Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2819
  1. A UTXO is an unspent transaction output that has not yet been delivered to a receiver.
  2. Several UTXOs can be added to exceed the intended transaction level, otherwise not sent.
  3. The positive difference between the sum of UTXOs available to go out and the delivered value is taken as the transaction fee.
  4. Using several outputs and a different address for each transaction increases complexity and therefore the anonymity of the sender.
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#2820

  1. UTXOs are in the past received transactions that available to your private key for spending (using as inputs for constructing a transaction).

  2. The wallet adds up the UTXOs so the transaction can be constructed.

  3. The wallet would check the blockchain for the fee size so that it would make a transaction possible in a timely manner and then it would set the Output size so Input = Output + Fee

  4. Sending BTC to oneself (an adress controlled by oneself ) makes it impossible to determine this adress’s owner by an outsider.

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#2821
  1. Describe what Unspent Transaction Outputs (UTXO) are.

Unspent transactions are verified possessions of crypto assets. They are the analogue of traditional banking of funds available.

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

Then any attempt of transactions will get rejected.

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

The wallet will automatically calculate the fee from the input and output transactions.

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

Privacy is already high in the blockchain since it only displays the amount and address. Moreover, many inputs and outputs can result from a single address.

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#2822
  • UTXO’s (Unspent Transaction Outputs) are unspent outputs of previous transaction/s.
  • Wallet will sum up my UTXOs and construct a transaction. If it’s still not enough the transaction will be revoked.
  • Fee = (remainder of all )inputs - outputs
  • Use a different address for each receiving transaction.
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#2823
  1. UTXOs are like ‘ious’ from previous transactions made to your address (which you have the private key for). Your wallet must link to all these UTXOs in order to create a transaction for you.
  2. The transaction will take another UTXO as input so that there is more than enough for the transaction, or refuse the transaction (well more specifically not create one at all) if there is no existing UTXOs to cover it.
  3. Total sum of inputs minus outputs = fee.
  4. Having more UTXOs would obfuscate which ones are related to what.
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#2824
  1. UXTOs is how the network calculates how much currency your private key has access to. It acknowledges the transactions that have been sent to an address that are not yet spent. Instead of a focus on account balances, it is a focus on the potential spending of different wallets.
  2. Either use multiple UTXOs to cover the transaction, with any remainder being directed back to your account, or if you don’t have the remainder to cover the transaction it will not be confirmed by the blockchain and the transaction will not go through.
  3. The fee will typically be suggested by the platform by the current market rate. The fee is the difference between the input and the output.
  4. You could use multiple addresses when sending the remainder back to yourself as well as splitting that balance between multiple addresses.
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#2825
  1. Let’s look at the example of one wallet/address, we’ll call it wallet W. UTXOs are funds (bitcoins/satoshies) that belong to a particular wallet (address/public key), our wallet W, and which are not yet spent by that wallet. These funds are not located IN the wallet, but are actually just statements which say that an X amount of funds belong to the wallet W (and are transferred from the wallet/s Y,Z, etc). All the funds that are ever “sent” to the address of the wallet W are like the statements in a ledger sheet which keeps track of how much funds have been transferred to the wallet W. This is how wallets calculate how much bitcoin they own - they query the blockchain (which is a constantly updated digital ledger of input and output transactions of all existing addresses on the blockchain) and figure out how many transactions (and which amounts) have been sent to the wallet W. The wallet W then summarizes all the values of all the transactions sent to the wallet W and provides the current balance of the wallet. All these summarized transactions are each their own Unspent Transaction Outputs which were created by other wallets on the blockchain when they decided to broadcast to the network that they want to send X amount of BTC to the wallet W. Of course, to precisely calculate the current balance of the wallet W, the wallet needs take into consideration its own spent transactions. So the actual current balance would be all the Inputs - Outputs (including the fees) to and from wallet W #respectively.
  2. The attempted transaction would be rejected as invalid because there is not enough funds that the wallet owns to spend. Maybe lending some money on De-Fi can help in this case. :sweat_smile:
  3. Fees are specified as total Input - total Output, where total Input = total Output+Fee. The trick here is that all the Inputs are represented as transacted, but the part of the Input that is not meant to be spent is transferred back to the wallet. Fees themselves are usually automatically set by the wallets that check the latest fees on the network and adjust the fees accordingly. Some wallets allow for manual setting of the fees (like the Ledger Nano wallets).
  4. To increase privacy in transactions, funds can be send to multiple newly generated addresses which are not tied to any entity and thus it would be hard to determine how much and by whom is owned if a transaction is broadcast in that way.
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#2826
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXO is data in the blockchain which contains Information about the Sender and Recipient (a new UTXO) of an transaction. A wallet queries all available UTXOs for it in the Blockchain. It builts a new transaction (UTXO) by inserting it’s signature, all the UTXOs and the recipients (including itself minus a small amount of fee, because all BTC not defined, will be transaction fee and belong to the miner). For example if you have one UTXO of 10 BTC and spend 9 BTC, the UTXO will be 9,0 BTC as a new UTXO to receipient and 0,999 to you “back” as another new UTXO. 0,001 BTC are left and belongs to the miner.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? A transaction will be generated, where several UTXOs are added together. -> OR are ALL UTXOs added together?
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    See Answer Point 1 :slight_smile:
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    By “sending” ALL the amount of available UTXOs and “send” the left amount back to myslef using a new address for my wallet or even use another wallet.
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#2827

