Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#3321
  1. Describe what Unspent Transaction Outputs (UTXO) are.
  • An unspent transaction output (UTXO) has ‘X’ BTC value and the owner of the Private key to which UTXO is related has the right to spend that UTXO. E.g. If Person “A” sends person “B” 1 BTC then person B has 1 UTXO until he don’t send it to person “C”.
  1. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
  • If output value is greater than the single UTXO then to create a valid transaction, it will add 2 or more UTXO’s as an input to the transaction to cover output value and fees. Input should be greater than or equal to Output +Fees
  1. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Fees = Total Input - Total Output
  2. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    to receive the change back from the transaction it does not uses the same input address and hence we cannot determine the persons identity just by looking at the transaction.
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#3322

The sum of all your UTXOs is the wallets balance.

You can use multiple UTXOs as inputs to a tx. But if you don’t have enough of them, then the tx will not happen.
The wallet usually also tracks the UTXOs available to it so it doesn’t need to query when you are making a tx but already knows where the UTXOs are and how many are available at the time. :slight_smile:

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#3323
  1. A UTXO is an Unspent Transaction Output that constructs the transaction on the blockchain from the input.
  2. Your wallet will select UTXO’s until it is enough to cover the transaction then the remaining balance will be sent back to your wallet.
  3. The fee is never specified since it is easily calculated but it is the difference between the Inputs and Outputs.
  4. Increase the amount of Outputs by sending small amounts until it reaches the total.
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#3324

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Your balance, your stored unspent transactions

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    The transaction will be cancelled because there are no available UTXOs to meet the minimum transaction amount needed.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The transaction fee is the difference between the transaction inputs and outputs. While sending the transaction, you can choose the fee manually in an attempt to expedite the transaction speed or save more by reducing the amount of the fee, therefore you can reduce the transaction speed.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    From the output’s point of view it is impossible to know which output went where. Always generate new wallet addresses, especially the outputs, so that it is difficult to see which output goes back to the sender.

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#3325

Thank you for removing my misconceptions and clearing that up for me. I really enjoy being here, I’m learning a lot.

#3326

• Describe what Unspent Transaction Outputs (UTXO) are.
UTXOs are inputs which have not yet been spent
• What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
The wallet sums all of your UTXOs to give a total balance so it doesn’t matter if you don’t have a single large enough UTXO as long at the total is balance is large enough.
• How would a bitcoin wallet specify the transaction fee when creating a transaction?
The Fee = Inputs-Outputs. Many wallets specify a transaction fee which will get your transaction into a block reasonably quickly – other wallets let you specify a fee, typically based on time expected for your Tx to enter a block.
• How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Use a wallet which generates a new address for the output

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#3327

1- Unspent Bitcoin received that it has not an output.
2- The transaction won’t go through.
3- The wallet reads the blockchain and calculates the TX fee.
4 - Using many inputs to outputs and then send them to the same or other inputs

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#3328

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    A: UTXOs are the outputs from transactions for a specific private key that make up your balance. They ar generated when someone sends you money. They exists in the blockchain until the wallet / private key that corresponds to them uses them as inputs in a transaction.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    A: Your wallet will aggregat all UTXOs that your private key can use. Hence even if one UTXO is not large enough for your transaction as long as your total balance from what could be multiple UTXOs, can cover the transaction you will be able to make said transaction. Each transaction can and usually has more than one UTXO. These transactions are all built by your wallet.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    A: The wallet surveys what the going fees on the latest blocks are and adjust its fees accordingly for best chance for your transaction to get picked up by miners. It then specifies this fee by the difference in input vs output. Some wallets allow you to pick the fee yourself.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    A: Since you can have multiple recipients in one transaction including yourself. You can add many recipients to everyone of your transactions making it harder to deduce whos who and where you’re sending your money.

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#3329

The sum of all your UTXOs is the wallets balance.

