Homework on Bitcoin Transactions and UTXO - Questions

[DNC]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   A UTXO is a transaction output that hasn’t been used (spent) to create a new transaction. After the UTXO is spent, it becomes a Spent Transaction Output, or, an input for another transaction.
   @Alko89 answered it more efficiently: “UTXOs are unspent outputs of the previous transaction.”

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   My wallet will add up all my UTXOs.
   If the sum is bigger than the amount needed to cover the new transaction, my wallet will construct the new transaction, pay the transaction fees, and give me back the remainder.
   If the sum is equal to the amount needed for the new transaction and the transaction fees, than my wallet will construct the new transaction and pay the transaction fees. I will not be receiving something back.
   If the sum is smaller than the amount needed for the new transaction and the transaction fees, my wallet will not be able to construct the new transaction.

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   The transaction fee is equal to the difference between the input(s) and the output(s) of the transaction.
   There are 2 scenarios for specifying the transaction fee:

• the wallets that allow their owner to choose the transaction fee (self-explanatory), and
• the wallets that propose a fee to their owner, based on the blockchain history (previous fees). This fee proposal is made by looking into the blockchain and providing a fee that will get the owner reasonably fast into the blockchain.

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   I would use the fact that every transaction input and output has a different address.

So, in the scenario where I would want to keep all of the received UTXOs (minus the transaction fee), I could ask my wallet to construct a new transaction with different outputs (and consequently different addresses) that all come back to me. That would be possible because all the different addresses would be part of the same wallet, mine.

[Cryptocle]

1. UTXO are the transactions coming your way. Until you do something with the btc, the transactions will be unspent, i.e. available for you to spend. It is the input arriving to your wallet, which is the output from a previous transaction from somebody’s else’s wallet to yours.

2. Your transaction would need to use several UTXO. However if the sum of all UTXO is still less than the new transaction you are trying to do, the transaction would be reverted and the amounts remain UTXO.

3. A wallet needs to take a percentage fee from the input. Input - fee = output. This is calculated based on the market. The higher a fee the most incentive there is for miners to prioritise that transaction (as they receive the fee in compensation for their work).

4. We can always see where a previous transaction originated from, and what further transactions have been operated from an original output, but we cannot see who holds the wallet. Sending one transaction into several smaller transactions to several wallets hold by the same person, will increase the privacy, as this would be harder to track the flow of transactions.

[Riane_Louise]

1. UTXO are the wallet balance.

2. Either the transaction is declined or more than one UTXO will be used to cover payment.

3. Input-Output= Transaction fee

4. New addresses can be created for each transaction by sending UTXOs to different wallets. It would be difficult to see where they originated from, the amount spent and who is sending them.

[HansoloandX]

1 .UTXO are the balance left in your wallet that it keeps track of.
2 .Use more then one UTXO.
3. the fee is calculated from the remainder of all inputs minus the outputs of transactions.
4. generate new output addresses, and also have multiple output addresses.

[Rusokovich]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   They are transfer transactions, that are “floating around your wallet” to be transferred to others.

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

if the output is higher than the input there would not be a transaction.

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

it takes the previous fees and makes a calculation based on the information sent by the block chain

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

the sender and recipient are completly anonymous, hence you dont really know who that person in real life is

[MarkAlvee]

1. UTXOs are the sum of the the transactions that have been sent to you.
2. Transactions would be declined if there is not enough bitcoin to cover a transaction that you are trying to do.
   3.Bitcoin wallet tracks what kind of UTXOs your private key can spend then constructs the transactions for you as well as the fees. input=output + fees.
   4.There can be many addresses associated with the inputs/outputs in order to keep the transactions private.

[Maki]

@MarkAlvee

Transactions would be declined if there is not enough bitcoin to cover a transaction that you are trying to do.

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.

[MarkAlvee]

Thanks for the clarity!

[GarActual]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   UTXO are what if left in the transaction, the change in normal terms
2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   Declined transaction.
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   Inputs minus outputs
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   From one input you could have many outputs to other people or even yourself

[valish]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   UTXOs are entities available for your spending, and once you spend them they become an input you give someone else that once they arrive at another wallet are UTXOs again because they can be spent in any way and do not have to spent in the entity they were transferred
2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   Transaction does not go through (would be the case when output is higher than input), you could use multiple UTXO to cover the transaction, but if that still does not add up the transaction would still be declined
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   a fee is taken from the input while the amount of the fee is dependent on the market situation; the fee is a miner’s compensation for their work. To calculate the actual output one takes the input and substracts the fee.
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   by splitting the transaction outputs into various transactions when wanting to spend

[Maki]

@GarActual

Declined transaction.

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.

[Gry]

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

UTXO are inputs which are not yet spent.

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 send.

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

It picks a fee from the blockchain that is fast enough - proposes a fee.

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

Using multiple addresses would help to make the transactions more anonymous.

[kiwicrypto1]

1. tx’s received previously, but not yet spent by this wallet
2. the tx would fail
3. by checking on the block chain the normal fee price.
4. by sending multiple outputs and one of them or all of them be different adrresss in my wallet

[Kerok]

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

• UTXOs are the equivalent of “having coins” in your wallet for crypto. Difference is, UTXOs are assigned on the ledger to your wallet that you can spend by broadcasting a transaction.

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

• Multiple UTXOs you have can be combined to cover the transaction and you can let the overflow be sent back to you.

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

• By making the total output lower than the total input.

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

• You can make multiple outputs in a transaction where some of them go back to other wallets you are controlling. Making it harder to track which transactions are actually sent to other people.

[Maki]

@kiwicrypto1

the tx would fail

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.

[thehong]

1. UTXO is basically the balance to be allowed to spent in the wallet
2. Your transaction will not go through as the input is not enough to cover the output of the transaction.
3. transaction will be calculated as input minus output
4. Creating transaction between multiple addresses to increase the anonymity.

[Maki]

@thehong

Your transaction will not go through as the input is not enough to cover the output of the transaction.

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.

[Kerux_api]

1. UTXOs(Unspent transaction outputs): are outputs of balances or transactions received from a initial sender to a private key and can be spent by making transactions with another receiver and they can be tracked by a wallet.

2. Then the transaction is invalidated by nodes and nothing happens.

3. A bitcoin wallet specifies transaction fee by checking the UTXOs on the blockchain available for the private key in context to spend, and set apart the transaction fee from spent transaction input received previously. (Fee = Input - Output)

4. Using different addresses to receive transactions.

[Maki]

@Kerux_api

Then the transaction is invalidated by nodes and nothing happens.

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.

[Denislav]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   That’s the balance your wallet. Everything you’ve received and haven’t yet spent

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   You can’t transfer fund you don’t own. Miners won’t agree on it.

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   Outputs=inputs-fee

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   I could send the amount that would go back to my wallet to another wallet I control