Homework on Bitcoin Transactions and UTXO - Questions

[Roger_Jaanhold]

1. UTXOs are unspent transaction on blockchain which you have received before as input, it is amount that is available for you to spend and construct transaction.
2. The transaction will be ignored
3. Input minus output = fee
4. Several different addresses

[Dawton]

1. An UTXO is an output that has been spent. You have received an input from someone and that input becomes an unspent output until you spend it.

2. If you dont have any single UTXO to cover a transaction the wallet would use multiple UTXOs to cover the transaction. You would then get “change” from the transaction if the input is more than the out put. If you havent got any other UTXOs and the single UTXO is not enough to cover the transaction, then you will not be able to make a transaction.

3. The wallet specifies the fee by input - output.

4. The privacy of transaction comes from the bitcoin address, all though they are visible to anyone on the blockchain they cannot be linked back to one person. So when you get a transaction if you have one input and multiple outputs knowone will know which is your address.

[Beverley]

1. It is crypto which you have received and is sitting in your wallet, which has not been spent.
2. Transaction would be declined.
3. The wallet would calculate the fee through the blockchain.
4. Buy generating new address

[zlr1984]

Describe what Unspent Transaction Outputs (UTXO) are.
UTXO are outputs of transactions of BTC sent by others to your wallet, which you can then use as inputs of transactions to others

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

How would a bitcoin wallet specify the transaction fee when creating a transaction?
Input = Output + Fee

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
You can transact to other wallet addresses that are controlled by yourself

[Alko89]

@upero

If you don have enough balance in the wallet, the transaction will not go trough

@Juan_araujo

The transaction will be declined.

@Roger_Jaanhold

The transaction will be ignored

@Beverley

Transaction would be declined.

@zlr1984

The transaction would not be able to be completed

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.

[Alko89]

@akhilkm96

Inherently, all UTXOs must be spend in the next transaction, and if the next transaction is of lesser amount than the sum of all UTXOs, then rest is returned/assigned to the wallet address as another UTXO.

You don’t need to spend all UTXOs just as much as you need to fund the tx. But the entire UTXO must be spent.

@akhilkm96

Is this scenario different from the example shown from the block chain explorer, where it calculated the estimate of net btc transfered by guessing the controller of the addresses? how block chain explorer manages to do that?

The explorer doesn’t guess the owner of the address it just shows where the output went. The owner can be predicted by more complex chain analysis tools though.

@akhilkm96

the explanation of UTXO going back to the same address is clear, but how can it go to a different address?

Most of the time the wallet will generate a new address to send change back and will not reuse addresses. If your wallet does that I would suggest changing it.

[Ribr]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   Unspent Transaction Outputs are outputs from a previous transaction that are available and have not been spent.

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

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   The wallet takes the total inputs and subtracts the total outputs to determine the fee.

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   Multiple transactions can be made within one transaction. That increases anonymity in transactions.

[L0rdStitch]

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

• Basically inputs within the blockchain for wallets

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

• The wallet will need to create a transaction with multiple UTXOs instead or else there will be no transaction

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

• input minus output.

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

• By creating more wallets and create transactions between one another. This however creates more transaction fees.

[eunice_salimao]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   UTXO is previously and output of a transaction that was sent to your wallet. The sum of UTXO is the total balance you have 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 wallet will combine other UTXO available in your wallet to cover the amount.
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   The fee is not specified anywhere. In order to get the fee, you mush subtract the output from the input.
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   The input is equal to the output minus the fee. This allows for increased privacy in the transaction because anyone who sees this, doesn’t know what amount went to which wallet.

[M.K]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   amount of UTXO/ BTC in the wallet

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   no txn, but Does the txn get rejected or it cannot be processed at all ? Who tells the sender that the txn cant be processed? the wallet right?

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   take the difference between input and output

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

why is there a need to do this? Because no one knows who is who based on the output right? Blockchain is secured enough on its own. Why do we need to do this extra security and confuse ourselves ? Please explain simply for me if possible.

