Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2195
  1. Every transaction received becomes an unspent transaction which are added together by the wallet to calculate a balance.
  2. If a single UTXO is not enough to cover the transaction then multiple UTXO’s will be used and any excess will be transacted back to the user acting as ‘change’.
  3. The TX fee is calculated by subtracting the input from the output.
  4. By there being multiple outputs and yourself could also be an output.
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#2196
  1. A UTXO is an unspent output from a previous transaction i.e. an input in a wallet
  2. The wallet would add the received UTXO’s up until it is enough to create a big enough UTXO
  3. It doesn’t specify the fee but it is the difference between the previous received UTXO’s and the output
  4. Use several addresses
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#2197
  1. UTXO is a sum of unspent money available to spend
  2. If we do not have enough UTXO’s available to cover the transaction - it will not be validated by wallet nor miners- it will not go through.
  3. Wallet will calculate the fee when constructing the transaction, which is input minus output.
  4. Use few different output addresses, as they are not linked to my identity.
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#2198
  1. UXTO is the unspent balance of your wallet.
  2. The UXTO would be declined by the blockchain network if it isn’t large enough for the transaction.
  3. The transaction fee is the difference between the inputs and the outputs.
  4. Controlling multiple addresses and sending funds between them could increase privacy.
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#2199
  1. UTXOs represent BTC inputs of BTC sent to you
  2. You can use other UTXOs sent to you to cover the amount such that total UTXOs or total inputs = total outputs + transaction fees
  3. The TX fee is the difference between Inputs and Outputs and are shown on Bitcoin.com as an amount separate from the inputs and outputs
  4. You can disguise the amount you are paying to a third party by sending to multiple parties in one transaction and also by sending some money back to yourself
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#2200
  1. UTXOs outputs from someone which are my inputs. My wallet uses these UTXOs to buy something but the rule is that it has to spend the whole UTXO. Therefore it sends the change back to me.
    2.Then my wallet will find any number of UTXOs large enough to cover the transaction and send the change back to me.
  2. The wallet wouldn’t specify the fee. The only way to see it is to subtract the output from the input.
  3. not sure
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#2201
  1. UTXO’s are outputs that have been received and can then be passed along in another transaction.
  2. The transaction would not be verified.
  3. sum of inputs-sum of outputs=tx fee
  4. If utxo’s are proliferated through multiple transactions the difficulty of tracking back to the original source becomes greater. I believe this is the principle behind “tumbling” cryptos…?
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#2202

  1. Unspent Transactions Outputs are transaction outputs into wallet that must be spent.

  2. Invalid transaction

  3. A bitcoin would automatically add the transaction fee once you transfer. Inputs = Outputs + TX Fee

  4. You can use several addresses you control and send UTXOs transactions to those wallet addresses

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#2203

You could check the answers from other students :wink: but using a new address everytime you receive funds helps you keep the privacy on a pseudo anonymous blockchain like Bitcoin :slight_smile:

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#2204

I’m not sure what you mean by that. Are you talking about CoinJoin?

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#2205

wallet balance

the transaction would not go through

transaction inputs minus the transaction outputs

outputs are encrypted with the private key no one knows which output goes back to you

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#2206

I don’t understand two things here

  1. How can my wallet make an accurate guess for how much is my output and Input if I’m sending money to addresses that it doesn’t know to whom those addresses belong as they could be mine? You telling me that this perfectly calculated system called blockchain operates on random guesses to determine how much money I have? I’m blown away

  2. If I’m sending money out why do I have to sent the surplus money back to myself? Could I not just send the exact output?

#2207

  1. UTXO is an amount of BTC that has been received to a wallet from a previous transaction but that hasn’t yet been spent and sent to another address.

  2. It will combine multiple UTXO’s that will add to a sum greater than the amount required for the transaction, then send the remainder (the difference of what was sent in total minus the amount of the transaction) back to you.

  3. The transaction fee is simply the difference between the all of inputs and the outputs in a given transaction.

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#2208

Your wallet knows those addresses because it also generated the corresponding private keys for them :stuck_out_tongue:

If for example you would import a mnemonic key into a new wallet, that wallet would derive the keys from the master seed and then scan the blockchain if those addresses appear anywhere and count the correct balance you have. It absolutely isn’t random in this regard.

You can’t do this in a UTXO model blockchain, because you always must spend the entire output. The reason for this is to assure immutability on the blockchain. You can’t just subtract a specific amount from a UTXO that is already confirmed in a block, because that would also subsequently change the hash of the transaction and the block, thus breaking the entire chain in the process.
You can do this in account based blockchains like Ethereum though, but that is a different model of the chain :slight_smile:

#2209

You missed the final question :smiley:

#2210

Oops!

  1. You could send the money from a wallet which you created and sent BTC to via several different wallets. It would make tracking the source more complicated and time consuming.
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#2211

Correct! But you can also use multiple addresses in the same wallet :stuck_out_tongue:

#2212 
1. UTXO are the wallet balance.
2. More than 1 UTXO is combined to cover the tx plus fee. If there are not enough UTXOs the transaction will not process.
3. The Tx fee is the difference between the inputs and outputs.
4. Privacy is protected if the private keys are not shared. Generating new addresses increases the level of privacy.
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#2213

1- UTXO are the outputs generated by the past executed transactions. They allow too keep track of all the coins which were sent toe a specific address and therefore the amount that this address is allowed to spend.
2- if no single UTXO is large enough to cover a transaction then you need to combine multiple UTXO as inputs to your transaction and send the leftover money from your transaction back to yourself in the same address or a different one
3- When creating a transaction a bitcoin wallet will specify the fee as an output to be picked up by the miner who successfully include the transaction in the next block
4- to increase privacy in transactions you can transfer money to multiple addresses belonging either to you or to the same recipients

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#2214

I think it won’t make a difference since its the private Key that is needed to sign and execute.