Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#3361
  1. Describe what Unspent Transaction Outputs (UTXO) are.

Answer: UTXOs are unspent outputs from previous transactions

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

Answer: If you don’t have enough other UXTOs to cover the amount, the transaction would be invalid. If, however you did have enough other UXTOs, those would be used and any remainder(minus the transaction fees) would be sent back to you.

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

Answer: The wallet will either show you various fee options to choose from when creating the transaction or choose one for you(based on querying the networks recent transactions) that is a good balance of being likely to be accepted by the miners, the transaction completing in a reasonable amount of time and not too high of a fee. Once the transaction is complete the wallet will have a record of the fees and your new total of UXTOs(as well as a record of previous transactions). The fees are equal to the input minus the output.

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

Answer: You can splinter or ‘fragment’ outputs to various addresses that may or may not be controlled by you.

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#3362

The sum of all your UTXOs is the balance.

You can use multiple UTXOs as inputs to a new tx. If you don’t have enough of them, then the tx fails. :slight_smile:

#3363
  1. Describe what Unspent Transaction Outputs (UTXO) are.

A UTXO is an output of a bitcoin transaction. They are what is stored in the blockchain in lieu of a balance. A wallet can query the blockchain for all UTXOs associated with it and can aggregate all UTXOs to determine a balance.

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

It would be flagged as an invalid transaction when submitted to a node. However if you have other UTXOs that when added together can cover the transaction they could be added as additional inputs to the transaction and you would specify that the any amount above the transaction total and fees would be sent back to your wallet, another wallet you control or if you are feeling particularly generous you could leave it as the extra amount as a mining fee.

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

A bitcoin wallet does not explicitly specify a transaction fee, instead the transaction fee is simply the difference between the total bitcoin input into the transaction and the total bitcoin in the UTXOs of a transaction.

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

Transaction inputs and transaction outputs can be used to enhance privacy by using them to obfuscate the true value a transaction. This is accomplished by specifying multiple inputs and outputs to a transaction that are above what is needed and sending the surplus to other wallets that you control.

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#3364
  1. UTXOs are the proceeds from prior transactions the have no been used. They are the spent out puts of previous inputs.

2.If your UTXOs are not large enough to cover a proposed transaction the Blockchain will reject/ignore your request for the instant transaction.

3.Transaction fees are specified by adding the cost of the transaction to the requested output. Fees ae not usually listed separate from the UTXO .
4. Privacy can enhanced and in inputs and outputs by using and encryption protocol such as SHA256 or another encryption protocol to encrypt both the input and output.

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#3365

Homework on Bitcoin Transactions and UTXO - Questions

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Answer: It’s the input balance of the account holder BTC from the output/s of one or more sources.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Answer: Your request will be rejected for insufficient BTC input/balance.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Answer: The wallet can calculate the fees automatically based on previously known transactions. It will be calculated in the total output once the account holder have sufficient BTC to cover the transaction/s.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    BTC is all about privacy. Using multiple channels and addresses where the public don’t know the owners of the addresses or channels. Walls and nodes take care of transaction/s privacies.
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#3366
  1. Describe what Unspent Transaction Outputs (UTXO) are.

If you recieve some btc through a transaction to your wallet and don´t spend it, this transaction is called a utxo.

2.What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
The wallet will keep track of all incoming utxo´s so if the sum is high enough the transaction can be proceeded and validated.

3.How would a bitcoin wallet specify the transaction fee when creating a transaction?
The transaction fee is the sum of btc Utxo´s on the input side minus the amount of btc on the output side.

4.How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Since a btc adress is private it is impossible to determine who is the owner of a btc adress,
could even be yours again using the transaction step to diversify to different wallets for security.

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#3367

You can use multiple UTXOs as inputs to a new tx. If you still don’t have enough, then the tx will be rejected.

Fees are implied, meaning its the difference between the total input and output (input - output = fee)

You can’t hash inputs or outputs. One way to increase privacy is by using a new address each time you receive a tx or send funds back to yourself. :slight_smile:

#3368

Its an unspent output of a transaction (UTXO = Unspent TX Output), not unspent transaction itself. :slight_smile:

#3369

1: UTXO’s are like bills in your wallet. they represent the fractions of the total amount you have.
2: Just like a transaction with dollar bills. you would use more than one UTXO and if there is some left it will be returned to you in the output.
3: it would add the required amount to your input and output. The wallet will get the transaction fee online and calculate that for you or in some wallet you can add more to get a faster transaction.
4: by having the input send to more than one output.

