Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#4565
  1. A wallet’s input…
  2. The wallet will choose the UTXO’s needed that at least sums up to cover the transaction, fees and the difference sent back in a new UTXO.
  3. Proposed, look at previous fees from the blockchain or specified manually…
  4. Spend all your inputs with the difference of the transaction amount, minus the fee, coming back to you
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#4566

  1. Describe what Unspent Transaction Outputs (UTXO) are. | UTXOs are what happens when you create a transaction and send currency to someone, and what they receive is a UTXO which is what you sent them, and they can use it to create a new transaction.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? | You would create a new transaction and combine several UTXOs into one large UTXO.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction? | Input-Output.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? | Because it is impossible to tell where the transaction outputs go to.

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#4567

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

    UTXO’s are what can be called a wallet’s balance, a combination of outputs.

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

    If the total sum of your UTXO’s is less than the tx it would simply not go through.

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

    It would query the blockchain and give you a reasonable fee based on the latest previous fees to get you into the blockchain fast enough.

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

    You could use more than 1 wallet between your tx’s, but then you would have to pay more fees.

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#4568

1 - Describe what the unspent transaction Outputs (UTXO) are.

A1 - They are transactions sent (output), to someone, that have not yet been destined and that the wallet can view them, allowing new transactions to be carried out, within the limit of available UTXO;

2 - What would happen if you didn’t have any UTXO large enough to cover your transaction?

A2 - The transaction would not take place. However, in some wallets, it is possible to check the proposals for payment of fees in order to reduce them;

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

A3 - Input - Output;

4 - How could you use the notion of transaction inflows and outflows to increase privacy in your transactions?

A4 - By using different addresses in your transactions, privacy will increase.

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#4569

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. :slight_smile:

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#4570

Homework - UTXOs
Bitcoin Basics

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

• I received 0.5 BTC from BOB and 0.5 BTC from Mike, so the sum of the received input is 1.0 BTCž
• My wallet queries someone else’s copy of the blockchain and know what is the state of my UTXO
• I can spend only 1.0 BTC, the output in my wallet can be max 1.0 BTC

So the UTXO is the sum of the inputs that were not spent yet therefore, that is the balance.

  1. What would happen if you don’t have any single UTXO that is large enough to cover your transaction?
    A single UTXO is not the object of covering a tx. The sum of all inputs must be bigger than the output+fee. If the sum of all inputs is large enough for the tx+fee, the tx can be realized.

• INPUTs=OUTPUTS+TX fee
You have to have enough inputs or the tx is not valid.
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
INPUTs=OUTPUTs+TX fee

TX fee=INPUTs-OUTPUTs

  1. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    • A researcher can track the input tx-ns to specific wallets and connect them to me, but the researcher can’t be sure that I am the owner of the wallets.
    • I can send the funds to another address that I “own” to fulfill the transactions.
    • I can generate different addresses and sent the output there.
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#4571
  1. Unspent transaction outputs /UTXOs are essentially the balance one has in their wallet from previous inputs.
  2. Several UTXOs can be combined to form one that is large enough to cover the tx. If not, the transaction would happen.
  3. Inputs = Outputs + tx fees. The wallet picks a tx fee that will get the transaction into a block in a reasonable amount of time.
  4. By sending BTC to one’s self to a different address in the same wallet, no one can tell whether BTC was sent to another person or not. This creates privacy for the user.
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#4572

1. Describe what Unspent Transaction Outputs (UTXO) are.
The Wallet does not safe your balance but it can calculate it with the received funds (input) - the amount of unspend transcations output.
2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
The wallet will sum up the UTXOs to check if there is enough to cover the transaction.
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
TX fees = Input - Output
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Using several output adresses and also sending transactions to your own other adresses.

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#4573
  1. Describe what Unspent Transaction Outputs (UTXO) are.

The Sum of UTXOs is the wallet balance.

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

Transaction will be invalid

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

Inputs = Outputs + TX Fee

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

Multiple output transactions. You can send to several output addresses owned by yourself and nobody will notice, since they hold no personal information.

