Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#3985

1. Describe what Unspent Transaction Outputs (UTXO) are
UTXO’s are the unspent transaction outputs
The sum of the UTXO’s is what you can actually spend in your wallet

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
The transaction will not settle

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
The transaction fee is calculated as (Inputs - Outputs).
The wallet is automatically calculating the fee to make through the transaction fast.
In some wallets you can specify the fee by yourself.

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
You can split the transaction into many inputs and outputs.

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#3986

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Unspent Transaction Outputs are created from previous transactions. UTXOs are the balance for future transactions.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    More than one UTXO may be used to cover a transaction. If there are not enough UTXOs the transaction cannot be completed.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The wallet will propose a transaction fee by looking at previous transaction fees or in some cases you can decide the fee to try to expedite the transaction speed.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    From the outside it is impossible to tell which outputs went to a recipient or back to the sender.

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#3987
  1. It’s the balance, usually divided into multiple “bills”.
  2. One would need to use multiple UTXO to match the needed amount.
    3)Fee is equal to the input amount minus the output amount.
  3. Using multiple inputs and outputs increase anonymity.
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#3988

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

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#3989

  1. UTXOs are balance received in a wallet that can be spent in new tx.

  2. There will be spent funds from more UTXOs to cover the amount, and if that is not possible, the tx can not go through

  3. In most wallets it will be given a fee so that the tx will be reasonably fast

  4. You could send funds back to yourself to make it look like a transaction to someone else

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#3990

Thank you for the clarification @Alko89 ! :slight_smile:

#3991

  1. UTXO is a result of previous transaction inputs. A wallet can calculate summary of UTXO and display it as a wallet balance.

  2. Perhaps some wallets will not allow to create transaction. If transaction with insufficient UTXO has been created it should be rejected by network.

  3. Some wallets give an option to choose transaction fee, other wallets will scan the network to calculate a fee so that transaction can be confirmed reasonably fast.

  4. You should alwasy use different bitcoin address each time you send or receive transactions.

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#3992

Describe what Unspent Transaction Outputs (UTXO) are.
UTXO can be described has credits to be sent. If we have an clean wallet these UTXOs are there to be used in the next transactions. If we are to send crypto, but not on the total of one previous UTXO, part of an output will be sent to its address and the remaining will come back to our wallet, both as UTXOs.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
Since UTXOs can be considered digital money, since they have value, if there isn’t enough credit, the network won’t validate an operation as valid, and it will be denied.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
Generally, a bitcoin wallet will go to the blockchain and check for previous, recent similar transactions, and choose the best fee automatically.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Since no names are show, only hashes and addresses, it is only possible to know how much a wallet has (if we have the public key) in UTXOs, but we cannot know who is the owner. Since in every new transaction we have a new address (input and output), it can be speculated what comes back as change, but never confirm it.

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#3993
  1. Describe what Unspent Transaction Outputs (UTXO) are.

The amount of digital currency someone has left remaining after executing a cryptocurrency transaction.

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

An insufficient single UTXO will have to add another UTXO as a make up rather than invalidating the entire transaction.

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

Fee = input - output

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

Well. From the outside in (via a Block explorer) you can track transactions and its corresponding wallet address. If you wanted to boost anonymity, you could send output transactions to separate multiple/separate wallets.

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#3994
  1. UTXO is basically the net result of all preceding transactions (by a particular wallet/address) i.e. wallet balance (nominated in this or that asset) , that is yet to be spent
  2. such transaction will not be verified by the blockchain and will be returned as INVALID
  3. … as a difference between INPUT and OUTPUT
  4. Privacy may be increased by splitting a transaction into several transaction channels/ addresses.
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#3995

  1. Describe what Unspent Transaction Outputs (UTXO) are:
    total of UTXO is the wallet balance.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    The blockchain will check your UTXO first and after noticing that you don´t have enough founds, it will decline your transaction.

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

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Since every transaction uses all of my UTXO, in each transaction the blockchain produces a new address for me. changing addresses makes it hard to understand who is the owner of the wallet.

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#3996

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    A UTXO is an input to you ( ouput to the sender) and the amount of coin you have to spend

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    You can combine UTXOs to make up the amount to cover a trasnactions you need to pay for / transfer

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    inputs = outputs plus transaction fee. The blockchain figues out the amout of fee. Some wallets let you choos a fee which affects the speed of the trasnaction.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    there can be several inputs and ouuuts in a transaction so no one can be sure what is going where and what trasnactons are going back to you…

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#3997

Describe what Unspent Transaction Outputs (UTXO) are.
UTXO’s are the input transactions of btc into your wallet.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
The transaction will be terminated and not get added to the blockchain.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
It looks at previous transaction fees and determines the best price to have the transaction added to the blockchain in a reasonable time frame.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Because all UTXO’s are spent on each transaction, where all recipients are anon, there is no way to tell who is getting sent what amount.

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#3998
  1. UTXO’s are the unspent outputs from previous transactions in your favor.
  2. It will add up other UTXO’s until there’s enough. If not enough, the transactions will be rejected.
  3. Total of inputs minus total of outputs. The wallet proposes a value for the fee.
  4. Many outputs can be created and no one would know to whom you sent the coins.
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#3999
  1. Describe what Unspent Transaction Outputs (UTXO) are. Unspent funds or inputs sent to your address.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? The wallet sums all available UTXOs and calculates a fee. Or, if blockchain finds insufficient UTXOs to render the transaction (inputs < outputs), transaction is rendered invalid and not confirmed
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction? deducted from sum of available UTXOs, so its the difference between the input UTXOs and output, this fee is implicit but high fees get priority processed by miners since miners are incentivized to on blockchain site. Hence fee is some amount <= input - output
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Multiple transactions happen simultaneously but it is difficult to determine which send hash addresses are a receiver and which are actually yourself (for change, or remainder of input - output + fee.
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#4000

Describe what Unspent Transaction Outputs (UTXO) are.
A UTXO is an unspent transaction associated to your private key

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
The wallet would check for other UTXOs that can be added up together to cover the transaction.If the total exceeds the necessary amount, the wallet will send the “spare change” back to the wallet. If not enough are available, transaction would not go through.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
It would either allow user to select the fee, or would look into previous transactions in the blockchain and decide what is the best fee to get your transaction faster in the blockchain.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
The blockchain does not track total amount of crypto in a wallet. It tracks UXTOs. This generates an infinity of inputs and outputs that make it very difficult to trace back to a single entity.

(Please, can someone help check 4 ?)

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#4001

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 be invalid. :slight_smile:

#4002

You’re on the right track. Combining this with not reusing addresses or generating a new one when sending change back its impossible to determine which output was used to pay for a service and which to send the change back to yourself. :slight_smile:

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#4003

Thank you :slight_smile:
Not sure i fully get one thing: are addresses the same as public keys?

#4004

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Unspent digital currency which becomes your future input for future transactions and can be checked on your balance sheet in your wallet

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Transaction will use all utxo’s combined, send a part of it to fullfil request and send over the rest back to your wallet, of course after you pay fee to our lovely miners

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It would look at blockchain and propose similar fee as already used in that particular blockchain, all in terms to make it juicy enough for the miners to process your transactions fast enough

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Transaction doesn’t have a name of owner and also it can’t specifically know which of few transactions are actually real one and which are “change back”

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