You can use multiple UTXOs as inputs to a new tx. If you don’t have enough then the tx won’t go through. :slight_smile:

#3330
  1. every UTXO was an input before. it’s basically the record which proves the availability of the funds in a new transaction. all the UTXOs combined in your wallet is basically the wallet balance
  2. the nodes would not “agree” to the transaction and the funds would go back to your wallet
  3. transaction fee is calculated/estimated from previous transactions. output = inputs + fees
  4. you could create different outputs. although, at the end of the day all blockchain transactions can be traced back
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#3331
  1. UTXO’s are any Bitcoin remaining after a transaction is completed. These Bitcoin remain in your wallet under the same key.
  2. A miner would would deny the transaction and therefore never make it to the blockchain.
  3. By seeing fees for prior transactions and will get a miner to mine your transaction.
  4. I believe instead of sending partial amounts you send your other UTXO to a different wallet you own like Ivan talked about. This would add privacy in the sense that the original wallet is now empty.
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#3332

You can use multiple UTXOs as inputs to a new tx. If all your UTXOs balance is not high enough, then the tx will be denied. :slight_smile:

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#3333

1.UTXO = the transaction information on currency received that is available to be spent.
2. If no individual utxo is enough for purchase then more than 1 with the total more than the value of purchase will be used and the difference minus fees will be returned to the sender.
3. Bitcoin wallet would normally automatically work out the best fee for you but it is basically specified as total input minus total output and the fee would be the difference.
4. By sending multiple small transactions instead of one large.

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#3334

Homework Bitcoin Transactions and UTXO – Lesson 9 – Questions:

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

UTXO’s are inputs of unspent bitcoin transactions as recorded and received by the blockchain under your private key and as shown in your wallet after query of the blockchain by your wallet.
or
UTXO’s are Inputs to your wallet from previous outputs (=UTXO’s)
or
They are basically bitcoin balances received which have not been sent out (=spent) of your wallet.

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

Your transaction would be rejected by the nodes in the blockchain network.

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

Input minus output = transaction fee

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

By using multiple recipient addresses that are different from your sending address, you can obfuscate the recipient (i.e. you) of the UTXO’s.

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#3335

How do you think would that help? :slight_smile:

#3336
  1. UTXOs are the transaction outputs that a wallet has received which have not yet been spent.
  2. your wallet sums enough UTXO’s to cover the transaction and sends the transaction amount required to the recipient and the balance, minus fees, back to you.
  3. The wallet looks at the previous fees on the blockchain and selects the one that gets the transaction onto the blockchain in a fast enough manner (but some wallets present a list of fees that you can choose from yourself). The total outputs (including any sent back to yourself) will then be the input minus the fee.
  4. All the transaction data on the blockchain contains no identifying information anyway, but you could increase the anonymity by using multiple different outputs and inputs and different addresses for yourself.
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#3337

If you used different addresses ie splitting the transaction into smaller chunks it would reduce the probability of these transactions being tracked… makes you more anonomous from the outside. Its impossible to know who owns all the addresses, currency could going from a-b a-c a-a for example.
I

#3338
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXOs are representing the funds an wallet received and is able to spend. In sum they are the wallets balance.

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

It would use multiple UTXOs to cover the transaction. If there are not enough UTXOs to cover the transaction the transaction doesn’t go through.

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

The wallet is calculating the best fee for the transaction going through.

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

Using multiple addresses for different purposes. One for savings one for spending and so on …

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#3339
  1. UTXO is money that is being recieved into your wallet which you have not spent yet, you’re balance.
  2. The nodes would reject the transaction and your transaction would not get added to the block
  3. The transaction fee is input - output, and an appropriate fee will be measured
  4. Several adresses and outputs can result from one input
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#3340

Yes, but creating more transactions wouldn’t really help in this case. More it would probably make it easier to track the change and link addresses.
You can create multiple outputs in one single transaction and send the change back to a new address. From the explorer its impossible to determine what part of the tx went to pay for the service and what went back to you as channge. :slight_smile: