Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#5047

  1. UTXOs are Unspent Transaction Outputs. They are funds that have been sent to an account but have not been spent yet.

  2. If the sum of your UTXO’s are not large to cover a transaction, then you would not be able to make that transaction.

  3. A wallet specifies the fee by checking the network, and determining what an appropriate fee would be to send the transaction reasonably quickly. The fee is taken from the output.

  4. All outputs have to equal all your UTXOs, so you can send a portion of transaction to your intended destination, and the rest back to yourself, or another wallet that you control. Doing this a few times will make it difficult to know who you really wanted to send funds to.

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#5048
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXOs are the transactions created by your wallet to allow you to send a cryptocurrency.

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

Your wallet would not be able to create the UTXO and the transaction would be canceled.

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

The BTC wallet would show the provided input amount of BTC for the transaction that the user gave, as well as how much the output of the transaction would be, which will be the input minus the transaction fee.

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

By sending multiple transactions to different addresses, it is impossible to tell how many of the transactions went to whom. Some of the addresses could be yours, some of theirs could be the recipient, some could be the account you received the BTC from.

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#5049

  1. UTXOs are unused input and output transactions coming into and leaving your wallet.

  2. If you do not have a enough to cover a transaction with a single UXTO your wallet will combine multiple input UXTOs until you are able to cover the the output + fees, or you will have to wait until you have enough inputs to transact the input.

  3. A BTC wallet specifies the the transaction fee by finding the best suggested fee that will get your transactions onto the blockchain the fastest.

  4. You could use increase the privacy of your transactions by using multiple wallets, using multiple inputs and sending smaller outputs to the same or different address.

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#5050

  1. UTXOs are the outputs of a transaction in a wallet. The blockchain saves the data of all UTXOs, and your wallet is who add all your UTXOs and show your total balance.

  2. A transaction can be created with multiple UTXO as inputs. So, the wallet will just add some UTXOs to reach the required amount for the transaction.

  3. The wallet will check a transaction fee that makes the transaction fast. With some wallets you can choose the wanted fee to pay.

  4. You can have outputs to your same wallet (as “change”) and will be very difficult to track correctly the owner of each UTXO.

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#5051

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.

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#5052

  1. Wallet balance is total of UTXOs and unspent outputs

  2. Transaction would fail or other UTXOs would be added to transaction.

3.The transaction fee is implied not specified by using previous transaction fees.

4.use different addresses

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#5053

Thanks for the clarification! I should have thought of that eventuality that it will check for additional UTXOs to cover the balance. I guess that goes back to the idea that the UTXO’s are not your balance, but the sum of them is used to calculate a logical account balance.

#5054
  1. Describe what Unspent Transaction Outputs (UTXO) are.

The recipient of a transaction receives an input that has not been utilized by the receiver. Until the input is utilized it will be labeled as an unspent transaction output.

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

If there isn’t enough UTXO then the transaction will be denied.

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

The transaction fee is the difference between the input and output of a transaction. Typically your bitcoin wallet will allow you to specify the fee you want based on how quickly you want your transaction to go through. Otherwise, your wallet will propose a recommended fee based on market conditions.

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

By using multiple output addresses.

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#5055

  1. UTXO are spendable funds that your wallet tracks.

  2. Your wallet sums up your UTXO and constructs a transaction for you. If that is not enough to cover you transaction, your transaction would be refused.

  3. Most wallets propose optimal fees that will get your transaction into the blockchain reasonably fast by checking previous transactions fees from blockchains.

  4. You can use multiple wallets for different purposes.

Also you can use services such as Coinjoin. It requires multiple parties to jointly sign a digital smart contract to mix their coins in a new Bitcoin transaction, where the output of the transaction leaves the participants with the same number of coins, but the addresses have been mixed to make external tracking difficult.

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#5056

I still don’t understand it :((

#5057

You can use a new address every time you receive funds or change back. You might have noticed most modern Bitcoin wallets do this for you already, giving you a new address each time you click on the receive button. :slight_smile:

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#5058

1/ UTXO is the transaction you sent to someone, before it’s again sended to a third person.
2/ then the transaction will be canceled, it won’t happen
3/ The wallet checks the blockchain and figures out the correct fee, Input - output =fee. Also, you can check the fee you want to pay.
4/ creating many outputs and sending them to different addresses

#5059

ohh I seee. Thank you,

#5060
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXOs are the outputs of a blockchain transaction created by the player’s wallet. Once confirmed and entered into the blockchain, these UTXOs will be available on the recipient’s wallet and can be used for additional transactions. At this stage, they can be thought of as part of the recipient’s ‘balance’.

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

If you do not have single UTXO that can cover a transaction and the associated fee, one or more UTXOs will be combined until there are enough UTXOs to cover the transaction and associated costs. In the case, that there are not enough UTXOs in the wallet to cover the costs, no transaction is created.

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

When creating a transaction, Bitcoin wallets will check the current fees on the blockchain network and automatically calculate a fee for you that will ensure the transaction is carried out relatively quickly.

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

One could send a transaction to several recipients, including themselves. Since the Bitcoin addresses are anonymous and linked to one’s wallet, it is impossible for someone other than the wallet/private key holder to trace a transaction back to its origin.

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#5061
  1. UTXO is the balance in your wallet that was transfered from another wallet.
  2. The transaction would not be granted because inputs did not equal inputs.
  3. The fee is calculated by the difference between input and output from the wallet
  4. The blockchain requires validation of all transactions and is seen on the public ledger. The use of private keys keeps this secure and transparent.
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#5062

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.

#5063

UTXO’s are the input and output of a Tx

#5064
  1. UTXO=balance left in your wallet
  2. Transaction would be declined if your UTXO is not large enough.
  3. The wallet checks the blockchain and figures out the correct fee.
  4. Generate new output addresses, and also have multiple output addresses
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#5065

Homework on Bitcoin Transactions and UTXO

  1. UTXO is information about unspent fund. UTXO tells you how much BTC you are allowed to spend. You can have more than one UTXO, therefore the total sum of BTC you can spend is a sum of all UTXOs.

  2. Your wallet will combine number of UTXOs that are together large enough to cover for the transaction. If all of your UTXOs are smaller than the sum you want to send, transaction would be invalid.

  3. The transaction fee is what remains after the wallet substracts output UTXOs from Input UTXOs.

  4. It is possible to use more than one receiving adress for your UTXOs.

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#5066

The sum of all your UTXOs is your balance.

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