Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#5147
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXO’s are transactions your wallet has received with amounts not yet sent from your wallet.

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

That single UTXO will be combined with other UTXO’s in your wallet. If the total is not enough to cover the transaction, you will not be able to proceed with the transaction.

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

The wallet will check the current base fee on the blockchain, which you can increase or decrease. The wallet will then subtract the outputs from the inputs to obtain the fee.

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

You can route various original UTXO’s to one wallet address, then, use the balance to send different amounts to other addresses. An outsider will not know what original UTXO was used to send money to the final addresses and makes it more difficult to determine who owns the final addresses.

1 Like
#5148
  1. Describe what Unspent Transaction Outputs (UTXO) are. - incoming funds that 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? You would send multiple utxo’s to cover the transaction plus fees.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction? The transaction fee is equal to the difference between the inputs and outputs.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Use many inputs and outputs to create a transaction.
1 Like
#5149
  1. Describe what Unspent Transaction Outputs (UTXO) are.

An unspent transaction output (UTXO) is an abstraction of electronic money. A UTXO defines an output of a blockchain transaction that has not been spent, can be used as an input in a new transaction.

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

Your wallet adds all you UTXO’s together. If you had enough UTXO’s when they are collectively added together the transaction would be processed. Otherwise the transaction would be rejected.

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

The bitcoin wallet will take the Input and minus it from the Output and give it the fee. Input - Output = Fee.

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

With a hardware wallet you can use a different address for each transaction. The hardware wallet will take care of this for you.

2 Likes
#5150
  1. It is a received transaction that I didnt spend yet.
  2. It will add several UTXOS and then I’ll have to send me back the change OR the transaction will canceelled
  3. By guessing the amount left after the outputs have been sent. As well, the wallet will checks previous blocks in the blockchain in order to match previous fees.
  4. Because we dont know were the transaction is going. I can split my outputs as well.
1 Like
#5151

Exactly! Got the same guess!

1 Like
#5152
  1. Unspent traction outputs are the remaining “funds” left from a generated transaction which ends up being the total number of funds in the wallet.
    2.You would have to combine two or more UTXOs to solve the transaction and the residue would be sent back to yourself.
  2. Inputs = Outputs + Fee.
    4.By generating more addresses, you can potentially hide ownership from the original transaction.
1 Like
#5153
  1. UTXO are unspent outputs of the previous transaction. They are also the indicator to your wallet balance.
  2. The transaction would be declined.
  3. Transaction fee = input - output.
  4. Make use of different addresses when you want to receive or send a transaction.
1 Like
#5154
  1. UTXO’s are inputs which have not been spent.
  2. Send multiple UTXO’s and, if necessary, send the remainder back to yourself.
  3. Wallet will discover the fee by subtracting the total outputs from the total inputs of the transaction.
  4. Increase the number of inputs and outputs using newly generated addresses.
1 Like
#5155
  1. money we receive in our wallet. bc they are output for the sender, and if not spent for us- then unspent tx output it is.
  2. this is also known as, not having enough $$$
  3. see previous fee’s
1 Like
#5156

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    your wallet can query the blockchain for all the UTXO (in a way it is similar to credit) for your private key and total them to find the balance of all your BTC for that private key in that wallet

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    the transaction will not be able to initiate, it will be declined

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    the wallet will query the block chain and the best estimated fee you could expect.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    By increasing the number of inputs and outputs and using different addresses to yourself and others you can increase privacy around the transaction source and destination information.

1 Like
#5157

  1. UTXOs are transactions you have received from others (inputs), and/or leftover balance from your own transactions (outputs).

  2. Your wallet will us multiple UTXOs to cover the cost of the Tx. Any change from the Tx will be returned to your wallet.

  3. Your wallet will automatically select a Tx fee which is calculated as fee = Input - Output.

  4. Input and Output numbers generated during Tx are impossible to track to an individual, creating anonymity.

1 Like
#5158

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.

