Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#623

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXOs are the result of a transaction that a user receives and is able to spend later on.
    Inputs are outputs from last transaction.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    You use a combined amount of UTXOs to make a balance high enough to pay for the transaction just as with paying with cash and getting change back.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It will usually choose the highest fee which will go to the miner. Input = Output + Fee
    Fee = Input - Output

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

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#624

  1. UTXOs are outputs of previous transactions that have not yet been spent in a new transaction. There are no actual coins in bitcoin wallets. When you send bitcoin, you are creating a transaction that chooses UTXOs that are under the control over your private key. The transaction takes them as inputs, and creates new output UTXOs of an equal amount, minus miner fee. Your balance reflects the sum of UTXOs that your private key currently has control over.

  2. The wallet will take several UTXOs the sum of which is larger than the total you want to send and will then send you back the change.

  3. It is not specified overtly in the transaction. Rather, it will find out the appropriate fee at the current time by monitoring the network and will then construct the transaction so that total input UTXOs = (total output UTXOs + fee).

  4. You can construct a transaction with several inputs and several outputs to make it more unclear who is receiving the outputs. This is especially effective when outputs are all of equal size. The input UTXOs will be ‘mixed’ making it unclear to an observer to whom the equal output UTXOs belong. (e.g. coinjoin as used in Wasabi wallet)

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#625
  1. Describe what Unspent Transaction Outputs (UTXO) are.

Unspent Transaction Outputs, otherwise known as UTXO’s are transactions which you have not yet spent. They are the individual payments you have received, the sum of which is the balance reflected 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 there is a transaction of a certain amount of coin you wish to initiate that is more than any one of your UTXO’s, the system will combine two or more UTXO’s that will cover the transaction.

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

The transaction fee will be the amount left over from the sum of the various UTXO’s needed to complete the transaction. It is important to note that you are able to pay yourself a portion of a UTXO that makes up the transaction, and it would benefit you to do so rather than lose the entire balance of the UTXO as a fee. Bear in mind that the speed of a transaction will be affected by the amount of the fee because miners will act on the largest fee first. You could say that there is a delicate balance between the necessity of speed for a transaction relative to the cost of doing the transaction.

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

Since most payments you make will be a combination of UTXOs from various sources, the notion of privacy is quite strong. It is far easier to trace and track a traditional ledger transaction of “X” going into the ledger equals “X” going out of the ledger.

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#626
  1. UTXO are the amounts previously received that have not been spent.
  2. Multiple UTXO can be used in a single transaction.
  3. A wallet will specify the transaction fee by calculating the difference between inputs and outputs.
  4. You can use multiple outputs to send bitcoin to several different addresses that may belong to yourself and others.
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#627
  1. A UTXO contains the amount of BTC received from a transaction that can now be spent.
  2. Severals UTXOs can be combined as an input of a transactions.
  3. Based on previous transactions and speed of the network to create a transaction that makes sense.
  4. You could use an amount of inputs and outputs greater than necessary to mask the relevant output a transaction.
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#628
  1. UTXOs are the transactions recieved
  2. Transaction would be declined.
  3. Transaction fee is the difference between the inputs and the outputs.
  4. Transactions to multiple addresses that you own.
#629

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    A UTXO is the balance of bitcoin waiting to be spent in wallet. It is the result unspent outputs from prevoius transactions

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Your wallet would combine UTXOs to reach the desired balance, assuming you have that much in the wallet.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Different wallets specify different parameters for determining this. At the end of day, miners pick transactions based on the fee, as they want to make the most profitable block they can. But typically the fee is calculated from the remainder of all inputs minus the outputs of the transaction.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Since you can have multiple inputs and outputs, obfuscation is easier. You could combine inputs and then send them out as UTXOs to multiple adulteresses, and because bitcoin is pseudo anonymous, if created properly and if proper opsec is used it is harder to track.

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#630
  1. Unspent transaction outputs are transactions, or inputs, sent to you by other people that are meant to be spent in the future. They are also the other peoples’ outputs.
  2. You send them multiple UTXO:s that mounts up to the price and then you send the difference/change to an adress that you control, in essence back to yourself.
  3. The inputs minus the outputs.
  4. The more inputs and outputs there are in a transaction, the higher the security of the transaction.
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#631

  1. UTXO is unspent funds from previous transactions.

  2. Your UTXO’s will be added together to send. If there is still not enough funds the transaction will not be accepted.

  3. The wallet will suggest the best fee. The difference between input and output.

  4. There can be multiple outputs including one that goes back to the original sender.

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#632

  1. UTXOs consists in the funds available to you as “active” spendable transactions. Your wallet balance is not a storage of coins, but rather the sum of all UTXO’s than you can mobilise as payment. UTXOs are basically the amount of inputs at your disposal. Once you spend them, they become outputs are you cannot mobilise them anymore.

  2. The miners of the network would not confirm the transaction, and it would not go through.

  3. Fees = Input minus Output

  4. By using different addresses. It is not possible for the public to know what different addresses are linked to a single individual.

#633

  1. UTOXs are a way for the wallet to sum the total balance that your private key contains.

  2. Transaction will be invalid.

  3. It looks at previous fees that matches your transaction, and that is fast enough. Some wallets do this automatically, and some wallets lets you adjust the fee yourself.

  4. UTXO’s incorporate several adresses which makes it more secure.

#634

Homework on Bitcoin Transactions and UTXO

Describe what Unspent Transaction Outputs (UTXO) are.
Unspent Transaction Outputs essentially determine the spending amount (account balance) of a bitcoin wallet. In a Bitcoin transaction, there are inputs and outputs. The output of a transaction is considered a UTXO. Adding up the bitcoin amounts of all UTXOs to a given wallet address would determine the amount left to spend on that 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 declined if there isn’t enough bitcoin in the wallet. If one single UTXO can’t complete the amount needed for the transaction, then the wallet checks if a combination of UTXOs can be made to satisfy the transaction requirements.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
The difference between the input value and output value would determine the fee of the transaction.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
The inputs and outputs to a transaction could be pointed to many different addresses including the sender’s own address. As a result of this, no one knows where the money is going except for the sender.

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#635

Screenshot 2020-04-30 at 22.44.46
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#636
  1. Unspent outputs from previous transactions
  2. The transaction can’t happen
  3. Inputs minus outputs
  4. Send all uxto’s through a transaction with one of the output addresses as your new address
#637

  1. UTXO’s are inputs and outputs of transactions that equate the number of btc in the process.

  2. Your transaction would get declined.

  3. Your wallet will check the blockchain and determine through previous transactions the best recommended fee to be processed at the best rate.

  4. Multiple addresses give anonymity. From the outside, no one know who the exact address belongs to except the permissioned parties.

#638

1: Unspent Transaction Outputs (UTXO) are the spending power available to your wallet.

2: If you didn’t have any single unspent transaction, your wallet would send multiple unspent transactions and the remainder would be sent back to your wallet.

3: Most Bitcoin wallets will automatically select a transaction fee which affords a good balance between speed and economy. Some wallets will allow the holder to set their own transaction fee. This is beneficial if you need to expedite the transaction to the recipient and don’t mind spending more for this. If you are in no hurry, you can set a lower transaction fee.

4: You could send a portion of your transaction from multiple addresses.

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#639

Describe what Unspent Transaction Outputs (UTXO) are.
A UTXO is an unspent amount of BTC that has been sent to your wallet address. This BTC can now be spent by you.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
If your wallet cannot make the payment using a single UTXO it will combine several UTXOs to make up the total of the payement and send the change back to your wallet as a new UTXO. If it cannot make the value large enough to cover the transaction, then the transaction cannot happen and would be rejected.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
The transaction fee is the difference between the UTXO inpouts and the UTXO outputs. Usually this can be specified by the wallet owner if they want a faster confirmation on the blockchain.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
You can create multiple outputs and send some BTC to another address which you also own or back to the original address. This makes it more challenging to follow the trail of addresses and identify where BTC has come from and gone.

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#640
  1. Describe what UTXO are.
    • UTXOs are outputs from other transactions. Each UTXO has its own amount and can only be spent by the owner of the private key that can sign the transaction for that UTXO.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    • The smaller amount UTXOs are aggregated together in order to pay for the larger transaction.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    • It specifies the fee by leaving the fee out from the input. For example, a transaction with 0.9 BTC as input would have 0.8 as output if it wants a transaction fee of 0.1 BTC.
  4. How could you use the notion of transaction inputs and outputs to increase privacy for your transaction?
    • By ensuring that we do not create UTXOs back to our input address by using a new address for every output we create.
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#641

  1. UTXOs are received transactions

  2. The transaction would not be possible

  3. it would subtract the the input from output

  4. By using multiple inputs and outputs

#642

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    A UTXO is an output from a bitcoin transaction. The address that owns that UTXO, now has funds that can be spent up to the value of the UTXO. Spending bitcoin takes UTXOs as an input of new transactions. Your bitcoin balance is the sum of the value of all your UTXOs

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

You can raise a new transaction using one or many UTXOs as inputs. Any amount over of the desired transaction total can be wired back to yourself - electronic change in effect.

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

The fee of a transaction is implied by the difference between the inputs and outputs. Input-Output=fee.

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

UTXOs could be used as inputs to transactions that route funds back to yourself via other addresses

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