Describe what Unspent Transaction Outputs (UTXO) are.
UTXOs are the total outputs of previous transactions, your “balance”
What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
the transaction would be discarded, never be confirmed, and never really get to know what it’s like to exist
How would a bitcoin wallet specify the transaction fee when creating a transaction?
by subtracting the input from the output, or subtracting your end-of-transactions change from the pre-transaction’s balance. this is chosen from best proposed fees available, or on cooler wallets by the user.
How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?.
they each have a different hash-function-scrambled alphanumeric output address so one does not know who the sender was
UTXOs are stored on your wallet and basically determine the amount of Bitcoin you have to spend. It is in a transaction form so there are not actual coins.
If you do not have a single UTXO to cover for a single transaction, your wallet will combine several UTXOs to cover the transaction plus fees or the transaction will simply not occur.
A Bitcoin wallet determines the transaction fee by subtracting the Inputs from the Outputs. Some wallets query the blockchain for the most recent transactions to determine a proper fee to charge.
You could create transaction outputs to other wallets that you may own or you could use a mixing app like Shapeshift to further increase your privacy.
1- UTXO’s are the unspent outputs of previous transactions, and the total are your balance
2- The transaction wouldn’t go forward
3- The difference between inputs and outputs
4- Use many outputs since there is no way that can be track to you or the person you are sending.
UTXOs are Unspent Outputs of a transaction, a tx can have multiple outputs.
You can use multiple UTXOs as inputs to a new tx. If you still don’t have enough then your tx would not be approved.
Both sending and receiving addresses are publicly visible and can be viewed on the explorer. The most basic method you can use to increase privacy is to not reuse addresses and generate a new one every time you receive funds or send change back to yourself.
it is a transactions sent from my wallet to another wallet but still not spent by other. or I can say that this is teh transaction I received from somebody until i will spent it.
transaction will not be confirmed by nodes in blockchain
the fee is the difference between input and output transactions
create a new addresses, especially the outputs, so that it is hard to tell which output goes back to the sender.
Unspent Transaction Outputs (USTOs) are funds transferred into your wallet that have not been output yet.
The wallet can draw on several UXTOs to execute the transaction.
The wallet subtracts the fee from the input so that the input is equal to the output plus the fee. Some wallets let you choose the fee yourself, but most wallets determine a fee based on previous blockchain transaction fees, with the goal of getting you into the blockchain quickly.
Blockchain never shows recipients so that all transactions are private. Anyone viewing the blockchain would not be able to see how much was sent to whom, nor how much was returned to sender.
Describe what Unspent Transaction Outputs (UTXO) are. - UTXOs are unspent outputs from the previous transaction into your wallet. The sum total of UTXOs tracked by Blockchain represent your balance as calculated by your wallet.
What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? - Your wallet would combine UTXOs, calculate the fee and return the balance.
How would a bitcoin wallet specify the transaction fee when creating a transaction? - Your Bitcoin wallet would calculate the fee as the difference between the input and output. “Input - Output = Fee”.
How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? - Use multiple output address and never use the same one twice.
Ethereum is an account based blockchain and doesn’t have the concept of UTXOs like Bitcoin (which has an UTXO based system).
The difference is that in Ethereum you only have one address where you have a balance that gets updated while in Bitcoin you have UTXOs that you received. The sum of these UTXOs represent your balance, that can be linked to different addresses.
This makes Bitcoin technically more private than Ethereum, while Ehtereum is more fungible because you can’t mark “bad” UTXOs (being stolen or otherwise suspicious).
When you are creating a new tx you can use multiple UTXOs as inputs to a new tx, but if you don’t have enough balance in all available UTXOs then the tx will fail.
Based on that you can use this notion to not reuse addresses and always use a new address when you are receiving funds or sending change back to yourself.
Transactions on Bitcoin are public and anyone can view them using a block explorer. The blockchain is pseudo anonymous, meaning the addresses are private until you can connect them to a physical entity. That is why most exchanges today require you to do KYC.
You can still have some basic form of privacy by not reusing addresses when receiving funds and sending change back to yourself.
You could just send the change from a tx to a new address back instead of spending the UTXOs just to mix addresses. Not sure if this would even help if someone does chain analysis, one could conclude the UTXO was just send to the same owner again.
Thank you. But can a random reader of the block chain figure out the physical entity? I thought that was super private. I know the exchanges do identity verification, but who beyond the exchange has access to that information?
