Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2759
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXO are the unspend out of the previous output.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    The transaction won’t be validated
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It’s calculated by the difference between input and output transaction. Input-Output.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Evrytime you want to proceed a transaction it’s good to use diffèrent adresses
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#2760

1. Describe what Unspent Transaction Outputs (UTXO) are.
UTXO or unspent transaction outputs are used in cryptocurrency transactions. These are the transactions that are left unspent after someone completes a transaction.
2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
Your wallet sums up all your UTXOs and if the sum is greater than amount required to cover the transaction it will made otherwise it will not be valid.
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
Bitcoin wallets recommend a reasonable fee based on previous transaction fees.
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Create different addresses for each transaction or wallet.

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#2761

So does this mean that in your bitcoin wallet you can have many different utxo’s of varying amounts? Will that wallet have a different address for each utxo or were they all sent to the same address?

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#2762
  1. A UTXO is unspent money/value. All your UTXO’s put together is your current balance.
  2. You would not be able to transfer anything / no funds available
    3.all inputs - transaction outputs = fees / blockchain gives the wallet the correct fee
  3. by increasing amount of inputs and outputs of transaction
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#2763

  • Describe what Unspent Transaction Outputs (UTXO) are.
    UTXOs are the Total outputs Of a bitcoin transaction Sent to a wallet that has not sent the bitcoin yet. They’re what the blockchain database stores and knows which wallet they belong to.

  • What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Then you would have to use the total amount of Bitcoin from another UTXO assigned to that wallet. Then the rest would be sent back to a wallet that the sender controls.

  • How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The bitcoin wallet would take the difference of the input and the output and that’s how it calculates the fee.

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

Use multiple inputs and outputs.

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#2764

Yes, every time you receive a transaction a new UTXO is created. UTXO means Unspent tx Output. Which is an output of a transaction that has not been spent.

An address can have multiple UTXOs and so does the wallet that holds multiple addresses. UTXOs are sent to the address they are sent, your wallet will not spend them until you want them to. :slight_smile:

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#2765

Yes,
Most wallets are HD wallets, meaning they have lots of public private key pairs and addresses.

So you will have different utxo’s on different address that the keys of your wallet can spend.

In HD wallets, every time you want to receive bitcoin, it will generate a new address.

But in the early days, many users reused the same address. So you can have multiple utxo’s on 1 address. For example a donation address where each donation to that address becomes 1 utxo.

Talk about HD wallets:

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#2766
  1. Wallet balance
  2. SOL
  3. The wallet will determine a fee that is efficient.
  4. Multiple addresses.
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#2767

1.- It is basically the money you haven’t spent. It is based in the sources/inputs where you got the money from.
2.- No transaction is made.
3.- Total input minus total output
4.- Public keys hold no personal information and also you could use several addresses to become even more untraceable.

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#2768
  1. UTxO’s are unspent transaction outputs. This is basically the sum of the coins in your wallet
  2. If you do not have enough UTxO’s to cover the transaction then the transaction will not be processed
  3. A bitcoin wallet specifies the transaction fee by calculating the input - output and give such a value that would provide a fast enough service from the miners
  4. By using a lot of inputs and outputs (all UTxO’s must be “spent”)
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#2769
  1. In a transaction from Wallet A to Wallet B, the amount in the transaction that Wallet B is receiving is an Unspent Transaction Output.
  2. If you don’t have UTXO enough to cover the TX there will be no TX.
  3. Inputs = Outputs + Fees
  4. You could increase privacy in you TX by having multiple inputs and outputs.
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#2770

Why all? You mean for every tx? This is not really necessary, you could just use a new address each time you receive funds and a new address when you send change from the tx back to yourself.
So two outputs is sufficient. There is still no way of knowing what part went to the service you payed and what part back to yourself :slight_smile:

#2771

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    These are transactions sent out by A to B but not yet spent by B.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    If there are other UTXO’s that can together cover the transaction, the wallet will generate these outputs :
    -the transaction you want to make
    -eventually a transaction to yourself with the ‘change’
    If there are no other UTXO’s, then the transaction will be rejected by other computers in the network.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Based on previous fee’s on the blockchain.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Due to multiple outputs, you can’t know exactly which transaction is made to yourself or to another person.

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#2772

Thanks for clarifying that.

#2773
  1. Utxos are inputs that have not been spent.
  2. You would not be able to make the transaction unless you combined utxos.
  3. It won’t you have to subtract your utxo from your output to get that number.
  4. You could generate new output addresses
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#2774

Yes, I should have specified that all UTxO’s need to go somewhere. Either back to your self (like change from a money transaction) or to someone else. Thanks for the clarification Alko89 :smiley:

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#2775

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXOs are the amount available for you to spend. The total of your UTXOs is your total bitcoin balance and is calculated by you wallet and not on the ledger anywhere.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for you transaction?
    It would not matter as long as the total of all you UTXOs are large enough to cover the transaction. Otherwise it will be denied by the network.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It looks at the average fee that would get your transaction into the blockchain at a reasonable time. Input minus the output is the fees.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Outputs to different address you control.

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#2776
  1. UTXOs are outputs of a transaction, that have not yet been spent (have not yet been used as inputs of a new transaction). The sum of your UTXOs are the funds you can spend.
  2. Two things can happen:
    If you don’t have any other UTXOs or the sum of your UTXOs is less than what the amount you want to cover, the transaction will not be valid and will be rejected by the nodes in the Network.
    If you have another UTXO and the sum of your UTXOs does cover the amount you want to pay, then the two (or more) UTXOs will be used as inputs of the transaction. If the sum of inputs is greater than the amount you want to pay, you will get back the difference (minus the TX fee).
  3. It doesn’t directly specify it, but it can be easily calculated by subtracting the sum of outputs from the sum of inputs.
  4. More inputs and outputs mean more addresses used in the transaction. With addresses being anonymous, it’s hard to know who the address belongs to.
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#2777

Answer 1 : UTXO are the balance left in your wallet that it keeps track of.
Answer2:The transaction would be declined if your UTXO is not large enough to cover it.
Answer3:The wallet checks the blockchain and figures out the correct fee.
Answer4 :Several addresses and outputs can result from one input.

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#2778

  1. They are outputs from a previous transaction waiting to be received/spent.

  2. The transaction will not be validated/completed.

  3. Input-Output= Fee

  4. Use different Wallets/Addresses when receiving funds.

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