  1. Unspent Transaction Outputs are output datas of transactions that are stored on the blockchain. Cumulated together, it enables your wallet to establish your balance.

  2. You would not be able to do the transaction. To solve the problem, you need to add UTXOs until you have a large enough ouput to cover the transaction you want to do. The difference is sent back to you as a new UTXO.

  3. It will propose one to you by looking at the previous fees on the blockchain.

  4. By only looking at the inputs and ouputs of a blockchain transaction. It is impossible to know from the outside where did the transaction go since a person can hold many private keys in a single wallet.

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#2828

  1. A UTXO is an unspent transaction. It’s a previous Input that you can spend to create an Output.

  2. My transaction would use enough UTXO’s to cover the transaction, spending the full amount of every UTXO and the remaining funds would be sent back to my address as a new UTXO. If I don’t have enough UTXOs to cover the transaction it would be denied and invalid by the Nodes and never added to the Blockchain.

  3. A wallet will automatically calculate the transaction fee from previous blocks, Input - Output = TX Fee. Some wallets let you specify the TX fee yourself, but the miners will pick the TX’s with highest fees first as they are rewarded the fees. This can make your TX to be picked up last if the fee is too low.

  4. You can own several wallets with several addresses. Splitting your transaction into small amounts among your accounts.

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#2829

It’s basically a previous OUTPUT that you can spend in a new transaction by using this in the input of a transaction and change ownership in the output of a transaction.

UTXO stands for unspent transaction output

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#2830

  • Describe what Unspent Transaction Outputs (UTXO) are.
    it is a sum of inputs - received transactions; the sum of UTXO gives the balance in the wallet - what can be spent now

  • What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    such transaction cannot be realized

  • How would a bitcoin wallet specify the transaction fee when creating a transaction?
    fees are usually calculated by the wallet (sometimes can be adjusted) and depend on the number of transactions, the more transactions (inputs / outputs) the more expensive

  • How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    the output transactions can contain many addresses, also my addresses, so it is more difficult to tell if some funds were sent to some else or back to me

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#2831

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    All you utxos you have are basically your balance of that specific crypto. If you own 1bitcoin you own actually utxos worth 1bitcoin.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    You would overspend at two ore more utxos and the change Minusbeträge fee would be send back as a new utxo to an address of yours.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Sometimes you can choose depending on how fast you want your transaction to be processed or the wallet has a fix transaction fee it pays to the miners

  4. How could you use the notion of transaction inputs and outputs to increase privacy
    You can use many l different addresses the overspent utxo go to. Even different ones your own.

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#2832

I think for the most part it’s just the community kind of self-checking, from what I can tell, I suppose it’s more about putting the knowledge down “paper” than anything else. if that makes sense?

#2833

I’m still here to rate your homeworks :stuck_out_tongue:

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#2834
  1. UTXO is any input into your wallet that has not yet been spent.
  2. your wallet will decide which UTXOs to combine to cover the amount specified in the transaction.
  3. your wallet analyzes the blockchain and derives a fee that provides an acceptable price and time to confirm based on the parameters of your transaction.
  4. by requiring inputs to equal outputs people looking at a transaction do not know which output is the actual transaction and which output is going back to the original transactor.
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#2835

Fair enough! keep up the good work, sir!

#2836

  1. Unspent transactions are when you get an input and you have to spend all of the output.

  2. The transaction will be denied.

  3. Input - Output = Transaction Fee

  4. You could give some to your friend and some back to another address you control.

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#2837
  1. Unspent Transaction Outputs are transactions that have come into a wallet that have not gone out of the wallet or been used.
    2)The transaction would use additional transactions to fulfill the agreement and return the balance due as another transaction back to the original one who paid as a separate transaction. input minus output results in the fee.
    3)The wallet creates the fee by all inputs minus the outputs.
    4)Creating a # of inputs and outputs can increase privacy.
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#2838
  1. UTXOs are the outputs from a transaction. The private key that controls an UTXO is able to spend it.
  2. transaction would be declined
  3. Sum of UTXO inputs minus sum of UTXO outputs
  4. Use other addresses that you control.

Question: how does a miner know you actually have the private key? I assume the private key is not in the transaction you send.

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