Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2134

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Unspent transactions are the amount of BTC an address holds on the leger.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    You have to combine UTXO to reach the need amount and then return the left minus fees to a wallet you control.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?UTXO input minus UTXO output equals the transaction fee.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Privacy can be increased by using multiple addresses for a transition. By using different private keys, it will add to the anonymity of who owns those keys. However, the source of the UTXO will always be tracked; like in the case of the Binance hack, those coins will forever knowen as stolen coins.

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#2135

  1. it is your balance from the inputs

  2. the transaction is false

  3. it would look in the blockchain and see what previous transactions had to pay for their fee

  4. there are lots of inputs and lots of outputs and many addresses

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#2136

UTXO are the funds you received from previous transactions that you haven t spent and therefore ready to be spent.
If you don’t have any single UTXO large enough to cover for your transaction your wallet will use several UTXO s within your wallet and if the funds are not enough the transaction will be declined
A BTC wallet transaction fee = total inputs minus output
by using a different address each time you do a transaction you can increase the level of privacy of your tx

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#2137

Homework on Bitcoin Transactions and UTXO - Questions

  1. Describe what Unspent Transaction Outputs (UTXO) are.
  • UTXO’s are transaction coming into an address that haven’t been spent or allocated to another address yet.
  1. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
  • You wouldn’t be able to complete the transaction.
  1. How would a bitcoin wallet specify the transaction fee when creating a transaction?
  • The fee’s are the difference between the inputs and outputs of a transaction. The wallet determines the fee by taking a look at the current fees in the blockchain and suggests a fee that will get your transaction into the blockchain fast enough.
  1. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
  • By using a different output address than your input address to send leftover balance back to your self.
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#2138

This is true, but it does not affect the privacy aspect. For example how would you mitigate the loss of privacy when you withdraw funds from an exchange where you did KYC? :slight_smile:

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#2139
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXO is on of the key words in Bitcoin blockchain. UTXO is representing a coin, UTXO is the way how to create coins as an unspent transaction output. Each transaction is creating little coins from the originally mined coin in the block. The transaction output is connected to a private key. When I receive bitcoin as an input, UTXO is melting the coin and creating a new coin wihthin all my inputs are added. When I sent bitcoin, UTXO is again creating a new coin. UTXO needs to be spent at all. So the difference between my sended money and fee, goes back to my private key adresse.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    if the UTXO is too little, the transaction will not be confirmed by the network.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The difference between inputs and outputs. the wallet is doing it for me, checking the blockchain.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Privacy is garantueed because you can sent money to yourself. Because of that you can not recognize who is the owner of the coins, because you send the coins back to your own adresse.
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#2140
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Before you can spend BTC, your wallet needs to figure out how much UTXO you have. Only than, you can make a transaction to buy. After the transaction, the state off “UTXO” is gone.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    The wallet makes a sum of all the UTXO. So if the sum of the UTXO is higher than you want to spend, you can do the transaction (output = input - the fees). If not, the nodes will not validate the transaction.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    There’s a ‘default state’ built in the wallet. It looks to the current transaction fee en present it as a default to chose. This is logical if you want your transaction be selected out of the mempool by the miners.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    You could do many outputs related to one input. How more outputs you have, how more difficult to guess which transaction is send back to the sender. Because a wallet uses many addresses. You could say that after each transaction, the amount of BTC send back to the sender gets more and more anonymity and thus privacy.
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#2141

A UTXO is a sum of money that has been received but which has not yet been spent or sent. As such it forms part of the balance of the account in the wallet.

Then the transaction will be accounted for against more than one UTXO. The remaining money from the UTXOs that are spent, in effect is like the change when spending say, USD 8.00 and paying for it with a ten dollar note. The $2 change is returned to you. In a similar way, the “change” from a UTXO if you spend less than an exact number of UTXOs is returned to you.

Transaction fees are the payment for miners who record transactions into a block. The higher the fee, the more quickly will a miner choose to include a transaction in a block. Wallets will offer a range of transaction fees corresponding to different block times. Some wallets will also check the network for the “going rate” at the time and offer fees corresponding to what is being processed at different speeds at a given moment.

The wallet constructs the transaction by deciding which inputs to match against the which outputs. As
such it maintains privacy as regards matching the sources of funds received with the ultimate destinations sent to.

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#2142

  1. UTXOs are funds that have been sent to you that you haven’t spent yet. They’re the output of transactions that are later used as input. The blockchain tracks UTXOs.

  2. Your wallet can combine UTXOs to cover your transaction.

  3. It’s implied so it isn’t specified as an output. The fee can be calculated from the difference between the output and input.

  4. Transaction inputs and outputs cannot be traced to specific people. People viewing the blockchain can only see the address it was sent to. Make use of different addresses when you want to receive something

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#2143

ah yes perfect, thanks

#2144

-UTXOs are the balance of money that you can spend

You would have to use more than 1 UTXOs to complete the transaction

  • The input minus the output will give you the fee

  • create a different address for each transaction

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#2145

Do you send to the same address? What if you withdraw from an exchange where you did KYC? :slight_smile:

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#2146
  1. Unspent transaction Output becomes an input when it has been spent on the network. The wallet is used to store the Private key, but it also regularly checks which transaction outputs are on the chain (UTXOs) that you can spend and turn into inputs. There is no account balance, there are no coins, there are UTXOs.
  2. If you don’t have any single UTXO that is large enough to cover for your transaction, the transaction would not be valid as all utxos must be equal to the inputs after the transaction. However, the Inputs will equal the output + the transaction fee.
  3. A bitcoin wallet would specify the transaction fee when creating a transaction, at the point the user relays to the wallet the specified fee required which is calculated easily either automatically or by itself, as the difference in balance between the UTXOs and the inputs.
  4. UTXOs and transaction inputs on the Bitcoin network are pseudo anonymous. It is fairly hard to tell the exact identities of a Bitcoin transaction to an untrained eye. To increase anonymity, use a privacy based blockchain for now.
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#2147
  1. UTXOS: Outputs avaiable from a previus transaction and could be spend, a balance .
  2. The transcation will be denied due it depends of UTXOS avaiables.
  3. Tx fee: input-output .
  4. Creating diferente adresses, increasing the number of outputs
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#2148

  1. UTXO’s are unspent funds linked to your private key. Essentially it is money in the bank… But without a bank.

  2. The transaction will get denied by the blockchain nodes

  3. The wallets estimate the appropriate cost to get your transaction on the blackchain in an efficient time manner. Some wallets allow people to set their own fee’s.

  4. Not really sure about this one, however what if you had a 1.0 BTC UTXO and you had a transaction for .5. Without accounting for the tx fee. It might confuse outside observers to see two transactions of exactly .5. Which one was to your own wallet? Which one when to someone else?

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#2149

  1. An UTXO is a input transaction(s) that have been sent to a wallet, but have not yet been sent into another transaction.

  2. The transaction would not be accepted.

  3. Previous transactions - Outputs = Fee

  4. By using a new address with each transaction.

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#2150

You could also have a different denomination and maybe you even didn’t sent anything back to yourself, who knows? :stuck_out_tongue:

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#2151

Describe what Unspent Transaction Outputs (UTXO) are.
UTXO are the transactions you have received and not yet spent from your wallet.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
It will add together other UTXO’S you have, and take the transaction from that.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
The fee is the total of inputs needed minus the output.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
If an input creates multiple outputs it makes it difficult to see which output is what.

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#2152

1. Describe what Unspent Transaction Outputs (UTXO) are.
it is the transactions that your account has received
2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
you would have to use 2 then create a second transaction wich would send whatever is left over back to your account
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
it would check you previous transactions and the current you are trying to do to determine the correct fee you should pay
4. How could you use the notion of transaction inputs and outputs to increase privacy in your
transaction?
use multiple inputs and outputs so that people cannot determine who is receiving or sending the funds

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#2153

utxo ios your total amount of bitcoin in your wallet. your total balance when the utxos are added together.

if I don’t have any utxo to cover my transaction then it will not be cleared as the wallet will peform that transaction.

the wallet would specify the transaction fee as the fee = input - output.

the notion of transaction inputs and outputs to increase privacy in my transaction is that the outputs could be sent to another address I own or it could be sent to anybody but that person is unknown.

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