Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#5207
  1. UTXO’s are credits assigned to your Private Key.
  2. The Blockchain Nodes would reject the transaction.
  3. A wallet will specify the transaction fee after analysing current network conditions, transaction size and
    period of time that you are prepared to wait. This will materialise as fee = input - output.
  4. Using multiple inputs/ outputs i.e different public keys.
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#5208

UTXOs is calculated when the wallet private key communicates with the blockchain (nodes and miners etc) to find out what inputs has the private key received and if it can be spent.

You just don’t send money to anyone.

Inputs minus UTXO equals transaction fee.

Its already quite private since transactions are also sent back to the same address. This makes it difficult to tell where the money has been sent.

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#5209
  1. Describe what Unspent Transaction Outputs (UTXO) are.

The wallet balance is the total UTXO

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

Transaction would not be completed

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

The difference between inputs and outputs

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

You could use different addresses

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#5210

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

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#5211

Describe what Unspent Transaction Outputs (UTXO) are.

The sum of bitcoin that has been received and is now available to the new owner to spend. Wallet balance

What happens when you don’t have a single UTXO that is large enough to cover for your transaction?

Another UTXO will be added to the transaction in order to cover for it. Any leftover BTC will be returned to the sender

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

Input - Output

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

Using many inputs and outputs.

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#5212

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    They are the unspent outputs from previous transaction inputs and the balance of your wallet combined.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Nothing.

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

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Wallet addresses are anonymous, so there is no way to know which output goes to which recipient or which output is returning to your wallet. You could also own several different addresses that you can send to.

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#5213 
Describe what Unspent Transaction Outputs (UTXO) are.

Balances on the blockchain that contain an amount and information on who can spend them. Existiing UTXOs are inputs to a transaction and they create new UTXOs as outputs.

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

You can’t do the transaction, but if you have another UTXO then you can combine multiple UTXOs.

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

Fee is calculated from inputs = outputs + fee . The wallet looks at fees from similar recent transactions and suggests a reasonable fee that will be attractive to the miners.

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

You can disperse the output to multiple UTXOs, each with a new key.

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#5214

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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#5215
  1. Is basically a input (received transaction) into a wallet that has a private key to access the transaction.
  2. The UTXO will just add additional transactions available to cover the transaction any left over will be sent back to sender.
  3. UTXO automatically calculates out to disperse and fees between a single or multiple transactions. Some wallets allow the sender to pick from a selection of fees. Many times the UTXOs will pick the highest fees for the miners. You subtract the difference between the inputs and outputs to find the fee amount.
  4. By dispersing inputs to many different addresses the user may or may not control.
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#5216

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXO’s are inputs you receive that you have not yet spent or sent to someone as an
    output.

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

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It would look at the blockchain and see previous transaction fees and suggest one to you
    that would make your transaction be accepted quickly.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    In a transaction, if you are going to send money back to yourself, do not use the same input address. Try and send to a different address you own.

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#5217

1 UTXOs are the all of the individual transactions that have been received by a wallet but have not been spent yet.
2. This is the same as having all small notes, the wallet would just add up UTXOs until the requires amount is met. If the total UTXOs go over the required amount, similar to not having exact change, The UTXOs would all be spent but the difference is returned to the users wallet as another UTXO that can be spent at a later time.
3. Wallets determine the tx fee by looking at the “going rate” to ensure an acceptable transaction time. The fee is calculated by the wallet by subtracting the subracting the outputs from the inputs with the remainder being the fee.
4. Sendting UTXOs to multiple wallets could provide some anonymity since it is not known if the sender is also the owner of the receiving wallets.

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#5218

  1. UTXOs are the result of a different wallet address sending an output to a wallet, in which the wallet that receives that output as an input can use those funds to make future transactions. UTXOs are the funds a wallet receives that are yet to be spent.

  2. Multiple UTXOs would be used until the cost of the transaction is met; if there are not enough UTXOs to meet the requirements the transaction would not go through.

  3. Transaction Fee = Total Output - Total Input

  4. By sending an input to several different wallet addresses that may have several different owners, a few owners, or they could all belong to you.

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#5219

“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.”
I would think this would happen automatically, generating multiple UTXOs until an acceptable fee is reached. But I don’t pretend I fully understand this concept as yet :}
ThnX Maki, for your input.

#5220

Correct, wallets do this behind the scenes for you. This knowledge would come in handy when you want to create a raw tx from scratch. :slight_smile:

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#5221

  1. UTXO are the difference between all input transactions and all output transactions, which is equivalent to the wallet balance.

  2. There will be no transaction. The inputs are not enough to cover the outputs.

  3. Transaction fee = input - output

  4. You can send money from one input to several outputs or from several inputs to one output. You can even send money back to yourself. This increases the privacy in the blockchain.

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#5222

1. Describe what Unspent Transaction Outputs (UTXO) are.
UTXOs are the outputs of previous confirmed transactions that has not yet been used.

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
In that case the wallet does not accept the transaction, and it will not be sent.

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
The fee Is the different between the inputs and the outputs. In some wallets the fee can be fixed manually and in other wallets the fee is automatically calculated by the wallet based on the fees of the previous transactions recorded in the blockchain.

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Using different address wallet every time we receive a transactions, and using wallets that allow UTXO mixed for sending bitcoins.

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#5223

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.

#5224

1: Unspent Transaction Outputs are essentially how your private wallet tracks your balance of crypto on the Blockchain. When someone sends you crypto then now you have an UTXO of x amount. With multiple amounts of sent crypto these figures are added up automatically by your private wallet so you can track & see how much crypto you have at all times.

2: Either the transaction would not happen if you do not have enough total UTXO’s otherwise your private wallet would gather the correct amount from other UTXO’s you have with the remaining being sent back to you.

3: Transaction fee’s are basically the input transaction total minus the output transaction total, the actual (gas) fee itself is selected by your private wallet which looks at the Blockchain & picks a fee based upon previous transaction of a similar nature. Some wallets enable you to select your own fee which is based up the speed of which the transaction takes place (faster is more costly).

4: By having multiple wallets you could send funds to & varying the transaction amounts, especially in larger figures.

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#5225
  1. UTXOs are transaction that you have received but have not spent.
  2. The transaction will not go through
  3. output minus input + fee
  4. create more outputs
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#5226

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

UTXO’s are the funds that you receive in your wallet and those UTXO’s are used to create a new transaction and send funds according to your balance which is calculated by adding all UTXO’s.

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

If you don’t have any single UTXO that is large enough to cover your transaction then the wallet will add up all the UTXO’s and then check if the sum is large enough to cover the transaction if yes then new transaction will be created if no then the wallet will show insufficient balance.

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

The wallet would look at the blockchain, see previous transaction fees, and suggest one that would make your transaction be accepted quickly.

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

Sending UTXOs to multiple wallets could provide some anonymity since it is not known if the sender is also the owner of the receiving wallets.

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