Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#3502

Its not really the sum of txs but the values of the balance being transfered within these UTXOs is your balance.

The sum of all your UTXOs is the balance.

You can use multiple UTXOs as inputs to a new tx. :slight_smile:

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#3503

Thanks for the correction :slight_smile:

#3504
  1. It is the amount of unspent outputs from the previous transaction, the total value of UTXO’s displays the balance of the wallet that can be used for new transactions.
  2. The wallet would look for more UTXO’s to cover for the transaction, in case the total amount is not large enough, the transaction would be invalid.
  3. Fee = Output - Input
  4. Using different adresses in the outputs to make it more difficult to track who sent and received the transaction.
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#3505

I battled with this question and didn’t quite understand it. What I tried to say was that as long as the sum of UTXOs was large enough to cover the transaction, the transaction would go through. The fact that no single UTXO isn’t big enough doesn’t matter. By putting in the equation for fees, I answered the question very badly. Thank you for the correction

#3506

I see that I still haven’t got it quite right. I take note of your answer: “Its not really the sum of txs but the values of the balance being transfered within these UTXOs is your balance.”

#3507
  1. UTXO - received BTC transactions, which have not been spent yet. Their total amount = total holdings.
  2. You cannot transact if the fees > UTXO
  3. The wallet considers the currently applied fees on the network and then creates a fee which can compete with it.
  4. Change addresses generated by the wallet
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#3508

Homework on Bitcoin Transactions and UTXO - Questions

  1. Amount that been sent/received and has not been spent
  2. Stays in pending until is picked up by a miner when the fees are lower
  3. Would specify both in USD and BTC
  4. Sending to several wallets
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#3509

Yea maybe I expressed it a bit strange. The balance of all your Unspent TX Outputs (UTXOs) is your total balance. :slight_smile:

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#3510

The sum of all your UTXOs is the balance.

You can use multiple UTXOs as inputs to a new tx. :slight_smile:

#3511

You can use multiple UTXOs as inputs.

There is no USD on the Bitcoin blockchain. The fee is implied as the difference between the inputs and the outputs (input - output = fee).

#3512
  1. Funds that have been sent to you are UTXO’s, the output of the sender’s transaction.
  2. You can use multiple UTXO’s available to you to cover the transaction. The entire amount sent needs to equal the entire amount spent, so fees will be covered from the ‘change’ and any remainder can be directed to an address you control.
  3. The fee equals the difference of the inputs minus the outputs. In some wallets you can choose the fee yourself. In most wallets, the wallet will ‘scan’ the blockchain to gather relevant information of recent fee amounts charged, and then will propose an appropriate fee to ensure a timely transaction approval.
  4. Looking at a Block Explorer, no one can tell who controls what addresses. The person who controls the input could also be set to receive the output, but the addresses will not be the same, adding anonymity and privacy.
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#3513
  1. They are unspent transactions associated to your wallet. These are BTC transactions that are outputs from previous inputs that are tracked on the blockchain.
  2. Greater than 1 UTXO will be used to cover the amount needed, and the rest will be sent back to you as change.
  3. Before making the transaction a fee will be designated by your wallet after a query to the blockchain looking at previous fees and determine what your fee should be so a miner will accept your transaction to append it to the blockchain at a reasonably fast rate. Output must = Input, therefore the fee is Input-Output = Fee.
  4. You can have multiple outputs from multiple inputs to send yourself back BTC to other wallets you control.
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#3514
  1. Describe what Unspent Transaction Outputs (UTXO) are

Its the balance or BTC received in the wallet that are not yet spent.

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

The transaction will not execute or be rejected for not having enough utxo in wallet.

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

The wallet will check blockchain for pervious fee for transaction then it will propose a fee to you that makes senses. You can set fee yourself on some wallets.

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

You can use many addresses for transactions to spreed out the inputs and outputs over many wallet addresses. Kind of makes it hard to know who owns the private keys to wallet addresses.

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#3515

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 the tx will not execute :slight_smile:

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#3516

Answers to Homework on Bitcoin Transactions and UTXO.

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    A bunch of Input and Output Transactions, that tells what funds belongs to and allowed to be spent by a specific Private Key.
    When money is moved from Person A to the Transaction Output going to Persons B, the output will become so called UTXO, until Persons B will constracte a New Transaction and gather the UTXO to his/her Input, that is now ready to be sent forward to his/her Output(s).

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Same when you try to spend BTC that doesn’t belongs to you.
    Ledgers/Nodes on the Blockchain network will not allow the transaction to complete, where the SUM of Inputs (UTXOs) needs to = SUM of Outputs + TX fee.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    By take a look at the Blockchain and check the previous transaction fees, and then the wallet will figure and give the User the fee that will get the TX into the Blockchain, fast enough.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    A User can send multiply Outputs via transaction, and majority of these Outputs could belong to the User him/herself.
    No one can actually tell for sure, if the User is sending all these Outputs to someone else or not.

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#3517

  1. The UTOX acts just like a bank that is receiving deposits. It is all the incoming BTC to your account.

  2. The transaction would not be accepted by the miners deeming it invalid.

  3. A bitcoin wallet specifies the transaction fee by subtracting the outputs from the input, the fee is generated.

  4. The increase in privacy comes from spending the entire amount of the UTXO and each transaction has a new hash that is created even if it’s returning to you on the public blockchain. This creates more levels of encryption.

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#3518
  1. UTXOs reflect the cumulative balance in your wallet from input transactions.
  2. when a UTXO isn’t large enough to cover for a transaction, it would be cancelled due to lack of funds
  3. the wallet interacts with the blockchain to determine the fee applicable to your specific transaction.
  4. the utilization of different wallet addresses would ensure increased privacy in transacting.
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#3519

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 the tx will not be accepted. :slight_smile:

#3520

  1. Describe what Unspent Transaction Outputs (UTXO) are. UTXO is the transactions that are left unspent after someone completes a transaction in cryptocurrencies.

  2. What would happen if you don’t have any single UTXO that is large enough to cover your transaction? If a single UTXO isn’t large enough to satisfy the demand of the input amount, then the wallet will try to use more inputs to complete the transaction. If the inputs are not enough then the transaction will fail.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction? Transaction fees are calculated based on the size of the transaction which is determined by the inputs and outputs of the transaction. Higher fees are given priority over lower fee transactions on the blockchain.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Transfer your bitcoin to a privacy coin like Monero then transfer it to a different bitcoin wallet.

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#3521
  • Describe what Unspent Transaction Outputs (UTXO) are.
    Utxo’s are previously sent inputs to a wallet. They tell you how much btc was sent and how much can be sent.

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 processed since all inputs must be used.
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How would a bitcoin wallet specify the transaction fee when creating a transaction?
The wallet will go into the blockchain and automatically calculate the best fee for faster processing. It will look at previous fees and calculate best fee for you.
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How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
You can increase your privacy by sending inputs to yourself on a different wallet. You could also send to multiple addresses using one input.

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