Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#2980

  1. UTXO’s are the left over currency outlets after a transaction is done.

  2. Then you would have to create a transaction that combines the inputs of UTXO’s that cover the amount and then send the access back to one of your own wallets.

3.the wallet will specify the fee by showing the amount in the inputs and the outputs. from the equation inputs= outputs + tx fee the fee can be found.

  1. you could use a different address for each receiving transaction.
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#2981

UTXOs are the amount that a wallet can spend

Multiple UTXOs would be used as input and the unspent would be in fees and back to yourself. If there were not enough in all the UTXOs to cover the transaction it would not be signed and sent.

The private key creates and signs the transaction but never goes outside the wallet

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#2982

  1. outputs from previous transactions that are not yet spent. this makes up the balance in your wallet

  2. other owned utxos will be added until there is enough to process the transaction

  3. it gets deducted from the utxos being spent

  4. From the outside it is impossible to know which output went where, to the recipient, to the sender and there can be multiple outputs. That increases anonymity in transactions.

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#2983
  1. the (positive) balance in your wallet
  2. you wouldn’t be able to complete the TX
  3. the fee is calculated automatically (input-output)
  4. using always different addresses for the outputs? Don’t know really…
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#2984

The sum of all UTXOs is your balance

You can join multiple UTXOs in a tx and if its still not enough the tx will be declined.

You should use a new address every time you receive funds and send change from a tx back to yourself, this makes it harder to tell what output is yours. :slight_smile:

#2985
  1. UTXOs are unspent transaction outputs.
    The are inputs that have been sent to you from other addresses that you have not yet sent to another address.
    2.If you don’t have a single UTXO that is large enough to cover for your transaction then several UTXOs can be used for the transaction, some of which would also be taken for a transaction fee and the rest you would send back to yourself.

3.The transaction fee is the total input less the output

4.To increase privacy you could send a portion of the transaction back to yourself, to a wallet for which control the private keys. As there is no way to determine who the address belongs to, only the history of transactions.

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#2986
  1. They are the sum of all the inputs in your wallet.
  2. If you don’t have enough the transaction will not happen.
  3. The sum of all the inputs will equal the sum of the output plus fee.
  4. The transactions inputs and outputs are not tied to your name.
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#2987

The sum of UTXOs is your balance.

You can combine multiple UTXOs, if its still not enough, the tx will be declined. :slight_smile:

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#2988

  1. You downloaded a Bitcoin wallet because you want to buy 1 Bitcoin in Coinbase. You then send the Bitcoin into your empty wallet, then the BTC reflected into your balance and that’s your UTXO :sweat_smile:

  2. Fund your account to be able to cover the next transaction.

  3. You specify the input and output then fee will be automatically calculated by your wallet. Fee would vary based on previous transactions. Normaly, the wallet implies the best fee for faster transaction. Some wallet may enable customize fee based on your preference. Fee chosen affects speed🤔

  4. The wallet you’re using for the transaction holds the private key. To ensure privacy in your transaction, be sure to NOT share your private keys and ONLY use the TOP rated Cryptocurrency wallet🙊

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#2989

Thanks for you help:)

#2990

  • Describe what Unspent Transaction Outputs (UTXO) are.
    For each transaction the value of input must equal output. The unspent value in the output is the UTXO. The sum of UTXO is the balance in the wallet.

  • What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    The transaction would not be made for lack of funds.

  • How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It does not specify explicitly but implicitly, by substraction

  • How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    There is no knowledge which part is a UTXO from a normal TX

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#2991

I think you are confusing security for privacy. When you created an account on Coinbase you probably had to do KYC and when you withdrew from that exchange to an address there is now a link to you and the address you control. How would you fix that? :slight_smile:

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#2992

UTXO is part of a tx and you can see what UTXO is part of what tx. How can you use the UTXO model to increase the privacy of the ones you are in possession? :slight_smile:

#2993

That is true. Thank you for pointing that out. Let’s just say “someone or a friend” sent a slice to Bitcoin to an empty wallet :thinking:

#2994

That could work :grin: but if they know your friend and that he sent you the funds, how would you get rid of the tracks, or at least make them harder to follow? :wink:

#2995

I would probably send Bitcoin to a different address, to my ledger device for instance :sweat_smile: As I received funds from a mobile wallet :sleeping:

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#2996

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Transactions you have received and 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 transaction would be ignored.

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

The wallet looks at the recent transactions and will recommend a fee consistent with previously/recently accepted transactions.

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

With multiple transactions there will be different addresses and it would be impossible to tell which address belongs to you.

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#2997
  1. Unspent transactions are outputs from a transaction that are yet to be allocated to another transaction.
  2. If you did not have a large enough UTXO the wallet would not be able to create a valid transaction.
  3. A bitcoin wallet looks at the previous transaction fees paid by other transactors and propose a fee to the owner in order to get a reasonably fast transaction as miners pick the highest fees first.
  4. a transaction can have many different outputs and the entire amount of UTXO’s must be spent and the remainder sent back to an address owned by the sender.
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#2998

1. Describe what Unspent Transaction Outputs (UTXO) are.
Unspent transaction outputs are used in cryptocurrency transactions. These are the transactions that are left unspent after someone completes a transaction, similar to the change someone receives after buying something at the store.

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
Your wallet aggregates UTXO’s and provides an ongoing balance based on the current price of the asset.

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

Inputs - Outputs = Fees

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Privacy is provided by bitcoin transactions. UTXO’s can be received, aggregated and sent to multiple channels as well to the same channel. This information is only available to the holder of the wallet with the private keys.

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#2999

Describe what Unspent Transaction Outputs (UTXO) are.
They are the inputs assigned to your wallet that are currently unspent.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
The wallet reads from the blockchain all of your available inputs and sums them into a balance, this number is the sum of your UTXO’s so now with all the inputs added together you will have enough for the transaction.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
By reading the blockchain for congestion or amount of traffic and deciding on a fair fee to broadcast the transaction

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
multiple addresses for inputs and outputs but this is good for a human however easily readable or software to track.

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