Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#5387
  1. Describe what Unspent Transaction Outputs (UTXO) are.
  • funds that are transferred to you, and haven’t not been spent yet.
  1. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
  • a combined UTXOs that is sufficient enough to cover the transaction with a proposed fee would be used with the balance to be returned as change
  1. How would a bitcoin wallet specify the transaction fee when creating a transaction?
  • it would query the nodes for the previous transaction fees and use those as reference for a proposed transaction fee
  1. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
  • there can be multiple outputs and inputs to various addresses but still belonging to the same owner
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#5388
  1. Describe what Unspent Transaction Outputs (UTXO) are.
  • It is the balance in your wallet.
  1. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
  • Just like in trying to take out more than you have in your bank account out of a cash machine, you would get a reminder that you don’t have enough to fulfill this transaction. But also, the way the question is posed, if you have more than one UTXO, it will be combined with another UTXO until you have enough and you would get some “change” back
  1. How would a bitcoin wallet specify the transaction fee when creating a transaction?
  • Per Ivan’s explanation the Fee is the difference between the Input and Output. Also you can set the fee based on how fast you want your transaction to be processed or let your wallet choose it for you.
  1. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
  • With each new transaction a new address is created, thus changing address with every new transaction blurs the knowledge of who the owner of the wallet is.
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#5389
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXO’s are the incoming transactions to a bitcoin address that have not yet been spent by the holder of the private keys. It is basically what determines that you have some bitcoin to spend in your wallet.

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

If you have several smaller UTXO’s they can all be put together to cover the transaction. If all the UTXO’s do not add upp to the amount you wish to send then the transaction is not valid and will not be accepted.

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

The transaction fee is implied by taking the difference between the total inputs and outputs.
input - output = fee

In this way the fee does not need to be stored separately but can be calculated at any time.

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

The bitcoin wallet could generate multiple private keys and send bitcoin to and from these addresses, and for an outside observer it would be difficult to tell which address belongs to you or someone else.

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#5390
  1. inputs into your wallet that haven’t been spent yet
  2. nothing happens
  3. calculates diff between input and output
  4. no one knows who controls the wallets or addresses associated with transactions
#5391
  1. The outputs from other transactions that are available for spending in future.
  2. Transaction would fail
  3. INPUT-OUTPUT=FEES
  4. the output can be send to multiple addresses and it will be difficult to track which one is under you private key.
#5392

Thank you for a very clear illustration of the UTXO concept…

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#5393

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.

#5394
  1. Describe what Unspent Transaction Outputs (UTXO) are.

Each time BTC gets sent to a wallet it is a UTXO until it is spent by the wallet in question.

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

Any amount of UTXO’s that are sent to your wallet are combined to cover for your transaction. If all of those UTXO’s together are not enough, it will fail, the amount of UTXO’s needed for the transaction is not important.

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

It is implied by taking the input and subtracting the output. Wallets look at previous transactions and decide which fee amount makes the transaction fast enough.

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

You can send the remaining BTC to a different wallet than the one you send it from.

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#5395

  1. Unspent transaction outputs is the amount of currency before and after a transaction is engaged on the blockchain. UTXO’s can be amalgamated by a wallet to give the user his balance.

  2. The transaction would fail.

  3. By scanning recent blockchain transactions, the wallet can give the user a fee that is big enough for the transaction to be accepted by the miners to be added to the blockchain.

  4. Having many outputs and inputs for each transactions is difficult for a someone to read the blockchain without a scanning software.

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#5396

1 – UTXOs are transactions that you have received and that still haven´t been spent.

2 – The wallet sums all my UTXOs and then creates the transaction with the needed amount to the destination and the rest being sent back minus the transaction fee.

3 – It looks at past transactions to calculate what is a transaction fee that will get the transaction executed in a reasonable speed.

4 – A transaction can have several different outputs, where some of these outputs can be addresses in control of the sender. In this way it is not possible to really know how much has the sender spent.

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#5397

  1. UTXOs are an unspent input waiting to be spent by the reciever.

  2. If you dont have any single UTXO that is large enough to cover your transaction you setup a transaction that combines any two inputs that has enough UTXOs and you take the remainder and send it back to your BTC address.

  3. The bitcoin transaction fee will be specified based off the blockchain data then applies the correct fee to the transaction.

  4. The transactions are in essence faceless. It allows you to utilize different adresses to recieve transaction rather than sending your transactions to the same address.

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#5398

UTXO is the balance of your wallets
The transaction gets declined
bitcoin calculates the transaction fees based off similar transactions
Multiple addresses can result from one transaction

#5399

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.

#5400

  1. UTXOs are the outputs of previous transactions that were sent to your wallet that you have not yet spent. The sum of all of the UTXOs to your wallet equals your balance.

  2. A transaction will not spend only one single UTXO. It will spend all of them and the balance left over (minus the transaction fee) will be sent back to your wallet as “change”. If the sum of your UTXOs is not large enough to cover the transaction then the transaction will not be confirmed.

  3. Some wallets allow you to choose the transaction fee yourself but most calculate it automatically based on analyzing the blockchain to see what is the appropriate fee size that the miners are accepting to get the transaction added to the blockchain in a timely manner.

  4. By having the “change” of a transaction that gets sent back to you go to a different wallet address than the one it came from.

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#5401

It won’t spend all of them, it can use multiple UTXOs that are enough to cover your transaction.

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#5402

1.) UTXO’s are outputs, previously Inputs that are unspent
2.) Turn them into Inputs to complete transaction
3.) The Bitcoin wallet will calculate the difference between Inputs and outputs
4.) Impossible to know which one is which, Private key is hidden

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#5403
  1. UTXOs are inputs received from other addresses that you are able to spend. Your total sum of UTXOs will be reflected in your wallet balance.
  2. If you did not have a single UTXO that would cover your transaction your wallet could consolidate multiple UTXOs to cover the transaction and any remaining balance would be sent back to an address controlled by you. If the sum of the UTXOs is not large enough the transaction will not be confirmed.
  3. Transaction fee is the result of input = output + transaction fee. Typically not set and created by the wallet to ensure fee is accepted by miner based on most recent accepted fees.
  4. Transactions can be sent to multiple unique public addresses including potentially back to the originator of the transaction. These unique addresses mask the private keys of the recipients to keep anonymity and UTXOs that belong to those private key safe.
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#5404

  1. UTXO is unspent transaction output which then in turn becomes the input of the next transaction.

  2. Transaction would be declined

  3. The wallet checks the blockchain to calculate a fee to get your transaction onto the blockchain as fast as reasonably possible. Input - Output = Fees

  4. Use of different addresses for different transactions

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#5405

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.

#5406
  1. Describe what Unspent Transaction Outputs (UTXO) are. Inputs you receive to your wallet that are outputs from people that want to send you bitcoin that you can spend. Total UTXOs are equal to the balance of your wallet.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? The transaction would not be verified and therefore remain unprocessed due to insufficient funds
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction? transaction fee equals input minus output.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Bitcoin can be sent to multiple people at a time and back to user and all addresses can remain anonymous.