Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#5027
  1. Describe what Unspent Transaction Outputs (UTXO) are.

It’s basically all the previous outputs that you didn’t spend yet. Your wallet then collects all your outputs from the blockchain, add them up and show you how many bitcoin you have in total.

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

It will then find multiple UTXO’s that are larger then the transaction is worth and execute the tx. You will have to pay a fee because you have to spend all of the UTXO’s and the rest is send back to your wallet.

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

It is the difference between the input and the output.
So if you want to send 1 BTC to somebody it will send 1 BTC minus the fee. The fee is being calculated for you or sometimes it is possible to choose the fee you want to pay.

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

If you use multiple adresses wich are just string of numbers and letters everybody can see that those transactions have been executed but nobody can tell who it’s been sended to since your personal data is not on the blockchain.

1 Like
#5028

  1. Describe what Unspent Transaction Outputs (UTXO) are. A UTXO represents a transaction that has been received but not spent. If UserA sends BTC to UserB, that information is captured on the blockchain. UserB can use his wallet to query the blockchain and aggregate the UTXOs available to his private key. New transactions can then be constructed from outputs that are now inputs to follow-on transactions. This is a UTXO.

  2. What would happen if you don’t have any single UTXO that is large enough to cover your transaction? If a single UTXO is not large enough, the wallet is capable of aggregating multiple UTXOs to form a transaction equal to the amount of the transaction plus the fee. If there is not enough UTXO available, the transaction will not go through.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction? Typically, the wallet will automatically recommend a transaction fee that would ensure your transaction takes place within a reasonable amount of time. However, you can make it higher or lower and this will affect your transaction one way or another.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Transaction inputs and outputs are tracked based on the wallet address of the individuals involved in the transaction. There is no easy way to know who the persons are that own the addresses involved in a transaction. When looking at the blockchain, it is easy to tell what bitcoin was sent between addresses. And that’s all the blockchain cares about. If a user implemented multiple wallets, the net result of transacting on the bitcoin blockchain is near perfect privacy.

2 Likes
#5029

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Unspent coins (received inputs) you hold

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    That transaction will not happen as you do not have sufficient funds

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

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    By creating a new address for every transaction done

2 Likes
#5030

  1. Is referred as bitcoin you would send to another party on the blockchain, where that party has yet to spend that bitcoin they received in their wallet. It is the sum of bitcoin the party received in their wallet which has not been spent.

  2. Without a UTXO large enough to cover a transaction would result in the inability to carry out the transaction. It would be declined.

  3. It would propose a fee based on the amount involved in the transaction to allow you to finalize the transaction and connect to the blockchain as quickly as possible.

  4. The use of the private key in a Wallet would be central to ensure the protection, security and privacy of transactions one would engage in on the blockchain network.

2 Likes
#5031
  1. Unspent Transaction Outputs are your wallets balance(how much you can spend). These are tracked by the blockchain.
  2. If there are other UTXO’s they will be combined and you will get “change” back. If there are no other UTXOs to combine the transaction will be invalid.
  3. Wallet automatically calculates this which will be the Input - the output.
  4. Sending the transaction to multiple outputs some of which are yours with a different address.
1 Like
#5032

You can use multiple UTXOs as inputs to a new tx. If that isn’t enough to cover your transaction then your transaction would be refused.

1 Like
#5033

  1. UTXOs are a walle’s availble bitcoin to send to another wallet

  2. The walles will aggregate the UTXOs

  3. Its the difference between the input and output side of the transaction.

  4. By increasing the number of inputs and ouputs its harder to track

1 Like
#5034
  1. Unspent outputs of previous transactions. All UTXOs belonging to a specific private key constitute that private key’s balance.
  2. It would be invalid, rejected by the network.
  3. The fee is the difference between the input(s) of the transaction and the output(s).
  4. The owner and recipient(s) of the transactions can be the same.
1 Like
#5035
  1. A wallet’s balance.
  2. Pay the balance back to yourself minus the TX fee.
  3. Input minus output = fee.
  4. Not possible to tell if the output has been sent to the recipient or the sender.
1 Like
#5036

@Maki bravooo <3 well detailed explanation!

1 Like
#5037

1- A UTXO is an unspent transaction output. The UTXO contains a private key that is identifiable and verified by the Blockchain.
2- If you don’t have a UTXO that is large enough for your transaction then the blockchain will reject the transaction.
3- The fee is usually calculated based on the input minus the output.
4-Privacy is inherent to the wallet being used.

2 Likes
#5038
  1. The receiving end/ output of a TX
  2. The TX wouldn’t be valid or sent by the wallet
  3. TX fee = Input - Output
  4. Use different addresses when receiving funds
#5039

You can use multiple UTXOs as inputs to a new tx. If that isn’t enough to cover your transaction then your transaction would be refused.

1 Like
#5040

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXOs are the unspent outputs and can be spent.

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

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

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Make use of different address when you want to receive unspent transactions

1 Like
#5041

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    A: They are transactions on the blockchain that were sent to a Bitcoin address that has not yet utilised those funds.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    A: Your wallet communicates with the blockchain and establishes if there are any more UTXOs associated with your private key and would use those UTXOs to cover the transaction, should they have enough to cover the whole transfer plus any fees required. If no more UTXOs are found, or existing UTXOs don’t have enough Bitcoin funds, the transaction will be dropped.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    A: A suggested fee will be specified as fees are not fixed and can vary depending on network utilisation at the time of the transaction.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    A: If you used multiple wallets to send and receive Bitcoin, it would be harder to ascertain what transactions and Bitcoin reserves are linked to one account.

1 Like
#5042

  1. UTXOs are block chain transaction outputs that has not have further transaction by the recipient (private keys).

  2. all available UTXOs will be added as input to cover the transaction and difference will be sent back to my private key

  3. a bitcoin wallet does not specify transaction fee

  4. transaction inputs and outputs increase privacy since it is impossible to tell who are the recipient of the output(s) .

1 Like
#5043

  1. UTXOs are bascially the transactions sent to your wallet and give you combined sum/balance in your wallet

  2. More UTXOs will be added till you have enough or the nodes will come back saying invalid

  3. Bases the fees on current/previous transaction fees that give the miners incentive to mine and add the transaction to the block

  4. By using multiple addresses/outputs and/or by using different wallets

1 Like
#5044

You can use multiple UTXOs as inputs to a new tx. If that isn’t enough to cover your transaction then your transaction would be refused.

#5045

  1. Unspent transactions are outputs awaiting to be confirmed as an input held on a database as a ledger of recipients new confirmed balance.

  2. Your wallet adds all TXO’s together & if collectively you have enough, then the TX would be processed otherwise the transaction would be rejected.

  3. By taking the UTXO input and subtracting it from the UTXO output.

  4. By sending your BTC to a very good privacy coin, private blockchain or by using several wallet addresses in a favourable crypto welcoming country.

1 Like
#5046
  1. Unspent transactions are amounts that have been received but not spent.
  2. If you don’t have a single UTXO large enough to cover for a transaction you look for another UTXO that with the two combined would cover for a transaction.
  3. Transaction fee is determined by leftover inputs after the outputs are taken.
  4. Using multiple inputs and outputs generating several addresses.
1 Like