This video shows how bitcoin work visually. I watched this video 3times.
https://www.youtube.com/watch?v=bBC-nXj3Ng4&ab_channel=3Blue1Brown
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About UTXOâs, does the wallet have to group all available UTXOâs together for each transaction and send back the difference, or can it choose only enough of them to cover the transaction? It seems like its the latter but I just want to be clear.
The wallet will cherry pick enough UTXOs to cover the tx. But you must spend the full UTXO. 
Just a question regarding a stale block, does the miner still get rewarded for solving the nonce and adding the block?
The application of transferring Bitcoin in a text with the hex number that can be generated using the apps/websites provided make sense for many projects in crypto. I am wondering whether the idea is to bypass the public key or to access the actual wallet. Texting a public key in 2021 seems like a common practice.
No, the block reward is part of the tx data called a coinbase and gets dropped with the block.
Iâve got no idea what are you referring to. Is the hex a signed tx? You can send a tx that has been signed by a wallet and send it via sms to someone that sends it to the network.
thanks for clarifying that.
QUESTION
Iâm sure many of you have been using blockexplorer and etherscan to track and verify your transactions on the blockchain. I have a question with respect to calculating the fees on these websites. I do realize Input = output + transaction fees, but I am a bit confused as to how etherscan in particular displays this.
In etherescan you can see the âvalue of the transactionâ on the day you made it which can serve as the cost basis for the transaction. Or how much you invested. A bit further down you see the âfeeâ on that day. So is the value of the transaction on that day including the fee or do i have to add it back in to get the true cost basis for the transaction?
For exampleâŚon etherescan it showsâŚ
$400 dollar value on day of transacton
$40 fee on day of transactoin
So is the $400 including the $40? Or do I have to add it back to the value showing to get the cost basis for what i spent? In other words is my total cost of the transaction $400 or $440?
Thanks in advance for the responses.
Ethereum is very different, its an account based blockchain, not UTXO like Bitcoin. The fee is also calculated with gas used which is based on the operations executed not the size of the tx.
The tradeof is that Bitcoin is technically more private but can track BTC UTXOs which in case they are stolen funds or anything makes them less fungible while Ethereum is more fungible because it has an account value instead of UTXOs but is less private, its common to use the same address for everything on Ethereum.
Anyway the fee in itself on Ethereum is calculated by the gas price and the operations you will perform in the contract and also get refunded if you spend less gas than was predicted and the fee is subtracted from the account and is not implied and static like on Bitcoin.
This is also the reason why some people are critical of Ethereum because it makes its state muttable. When you create a tx on Ethereum you change the global state of the network. Bitcoin on the other hand is immutable, that is why you have to spend the entire UTXO every time, because you canât subtract a portion of it because that would mean changing the data that is already on the blockchain.
Hey @thecil Just finished the module on the different types of wallets and iâm wondering if the desktop versions of wallets like Metamask, Trustwallet, and Atomic wallet can be classified as full nodes?
If so, would the mobile versions of the above i.e Metamask, Trustwallet, Atomic wallet etc be classified as SPVâs?
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Hey @Huddoh, hope you are great.
All wallets you mentioned are SPV, to keep it simple, full nodes wallets are those who kept a copy of the entire blockchain (or part of it) and serve as a peer to others.
SPV are just programs that have all the functionality of a wallet (manage priv key) but relies on a full node to sent the transaction to the blockchain mempool for them.
Mobile versions are the best example for SPV, you dont have to download tons of gigabyte of blockchain data in order to use them, thats a node job.
Carlos Z
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My question is what happens when the issuance of bitcoin goes down over time and everyone is HODLing the bitcoin because it is a store of value and digital gold, will miners still have the incentive to mine? Will the fees be high enough if the vast majority of bitcoin will be just sitting in peopleâs wallets and not moving for long periods of time?
Thank you!
The transaction fees reward miners from processing transactions. The block reward is for securing the hash chain. Even there is no transactions, a block will be formed every 10 minutes and miners receive 6.25 BTC reward for unlocking a new block, they get block reward because they are securing every transaction made in every previous block, increasing the number of confirmations it has and increasing the difficulty of undoing it. Assuming that there are no changes to the protocol, the Bitcoin cap will be reached by 2140, 122 years from now. I am not sure what going to happen after 2140 when there is no block reward. But now the miners are incentivized enough to create new blocks.
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That makes sense! But my concern is 20-30 years from now, which I think is relevant because it is within the lifetime of most people in this forum. Because of the halving every 4 years, in 20 years the reward will be 0.195 BTC per block and in 30 years it will be 0.048 BTC per block. What happens if the price of bitcoin drops a significant amount, will the reward be even worth the effort? Will the incentive still be there, if bitcoin remains a store of value and not actual money?
Also, what happens if the government just buys $10billion worth of hardware and does a 51% attack? Will it be this easy to break bitcoin or am I missing something major here?
Also, I am curious how will bitcoin become resistant to quantum computer attacks, because those computers might break sha256 hash functions
This is a very interesting question, it is going to be an issue unless there is a change in the protocol. https://quillette.com/2021/02/21/can-governments-stop-bitcoin/ this link help to answer the other two questions
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no- you would never give your private key. in any scenario!! That is why I really donât trust any platforms that donât let you own your own private keys. Metamask was a big deal when it came out because it allowed you to interact with dApps without having to provide your private key.
âalso, I am curious how will bitcoin become resistant to quantum computer attacks, because those computers might break sha256 hash functionâ
when i first heard of quantum computers i had all kinds of thoughts about what that might mean for everything from consciousness to crypto, but Iâm not sure that that is accurate. Honestly, I am by no means someone who has the capacity to discuss this (hopefully, just for now ) but I do think I can formulate a somewhat intelligible thought on it. Quantum computing is apparently âbetterâ than regular computing in one way because it can preform multiple computational tasks at once. So, from what I imagine, it can preform brute-force attacks better than a regular computer, but apparently SHA256 encryption is so heavily secure that it is statistically insignificant how much of a probability there is of a quantum computer guessing the correct input that would have generated that hash. From what I have read, only use of Groverâs algorithm can be used to crack SHA256 and higher.
here is an article in Forbes about it (take it for what you will) that seems to address a number of mathematical theories and law that indicate that quantum computing is not a threat to SHA256. here is another one that indicates it was studied up in Canada (with a link to the paper).
https://www.forbes.com/sites/rogerhuang/2020/12/21/heres-why-quantum-computing-will-not-break-cryptocurrencies/?sh=1059064e167b
https://www.theregister.com/2016/10/18/sha3256_good_for_beelions_of_years_say_boffins/
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I am not sure why this discussion thread/link is presented at the beginning of Bitcoin 101 lessons. Is it to for you guys at the Academy to test our knowledge level before engaging in the lessons or just as a reminder that we should go back when we finish?
There are a few discussion threads about different topics in the forum.