Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#3000

  1. UTXO is an output transaction from someone to you (or anyone) and it stays unspent until it is used as transaction input.

  2. It takes as many UTXOs until it can cover for the whole of your transacion. If sum of UTXOs is bigger than what you want to spent, part of it goes back to you as another UTXO.

Actually I am not sure now, whether it works like I described (takes only as many UTXOs as necessary) or it takes all UTXOs and use it as input. Can you clarify this to me? Thanks.

  1. Wallet basicaly looks up for current transaction fees on blockchain and picks such transaction fee which enables you to process transaction with enough speed. Transaction fee = Input - Output.

  2. The privacy increases with increasing number of inputs and outputs of transaction.

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#3001

Describe what Unspent Transaction Outputs (UTXO) are.
UTXO is output of bitcoin transaction that the recipient of that transaction can now spend.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
Wallet would use multiple UTXO-s

How would a bitcoin wallet specify the transaction fee when creating a transaction?
Inputs-outputs=FEE

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
You can use multiple outputs, how many of those outputs belong to you is unknown.

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#3002
  1. UTXOs indicate the balance left in your wallet
  2. The transaction you are attempting to initiate would be declined.
  3. The transaction fee is determined by completing the equation UTXO - UTXO input
  4. In order to increase privacy you can utilize multiple output addresses where more than one is yours.
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#3003

It only takes as many UTXOs as it needs to fund the tx. Using all UTXOs would be a waste because it would increase the size of the tx, thus increasing the fee. :slight_smile:

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#3004

  1. Unspent UTXOs are Bitcoins that belong to the recipient of the transfer.

  2. If you don’t have any one UTXO that is large enough to cover your transaction, the blockchain would be queried for others. If the sum of all UTXOs is sufficient, the transaction will be approved.

  3. The Bitcoin wallet specifies the transaction fee by subtracting the outputs from the inputs.

  4. You could increase the privacy of your transaction by using multiple output addresses whether to yourself or someone else.

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#3005
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXO’s are the output of transactions that have been sent to a private key. UTXO’s change into inputs when they are being used for another transaction.

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

Your wallet adds up all the UTXO’s are linked to your private key, if you have insufficient funds the transaction will be rejected.

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

The transaction fee is the input minus the output. When sending a transaction you can choose the fee manually, the higher the fee the faster the transaction will be confirmed.

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

When looking at a transaction you cannot link the adresses to an identity. So using multiple output adresses increases the privacy.

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#3006

  1. UTXO = Input, can be used to be spent in another transaction. If UTXO is zero, that means you can make any transaction.

  2. My wallet can calculate my UTXOs, if the sum is enough to pay my transaction, the transaction can be executed.

  3. A bitcoin wallet recommend a reasonable fee, bases on the current and previous transaction fees.

  4. Always generate new addresses, especially the outputs, so that it is hard to tell which output goes back to the sender.

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#3007

I would say by sending to yourself, but using a different destination address from the send address.

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#3008

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXO’s are unspent transaction outputs. They keep track of how much bitcoin you can spend.

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

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Your bitcoin wallet decides what the transaction fee will be by subtracting the inputs from the outputs.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Transactions inputs calculate the total amount of money that you can spend. When sending btc to someone multiple outputs are created which make it hard to tell who the money was sent to.

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#3009
  1. A UTXO is a transaction that you have received from someone, and not reused to send to anyone else. It is an “output” not yet converted to an “input”.
  2. Nothing. All Bitcoin transactions spend the entirety of the UTXOs and “refund” the original account with a new UTXO of the excess amount.
  3. It looks at the level of previous transactions and proposes an amount such that your transaction will likely get picked up by miners. But you could also set it manually.
  4. You could send bitcoin to yourself on a new account you control, and there is no way to know if you’ve sent the bitcoin to yourself or to someone else.
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#3010

  • Describe what Unspent Transaction Outputs (UTXO) are.
    Balance of unused funds remaining in the wallet.

  • What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    If you had other multiple UTXO’s, then would access required amount from other UTXO’s. (?)
    If you had no other UTXO’s then the transaction would be unconfirmed due to insufficient funds. (?)

  • How would a bitcoin wallet specify the transaction fee when creating a transaction?
    By subtracting output from input.

  • How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    By using multiple addresses.

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#3011

  1. UTXO’s are outputs from transactions that are not spent yet. Your wallet can check UTXO’s and show your effective total balance.

  2. It would include any additional UTXO’s available in order to cover the total, with any excess returned.

  3. The fee is equal to inputs minus outputs. A wallet will pick a fee that it would propose to be best based on looking at previous transaction fees on the blockchain and selecting a fee determined to be fast enough to get the transaction included on the blockchain.

  4. Transaction inputs and outputs can increase privacy as it is difficult to know who the owners of the recipient addresses are. Multiple addresses may belong to the same owner.

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#3012

Unspent transaction outputs are an input transaction amount your wallet receives that is verified on the network available for to you to spend. Transaction waiting to be spent.

2)If you do not have enough funds to cover your transaction it will not be confirmed and the network will reject it.

  1. A bitcoin wallet will automatically calculate your transaction fee based on the information it receives from the nodes and adjusts it to an amount that will be accepted in a timely fashion.

  2. You could increase the privacy of a transaction by having multiple output source adresses and vice versa on the input end.

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#3013

UTXOs are outputs of a transaction, not a transaction in itself. A tx can have multiple outputs (or inputs).

You can use multiple OTXOs as inputs to a new tx. However if its still not enough, the tx will not go through. :slight_smile:

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#3014

1)There are the recorded transaction left on the ledger after a transaction which can later be spent to the value of the sum of all your UTXO’S on the ledger.
2)The transaction would fail
3)The input - the output
4)You could use many different addresses

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#3015

Quick question… if i buy a BTC made up of lots of UTXO’s are they then consolidated into an input so that if i spend that BTC it is now only considered 1 UTXO or will it still consist of multiple UTXO’s?

#3016

UTXO or 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 conducting a cash transaction at the store.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction ? You cant spend it. transaction will be denied.

Our wallet uses dynamic fees , meaning that the wallet will calculate the appropriate fee for your transaction taking into account current network conditions and transaction size. You can choose between a Priority fee and a Regular fee .

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#3017

You would receive those BTC as a new UTXO (just one). Its only valid for the sender that must use multiple UTXOs as inputs to the tx. :slight_smile:

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#3018

How is this fee reflected on the blockchain level?

Also you missed the last question :wink:

#3019

  1. UTXO’s are basically inputs to your private key that you haven’t spent yet. Once you decide to spend them, they become a UTXO to the next person who receives them. Blockchains do you measure/pool together your funds, they simply measure UTXO’s

  2. If I don’t have any single UTXO’s large enough to cover my transaction, the wallet will pool together enough UTXO’s in my wallet that will cover the TX cost (plus fee) and return the excess back to my wallet.

  3. The bitcoin wallet specifies a transaction fee by simply calculating the difference between the input and the output. For instance, the Input = TX + Fee, but will not make a fee a output in itself.

  4. ?

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