#5159

what happen to question number 4🤔

#5160

  1. UTXO’s are incoming transactions that have not been spent. Once added together it is shown as your balance by your wallet.

  2. If one is not enough another is added much like using a larger denomination of money and getting change back.

  3. It would subtract the output from the input and the difference is the fee which is estimated based on past transactions or set by the sender.

  4. You could increase privacy by sending the change of your transactions to a new address that you control so no one can tell which one is the purchase, which one was the change returned to the sender, or if the sender even got any change.

1 Like
#5161

UTXO are the bitcoins which you have gotten and not yet spent from your wallet.

It will summarize all conceivable other little UTXos to make a huge exchange as required and change will be credited to your record after derivation of exchange charges.

Bitcoin exchange charges is suggested. Its not unequivocally indicated

Secrecy is given by the idea of bitcoin exchanges as yield can be shipped off numerous channels too to same information channel. Nobody knows with the exception of the private key proprietor.

1 Like
#5162

  1. Unspent TX in your wallet/ your balance that you can spend.

  2. The wallet will take multiple UTXOs and create the input and output needed for that TX.

  3. Input- Output = Fees

4.Create multiple outputs from one input.

1 Like
#5163
  1. Unspent transactions on the ledger that are linked to the private keys
  2. Combine multiple UTXO
  3. could be manually suggested, but typically just looks at previous blocks transaction fees
  4. Create UTXO linked to additional private keys held by oneself.
1 Like
#5164

Homework on Bitcoin TXNs & UTXO - Notes & Answers

NOTES:

  • We already learned that wallets do the following

    • Construct transactions
    • Sign transactions
    • Broadcast transactions

  • This section focuses on constructing transactions

  • UTXO = Unspent Transaction Output

  • Anatomy of TXN

    • INPUT --(TX)–> OUTPUT
    • Note: can have any number of inputs and outputs but must have at least one of each

  • Sum of inputs must = sum of outputs

  • One persons UTXO will become another persons input for their transaction

  • The blockchain tracks which UTXOs are unspent

  • When someone sends you money you now have an unspent transaction output (UTXO)

  • You wallet which holds you private keys will query the blockchain and see which UTXOs this private key can spend

  • ***UPDATED: Role of Wallet ***

    • Store private key
    • Query blockchain to see which transaction outputs you can spend
    • Sum together att UTXOs to display your balance (blockchain does not provide balance)
    • Construct, sign, and broadcast transaction

  • There are no “coins” … only UTXOs

  • UTXOs & TXN Fees

    • Inputs = Outpus + TXN fees
      • All inputs need to be spent
    • Fees are never specified because they can be easily calculated by the following"
      • TX fess = Inputs - Outputs

1)Q: Describe what Unspent Transaction Outputs (UTXO) are
A): UTXOs are transaction outputs sent to you by other people or yourself. valid UTXOs can be used as inputs for transactions that you want to send to others. In simplified terms when someone says “I sent you money/crypto” what they actually sent you was a UTXO that you can then use in a transaction that you contruct.

2)Q: What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
A) In this case your wallet grabs enough UTXOs to total greater than what you want to spend and the remaining amount is sent back your wallet

  • Example: You want to send 0.8 BTC but only have two UTXOs worth 0.3 & 0.7 BTC. Both of these alone are not enough but together they are. So you use both UTXOs as inputs and to ensure that inputs = outputs + gas fees, you send ~0.2 BTC back to yourself thus … 0.3 + 0.7 = 0.8 + 0.2
2 Likes
#5165
  1. Question:
    Hi I have such a question. If I have understood correctly, if I have received 0.2 and 0.7 btc and I want to buy something of 0.8 btc then, UTXO from 0.2 and 0.7 will form a whole 0.9. Then 0.8 will be sent for purchase, plus the transfer fee will be taken, and automatically the rest will be sent back to me as transfer?
#5166

Yes, two outputs or new UTXOs will be created, one to buy the thing you wanted and the second as change back to yourself. :slight_smile: