Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2175
  1. The BTC amount that received previously and has not been spent.
  2. It will be an invalid transaction and will be rejected by the miner.
  3. The fee will be the difference between the input and the output.
  4. Sending to multiple public addresses.
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#2176

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Answer: UTXOs are outputs of previous transactions received that have not been sent or used by the wallet’s holder. The sum of these unspent transactions outputs designate the total balance in the wallet.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Answer: If you don’t have a single UTXO large enough to cover your transaction, your wallet would examine if the sum of smaller UTXOs that have not been spent would cover the large transaction. If so, the transaction would proceed for the large UTXO by sending the smaller UTXOs together as inputs and the difference of the large UTXO minus the sum of the smaller UTXOs and minus the transaction fees would be sent back to your wallet. If you do not have enough small UTXOs in your wallet, then the transaction would be invalid.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Answer: In order to specify the transaction fee, a bitcoin wallet will subtract the output sum from the input sum when creating a transaction. In order to speed up your transaction, you can choose a higher transaction fee. You can also choose a smaller transaction fee and therefore slowing the speed of the transaction.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Answer: To increase privacy in your transaction, you can create a different bitcoin address or output for each transaction in order to not reuse the same address in different transactions. For example, when sending bitcoin to another address you can choose to send to multiple recipients and designate one as yourself with a new address to send some back to yourself with greater anonymity. If this transaction is examined on the blockchain, one would not be able to connect that new output to you specifically.

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#2177

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXO’S are the unspent balance in your wallet. They are the outputs of previous transactions. They all add up to your wallet balance.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? Your wallet would bundle together enough UTXO’s into one that is large enough to cover your transaction plus fees or it would be rejected as having an insufficient balance.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The UTXO output minus the input = fee as shown by Ivan in the video and confirmed by checking it on BlockExplorer.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Send to multiple recipients, some of them being multiple addresses you control.

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#2178
  1. Unspent transaction outputs are the result of multiple inputs of different values being converted into multiple outputs of different value. When a transaction takes place, you entire wallet balance is converted to UTXO so that the amount being spent can be differentiated from the amount that will remain in your wallet; in other words, many outputs will remain in the same location.
  2. If there is not a single UTXO that is large enough to cover a transaction, then the transaction cannot occur until another UTXO is received to combine with the one you already have to cover the total requested for the transaction to take place.
  3. A bitcoin wallet will give you a recommended amount to pay for transactions fees depending on the amount being transacting, because the higher the transaction fee the faster the transaction will be verified. Many wallets will allow you to choose your own fee amount, so the lower the transaction amount, the lower the fee.
  4. The notion of inputs and outputs in transactions increases transaction privacy because, since all inputs must be spent, no balance will remain as the same UTXO for long. Every time a transaction takes place, all the inputs that make up your wallet balance are converted to outputs even though one output will remain in your wallet, but it will be a new UTXO and a new balance.
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#2179

You could just use a new address each time you receive coins :slight_smile:

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#2180

What if someone knows your public key or address? :wink:

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#2181

1 - They are basically an input that has not yet been spent into an output. (i.e an unspent input).
2- You would not be able to make the transaction
3 - It would calculate the latest fees charged, then deduct them from the total output leaving a net output
4 - Transactions are only related to a wallet address. You could have multiple wallets and use them in part of any output or input to confuse any party looking to determine how much BTC you had or were spending.

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#2182

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    These are amounts received (from yourself or other parties) by your private key but not yet spent (used in a transaction) by your private key.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    You need to use multiple UTXOs as inputs to your transaction, and send the remainder (after fees) back to yourself. This is similar to getting change when you pay in a shop using bills that amount to more than the price of what you are buying.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Subtract the total output from the total input.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Send or receive transactions across multiple wallets.

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#2183

You could just use multiple addresses from the same wallet :slight_smile:

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#2184

UTXOs are the most recent funds that have been the output from a transaction. They are available to be used in the next transaction. When new UTXOs are created, the previous set of UTXOs are verified as “spent.”