One more question after hearing Ivan’s video on UTXO and fees
Why must input equal output ? I do not understand this.
If i receive or buy 1 BTC now, and i want to send 0.9 BTC to another address, i am sure i can do that. So input is not equal output.

What am i missing or what am i not understanding from ( input must equal output) ?

[Knoxic]

1. Basically UTXO’S are transactions that come into your wallet and transactions that leave your wallet.
   2.The transaction won’t go through because miners and nodes won’t reach consensus concerning your transaction.
   3.The wallet will basically deduct the output fee from the input fee to determine the actual transaction fee.
   4.Using different wallet addresses and private keys.

[akhilkm96]

@Alko89

The explorer doesn’t guess the owner of the address it just shows where the output went. The owner can be predicted by more complex chain analysis tools though.

Thanks, can you please then clarify what is the meaning of the “net” transfer amount that is shown on the block explorer? if they are not concerned with the owner of the address?

[akhilkm96]

@Alko89

Most of the time the wallet will generate a new address to send change back and will not reuse addresses. If your wallet does that I would suggest changing it.

This means the address ( Public key associated with private key) keeps on changing for every transactions?

[ShreyPanda]

1. UTXO’s are the unspent outputs from the previous transaction.

2. Other small UTXO’s will be summed up in order to create a larger amount to transact with,(after the transaction is complete) the remaining amount will be sent back to your account after deduction of transaction fees.

3. Your wallet will read the Blockchain; work out a suitable transaction fee after calculating the difference between the input and output of the transaction.

4. By generating new output addresses/ having multiple output addresses. BTC transactions are private by nature and are hard to track.

[Piers_Sciolti]

1. UTXO’s are unspent transaction outputs that remain idle in your wallet waiting to get turned into TX inputs.
2. Your wallet would check your total amount and not let you make the TX
3. The difference between input and output.
4. Several addresses because they are all anonymous

[Alko89]

@M.K

no txn, but Does the txn get rejected or it cannot be processed at all ? Who tells the sender that the txn cant be processed? the wallet right?

@Knoxic

The transaction won’t go through because miners and nodes won’t reach consensus concerning your transaction.

@Piers_Sciolti

Your wallet would check your total amount and not let you make the TX

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

[Alko89]

@akhilkm96

Thanks, can you please then clarify what is the meaning of the “net” transfer amount that is shown on the block explorer? if they are not concerned with the owner of the address?

It depends on what explorer are you looking at, explorers abstract data for better readability. I’m guessing the net transfer is the total amount transfered.

@akhilkm96

This means the address ( Public key associated with private key) keeps on changing for every transactions?

Yes, for each address a new keypair is generated. Depending on the wallet you use you have probably noticed you will get a new receive address every time you want to receive funds.

[Fox_Hound]

Q1. Describe what unspent transaction outputs (UTXO) are?
A1. These are transaction sent to anybody. These outputs is the proof of the holdings be sent to the receiver.

Q2. What would happen if you dont have any single UTXO that is large enough to cover for your transactions?
A2. Will not be able to perform the transaction.

Q3. How would a bitcoin wallet specify. the transaction fee when creating a transaction?
A3. input - output=fees

Q4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
A4. Don’t disclose transaction ID.

[akhilkm96]

@Alko89

Yes, for each address a new keypair is generated. Depending on the wallet you use you have probably noticed you will get a new receive address every time you want to receive funds.

I haven’t had noticed that but thank you for the clarification.

[akhilkm96]

@Alko89

It depends on what explorer are you looking at, explorers abstract data for better readability. I’m guessing the net transfer is the total amount transfered.

please check the attached image, he refers to the net transfer as the input - output. The rest amount is returned to the owner, and the “net” amount is being guessed by the block explorer. Having cleared the random public key aspect, I understand that the rest of the unspent utxo might be sent back to the owner. As you mentioned before the block explorer might be figuring out the addresses corresponding to the owner…?