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UTXOs are unspent transactions. In the context of btc, it is the sum of the btc held in a user’s wallet.
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What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
There are transaction fees associated w/ sending btc. The fees are distributed to miners, which are paid from utxos unrelated to the $amount sent. In other words- you need btc to send btc. For example, you are sending Ivan 1 btc, and the transaction fee is .01btc. The total amount in your wallet is 1btc, so you are short .01 btc, and can’t pay the transaction fee, resulting in a rejected transaction. You feel dumb for not dollar cost averaging btc this month, and wasting inflated fiat on lambo repairs. -
How would a bitcoin wallet specify the transaction fee when creating a transaction?
The transaction fee is based on various factors, a major one being the congestion of the blockchain network. If the activity on the network is above average, the fee will reflect the congestion, and will be higher than average. -
How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Inputs and outputs are visible on the btc blockchain due to the distributed ledger property, but the addresses remain pseudonymous to the public. Most importantly, the input does not require 3rd party centralized verification, so the transaction will remain private, except to sender and receiver.
utxo’s are unspent transactions that you have and can use on future transactions.
The transaction would be invalid
it compares the input and output
you can change the address or wallet
- UTXO is a chain of ownership as a digital signature where the owner signs a message transferring ownership to the receiver’s public key.
- Adds UTXOs together and if sufficient transaction proceeds.
- Recommended based on previous transaction fees. Also possible to set manually.
- Create different addresses and add them to the transactions.
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.
- Transaction outputs that are not used as a transaction input yet. Basically the available funds on a wallet.
- If multiple UTXOs are present, the wallet uses more and more UTXOs until the sum is large enough for the transaction. (Assuming the sum of the UTXOs are more than the tx requirement). If only a single UTXO is present, or the sum of the UTXOs is not enough, the tx will not be included in the blockchain, hence the tx would fail.
- Fee = sum(inputs) - sum(outputs)
- Using multiple addresses as outputs can somewhat obfuscate the final recipient(s).
1- UTXOs (Unspent Transaction Outputs) are the inputs someone send you as their outputs, but you haven’t put them on a transaction yet.
2- Then you will use another UTXOs that covers at least the amount you will spend. For example, if you have two UTXOs worth of 0.5 BTC and 0.5 BTC as well, and you want to spend 0.7 BTC. You have to use both of the UTXOs then.
3- Some of the wallets let you choose the fee from a list according to the sending speed, and some other wallets check out the block and the past transactions to specify a proper fee that let’s you send in fast enough.
4- You can make the transactions to both the real owner and to your own wallet which has different address but the same wallet. But it is technically impossible to find out to whom you send from outside.
1. Describe what Unspent Transaction Outputs (UTXO) are.
Those are transactions from which the funds are available to the recipient for him to spend them in future. As long as the recipient doesn’t send the funds from those transactions further they stay as UTXO. After the recipient sends them, they are not UTXO to him anymore, but rather to the new recipient to which the old one has sent the funds. Meaning they are not available to the old recipient anymore. It’s a feature that assures that the funds will not be spent twice. Only the available amount of UTXO can be spent.
2. What would happen if you don’t have any single UTXO that is large enough to cover your transaction?
The transaction will not happen.
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
It examines the blockchains activity. If there are a lot of people submitting transactions the fees will be higher. If the user sets its fees lower there is a risk for the transactions not to be processed. Even though an average fee is enough, if the user pays it above-average his transactions will be prioritized. So the fees should be high enough to make a successful and adequately fast transaction.
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
One could make a new address for each transaction. Therefore making only the new address visible to the curious eyes.
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UTXOs are the transactions inputs you have received from other wallets that have not yet been spent as outputs.
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Your transaction will not be validated. However if you have multiple UTXOs with enough spread between them then a transaction can take place.
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A bitcoin wallet will specify the fee by calculating the difference between the Inputs and the Outputs, the Input = Output + TX Fee. The wallet will generally determine the fee based on historical fee rates on the blockchain and try to get you in fast enough.
4)The best way would be to use multiple addresses for receiving outputs, this way someone checking using a blockchain explorer will have a harder time trying to figure out which the specific person they are looking for.
- transactions you received and send further - basically your value in your wallet
2.you wont be able to make any transaction - by adding up your UTX’s received and the differenc of generates UTX’s that shall be sent
- create many UTX’s. the more you create the bigger gets your privacy inlc. your fees
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A UTXO is the output to a particular wallet from a prior transaction that is yet to be included as an input for a future transaction from the past transactions output address. It could be considered ‘unspent received balance’.