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#3370
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXO are the total of the outputs received from the previous transactions that can be used for the inputs for the next new transactions.

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

The wallet will sum up all the UTXO to cover the transaction if there isn’t have any single UTXO. Should the total of all UTXO unable to meet the amount of that transaction, the transaction will not be executed.

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

In some cases, wallet may look into the previous fees in the blockchain to bid or propose for the best fee to go into the blockchain fast. In most cases, the wallet will calculate by taking the difference in value after deducting the sum of the outputs from the total inputs.

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

By having many outputs making its difficult to track/figure exactly where the amount in the transaction goes from the inputs, example having multiple addresses to the same wallet.

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#3371
  1. Describe what Unspent Transaction Outputs (UTXO) are.

In Bitcoin there is no data structures like sheet balances to show the bitcoins that the users possess, but rather, a collection of UTXOs with the users signatures scattered along the blockchain.

UTXOs are the fundamental concept of the transaction Bitcoin system. They are the Inputs of transactions, they are entries in the Blockchain laying around that are associated with private keys and is what users are able to spent. The first task of the wallet is to identify the list of UTXOs you own, to cover the value of the transaction you want to execute.

Inputs are outputs from previos transactions. Prior to be spent they are called UTXO, after being spent the are called transaction outputs, but immediately turn into UTXO again ready to be spent in the next transaction but probably with a different owner. Outputs are equal to inputs.

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

The transaction does not execute XD

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

Fees are determined based on the current traffic in the network, the more saturated the network the higher the fee. I think some wallets let you specify the fee so you can increase the priority of your transaction.

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

You could increase the number of outputs in a transaction. As long as nobody links your identity to your bitcoin address you are safe.

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#3372

  1. UTXO are unspended transaction that come to your wallet and then you can spend sending this transaction to someone else, even yourself.

  2. the transaction will be retained garbage and not stored to nodes

  3. UTXO = TX + fee

  4. you use a different publickey for receiving transactions

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#3373
  1. How much you can spend
  2. It will not go through
  3. Proposes a fee based on recent transactions on the blockchain
  4. Increasing the number of inputs or outputs increases privacy as it is more difficult to detect the source or destination
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#3374

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXO’s are collection for transactions that are unspent for a wallet or key. In every transaction we have input’s and outupts, when a transaction is created it basically query the block chain to see how many unspent transactions are available for a wallet, the total amount should be spent in new transactions plus fees. The new transaction the creates the new UTXO for recipient wallet.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    lets consider a hypothetical scenario - I want to spend 1BTC to buy a car, to create this transaction I should have 1BTC+ worth of UTXO’s.
    a. If I have multiple UTXO’s and total of these transactions amounts to > 1BTC+ I can create the transaction to buy car worth 1BTC
    b. If the total of UTXO’s < 1BTC then the new transaction won’t be validated on Bitcoin network.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Wallet selects transaction fee based on available blocks.
    4.How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Each Transaction has Input and output hash addresses these are anonymous, once can send the money to self but different address.

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#3375

You don’t need to use all of them, the wallet will cherrypick as much as it needs to fund the tx. :slight_smile:

#3376

UTXOs are used ad inputs to a new tx and the output is a new UTXO, they don’t get reused.

#3377

You can use multiple UTXOs as inputs to a tx. If you don’t have enough then the tx will not execute :slight_smile:

#3378

They are unspent outputs of a tx and the sum of all your UTXOs is the ballance. :slight_smile:

#3379

1)UTXO is the total of of your wallet balance after transactions
2) no transaction
3) the wallet will check the blockchain to figure out the correct fee
4) there’s no way for the block chain to see what each portion of transaction was used for, if I receive 0.5 BTC from Sam and bill each then I spend 0.25 of it there is no way to tell if that was Sam or bills btc transaction to me

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#3380

The sum of all UTXOs is the wallet balance.

You can use multiple UTXOs as inputs to a new tx. If you don’t have enough then the tx will not happen.

What about when you withdraw from an exchange where you did KYC? :slight_smile: