Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2416
  1. Describe what Unspent Transaction Outputs (UTXO) are.

A. Every transaction is a UTXO until the recipient creates a new transaction with previously sent data. At that point the UTXO becomes spent and a new UTXO is formed.

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

A. Multiple UTXO’s will be sent to cover the amount and fee of transaction. The remainder will be sent back to the wallet that formed this transaction.

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

A. Bitcoin wallets track UTXO’s. They receive inputs and upon creating outputs, the wallet will select which UTXO’s can be used, as well as which fees have previously been used and tracked.

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

A. Inputs and outputs can be broken up into multiple transactions. An input in a new transaction can be made up of several other UTXO’s from previous transactions. Outputs will combine UTXO’s to meet the fund and fee requirement of a transaction and remit the remainder back to the sending wallet. Each of these transactions creates a new hash, ultimately increasing the security of the information.

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#2417

Your answer is missing :stuck_out_tongue:

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#2418

1- Transaction outputs become next transaction inputs which lay dormant waiting to be used in a transaction. These are called UTXO, Unspent Transaction Outputs.

2- The wallet stores the private key and asks the blockchain what UTXO can this private key spend (what is available). If you don’t have a single UTXO that is large enough to cover your transaction, the wallet will add up your UTXO to an amount that is greater that the transaction in order to facilitate the transaction. If collectively you don’t have enough UTXO for the transaction, transaction will be rejected.

3- A bitcoin wallet calculates the transaction fee by taking the sum of the inputs and checking against the sum of the outputs and determines the difference as the transaction fee. All inputs to a transaction must be spent in the transaction. ie: sum of input = sum of output + tx fee

4- Privacy is increased in transactions with the method of inputs and outputs by the fact that a transaction can send multiple outputs to recipient address simultaneously with no way of knowing who controls the address.
Unlimited inputs (at least 1) into Transaction gives unlimited outputs (at least 1)

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#2419

  1. UTXOs are transactions that you receive but do not spend

  2. If you do not have sufficient UTXOs then the transaction will be rejected

3.A bitcoin wallet often refers to previous transactions made by other wallets and deduct the appropriate fee

  1. Multiple addresses can be used for inputs and outputs, furthermore the addresses are not connected to a person’t individual identity
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#2420
  1. Unspent Transaction Outputs are transactions you received to your wallet.
  2. Transaction will be declined.
  3. it will specify by the difference between inputs and outputs
  4. Use different addresses
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#2421
  1. UTXO’s are Unspent outputs from transactions received in your wallet
  2. The transaction will not go through if there is not enough UTXO’s to cover the transaction fees
  3. Subtracting the total inputs by the total outputs
  4. Difficult to correspond where the outputs are going from the inputs
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#2422

  • Describe what Unspent Transaction Outputs (UTXO) are.
    satoshis that I can spend with my private key, but this is not an account because we can have a lo of UTXOs with different values.

  • What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    If you have many UTXOs that cover the transaction the wallet sum the UTXOs until you reach the transaction value ( not exactly the exact amount most of the time, but the difference return to you ) so much alike when you paid with bills and coins

  • How would a bitcoin wallet specify the transaction fee when creating a transaction?
    I understand that the wallet see other history transactions and thanks to that, the wallet calcule the fees for this one in particular according to history of fees.
    In simple terms the leftover of the input(s) - output

  • How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    You only see addresses not people and generally we don’t know who is the owner of the inputs or output addresses even when we send bitcoins to ourselves (because the address in the output is another one)

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#2423

  1. UTXOs are the sum of all unspent balances in the wallet. It could be unspent “input” transactions and the change you get from your “output” transactions.

  2. The wallet will automatically sums up all the available UTXOs to cover large enough transactions and at the same time sent you the “change” (if there’s any) via output transactions.

  3. Transaction fee is never specified. Though, it is implicitly shown that transaction fee is always the result of “input tx” less “output tx”.

  4. Input and output transactions are just random numbers if you check it in the blockchain. Hence, it gives anonymity to both sender and receiver.

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#2424
  1. They are the transactions that have not yet been used as inputs in transactions (i.e. they have not been spent yet).
  2. Your transaction would not be verified.
  3. Most wallets will choose a fee that will get your transaction verified relatively quickly.
  4. Use a different address every time you receive crypto.
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#2425

  1. UTXO are unspent Transaction outputs. they older inputs to your wallet public address. when you send mondy out these UTXO get used up and are no longer UTXOs. It works like paper bills in your wallet. when you buy something for $15 and only have $20 bitl you had over the bill and get a $5 bill back.