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#4574

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    They are the inputs of transactions that you have received. Basically your wallet balance.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    You will need to send 2 or more UTXOs that are large enough to cover the transaction. If those 2 UTXOs are larger than the transaction, a part of the amount will also be sent to yourself. If there aren’t enough UTXOs the transaction will be canceled.

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

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

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#4575
  • Unspent Transaction Outputs (UTXO) are a list of transactions that store value within your wallet. They determine how much Bitcoin/Cryptocoin you can transact. UTXO must cover the output amount plus the fee cost.
  • If you don’t have a single input UTXO that can cover the amount of the output plus the fee, your wallet will add the nearest UTXO to fulfill that request and send any excess back to your wallet.
  • Wallets specify the fee in two ways, user input or wallet query estimate. The first option allows the user to set the fee amount, but the miner will always go to the highest bidder. The second option allows the wallet to query the blockchain and estimate a fee that will produce a timely transaction.
  • Since transaction inputs and outputs could go to a wallet controlled by the same person, it’s challenging to determine who owns a wallet address.

UTXO1
UTXO12820×2726 114 KB

UTXO2
UTXO24448×1457 105 KB

Edits: Typo Corrections

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#4576
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXOs are the leftovers from previous transactions.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    It will add all UTXOs together to get the sum, if the total sum is enough the transactions will go through, and leftovers will go to your account after deduction of the transaction fees.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The wallet specifies the transaction fee by subtracting the input from the output.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    You can create a lot of transactions to other and to yourself (to a different wallet that is still your own, or to the original wallet.) since no one from the outside can see which transaction went where.
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#4577
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXOs are outputs from transactions that when the recipients of this transactions made also new transactions become inputs of the new transactions.

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

The wallet adds others UTXOs (inputs) to cover for the total value of the transaction.

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

The wallet research the last transactions fees made on the blockchain network and give you an acceptable transaction fee based on the last one’s research so your transaction can enter easily on the next blocks in reasonable time.

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

Every time we made a transaction to receive or send money, we must generate a new bitcoin address. Some wallets make this automatically if we want.

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#4578

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. :slight_smile:

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#4579

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    A UTXO is the amount remaining after a cryptocurrency transaction is executed.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    If the total sum of UTXO < Tx - -> TX won’t go through

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The fee is calculated automatically (Input - Output). The wallet checks the Blockchain for similar transactions to come up with a correct fee. There are some wallets that give the possibility to choose the fee.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    By using multiple inputs and outputs for transactions

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#4580
  1. UTXOs are the outputs received by someone who create a new transaction to somebody else.
  2. The difference between UTXOs = Transaction + fees - Back to your wallet
  3. The wallet will check into the network the correct fee for your transaction
  4. You don`t need that , the protocol will generate itself privacy for your transaction even when you have one input and several outputs.
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#4581
  1. UTXO’s are the money that you can spend on transactions.
  2. Your transaction would be ignored.
  3. It is not specified. It is the difference between transaction input and output.
  4. You could use multiple transactions.
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#4582 
Describe what Unspent Transaction Outputs (UTXO) are.

UTXOs are an aggregation of all the incoming transactions that your wallet is storing.

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

The transaction will be rejected.

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

It subtracts the input from the output.

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

You can have multiple outputs going to multiple people or all to yourself. No one can knows who the funds to go.

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#4583

  1. They are the transaction receive in your wallet and that your wallet can use as a input for a transaction.

  2. If possible you wallet would merge enough UTXO to create the amount you money need for the transaction and any exceed amount will just be send back to you.

3.It will specify it by the difference between the input and output.

  1. From the outside it is impossible to trace the creator of the transaction because you can use multiple input from different address and send them in multiple address.
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#4584

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    They could be described as transactions where only the inputs have been fulfilled, so they lack the transactions output to be considered a finished transaction. If the output is fulfilled, the UTXO becomes a normal transaction, and where the uotput is directed becomes a new UTXO.

  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 denied, as it means you dont have funds enough for the transaction you want to do

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It calculates it by itself, watching the previous fees and seeing the time you need to integrate the transaction in the blockchain

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    As the outputs are limited only by the input, you can use different outputs to make transactions to one specific person.
    You can even make transactions to yourself, as the only data recorded will be the amount and the public key of the receiver.

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