Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#4005
  1. Describe what Unspent Transaction Outputs (UTXO) are.

The remaining balance of the after executing a transaction.

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

You will need to combine your UTXO with other UTXOs. If you still do not have enough then your transaction will not go through.

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

Input - Output = Fees

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

You can have unlimited numbers of inputs and outputs. Supposedly there was a record with 20,000 inputs and 13,107 outputs

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#4006

1 Its the tracking of the money you have received before you spend it/sed it to someone else.

2 The transaction wouldn’t be possible to be made because it would mean there is not enough money available in the wallet.

3 Should be equal the input to the output plus the fee.

4 Create several outputs (different addresses) can ensure a better anonymity.

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#4007
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    • Unspent Transaction Outputs are transactions sent to a BTC wallet which hasn’t been spent yet.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    • Your wallet will combine two or more UTXO and send a transaction to the payee, pay the fee and send the balance back to you as another UTXO. If you don’t have enough UTXO then the transaction would be invalid.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    • It would show as a “transaction fee.” You can choose a transaction fee or accept the wallets suggestion which it gets from querying past Tx fees. Outputs + Tx Fee
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Send the balance of UTXO to a different wallet address you control instead of the originating wallet.
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#4008

  1. UTXOs are the outputs from transactions where other entities sent you bitcoin that you haven’t used yet. In essence, the sum of all of your current UTXOs equals your current total available amount of bitcoin.

  2. You will need to use two or more UTXOs and the sum of them must be equal to or greater than the total amount you want to spend. If it is greater, then the change will be restored to you as part of the transaction output in the form of a new UTXO.

  3. The wallet will either recommend a fee to you prior to you executing a transaction or you can set the fee selection to manual and pick out a fee on your own. The wallet will look at how much the different fees are and how quickly they will allow your transaction to be processed and from this data it will make a fee recommendation.

  4. If you wanted to keep private how much BTC you were spending in a transaction, you could select more bitcoin than you actually want to spend and break the output up into many UTXOs. If you control multiple BTC addresses, you could then send the excess UTXOs back to yourself via the other addresses. That way, the total amount you actually spent is unknown to anyone simply looking at the public ledger and unaware of how many addresses you control.

QUESTION: In the Transactions and UTXOs lecture, while describing how a wallet determines how much bitcoin you have available to spend, Ivan says that your wallet asks the blockchain “which UTXOs can this private key spend?” and “then the blockchain will give back to you a list of transaction outputs.” I just wanted to clarify whether or not your wallet shares your private key with the blockchain because I thought that the private key itself was never supposed to be sent out onto the internet and that only your bitcoin address and signature, which were derived from your private key, were ever sent out onto the blockchain. If someone could please clarify this for me I’d greatly appreciate it, thank you!

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#4009

[quote=“ivan, post:1, topic:8436”]

  • Describe what Unspent Transaction Outputs (UTXO) are.
    is the. input amount that is unspent

  • What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    the transaction will denie cause no fees to cover the broadcasting of tx

  • How would a bitcoin wallet specify the transaction fee when creating a transaction?
    input- output= fees

  • How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Probably send in multiple address for full privacy

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#4010

They used to be, nowadays the address in Bitcoin is a hash of the public key. This was made to save on storage: public key is 65 bytes while the hash is 20 bytes. :slight_smile:

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#4011

You can cherry pick as much UTXOs as you need to fund the tx. Using all at once would be a waste because you would make the tx more complex and had to pay a higher fee. :slight_smile:

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#4012

The wallet knows the corresponding public key of the private key it owns so it can query the blockchain to find the UTXOs that are available to it. It doesn’t need to send the private key anywhere and doing so would be a high security risk. :slight_smile:

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#4013

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

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#4014

Thank you Sir for the help, it actually makes sense, same as you wouldn’t take all of your money from real wallet to pay a pair of socks, but in this case you additional also pay a fee due to complexity which is not applicable in real world…

#4015
  1. The value of every UTXO that is connected to a single wallet display the balance.
  2. The transaction will be invalid.
  3. The wallet checks the blockchain and then calculate the fee.
  4. Make use of different addresses for each transaction.
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#4016
  1. UTXO: The summation of unused/leftover funds from a previous/past exchange.
  2. If this scenario was to be an attempt at submission into the blockchain, it would get denied and not be accepted.
  3. A transaction fee will be the leftover difference between all existing inputs and what was desired to be outputted by the user.
  4. Personally generating a unique address for each participated transaction. However, at this point in my understanding of things, I am unsure of how feasible, useful or redundant this practice is.
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#4017

  1. UTXOs are transactions you have received as an input available to be use for the future transaction as an output. Basically amount of BTC available to spend.

  2. It will add up other UTXOs available to use as inputs for this transaction.

  3. The fee is calculated from the remainder of all inputs used in this transaction minus the outputs of a transaction. The wallet will recommend a fee, based on the current and previous transaction fees.

  4. Generating and using different address for each TX. You can succeed anonymity by the nature of bitcoin transactions, input can be sent to multiple channels as an output as well back to the owner as a new input, generating new address which hold no personal information, no one knows except the private key owner about the outputs due to encryption. How ever, there’s a possibility for a software to track UTXO’s, by linking a TX to identified owner all transactions which are linked to this one are visible.

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#4018
  1. UTXOs are the outputs from the previous transaction to your wallet. They are essentially the input data into the wallet, the sum of which is your wallet balance. Once you spend them, they no longer exist.
  2. When you don’t have a single UTXO that is large enough for the transaction, the price of the transaction is subtracted from the total amount of UTXOs and the remainder is returned to you, just like if you were to give $10 for an item that costs $8 and you receive $2 back.
  3. A bitcoin wallet specifies the transaction fee when creating a transaction by taking the input and subtracting the output.
  4. To increase privacy in a transaction you can use many different inputs and outputs to hide while on block explorer. You can divide one large transaction into many smaller transactions in order to hide the fact that you’re a huge whale making moves underneath the water.
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#4019

  1. UTXO are sent transaction outputs from someone, who payed a specific wallet, with amounts of bitcoin that wallet can use in new transactions.

  2. UTXOs will be pooled together to be able to cover the transaction and also send any extra bitcoin back to your wallet as well as cover the transaction fee.

  3. The transaction fee is specified by subtracting the input transaction amount with the output amount in a created transaction.

  4. Multiple inputs and outputs are possible and all input and output addresses are anonymous, which helps keep privacy of transactions.

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#4020

  1. UTXOs are the amount of bitcoin that was received on the wallet address that are available to spend

  2. The transaction will not be process by the network

  3. The fee will be calculated automatically: input UTXOs minus output UTOXs

  4. Using many different addresses that you control for inputs and outputs on the transactions

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#4021

Ok great, thank you for clarifying!

#4022

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXO are outputs from tansactions. your wallet can add them up to show you your balance.Not a coin.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    You woudnt be able to confirm the transaction. You would need multiple utxo’s to cover the the transaction+fees.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It will either say somewhere or you would add all inputs - outputs=fee

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    If you can essentially send utxos to other wallets you own as both inputs and outputs dont show ownership.

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#4023

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

#4024

Thanks, I misunderstood the question
You can keep adding UTXOs available until there´s enough for the transaction
Only when the total amount of UTXOs isn’t enough then the transaction will be invalid

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