Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#3924

Homework on Bitcoin Transactions and UTXO - Questions

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

UTXO’s are like changes from a previous transaction.

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

You would use more than one UTXO

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

The fee is the difference between inputs and outputs

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

Using many inputs and outputs. Though effective to someone reading block explorer this is useless privacy measure for software based tracking.

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#3925

UTXOs -Homework

1-The UTXOs are the outputs of any transaction, and they will stay as UTXOs untill they are used as inputs in another transaction
2- Two options, If you only have one UTXOs that is not enough, in that case the transaction will not be validated by the network and it will not be sent to the blockchain. Another option is that you will need more than one UTXO´s provided you have previous enough inputs to cover for the transaction.
3- A BTC wallet will specify the fee as the result of the inputs minus the outputs (UTXO´s)
4- Privacy is part of the system because there is no way anybody can know who generates the transactions, it is all Hashed. The only link with the user is the wallet and its credentials are not in the block chain, only the public key which is encrypted.

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#3927
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXO are transactions you received, and you did not spend.
  2. What would happen if you do not have any single UTXO that is large enough to cover for your transaction?
    The system will not allow you to complete the transaction.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The wallet calculates the best fee to get you into the blockchain faster
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    The use of private and public keys.
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#3928

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

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#3929

UTXO’s Homework

Describe what Unspent Transaction Outputs (UTXO) are.

A UTXO is the output of a transaction. If one BTC was sent to my wallet address that would create a UTXO on the network. My wallet then queries the blockchain using my private key to see which UTXO’s are sent to me. Once I use the UTXO in a new transaction it becomes a spent transaction which is classed as an input to my new transaction.

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

If one UTXO wouldnt cover your full transaction your wallet would use several UTXO’s to create a new output large enough to cover your transaction.

Ie. I have two UTXO’s for 0.4 BTC each.
My Transaction is costing me 0.6 BTC. But I have to spend all of my 0.8 available. So I would send 0.6 to my purchase and 0.1 back to myself. The fee is calculated as Input - Output so the fee would be 0.1

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

It will pick the fee that it thinks is best by looking at the blockchain seeing what the previous fees were. Some wallets allow you to specify fees.

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

I could use multiple outputs. Some of which may be legitimate spends the rest may be used to feed funds back to my wallet or other wallets I own.

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#3930

UTXOs are inputs to wallet that have not been allocated to an output

Transaction would not be verified 8n blockchain and transaction would fail

Fees are based on previous transactions, input - output.

New addresses are created for each transaction

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#3931

  1. UTXO’s are key to wallet construction. The wallet controls the private key. The blockchain tracks the UTXO’s with each transaction being inputs and outputs. The wallet then queries the blockchain which UTXO’s this private key can spend. The wallet then sums together which UTXO’s it can spend.

  2. If the wallet determines there is no sum of all UTXO’s that can be spent on a specific transaction, then the transaction is invalid.

  3. The difference between the transaction inputs and transaction outputs.

  4. Use different addresses.

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#3932

  1. It is a transaction that was sent to a specific address and person holding a private key now has access to the amount sent in that transaction.

  2. The wallet would use multiple UTXO’s for the transaction. If the value of those UTXO’s was larger than the required amount your wallet would send the difference back to your address.

  3. Fee = input - output

  4. Generate new address for every transaction.

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#3933
  1. They are your balance that other people send to you. You can then send them to others.
  2. The transaction would fail.
  3. It knows what the miners cost and it would subtract it from the total amount you are sending.
  4. Several addresses from one output.
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#3934

Thank you so much!! :smile:

#3935
  1. UTXO’s are the amount of bitcoin someone has left remaining after executing a transaction. Only UTXO’s can be used as inputs to a transaction. It verifies how many funds you have available to spend.

2.You can use several UTXO’s combined in order to add up to the amount you need to send. If your UTXO’s still don’t equal to that amount, you will not be allowed to create the transaction.

3.The input minus the output amounts will equal to the transaction fee paid. You won’t be able to input the transaction fee quantity, but have to consider it when arranging the outputs.

  1. If someone is looking at your transactions, it will be very hard for them to know who the owner of the addresses are. All they can see is a long hash that is infeasible to figure out an identity from it.
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#3936

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

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#3937
  1. UTXO is the remaining balance in your wallet.
  2. The transaction will not go through.
  3. The wallet will talk with the blockchain to figure out the transaction fee.
  4. You can do multiple output transactions to increase anonymity.
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#3938
  1. Your current unspent wallet balance.
  2. The transaction would be void.
  3. It would calculate the difference between the input and output amounts.
  4. By using multiple addresses.
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#3939
  1. UTXO are the balance left in your wallet that it keeps track of.
  2. The transaction would be declined if your UTXO is not large enough to cover it.
  3. The wallet checks the blockchain and figures out the correct fee.
  4. Several addresses and outputs can result from one input.
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#3940
  1. UTXO’s are change from transactions
  2. The TX would get rejected by the consensus
  3. The fee is the sum of input - output.
  4. Using many input / outputs and creating different addresses.
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#3941
  1. the fund you can spend on transactions, the balance you have left in your wallet to spend
  2. The transaction cannot be executed, it gets rejected. However, if you have multiple UTXOs that are enough to cover your transaction, it will be realized by adding them together
  3. The wallet calculates the best fee based on the previous transactions
  4. You can add more outputs, send each transaction to different addresses
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#3942

The sum of all your UTXOs is your balance.

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

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#3943

  1. UTXO’s are unspent transaction outputs. Theses are the transactions that are left unspent after someone completes the transaction.

  2. If I won’t have a single UTXO large enough for my transaction, I’ll use other UTXO’s at my account to sum it up and make transaction. The rest of unused funds will be back to my account (minus fee from transaction).

  3. Bitcoin wallet will apply transaction fee based on number of transactions which are created, not on a value. Most of wallets propose fee rate to make sure that your transaction will be make as quick as possible. If you set low fee, you’ll wait longer time to compete your transaction.

  4. Each transaction has a private key. If you make output transactions, they are coded with this key and nobody looking at output cannot figure out the input and vice versa. Specially if you make a lot output transactions.

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#3944
  1. UTXOs are the spendable outputs for each
    wallet that are available to be used in new
    transactions.
  2. Your wallet will decide on a combination of
    UTXOs that will be sufficient to cover your
    transaction, perhaps also returning some
    change to you.
  3. A bitcoin wallet will select a fee by reading
    the Blockchain to determine:
    a. the fees of other transactions that are
    similar to the data size of your
    transaction;
    b. the activity level on the Blockchain;
    and,
    c. the speed with which you would like
    your transaction to be processed.
  4. Use more than one address to send and
    receive transactions—even splitting the
    outputs from your transactions to more
    than one address. Do not reuse
    addresses.
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