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So long as you have enough UTXO’s in aggregate to formulate the required output required for a transaction, you may add all UTXO’s together and use them as outputs for the transaction. With the difference between total UTXO’s and how much you want to spend (minus the fee), this will be sent back to yourself and this balance will be considered another UTXO’s to your wallet.
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The fees of a bitcoin transactions are never specified, however easily calculated through subtracting total outputs of a transaction from total inputs. The bitcoin wallet is therefore easily able to calculate the transaction fee through simple subtraction.
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It is difficult to see who controls the wallets pertaining to the outputs of a transaction. It is therefore simple to utilise many outputs and for particular transactions.
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Describe what Unspent Transaction Outputs (UTXO) are.
Crypto’ (transactions) sent to my wallet from an outside source. -
What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
It will be rejected or unconfirmed. -
How would a bitcoin wallet specify the transaction fee when creating a transaction?
The wallet reads the blockchain and picks a fee of a miner that will help process my transaction in a timely manner. -
How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Use/generate different addresses.
Thank you that helped, much appreciated
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.
- UTXO’s are basically your bitcoin, they are inputs that were sent to your wallet that haven’t been spent yet.
- You would have to use another UTXO and the remaining amount would be recycled back to you or no transaction would occur.
- Input minus output
- You could have multiple output addresses and it’d be difficult for someone to figure out which is which.
- Describe what Unspent Transaction Outputs (UTXO) are.
UTXO’s are what’s in your wallet after you’re sent money. - What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
You wouldn’t be able to do the transaction because you don’t have sufficient funds. - How would a bitcoin wallet specify the transaction fee when creating a transaction?
you take the input and minus what you want to send and see if there is enough left to cover the transaction fee. - How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
You could send it to many different users. Spreading out the money further to different accounts that belong to you.
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Describe what Unspent Transaction Outputs (UTXO) are.
–> available balance in your wallet -
What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
–> no transaction possible -
How would a bitcoin wallet specify the transaction fee when creating a transaction?
–> input = output - fee
or: input - output = fee
it does this usually by looking and past transactions and getting an estimate based on the median fees in recent transactions.
- How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
–> generate new addresses and send from there, it’s just obfuscating because in the exit node it will be linked to your ID if your broker does KYC
Homework on Bitcoin Transactions and UTXO - Questions
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Describe what Unspent Transaction Outputs (UTXO) are.
Every transaction made to my wallet but I haven’t spend yet it is a UTXO. My wallet is the composite of all active UTXOs written in the Blockchain’s ledger. The Blockchain doesn’t record balances, but my wallet does to all relevant to my address, so to present a summary. When I make a transaction, I use the UTXOs to complete my transaction which becomes the new UTXO for the receiver address. The new block erases the UTXOs that I used. -
What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? Let’s say I have two UTXOs of 0.5 BTC each, but I want to make a transaction of 0.7 BTCs. Then, my wallet uses the two UTXOs (total value of 1 BTC) and sends 0,7 to the beneficiary and another to my self of 0.3 BTCs
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How would a bitcoin wallet specify the transaction fee when creating a transaction?
After deciding the whole transactions and the one to my self, the difference is the transaction fee. -
How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Create as many addresses as possible, and use other people as well. You mix the transaction randomly, but at the end the transaction ends up to the destiny. To track the transaction will be difficult
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Describe what Unspent Transaction Outputs (UTXO) are.
Only unspent outputs can be used as inputs. When a transaction takes place, inputs are deleted and outputs are created as new UTXOs that may then be consumed in future transactions -
What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
You’ll sum up enough UTXOs to cover the amount -
How would a bitcoin wallet specify the transaction fee when creating a transaction?
It looks at the recent tx fees on the blockchain and proposes you the value -
How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Using different wallets to receive bitcoin
You can use multiple UTXOs as inputs to a new tx. If you still don’t have enough then your tx wouldn’t go through.
- Describe what Unspent Transaction Outputs (UTXO) are.
ANS- these are unspent transactions that are being sent to a recipient. - What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
ANS-the wallet sums up the required amount of UTXOs to cover the transaction and send back the change to the sender( the input) . - How would a bitcoin wallet specify the transaction fee when creating a transaction?
ANS-the general fee rule for a transaction is INPUT-OUTPUT=FEE - How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
ANS-Having multiple addresses with in the same wallet would be a plus.