Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2315

  1. UTXO is how a bitcoin transaction is build and the ‘‘amount’’ of bitcoin your wallet recieves is actually recorded in the blockchain as a UTXO and It’s how much you can spend/send(output), therefor the name unspent transaction outputs.

  2. Either you have more than one UTXO(input) and it adds more than one input and makes the transaction(output) or you don’t have more than one and you will not be able to make the transaction(output). ,

  3. By the difference of input and output.

  4. By having different wallets/addresses for both inputs(recieving) and also for outputs(sending) you make it harder for others to keep track of the total sum of UTXO or amount of ‘‘bitcoins’’ one wallet or person have because of a wallets isn’t linked to a physical person.

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#2316
  1. UTXOs are the outputs that are linked to a persons private key.
  2. The wallet will find a total of UTXOs linked to a persons private wallet to give a total large enough to fill the transaction.
  3. It looks on the blockchain for the latest fee that will give you the fastest transaction time.
  4. By sending to multiple addresses because there is no clear identification of who possess the receiving transaction address.
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#2317
  1. Describe what Unspent Transaction Outputs (UTXO) are. “The value of BTC received as an output that can be spent as an input for a subsequent transaction.”
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? You would need to combine multiple inputs that add up to the desired output of the transaction.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction? The fee is calculated as the difference between input and output values.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Use a combination of multiple inputs/outputs so that publicly nobody will know exactly who is sending what to who.
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#2318

  1. A UTXO is an output of a blockchain transaction that has not been spent. It is used as an input in a new transaction.

  2. The wallet will check for other UTXOs to see if they could cover the amount. If they still are not large enough, the transaction cannot be created.

  3. Wallet will calculate the appropriate fee for the transaction taking into account of current network conditions and transaction size. In some wallets, user could specify custom fee for the transaction.

  4. In terms of privacy, avoid using the same address every time receiving payment could protect privacy to a higher level. Some wallets allows users to use a new bitcoin address each time receiving payment. This makes the transaction harder to be traced.

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#2319
  1. UTXOS are unspent transaction outputs which means that they are inputs from some other address that are contained in your wallet. If you purchase BTC from Coinbase and then transfer the amount of BTC from Coinbase to your cold wallet, then that becomes your UTXO in your wallet. If someone sends you BTC, employer, family, and friends, then those are Unspent Transactions Outputs in your wallet.
  2. The wallet will broadcast this to the BTC network and the transacstion will not post on the BTC ledger. However, if you have enough multiple UTXOs in your wallet to cover the transaction, then you can combine these to create outputs that will cover the transaction and the fees associated with doing so.
  3. The transaction inputs are subtracted from your wallets UTXOs and the result is the fee taken from the transaction. When using a BTC ATM machine or exchange, prior to confirming the transaction, the fee for creating a UTXO in your wallet is listed. These transactions are usually confirmed within a short period of time. If you are an experienced blockchain user, then you can set a specific fee for the transaction and broadcast that to the network. However, if you select a fee that is too low, then your transaction may sit on the network for an unconfirmed amount of time until it gets confirmed.
  4. By having multiple UTXOs in a transaction, you can make the transaction more private. Or you can use mimble wimble when is comes on line. Go LTC foundation and developers and miners and community!
    However, I do think that ultimately, pure privacy may not be part of the regulated Financial landscape in some countries. But using multiple outputs in a transaction may help with privacy. Then, throw a second layer solution on top, and then a third, and use a privacy coin (Monero/ ring signatures and stealth addresses) and who knows where privacy and financial privacy may lead, oh my! :scream:
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#2320

  1. Unspent Transaction Outputs are received money from someone else, which is available for me to spend. UTXO is basically output from someone else’s transaction, but input to my transactions. Once I spend it, it is no longer UTXO, but output and so on.

  2. There are 2 ways I see this question:
    1st: You would not be able to make transactions if you don’t have enough money in your funds, it would be rejected by the network.
    2nd: If you don’t have any single UTXO, it would add up other UTXOs until it is enough to cover your transaction and you could get your change back (minus Tx fees) just like in shop for example.

  3. BTC wallets check how much you spend and where, then it looks at the blockchain to previous fees and proposes the fee to you to get your transaction done reasonably fast. So basically it calculates it by itself. However you can choose the fee for yourself.

  4. By using different addresses that I control for different transactions.

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#2321

  1. UTXO is the amounts of coins remaining in wallets, as the result of previous transactions.

  2. In the case that one bucket of UTXO is not enough to cover the desired output, the wallet needs to select more buckets to complete the transaction.

  3. To specify transaction fees, the wallet can take a look at the cost of recent transactions and estimate a good balance between the cost and time it takes to perform transactions.

  4. It is clear that with all transactions being open and visible to participants, it is difficult to hide a trail. Nonetheless, in order to increase privacy, I guess we could use multiple wallets to move UTXOs back to us.

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#2322

You can use multiple addresses in one wallet :slight_smile:

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#2323

Hey, that makes it even simpler. Thanks for the info!

#2324
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXOs are the outputs of a transaction that a person has yet to spend in another transaction.

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

Multiple UTXOs can be used as inputs to cover for the transaction. If the total of all inputs is not enough, then the transaction will not be completed.

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

The wallet specifies the transaction fee by only allowing a total output that has had the TX fee deducted, hence inputs = outputs + TX fee.

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

Multiple addresses can be created with multiple transactions, public and private keys. The output of a transaction may also be returned to the original sender as another input.

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#2325
  1. Unspent Transaction Outputs (UTXO) are the amount of bitcoin your private key is allowed to spend.
  2. If you don’t have any single UTXO that is large enough to cover for your transaction, your transaction will be denied.
  3. Inputs minus outputs
    4.To increase privacy, you could create multiple outputs and create multiple wallets to send to.
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#2326
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    • UTXOs represent the balance in your wallet
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    • No transaction occurs.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    • By querying the blockchain and determining inputs - outputs. Some fees can be customized to speed up the transaction. (in the case of Eth gas fees)
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    • You can send to / from multiple wallets or addresses within the wallet.
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#2327

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Unspent transactions are the balance left in your wallet

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

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    fee=Inputs-Outputs

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    By having more output addresses that increase the difficulty of tracking someone.

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#2328

  1. UTXOs are unspent outputs of a previous transaction.

  2. The blockchain would deny the transaction.

  3. Transaction fees would be determined by the input value minus the output value.

  4. Increasing privacy can be done by frequently generating new addresses to make tracking, even through an explorer, very difficult as several output addresses can be made through a single input address.

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#2329

  • Describe what Unspent Transaction Outputs (UTXO) are.
    Ans: They are the transaction inputs which a user has received and these inputs have not been spent/used yet.

  • What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Ans: The wallet will sum up all the UTXOs and then it will use the total sum to cover for your transaction.

  • How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Ans: Either the user gets to choose the transaction fee or the wallet decides a fee based on it’s research of the ongoing/current fees from other transactions on the blockchain.

  • How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Ans: I’m not sure.

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#2330

  1. They represent the balance in the wallet not yet sent out as an output

  2. Unable to process the the request

  3. The remainder of Input - Output = Transaction Fee

  4. You could split up the transactions sent to different addresses or use different personal addresses also so people can’t determine the exact amount spent without a lot of effort.

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#2331

UTXO’s are unspent outputs calculated by your wallet from the blockchain

the transaction will not go through

the fee is calculated in the output, from the input
input = output +fees [automatically calculated by the the wallet]

by sending to different addresses that you only have access to.

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#2332

  1. transaction that you have received but have yet to spend (forward on to someone else) They make up your balance,

  2. Then more than 1 UTXO will be used. If you still do not have enough then that means your ballance in insufficient and the transaction will fail.

  3. total inputs - total output,.

  4. You can send a certain amount to an address and then another amount to a wallet that you have the key to. It will be hard to tell which transaction came back to you and which one you sent to someone else.

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#2333

You can use a different address each time you receive funds, making it harder to link all of them to your identity :slight_smile:

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#2334

Homework on Bitcoin Transactions and UTXO - Questions

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    BTC received but not spent yet. Its like following a $5 bill. The blockchain records the entire history of all transactions involving that bill. The UTXO would be the most recent transaction indicating where the bill is now (and hence who can spend it)
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Combine them and get change back. Just like combining two $5 bills to pay for a $7 pizza. Of course, the government gets their take $0.35 (sales tax) similar to miners fee, and the remaining balance $2.65 goes back to the sender.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The wallet figures out the proper fee automatically. It is the difference between the inputs and the outputs. A blockchain explorer typically displays the calculation for you. Miners pick the most lucrative transactions so examination of the blockchain will reveal the approximate amount required for a given waiting period to process.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Send the leftover amount (i.e. your change) to a new public address.
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