Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#5807

1 Unspent Transaction Outputs (UTXO) are the balances in your wallet.
2 If you don’t have any single UTXO that is large enough to cover your transaction it will be declined
3 A bitcoin wallet specifies the transaction fee when creating a transaction by adding the fee to the output i.e. fees are implied by looking at historically transaction fees.
4 You could use the notion of transaction inputs and outputs to increase privacy in your transaction by specifying different addresses for each destination of transaction like how Coinbase generates a new address for every transaction.

#5808

  1. They are the inputs from transactions that you have previously received (outputs) and are sitting in your wallet unspent.

  2. Your wallet will combine multiple UTXOs you have to create the transaction, that is, if you have enough UTXOs to cover the expense. Otherwise, the transaction would not be verified.

  3. It would be added to your transaction output prior to completing the transaction. You will be notified of the transaction fee with the total input as what the recipient is receiving and the total output is the input minus the transaction fee.

  4. You could send outputs from several wallet addresses. Plus the blockchain is designed to not include any personal information on transactions so it would be purely speculative if somebody is trying to track transactions tied to a specific person.

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#5809

You can use multiple UTXOs as inputs to a new tx. If you don’t have enough your transaction would be declined.

#5810

Describe what Unspent Transaction Outputs (UTXO) are.

  • The amount of currency remaining after a transaction. The balance remaining in a wallet.

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

  • The transaction would be denied. You would have to add multiple UTXOs together.

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

  • It’s the input subtracted by the output and the remaining is the fee.

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

  • Using several different output addresses in the transaction.
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#5811

Describe what Unspent Transaction Outputs (UTXO) are.

UTXOs are amounts of BTC that have been sent to a particular BTC wallet address, which have not been spent. They are available to that particular address, as BTC assets which can be spent / sent to other other BTC wallet addresses.

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

The input and output of a single BTC transaction need to have the same total amount. There needs to be enough BTC available to you to pay for the transaction. If there is no single UTXO which is big enough to pay for the output of that particular transaction, the transaction can still be done, if (at the time of the transaction) there are, other UTXOs which, added together, provide enough BTC to pay for the transaction.

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

Some BTC wallets allow users to make the amount of transaction fees. Many BTC wallets suggest a particular transaction fee. The amount of this suggested fee is an amount which should allow the transaction to be added to the blockchain quickly enough. This suggested amount is based on earlier transaction fee data, which the wallet gets from the blockchain.

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

If there is no data about who owns or controls a particular wallet address, there is some degree of privacy, though the blockchain gives information which can hint at possible owners or controllers of wallet addresses (for example if they are involved in transactions of receiving crypto from an exchange which has the ID information of a particular user). Also, the BTC block explorer does not show information about whether or not outputs are returned to the same person who made the transaction. Therefore people who use a BTC block explorer do not get exact information about who’s wallet receives outputs, and whether or not outputs are returning to the person who made the transaction. This lack of public information about who receives outputs increases privacy. These privacy features can be strengthened by using multiple outputs.

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#5812

Homework on Bitcoin Transactions and UTXO - Answers:

  1. Unspent Transaction Outputs are transactions addressed to your address and available for spending.
  2. Your transaction will be declined.
  3. Transaction fee = Transaction input - Transaction output
  4. To increase privacy in my transactions I would use a new address for every transaction.
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#5813

You can use multiple UTXOs as inputs to a new tx. If you don’t have enough your transaction would be declined.

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#5814

Describe what Unspent Transaction Outputs (UTXO) are.
Unspent Transaction Outputs (UTXO) are the transactions that are left unspent after a transaction has been completed.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
It will combine two or more UTXOs to cover for your transaction if your total balance is enough for this transaction.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
Fee is specified by the difference between total inputs and total outputs.

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

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#5815
  1. UTXOs are unspent transaction amounts you have received.
  2. UTXOs will be combined to cover the total amount of the transaction.
  3. Transaction fee must be satisfied by the remainder of the UTXO inputs minus the outputs. Wallet may let the user set the fee amount or may decide it for the user through querying current fees that are sufficient to process the transaction in a reasonable amount of time.
  4. You can’t easily trace an output address back to a particular user. You could be sending bitcoin to yourself there isn’t an easy way to tell.
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#5817

  1. Transactions that came from other wallets as inputs into ours, it will be our “ready balance” that we can spend / send to other wallets. But our wallets do not actually store the UTXOs themselves, the blockchain does.

