Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#3684

Homework on Bitcoin Transactions and UTXO - Questions

1. Describe what Unspent Transaction Outputs (UTXO) are.
UTXO’s are transactions you have received and can spend.

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
If you don’t have any single UTXO to cover your transaction your wallet will combine multiple UTXO’s, any change will be send back to your wallet. If your combined UTXO’s are not enough to cover the transaction the transaction will be invalid.

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
A bitcoin wallet does not specify the fee but it implies the fee by subtracting the output from the input. So input minus output implies transaction fee.

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
You can increase privacy in your transaction by adding more outputs with adresses that you own. Bitcoin adresses hold no personal information and are not linked to an identity. This makes it harder to link UTXO’s to an individual.

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#3685

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

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#3686

Unspent Transaction Output- output of a blockchain transaction that has not been spent. It is used as an input in a new transaction.

The wallet will check for other UTXOs that you have to see if they could cover the amount. If they still are not large enough, the transaction cannot be created.

The wallet will calculate the appropriate fee for the transaction taking into account the current network conditions and transaction size. In some wallets, the user could specify a custom fee for the transaction. The transaction fee is the difference between the input and output.

By having different wallets/addresses for both inputs (receiving) and also for outputs(sending) you make it harder for others to keep track of the total sum of UTXO or amount of ‘‘bitcoins’’ one wallet or person have because of a wallet isn’t linked to a physical person.

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#3687

  1. Unspent TransaXions Output. The entire output, or a portion, of previous transanction already not used for a transaction Input by the same PK.

  2. Use another utxo or more utxos

or instead portions of utxo to create a transaction where it’s possible.

  1. It is calculated with this formula
    Fee = input - ouput
    But many wallet probably recommend a reasonable fee, it have calculeted from previous transactions in the blockchain, to have relatively fast confirmation. Instead some other wallets allow you to set the fee by Satoshi per Byte relationship.

  2. You can try to blur the identity of the sender, the receiver and the amount of the transaction. Making so hard to identify and understand by making multiple output from multiple addresses to maybe multiple receiving addresses, in one or more transactions.

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#3688

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    An unspent transaction output is a previous input that I have received.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    My wallet connects to the Blockchain and checked all my previous Input and add them up for a transaction. If I don’t have enough fund the transaction is invalid.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Input = Output + Fees

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    One way to increase privacy in transactions would be to create multiple outputs, some for yourself, so that an observer may have difficulty guessing which of the many transactions is the intended receiver and which are just returns to the original holder.

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#3689

You can’t use a portion of the UTXO, you must always spend the entire balance in the UTXO and send the change back as a new UTXO. :slight_smile:

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#3690
  1. Describe what Unspent Transaction Outputs (UTXO) are.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    A1: Transactions you have received and can now be spent from your wallet
    A2: Your transaction would not be verified by the blockchain essentially ignored
    A3: A BTC wallet would recommend a transaction fee based on recent previous transactions fees.
    A4: Create new addresses so that’s impossible to know what is being sent back to the originator (you).
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#3691

They are outputs of the transactions. A tx can have many outputs.

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

#3692

  1. A UTXO (Unspent Transaction Output) are the method in which a transactions are made. The UTXO’s are the transactions that have been sent to you that you have n your wallet ready to spend. They can be summed up or spent individually as well as be sent to multiple people.

  2. If there wasn’t a large enough amount of money then just like regular monetary system the item cannot be purchased.

  3. It chooses the fastest way to get you onto the blockchain based on previous transactions.

  4. Since the transactions are already encrypted by the SHA 256 this input system creates mass transactions that can be sent to multiple people.

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#3693

Transactions are not encrypted and anyone can view them. The tx hash is used as a transaction id (txid). The most basic approach to increase privacy is to use a new address every time you receive funds or send change back. :slight_smile:

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#3694
  1. Unspent Transaction Outputs are the results of transactions on a blockchain. They also become the inputs of future transactions.
  2. If we don’t own a single UTXO large enough to cover a transaction, other UTXOs will be added as inputs for the transaction until there is enough to cover the transaction amount and the fee. If the requested transaction amount is larger than the sum of the available UTXO’s, the transaction will not be processed.
  3. The wallet will check recent transactions on the blockchain to determine the current fees.
  4. A person can have multiple wallets. Privacy for inputs could be increased by sending from multiple addresses while recipients could have transactions sent to multiple addresses that they own.
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#3695

Thanks! I had a hard time putting thoughts into words with this one. :grinning:

#3696

Thanks Alko! I appreciate the support bud!

#3697

  1. UTXO is the funds received in your wallet.

  2. The transaction will not take place.

  3. It will be the difference of what the amount sent and the amount agreed to.

  4. Using multiple outputs and including yourself. The knowledge of what has left the wallet would be a mystery.

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#3698
  1. funds in your wallet that have not yet been spent
  2. the transaction would not go through
  3. input fee minus the output fee gives your transaction fee
  4. you can have multiple adresses to complicate the transaction
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#3699

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

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#3700
  1. UTXOs are outputs of transactions stored in your wallet until sent to its next destination.
  2. Your transaction will be deemed false thus not go through and put on the blockchain to be confirmed
  3. The wallet will give you the difference of total UTXOs minus the amount being sent to come up with the transaction fee
  4. If there are multiple inputs and outputs to a transaction this could increase the privacy of what addresses send or recieve what amounts of coin.
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#3701

  1. UTXOs are outputs from different txns into your wallet that are waiting to be spent

  2. Another UTXO would be needed as input

  3. By decreasing the amount returning to the sender thus leaving out a portion of the input to go to the miner

  4. The input and output address could be 2 different addresses that you control so that the UTXO that is meant to go back to you cannot be easily identified

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#3702

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Wallet balance (unspent transactions).

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Your transaction would be unconfirmed as not enough fees available to pay a miner to confirm the transaction.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Transaction output minus the transaction input if using implied fees. Or you can specify your own which could impact efficiency such as speed of transaction (choosing lower fee) or may remain unconfirmed / invalid if no miner wants to mine the BTC for the small fee etc.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Use different (multiple) addresses for sending and receiving transactions.

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#3703
  1. Unspent Transaction Outputs are considered balance to spend in your wallet.
  2. Your transaction will be rejected.
  3. The Wallet inquiry the blockchain and app the fees or you some wallet allow you to specify your fees.
    4 By using different wallet
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