Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#4285

1
UTXO calculates your Wallet input balance by unspent trasactions

2
The wallet would combine multiple UTXO to cover the cost, if that is not enough it will not process the transaction

3
As a user, you specify the transaction amount and the wallet will determine from the blockchain a “reasonable” transaction fee. Although some wallets have the function of you choosing the amount.

4
Use multiple wallets, if you are storing/holding coins try not to use that wallet to send but if you do place the coins into a new wallet. Also for security use a hard wallet.

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#4286

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    A) They are outputs that haven’t been used to make another transaction.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    A) Then you use all of your inputs in order to cover your transaction. If the sum of your inputs are greater than the transaction the rest will get sent back to you (like receiving change) and cover the transaction fee.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    A) input - output = transaction fee

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    A) There is no way to tell which transaction output goes to who. So you won’t know which output goes back to the sender.

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#4287

  1. UTXO refers to the amount of digital currency someone has left remaining after executing a cryptocurrency transaction such as Bitcoin.

  2. If there is not enough balance left in a single UTXO to cover a transaction then your wallet would sum all UTXO’s together to cover TX or decline.

  3. I found this explanation to very confusing. According to my research, it is the miner who basically decides if the fee is worth his time. Supposedly the fee is a presumption based on previous Blockchain TX’s. There needs to be enough balance left in the wallet after All transactions are completed.

  4. Use multiple output addresses.

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#4288
  1. all the incoming transaction in a wallet are utxo.
  2. declined and reversed.
  3. it gets automatically calculated.
    4.the transactions are encrypted but using several outputs it is harder to track.

question: does the transaction fee change like gas fees?

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#4289

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    It is the way the of tracking transactions that are placed into a wallet and is defined as the balance of BTC that is available to be spent by the wallet that receives it.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    -If a single UTXO itself is not sufficient it probably will i) combine all the UTXO available in the wallet to achieve sufficient balance to spend the UTXO or ii) indicate that your wallet does not have enough UTXO to spend

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It will calculate with respect to the UTXO and the spending (TX fee = UTXO - Spent TX)

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    You could essentially have multiple transactions to different wallets before heading to the actual wallet. Branching of unused UTXO as an output back to own wallet is part of the system.

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#4290

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

It changes in a similar way but its not calculated in the same way as gas. Gas is used on Ethereum and determines the price of operations used in a transaction while the fee on bitcoin is used to pay for the block space. :slight_smile:

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#4291
  1. Describe what Unspent Transaction Outputs (UTXO) are.

Unspent Transaction Outputs (UTXO) is basically your balance. It is how much unspent currency you have from previous transactions to you.

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

Multiple smaller UTXOs will be used to cover for the transaction.

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

A wallet recommends a good fee for you to use based on previous transactions.

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

Because you can never know where each output transaction goes to who and you are able to own multiple addresses.

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#4292
  1. Describe what Unspent Transaction Outputs (UTXO) are.

Total UTXOs = value of wallet. From UTXO we can create new transactions.

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

Input = Output +transaction fee. Wallets automatically calculate transaction fee.

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

It would automatically choose transaction that is the best/fastest for us. Some wallets give us choice for transaction fee.

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

We can use different addresses, several transactions and outputs will increase privacy.

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#4293

  1. UTXO’s (Unspent transaction outputs) are the amounts I have been ‘paid’ in bitcoin, and therefore how much I can spend.

  2. Multiple UTXO’s would be used to cover your transaction, and whatever is left over (minus fees) would be returned to you.

  3. Most wallets will automatically calculate the fee, by looking at recent transactions on the blockchain, what their fees were, and choosing a fee that will get you into the blockchain in a reasonable amount of time. (Some wallets will allow you to manually set the fee)

  4. When people view transactions on the blockchain, all that they see are the private keys of the inputs and outputs of transactions, so they have no way of knowing who is sending and receiving bitcoin.

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#4294
  1. output of a transaction which has not been spent
  2. it will not be validated and therefore dismissed
  3. it will estimate it from most recent transaction fees. can be calculated as difference between input and output afterwards
  4. increase the number of receiving addresses but in the end everything can be tracked in the blockchain
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#4295

1.UTXO’s are unspent transactions that are on the blockchain.

  1. Transactions won’t be approved.

  2. A bitcoin wallet would take the input and subtract the output, the difference is the fee.

4.Using many inputs and outputs you can raise the security level of your transaction.

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#4296
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXO is the output of the previous transaction that have not been used as the input of any transaction.

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

The wallet can sum all UTXOs in the wallet to see whether the sum total can cover the transaction or not. And if yes, the transaction can be constructed and executed.

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

Based on the fee of the most recent transactions

  1. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Create a new address to receive transaction each time and use more than one outputs in a transactions which make it more difficult to tell which output sent back to you.
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#4297

they see the public key generated by your private key. Private key as the name implies it is private no one knows and you should keep it for yourself only.

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#4298

not sure if this goes here but here it is.
UTXO

  1. Describe what Unspent Transaction Outputs (UTXO) are.
  2. Answer : a coin that was received but still has not benn used or spent. no transaction.
  3. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
  4. Answer: the system blockchain, Nodes will trow out the transaction and will not be executed.
  5. How would a bitcoin wallet specify the transaction fee when creating a transaction?
  6. Answer: The wallet itself will figure out what the Fee will be.
  7. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
  8. Answer: When spending a TXO you i can send to three addresses at the same time to further confuse where the transitions are going and this increases anonymity.
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#4299
  1. Unspent transactions recorded in wallet, which would describe your total spendable balance.
  2. All UTXO’s would be aggregated to cover the transaction size. If aggregate not large enough transaction would fail.
  3. Not sure how fees are determined, however transaction inputs are the sum of outputs and fees.
  4. Never reuse addresses when receiving transactions
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#4300
  1. A UTXO is what’s been sent to a wallet but not spent

The UTXOs can be combined.

It will specify the input and the output. Input - output = fee

By using multiple addresses, it will be hard to tell who controls the wallets that the transactions are being sent to.

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#4301
  1. UTXO is the wallet that determines if you have many or not.
  2. If it don’t have any UTXO then it has insufficient funds that can’t cover.
  3. The bitcoin wallet can specify the transaction when it checks and charge small fee with crypto.
  4. By putting the output to input to make the digital wallet private.
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#4302
    1. Every time you receive funds, these are unspent transaction outputs, up until the point where you spend them by sending them off to another address.
    1. If you don’t have single UTXO that is large enough to cover my planned transaction, then multiple UTXOs are added together until they are more than I want to spend. The value I want to transfer is sent to the recipient, and the remainder is sent back to me (like change).
    1. A bitcoin wallet queries the network constantly to see what the current congestion level is and how much people are paying in fees. It will then determine how much you would need to pay for your transaction, for it to get processed quickly.
    1. Use multiple addresses to send & receive funds.
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#4303

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

#4304
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    These are the amounts that you are allowed to spend. They are the outputs of all the transactions a particular wallet received. They can be used for sending transactions.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    The wallet would then add another UTXO and send the extra back to your wallet assuming that you have other UTXOs on the wallet. If you don’t have other UTXOs the transaction would get rejected.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Transaction fee would be calculated by deducting output from the input.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    By creating new addresses for each transaction.
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