  2. The wallet will combine the balances of all UTXOs available for us (using our private key), and use the total balance as a ready UTXO to spend for us.

  3. It will look for a reasonable tx fee and propose it to us.

  4. It helps to mask transactions, as outputs and inputs are all anonymous.

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#5818

  1. UTXOs are basically the transactions you received that have not been spent. Your wallet will take those and construct them as inputs.

  2. It will combine different UTXOs as inputs so they combined will be large enough to cover for the transaction. If the sum of UTXOs are not enough, then you are trying to spend more funds that you have in which case the transaction will not be constructed by the wallet.

  3. The wallet will query the blockchain in order to see which transaction fee will get you into a block fast enough. The transaction fee is the difference between the inputs and the outputs constructed by your wallet.

  4. Because you can use different addresses controlled by the same wallet as outputs, so it is difficult to know which address is in fact your address or someone elses.

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#5819
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    An abstraction of electronic money. A UTXO defines an output of a blockchain transaction that has not been spent, and can be used as an input in a new transaction.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Transaction will not be valid and send by the wallet on the first place, not accepted by the miners in a second stage.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Fee = input - output
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Always generate new addresses
#5820

You can use multiple UTXOs as inputs to a new tx. If you don’t have enough your transaction would be declined.

#5821
  1. A UTXO is an accepted transaction on a block chain utilizing this model (e.g., Bitcoin). It spends the sum of previous inputs to the wallet.
  2. UTXO will look at the sum of previous transaction outputs to the wallet, not just 1 single transaction. If the sum won’t cover the amount spent in the transaction, then it will fail.
  3. Typically the wallet will take a look at the current fees on the block chain and calculate one that is reasonably competitive, but it is also possible to manually input a certain fee.
  4. You can route the BTC “change” coming back to yourself through a different wallet address, making it more difficult for an outsider to discern how much you are spending and whom it is going to.
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#5822
  1. UTXO is the input into your wallet, and that is created when somebody else uses their input UTXO to generate an output. Basically the balance that is available for you to use as output.

2.You need to use a combination of UTXOs large enough to cover the transaction, the transaction fee, and the remainder becomes another UTXO that you send back to yourself or another wallet.

  1. UTXO - the cost of what you buy. The remaining sum automatically becomes the transaction fee. Sometimes recommended amount, to give the transaction a high chance of being added into the next block by the miner.

  2. You can use multiple wallet adresses for imputs and outputs instead of using only 1 wallet.

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#5823
  1. UTXOs are the ballance of the wallet
  2. Transaction is invalidated by the nodes and it will be rejected.
  3. Wallets are calculating automatically the fee.
  4. By creating mode outputs.
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#5824
  1. UTXO = Unspend Transaction Output. More specific these are the transactions that you received but haven’t used yet. The output You received from someone elses (or your own) transaction becomes a UTXO until you use it as input for a new transaction.
  2. Then the blockchain will not allow the transaction to take place. The consensus mechanism will deny it and therefore it will not end up in the blockchain.
  3. the transaction fee is the difference between input and output, if you have funds left in the UTXO’s it will send it back funds and create a new UTXO. But there is always a transaction fee needed for the transaction to take place.
  4. By making transactions between different wallets it will be hard to trace the UTXO’s. The different wallets and utxo are linked to private keys which cannot be linked to a specific person from the outside. therefore it increases the privacy of the person. Because of this it’s hard to track someone’s funds and determine their balance (which a wallet calculates based on utxo’s).
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#5825

You can use multiple UTXOs as inputs to a new tx. If you don’t have enough your transaction would be declined.

#5826

UTXOs are transactions sent into your wallet that you have not spent.

Then transaction would not be spent. The wallet checks for UTXOs on your private key and compares them to the amount that needs to be sent and the the sum of the UTXOs must be more that the required output in order to transact.

The transaction fee = inputAmount - outputAmount

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#5827

what happened to answer number 4.:thinking: