Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2637

1.UTXO are unspend Transaction outputs that is like a change when we give someone a 100 dollar bill and they return the excess amount for the stuff.
2. In a wallet i dont need to have exact amount i can combine my different unspend inputs and try to cover large sum and if spare amount is left it will come back to my wallet.
3. Based on the size of the transaction i.e. in kilobytes, the miners will just deduct the fee from the UTXO.
4. i will just send whole amount and the amount back to me in different block where miner fees and the transaction send will create 3 out puts which are difficult to trace back to me.

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#2638

The fee is implied as the difference of tx inputs and outputs. Miners don’t pick a fee, but they will prioritize your tx if you’re feeling generous :wink:

You don’t need to send the entire amount and if you do this in multiple transactions it kind of defeats the purpose. What you want it to send the change from the transaction back to yourself to a different address you didn’t use yet. :slight_smile:

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#2639

UTXO-s are basically my available resources that I can use to construct a new transaction.

In that case, if I have multiple smaller UTXO-s, I would construct a new transaction out of them that is big enough to cover the transaction and the fee.

TxFee= Input - Output

I could have multiple addresses and i could specify these in the output.

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#2640

  1. UTXOs are user’s funds from past transactions which still haven’t been used.

  2. You will have to combine multiple UTXOs if you insist on executing the transaction.

  3. It will be set to what’s left after all outputs are deduced from all inputs.

  4. You can try by receiving your transactions on different addresses to make it look like they are received by multiple users.

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#2641

if i didn’t get wrong the information, it’s always possible to increase privacy increasing the number of outputs. maybe worthless it’s not the correct word :woozy_face: but at least you can try to make more difficoult to trace where the outputs are going

#2642
  1. UTXO’s are unspent outputs form a previous transaction.
  2. The transaction will look for all available UTXO’s to cover the transaction and fees or it will decline the transaction.
  3. It will be the total of the inputs minus the total of the outputs to specify the fee.
  4. Using a varied number of outputs can give the notion that these transactions are going to separate destinations however they could all be directed back to the original sender thus making it difficult to track.
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#2643
  1. Unspent traction outputs are the remaining “funds” left from a generated transaction which ends up being the total number of funds in the wallet.

2.You would have to combine two UTXOs to solve the transaction and the remainder would be sent back to yourself.

  1. Inputs = Outputs + Fee. Essentially your input would have to equate to the output + additional fee.

4.By generating another address, you can potentially hide ownership from the original transaction.

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#2644

  1. this is the amounts in your bitcoin wallet. they have been sent to your wallet and are waiting to become output

  2. it would not go through

  3. it will show the transaction fee before executing the transaction and then show it on the blockchain explorer

  4. you could send the remaining transactions to different bitcoin wallet address

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#2645

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    utxo’s are the bitcoins. your wallet will use the blockchain to keep track of all the utxo’s that have been sent to your wallet address. and then you can spend them.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? then your transaction will be nullified when it is checked against the blockchain by the nodes on the network.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    when creating a transaction your wallet will check the blockchain to determine a reasonable fee to use. the fee will be the input sum - out output sum.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? becuae transactions can have several inputs and outputs it can help increase privacy.

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#2646

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXOs are each input or transaction that is credited to your wallet and that you have not spent.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    The Wallet adds all the UTXOs to give a balance, if the transaction is higher than the UTXO it will go for another one, adding value, if value is equal or less than transaction it will make transaction if not after adding all your UTXOs and not enough input value, then it is rejected for lack of funds.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It looks for the previous fees on the ledger and proposes a fee so the transaction is done in a reasonable time.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    You can send the money back to your wallet, and remove the UTXO coming from another source.

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#2647

  1. UTXOs are unspent bitcoins.

  2. The transaction would not go through. You will have to get more UTXOs to cover the balance to process the transaction.

  3. The fee is specify by the difference between output and input.

  4. You can use multiple addresses.

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#2648

Homework on Bitcoin Transactions and UTXO - Answers

  1. UTXOs are how the blockchain communicates the BTC that someone can potentially use to transact. Your wallet, which reads the blockchain looking for your UTXOs is able to sum all available UTXOs to create a virtual balance. You can then use the UTXOs to create a new transaction.
  2. Your wallet would utilize additional UTXOs that when combined, meet or exceed the value of the new transaction + the fee.
  3. It would suggest a transaction fee that would allow the transaction to be completed based on data and fees it is able to collect from the blockchain.
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#2649
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    You can spend all UTXOs which your wallet controls, it is basically your balance.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Wallet would sum up all UTXOs and check if your balance is enough to make a transaction.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It is the difference between inputs and outputs where output can be an address which your wallet controls (your change).
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    No one knows if you are sending funds back to yourself if the address is different than the sender’s address.
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#2650

  1. Unspent Transaction Outputs are old input from a previous transaction.

  2. The transaction won’t be processed since your input won’t be equal to your output.

  3. input - output = fee, Transactions fees depend on the congestion of the blockchain, if you set a transaction fee too low, miners will not be incentivized to add your transaction to a new block.

  4. By creating multiple addresses you can create more anonymity since the input and output would be different for everyone to see even you have the private keys of these addresses.

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#2651

1 UTXO is the amount remaining and still to be spend after a transaction
2 More UTXO’s can be used to cover 1 transaction
3 Transaction fee is the difference between the Input and the output
4 An increasing amount of inputs and outputs makes privacy improve

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#2652
  1. Unspent transaction outputs are the same as your wallet balance.
  2. As long as the sum of all of your Unspent Transactions Output is larger than your transaction, you can make the transaction.
  3. The wallet reads the blockchain and based on recent mining fees the wallet proposes a transaction fee that will be confirmed on the blockchain reasonably fast.
  4. When you send bitcoin to yourself, always generate a new address to send the funds to. Similarly generate new addresses whenever someone else wants to send bitcoin to you. When sending to other people, require that they too generate new addresses for every transaction.
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#2653

  1. The balance in your Bitcoin wallet is made up of UTXOs. Unspent Transaction Outputs. if your wallet has 10 BTC and that is made up of 3 UTXOs … 5, 4, and 1 … and you want to buy something for 0.5 BTC, the UTXO of 1 can be used and 0.5 would be returned to you as change minus fees. Weird.

  2. Multple UTXOs can be combined as inputs to an intermediate transaction and outputs to send BTC would be created and the remainder would be returned to you minus fees.

  3. Depending on the sophistication of your wallet, fees deemed appropriate due to recent fee history on the network would be proposed. Some wallets allow you to adjust for speed or cost savings.

  4. With the right wallet software, transaction inputs could be mixed with other inputs and outputs could be mixed and ultimately it would be impossible to trace payments from your wallet. That’s a good thing.

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#2654

  1. A UTXO is the balance that remains from a prior transaction. In simpler terms it is like the change that we get back after making a purchase somewhere.

  2. The transaction would not go through as the system verifies that such funds attempted to be sent is actually present.

  3. It will be the difference between the inputs and outputs of the UTXO.

4.To generate new addresses or inputs/outputs.

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#2655
  1. The unspent outputs of the previous transaction
  2. The nodes will reject your transaction and it will be invalid. immutibility.
  3. It will imply the difference between the inputs and outputs
  4. Use a coinjoin or mixer to complicate things and increase secruity and anominity.
#2656

First your Wallet will probably try to combine multiple smaller utxo’s together to cover the amount. Only if the sum of all your available utxo’s aren’t enough to cover for your transaction, the transaction will not be valid according to the bitcoin rules and get rejected

Because bitcoin is pseudo anonymous, you can use different addresses in the output of a transaction that you own. (derived from your x/y/zpubs (wich other users can’t know who they belong to)

But off course, coinjoins is an effective method to mislead people and make it much harder to analyse it

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