Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2920
  1. UTXO is the balance in your wallet that is available for you to transact
  2. Your wallet keeps track of all of your UTXO’s and totals them in your balance. If your balance of all UXTO’s in your wallet is less than the transaction you are trying to make, the transaction will be disregarded.
  3. The fee is calculated as the difference between the transaction output and the transaction input. This fee may be suggested by the wallet but in some wallets the owner has the ability to set the fee manually.
  4. You can have multiple wallets that you own. These wallets can also receive UXTO’s from yourself which makes it difficult to trace the owner of the wallet that you sent the UXTO’s to.
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#2921
  1. It is the same as the available balance in a wallet.
  2. Another UTXO will be used by the blockchain to cover the rest of the transaction.
  3. The transaction fee is unspecified but it can be computed by deducting the input from the output
  4. By using different addresses every time.
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#2922
  1. UTXO is the balance that remains in your wallet after the inputs.
  2. Your transaction would be voided.
  3. The wallet calculates what the present fees are in order to get the quickest transaction.
  4. Use different addresses for each transaction that is to be received.
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#2923

UTXOs are used as inputs to a new transaction. It doesn’t construct a new tx for every UTXO, its all part of one tx. :slight_smile:

You don’t need to create multiple transactions, that would be a waste. You can use a new address to send the change back to you within the same transaction. :slight_smile:

#2924

You could just use multiple addresses within the same wallet :slight_smile:

#2925

UTXO is not the balance its Unspent TX Output. The sum of all available UTXOs is the balance.

You can combine multiple UTXOs to make a transaction. :slight_smile:

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#2926

  1. Unspent Transaction Outputs are the incoming transactions to your address which you have available to spend.

  2. The wallet would combine it with another UTXO and send any extra from the transaction back to your address.

  3. Transaction fee = Input amount - Output amount.

  4. You could send some of the transaction back to another address you own as another output of the transaction so the actual amount leaving your wallet is only known to you.

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#2927
  1. UTXOs indicate what inputs (amount of bitcoin) you have received from others or yourself in a previous transaction.
  2. The nodes in the blockchain will reject your transaction, unless you have other UTXO that you can utilize.
  3. Typically the bitcoin wallet establishes the transaction fee for you. It is derived from the difference between what you have and what you are trying to send as an output.
  4. Since it is difficult, if not impossible, to determine which UTXOs are going back to the original owner it creates a layer of privacy as those reading the blockchain are not sure what amount of bitcoins are actually going back or being held by a specific individual.
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#2928
  1. UTXO’s are bitcoin transactions being received by a wallet. The sender’s UTXO then becomes a spent transaction and the receiving wallet then receives an input of x bitcoin that is now a UTXO until that transaction is sent as an output to another address.
  2. Transaction would not go through.
  3. A bitcoin wallet will determine the fee based on previous transactions fees and will even recommend a reasonable fee to the user. Anyone can determine the fee by subtracting input by output.
  4. Transaction inputs and outputs increase privacy because only addresses are seen on the blockchain explorer. You can make transactions to 5 different wallets that you own and it would be impossible to know you are sending btc to yourself by only looking at the addresses on blockchain explorer.
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#2929

Homework on Bitcoin Transactions and UTXO - Questions

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

UTXO are unspent outputs of a prior txn (txns you receive and can spend)

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

Txn will be invalid if you only have a single UTXO under the amount you need, however if you have multiple UTXOs, it will add these up and use them together for the txn, with the output amount + fee being subtracted from the UTXO amount and the remainder being returned to your wallet.

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

fee = input minus (-) output

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

by utilising different addresses to receive outputs (you can send yourself multiple amounts via multiple addresses)

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#2930
  1. UTXO are the sum of all unspent transactions sent to you.
  2. Transaction will be declined.
  3. The transaction fee = Input - Output
  4. You don’t know who is the receiver of a certain transaction is. You can make multiple addresses while still being the owner.
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#2931

Unspent Transactions are just Bitcoins that have been sent to your wallet or remain unspent. Essentially your current balance of Bitcoin.

If you don’t have enough UTXO to cover a transaction then it will not be completed. Lack of funds.

The Bitcoin wallet specifies a transaction fee by aggregating a reasonable fee price from the network. Higher fees get transaction verification priority from miners because of economic incentive.

The Bitcoin network allows users to to send transactions to multiple wallets. Some users utilize mixers to make it more difficult for anyone to know the identity of the multiple addresses the Bitcoins are being sent to.

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#2932

1.Unspent transaction are input amounts of BTC associated to one’s private key. But as soon as this amount/part of this amount is used again/sent it is no longer an UTXO.
2.Then a second or third or any more UTXO needed is associated as an input to the transactions
3. the wallet recommend a fee in order for the miner to process the transaction in a reasonnable amount of time
4.The change amount is sent to another address even if it is to the same wallet

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#2933

  1. An Unspent Transaction Outputs (UTXO) are a earlier transaction to your own adress. When checking the blockchain with your private keys the sum of the UTXOs are your current balance.

  2. You would add more UTXOs as inputs until it’s more or equal to the output + fee. Otherwise it won’t be accepted.

  3. Input - output = fees.

  4. You can decide the number of outputs to make tracking transactions more difficult since addresses doesn’t have any personal information.

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#2934

The sum of all your UTXOs is your balance…

…And you can add multiple UTXOs together. If the balance is still not large enough then the tx will be declined. :slight_smile:

#2935
  1. UTXOs are the outputs of confirmed transactions indicating funds that have been sent to a wallet that have not yet been spent.
  2. The wallet will add other UTXOs together to create a value that is large enough, sending any remaining change to a designated wallet/address. If no combination of UTXOs will cover the balance of the transaction then the transaction will be deemed invalid by the network.
  3. Most modern wallets examine blockchain activity and recommend a feasibly serviceable fee. This fee is made implicit in the transaction as the difference between the input and the output.
  4. You could generate offline/cold storage/paper wallets that you control and send entire transactions or change from transactions to any number of these wallets.
#2936

You can create new addresses in the wallet app. You don’t need to create new wallets for that. :slight_smile:

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#2937

1- Unspent Transaction Outputs (UTXO) are outputs that are used as inputs to create new transactions when sending funds over the bitcoin network. A wallet uses its private keys to track the UTXOs belonging to those private keys. The wallet aggregates the UTXOs and displays the total sum to the user.

2- If you do not have a single UTXO that is large enough to cover the transaction, then the wallet will use more than one UTXO that will be added up to the total size of output plus the txn fee.

3- When creating a transaction, a bitcoin wallet specifies the txn fee by subtracting the total outputs from the total inputs because inputs = outputs + txn fee. The txn fee itself is determined by the txn fees of the most recent history on the BC.

4- The notion of transaction inputs and outputs increases privacy because the process of creating and signing a transaction requires no extra information beyond the private keys of the user and the bitcoin address of the recipient. Although the transaction is traceable, it still remains anonymous because no one knows which bitcoin addresses belong to which users and all bitcoin addresses are randomly generated.

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#2938

  1. UTXO is a remaining balance to be spent.

  2. Transaction would be invalidated.

  3. UTXO minus the outputs of transaction will create the fee.

  4. Split the inputs and outputs to create more transactions. It might take a longer time to track it down, but eventually it can be tracked down to the origination of transaction. It all stays on the blockchain.

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#2939

  1. Transactions in your wallet that are available to be spent. They came to you from prev. Transaction.

  2. Transaction would not go through.

  3. Bitcoin wallet would take the difference between the input and the output as the fee.

  4. Change your address each time you receive.

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