  2. when you dont have large enough UTXO to pay a transaction the wallet will use other UTXOs until the sum of the inputs is = the sum of outputs + transaction fee.

  3. transaction fee is calculated as satoshis per byte. The number of bytes in a transaction depends on the number of UTXO inputs (and outputs) there are.

  4. if you are paying out you can pay extra and pay back to multiple addresses back to your self. There is no way to know for sure which output addresses are under control of the sender and which are going out as a real payment.

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#2426
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXO are coins that a wallet received that have not been used in a new transaction.

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

Your wallet can use more than one UTXO as inputs for the transaction and send the change back to your wallet via a change address.

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

Your wallet calculates an appropriate fee based on network usage and transaction size. Sometimes wallets give you a list of fees and the user can pick one based on how fast he wants the transaction to be added to the blockchain. Since tx fees are a part of miners’ rewards, they have an incentive to prioritize transactions with higher fees.

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

You could obfuscate the amount of coins that change hands in a transaction by using multiple outputs and sending coins to both the real counterparty and several of your own wallets.

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#2427
  1. Describe what Unspent Transaction Outputs (UTXO) are.

An Unspent Transaction Outputs are transactions that are sent from someone else like your mom, brother, neighbor, friend and it is sitting there in your wallet waiting for you to spend it by starting up a new transaction with a merchant or a friend or whomever it is.

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

To you can add multiple inputs and combine the UTXOs to cover the amount. And if the combined amount is more, then you would have to create 2 outputs where one is to cover the cost and the fees.
The other output is the remainder that goes back to your wallet address.

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

A bitcoin wallet calculates or comes up with the specific transaction fee by taking the input minus the output based on the transaction size and the amount of usage it’ll be on the network. The output equals the amount that was input.

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

The notion of what goes in and goes out in transactions can boost the privacy of what I’m doing because I could use multiple output addresses and there’s no way of knowing which address is going for my payment and the other output could be coming back to me. The addresses are just numbers and doesn’t have any clear identifying information of what’s being output in a transaction.

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#2428

  1. UTXOs are the sum the amount of coin we receive and can be spent.

  2. Then we can’t do the transaction because the input must be the same as the output. If the case is output is greater than the input, it can’t be done.

  3. The transaction fee is basically the Input - Output

  4. Using several inputs and outputs can increase the privacy level

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#2429
  1. They are the unsent outputs of a transaction
    2.you would use multiple UTXO
    3.It would calculate the difference between inputs and outputs
    4.by using multiple outputs. Recipients are unknown
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#2430

  1. UTXOs are transactions received by a wallet that said wallet can use in the future to perform output transactions (that’s why they are unspent).

  2. The transaction could not be made.

  3. The transaction fee is the difference between the transaction outputs and the transaction inputs.

  4. If you use multiple inputs and outputs, since wallet addresses are not nominative, it would be hard for an external observer to determine to whom a certain address belongs to.

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#2431

1.UTXO are unspent outputs from the previous transaction.
2.Transaction will not be confirmed
3.Fee is subtraction of output from input
4.Using different addresses increases privacy

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#2432

  1. UTXO are BTC that are from other outputs to my BTC wallet that I can spend.

  2. The transaction will be denied.

  3. Transaction fee is specified by subtracting input with output.

  4. We can increase privacy by using different and multiple BTC addresses for input and output since output can be sending BTC back to myself via different BTC addresses.

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#2433
  1. A UTXO is an input to a wallet. The sum of UTXOs in a wallet is the maximum amount of what that wallet can send to other wallets.
  2. If the sum of UTXOs in your wallet is less than the the outgoing transaction, then it will not be accepted.
  3. UTXO - output transaction - fee = new wallet balance (sent to own address)
  4. If you generate a new address it is more difficult to say what goes back in form of UTXO to the sender.
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#2434

This can be determined quite easily, but if you use a different address to send change back its hard to determine what part goes back to you and what part to your purchase. :slight_smile:

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#2435

What about if you withdraw to an address from an exchange where you did KYC? :wink:

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