestamp(),
+            .height = height,
+            .fee = fee,
+            .fee_per_kb = @divTrunc(fee * 1000, @as(i64, @intCast(transaction.virtual_size()))),
+            .starting_priority = try self.calculatePriority(transaction, height),
+        };
+
+        // Add the transaction to the pool
+        try self.pool.put(hash, tx_desc);
+
+        // Add the transaction outpoints to the outpoints map
+        for (transaction.inputs.items) |input| {
+            try self.outpoints.put(input.previous_outpoint, transaction);
+        }
+
+        // Update the last updated timestamp
+        self.last_updated = std.time.milliTimestamp();
+
+        return tx_desc;
+    }
+
+    /// Remove a transaction from the mempool
+    ///
+    /// # Arguments
+    /// - `hash`: Hash of the transaction to remove
+    /// - `remove_redeemers`: Whether to remove transactions that redeem outputs of this transaction
+    pub fn removeTransaction(self: *Mempool, hash: tx.Hash, remove_redeemers: bool) void {
+        const tx_desc = self.pool.get(hash) orelse return;
+
+        if (remove_redeemers) {
+            // Remove any transactions which rely on this one
+            for (tx_desc.tx.outputs.items, 0..) |_, i| {
+                const outpoint = tx.OutPoint{ .hash = hash, .index = @as(u32, @intCast(i)) };
+                if (self.outpoints.get(outpoint)) |redeemer| {
+                    self.removeTransaction(redeemer.hash(), true);
+                }
+            }
+        }
+
+        // Remove the transaction from the pool
+        _ = self.pool.remove(hash);
+
+        // Remove the outpoints from the outpoints map
+        for (tx_desc.tx.inputs.items) |input| {
+            _ = self.outpoints.remove(input.previous_outpoint);
+        }
+
+        // Update the last updated timestamp
+        self.last_updated = std.time.milliTimestamp();
+
+        // Free the transaction descriptor
+        self.allocator.destroy(tx_desc);
+    }
+
+    /// Calculate the priority of a transaction
+    ///
+    /// # Arguments
+    /// - `transaction`: Transaction to calculate priority for
+    /// - `height`: Current blockchain height
+    ///
+    /// # Returns
+    /// - `f64`: Calculated priority
+    fn calculatePriority(self: *Mempool, transaction: *tx.Transaction, height: i32) !f64 {
         _ = self;
+        var priority: f64 = 0;
+        for (transaction.inputs.items) |input| {
+            // TODO: Fetch the UTXO from the chain
+            _ = input;
+            const utxo = .{ .value = 1000, .height = 100 };
+            const input_value = utxo.value;
+            const input_age = @as(f64, @floatFromInt(height - utxo.height));
+            priority += @as(f64, @floatFromInt(input_value)) * input_age;
+        }
+
+        priority /= @as(f64, @floatFromInt(transaction.virtual_size()));
+
+        return priority;
+    }
+
+    /// Check if a transaction is in the mempool
+    ///
+    /// # Arguments
+    /// - `hash`: Hash of the transaction to check
+    ///
+    /// # Returns
+    /// - `bool`: True if the transaction is in the mempool, false otherwise
+    pub fn containsTransaction(self: *const Mempool, hash: tx.Hash) bool {
+        return self.pool.contains(hash);
+    }
+
+    /// Get the number of transactions in the mempool
+    ///
+    /// # Returns
+    /// - `usize`: Number of transactions in the mempool
+    pub fn count(self: *const Mempool) usize {
+        return self.pool.count();
+    }
+
+    /// Get the last time the mempool was updated
+    ///
+    /// # Returns
+    /// - `i64`: Last update time in milliseconds
+    pub fn lastUpdated(self: *const Mempool) i64 {
+        return self.last_updated;
     }
 };
+
+test "Mempool" {
+    const testing = std.testing;
+    const allocator = testing.allocator;
+
+    var config = Config{
+        .allocator = allocator,
+        .rpc_port = 8332,
+        .p2p_port = 8333,
+        .testnet = false,
+        .datadir = "/tmp/btczee",
+    };
+    var mempool = try Mempool.init(allocator, &config);
+    defer mempool.deinit();
+
+    // Create a mock transaction
+    var transaction = try tx.Transaction.init(allocator);
+    defer transaction.deinit();
+    try transaction.addInput(tx.OutPoint{ .hash = tx.Hash.zero(), .index = 0 });
+    try transaction.addOutput(50000, try tx.Script.init(allocator));
+
+    // Add the transaction to the mempool
+    const tx_desc = try mempool.addTransaction(&transaction, 101, 1000);
+    try testing.expect(tx_desc != null);
+
+    // Check if the transaction is in the mempool
+    try testing.expect(mempool.containsTransaction(transaction.hash()));
+
+    // Check the mempool count
+    try testing.expectEqual(@as(usize, 1), mempool.count());
+
+    // Remove the transaction from the mempool
+    mempool.removeTransaction(transaction.hash(), false);
+
+    // Check if the transaction is no longer in the mempool
+    try testing.expect(!mempool.containsTransaction(transaction.hash()));
+
+    // Check the mempool count after removal
+    try testing.expectEqual(@as(usize, 0), mempool.count());
+}
diff --git a/src/transaction.zig b/src/transaction.zig
new file mode 100644
index 0000000..723684e
--- /dev/null
+++ b/src/transaction.zig
@@ -0,0 +1,156 @@
+const std = @import("std");
+
+/// Represents a transaction hash
+pub const Hash = struct {
+    bytes: [32]u8,
+
+    /// Create a zero hash
+    pub fn zero() Hash {
+        return Hash{ .bytes = [_]u8{0} ** 32 };
+    }
+
+    /// Check if two hashes are equal
+    pub fn eql(self: Hash, other: Hash) bool {
+        return std.mem.eql(u8, &self.bytes, &other.bytes);
+    }
+};
+
+/// Represents a transaction outpoint (reference to a previous transaction output)
+pub const OutPoint = struct {
+    hash: Hash,
+    index: u32,
+};
+
+/// Represents a transaction input
+pub const Input = struct {
+    previous_outpoint: OutPoint,
+    script_sig: Script,
+    sequence: u32,
+};
+
+/// Represents a transaction output
+pub const Output = struct {
+    value: i64,
+    script_pubkey: Script,
+};
+
+/// Represents a script (either scriptSig or scriptPubKey)
+pub const Script = struct {
+    bytes: []u8,
+    allocator: std.mem.Allocator,
+
+    /// Initialize a new script
+    pub fn init(allocator: std.mem.Allocator) !Script {
+        return Script{
+            .bytes = try allocator.alloc(u8, 0),
+            .allocator = allocator,
+        };
+    }
+
+    /// Deinitialize the script
+    pub fn deinit(self: *Script) void {
+        self.allocator.free(self.bytes);
+    }
+
+    /// Add data to the script
+    pub fn push(self: *Script, data: []const u8) !void {
+        const new_len = self.bytes.len + data.len;
+        self.bytes = try self.allocator.realloc(self.bytes, new_len);
+        @memcpy(self.bytes[self.bytes.len - data.len ..], data);
+    }
+};
+
+/// Represents a transaction
+pub const Transaction = struct {
+    version: i32,
+    inputs: std.ArrayList(Input),
+    outputs: std.ArrayList(Output),
+    lock_time: u32,
+    allocator: std.mem.Allocator,
+
+    /// Initialize a new transaction
+    pub fn init(allocator: std.mem.Allocator) !Transaction {
+        return Transaction{
+            .version = 1,
+            .inputs = std.ArrayList(Input).init(allocator),
+            .outputs = std.ArrayList(Output).init(allocator),
+            .lock_time = 0,
+            .allocator = allocator,
+        };
+    }
+
+    /// Deinitialize the transaction
+    pub fn deinit(self: *Transaction) void {
+        for (self.inputs.items) |*input| {
+            input.script_sig.deinit();
+        }
+        for (self.outputs.items) |*output| {
+            output.script_pubkey.deinit();
+        }
+        self.inputs.deinit();
+        self.outputs.deinit();
+    }
+
+    /// Add an input to the transaction
+    pub fn addInput(self: *Transaction, previous_outpoint: OutPoint) !void {
+        const script_sig = try Script.init(self.allocator);
+        try self.inputs.append(Input{
+            .previous_outpoint = previous_outpoint,
+            .script_sig = script_sig,
+            .sequence = 0xffffffff,
+        });
+    }
+
+    /// Add an output to the transaction
+    pub fn addOutput(self: *Transaction, value: i64, script_pubkey: Script) !void {
+        var new_script = try Script.init(self.allocator);
+        try new_script.push(script_pubkey.bytes);
+        try self.outputs.append(Output{
+            .value = value,
+            .script_pubkey = new_script,
+        });
+    }
+
+    /// Calculate the transaction hash
+    pub fn hash(self: *const Transaction) Hash {
+        var h: [32]u8 = undefined;
+        std.crypto.hash.sha2.Sha256.hash(@as([]const u8, std.mem.asBytes(&self.version)), &h, .{});
+        return Hash{ .bytes = h };
+    }
+
+    /// Calculate the virtual size of the transaction
+    pub fn virtual_size(self: *const Transaction) usize {
+        // This is a simplified size calculation. In a real implementation,
+        // you would need to account for segregated witness data if present.
+        var size: usize = 8; // Version (4 bytes) + LockTime (4 bytes)
+        size += self.inputs.items.len * 41; // Simplified input size
+        size += self.outputs.items.len * 33; // Simplified output size
+        return size;
+    }
+};
+
+test "Transaction basics" {
+    const testing = std.testing;
+    const allocator = testing.allocator;
+
+    var tx = try Transaction.init(allocator);
+    defer tx.deinit();
+
+    try tx.addInput(OutPoint{ .hash = Hash.zero(), .index = 0 });
+
+    {
+        var script_pubkey = try Script.init(allocator);
+        defer script_pubkey.deinit();
+        try script_pubkey.push(&[_]u8{ 0x76, 0xa9, 0x14 }); // OP_DUP OP_HASH160 Push14
+        try tx.addOutput(50000, script_pubkey);
+    }
+
+    try testing.expectEqual(@as(usize, 1), tx.inputs.items.len);
+    try testing.expectEqual(@as(usize, 1), tx.outputs.items.len);
+    try testing.expectEqual(@as(i64, 50000), tx.outputs.items[0].value);
+
+    _ = tx.hash();
+
+    const vsize = tx.virtual_size();
+    try testing.expect(vsize > 0);
+}