Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#3542
  1. It is the balance in your wallet that the wallet keeps track of.
  2. You have to send enough UTXO even if you have to use more UTXO, so the transaction will be accepted by the nodes end miners. If your transaction don´t have enough UTXO it would be denied.
  3. Transaction fee = Sum of UTXO in the transaction- Transaction amount - New UTXO
  4. Use more than one address so that you can receive transactions on a different address.
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#3543
  1. UTXOs are transaction outputs you can spend.
  2. The transaction will be declined or termed invalid.
  3. Input = output + transaction fee
  4. By sending transactions outputs to one or more addresses that belong to you from the same input block.
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#3544
  1. A UTXO is a record of a transaction that has not yet been spent by the recipient
  2. Assuming that enough UTXO’s exist for the transaction, they would be summed up to exceed the amount needed. Any inputs exceeding the output would be returned to sender as a new UTXO (minus fees)
  3. The wallet would query the blockchain for recent fees and specify a reasonable fee
  4. You could send unspent inputs to another wallet you own with a different address
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#3545

  1. UTXO’s are transaction outputs that are sent to bitcoin wallets. Your bitcoin wallet combines all UTXO’s to show you your total amount of bitcoin you can spend.

  2. Your bitcoin wallet would use multiple UTXO’s to cover for the transaction.

  3. Input transaction subtracted by the output transaction equals your transaction fee.

  4. You could make transactions with the person you are trying to trade with but also send the same amount to three other addresses that are yours.

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#3546

You can use multiple UTXOs as inputs to a new tx. If you still don’t have enough then the tx would not take place. :slight_smile:

#3547

Its simple the difference between inputs and outputs (input - output = fee). UTXOs are used as inputs to a new tx and the outputs become the new UTXOs (because they are not yet spent). :slight_smile:

#3548

  1. UTXO is your balance of bitcoin.

  2. The transaction will be rejected.

3.It will look in the bitcoin blockchain what the actual fees are and it will suggest them as a reasonoble fee to make the transaction comfirmed fast enough.

4.I will use different adresses for my transactions.

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#3549

The sum of all you UTXOs is your balance.

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

#3550

  1. A UTXO is a specified amount that a certain private key has access to and can use to create transactions.

  2. Your wallet may combine multiple UTXO’s as inputs to cover the transaction.

  3. Total inputs - total outputs

  4. Increasing the number of inputs and outputs of a given transaction can make it more difficult to understand who is receiving the outputs.

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#3551

UTXO (unspent transaction outputs) is the output of a transaction which can be used as the input of another transaction. All UTXO need to be spent. Your Wallet constructs the transaction for you so if you don’t have one single UTXO that is large enough to cover the transaction your Wallet will add everything up to cover the output. The Wallet will also pick the transaction fee that pays the miner for adding to the block after verification. So the input will be equal to output + transaction. Since you have to spend all UTXO(s) the outside world doesn’t really know which Bitcoin is going to someone else and which is going back to the senders Wallet.

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#3552

Questions on Homework on Bitcoin Transactions and UTXO:

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

    • those are payments/transfers being sent to a wallet address… the sum of UTXO’s is your balance.
    • Or to rephrase it is the ‘unspent’ transactions to your wallet (they are the outputs from other wallets).

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    a. It will combine UTXO (inputs) and send the sum of UTXO’s. If the transaction + fee is less than
    the sum of inputs (UTXO’s), it would send the remainder to a your address.
    b. If the total is still insufficient to cover the transaction + fee, the transaction fails.

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

    • The wallet would choose the transaction fee based on how busy the network (query the network)
    • Also the size of the transaction (not the value), the number of inputs and outputs increases the fees
      as does the current.
    • According to https://unhashed.com/cryptocurrency-terms-faq/bitcoin-transaction-fees-explained-complete-guide/
      no fee is ‘required’ but the block would like not be processed. Miners are incentivised to select higher
      priority through higher transaction fees.
    • modern wallets examine the blockchain’s activity and calculate a recommended fee.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    - Send to a secondary wallets to pay.
    - Sending funds from UTXO’s back to yourself. (also reduces # of inputs)

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#3553

The wallet can cherry pick as much UTXOs as it needs to fund the tx. Using all UTXOs would just be a waste of block space and would make the tx more expensive. :slight_smile:

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#3554

1 - UTXO’s are unspent funds form previous transactions.
2 - Your wallet would either collate your total UTXO’s into 1 output so that you are able to send the transaction, and then your wallet will create another output to send back the remaining funds to your wallet.
3 - Inputs - Outputs = Fees
4 - You could use multiple addresses as there is no limit to the amount of bitcoin addresses it is possible to have. However, tools such as Blockchain explorer can be used to link possible Bitcoin addresses to an individual.

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#3555

1.Describe what Unspent Transaction Outputs (UTXO) are?
UTXO are the amount of transactions received and ready to spend.
2.What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
All the UTXO I have will be spent and the change will be sent back to me.
3.How would a bitcoin wallet specify the transaction fee when creating a transaction?
A bitcoin wallet specify fee by looking in to the previous fees and determines or proposes the fee which enables for faster execution of the transaction.
4.How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
The more transactions happened the more new addresses created. The more new addresses created it’s hard to tell which is going back to the sender.

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#3556

  1. Basically, your wallet balance

  2. The transaction would be declined. You would need to pull from multiple utxo’s

  3. Automatically

  4. Pulling from multiple utxo’s

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#3557

The wallet can cherry pick as much UTXOs as it needs to fund the tx. Using all UTXOs would just be a waste of block space and would make the tx more expensive. :slight_smile:

#3558

The sum of all you UTXOs is your balance. :slight_smile:

#3559
  1. UTXOs are all the inputs an address has, that have not yet been spent.
  2. If you have multiple UTXOs that cover the costs you can group them in one tx (and send the change back to yourself) or it gets rejected by the nodes.
  3. Fee = inputs - outputs
  4. You can create txs to many different addresses owned by you. You can create an unlimited ammount of them.
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#3560

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

  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 denied.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The difference between inputs and outputs.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    The output can be send to different addresses , and nobody knows which address is someone else, and which one is mine, if it is.

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#3561

Answers:

  1. UTXOs are Unspent Transaction Output, which represent bitcoin balances that result from a specific transaction on the blockchain associated with one or more output addresses;
  2. If your UTXO is not large enough for the intended transaction, the transaction can not be initiated;
  3. The BTC wallet would calculate the transaction fee by looking at the fees of prior transaction and choosing/optimizing a fee that will complete your transaction within a reasonably fast processing time;
  4. You could use the notion of TX inputs and outputs to increase privacy in your transactions by creating numerous layers of transactions (using multiple inputs and outputs) to make the ultimate source to destination difficult to follow.
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