If you don’t have enough UTXO to cover a transaction, I believe that your wallet would take from any other remaining funds you have stored. But I’m sure if it couldn’t find a way to come up with the difference, the wallet would cancel the transaction.

The BTC wallet specifies transaction fees by examining the most recent transaction of a block and tries to determine a fair price.

You could use the notion of transaction outputs & inputs to further the privacy of a transaction by sending out a different number of outputs than you’ve received as inputs. The total must add up (minus fees), but you can break the total down into different increments, making tracking more difficult.

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#2185

  1. UTXO is the current balance of bitcoin in your wallet greater than 0.

  2. The UTXO will be added together to complete the transaction

  3. The input value is subtracted from the output value

  4. Utilizing multiple addresses for the recipients (including yourself) would help increase privacy

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#2186

  1. UTXOs are outputs of a transaction. Your balance is the sum of all the UTXOs.

  2. It would gather all your UTXOs to include in the transaction. The sum of input UTXO has to be the same as the output UTXOs.

  3. transaction fee is calculated by deducting the output UTXO from the input UTXO

  4. since input =output, the actual real transaction is hidden by the fact that you are sending the remaining unspent UTXO to yourself(which you can have several different addresses which you control).

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#2187

  1. Describe what Unspent Transaction Outputs (UTXO) are.

    UTXO’s are spendable outputs that are still haven’t spent or used into inputs of another transaction.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?

The wallet will look for another UTXO until the input amount is greater or equal to the said amount.

  1. How would a bitcoin wallet specify the transaction fee when creating a transaction?

Input minus UTXO output = Fee

  1. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?

These keeps the transactions private because they are seen only as random numbers or bitcoin addresses. even if it is being broadcast, no one can guess whose transaction is being or has been processed.

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#2188

  1. BTC that has been sent to the wallet that has not been spent yet. Unspent outputs from previous transactions. The sum of all UTXOs = the wallet’s balance.

  2. In a transaction, the sum of the inputs must equal to the sum of the outputs. If the sum of the UTXOs in input < UTXOs in output then the transaction is not valid and will be rejected.

  3. The wallet does not explicitly specify the fee when creating a transaction. The fee is determined by calculating: Fees = UTXOs in input - UTXOs in out.

  4. Always change addresses when sending btc to your wallet and also make sure that the output UTXOs that are going back to your wallet use different addresses every time.

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#2189

UTXO is a global accessible evidence that you have btc in your wallet, if no UTXO no bitcoins are in your wallet

your tansaction will be denied

depense on what wallet you use, the more you pay for the transaction the quicker .you will get it thrue the network…but like everywhere it is a fee what the miners collect…

use different addresse for your transactions

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#2190

1.) An Unspent Transaction Output is any set of inputs greater than 1 that can be outputted as any number greater than 1 to various different outputs. “Wallets” maintain the accounting of UTXO and keep track of which transactions are unspent and which are spent by querying the blockchain.

2.) If there is no single UTXO large enough to cover transaction multiple UTXO equaling to greater than the amount needed for the transaction is sent to cover transaction. Excess or amount or “change” the remainder owed back to sender is received back into their wallet.

3.)The wallet queries the blockchain for the best Transaction fee and determines it automatically. It finds the best transaction fee for efficiently entering the transaction into the blockchain.

4.) Any number of inputs can be used as long as they are greater than one and any number out puts can be created so long as they are greater than one.

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#2191

What if withdraw funds from an exchange where you did KYC? :wink:

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#2192

UTXOs are unused crypto inputs that come from senders.

more inputs would need to be gathered to make a sum large enough to meet the transaction and fee.

total output - input = transaction fees

use multiple addresses to throw off identification

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#2193
  1. UTXO are unused Bitcoins
  2. Will use more than one UTXO
  3. Input = Output + Tx Fee
  4. Make use of diffrent address
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#2194

1.UTXOs are the amount of bitcoin that you received in your address that you haven’t spent/sent.
2. The transaction would be denied
3. Fee = inputs - outputs
4. Since you have multiple inputs and outputs an observer could not know how many addresses are controlled by the same person, thus more privacy

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