Homework on Bitcoin Transactions and UTXO - Questions

[docbdublin]

1 UTXo - unspent transaction outputs - money paid to your wallet that has not been spent.
2. You have to pay youself the difference from the bal you add to your purchase from a different UTXO (minus the fees).
3. the fee is subtracted from the transaction you pay to yourself calculated by the wallet based on comparisons to other fees so that your transaction will be picked up in a reasonable amount of time.
4. Privacy is ensured because all the records on the blockchain show are UTXOs in and out, going to different addresses if you pay yourself to a different address no one knows what that address the original UTXO was paid so when you pay to the new address no one sees what your balance is because it went out to a different address.

[johnp]

1. UTXO are transactions received but are unspent.
2. The TX will be invalid and not move forward.
3. The wallet will read the fee on the previous block and choose a fee that will put your TX on the blockchain in a reasonable amount of time.
   4.Use multiple addresses.

[Hackerman]

1. They are all transactions that I’ve recieved but haven’t spent yet.
2. I would combine multiple smaller UTXOs.
3. It would be the inputs of the transaction minus the output.
4. It is difficult ti distinguish which output is pointing into address that I don’t controll. You can send transactions to yourself.

[Crypto_Tax_Fixer]

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

UTXOs are the outputs of other people’s transactions given to you. The sum of the UTXOs is the wallet balance.

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

You have to add additional UTXOs to cover the transaction.

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

The transaction fee is the difference between the inputs and outputs.

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

By using the private key stored in the wallet.

[Bunbo_Hue]

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

UTXOs are basically a record of the amount of unspent BTC sent to a particular address. When someone goes to send a transaction, the wallet initiating the transaction will add up the UTXOs to make sure that the sender actually has that amount of BTC. Then the BTC will arrive in the recipients address as a UTXO which will be used when that recipient goes to send a transaction.

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

The nodes which are queried from your wallet will disregard the transaction and it will not be accepted in the blockchain.

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

The bitcoin wallet will calculate the fee based on what is most likely to be accepted into the blockchain in a reasonable time. The transaction fee will always be the input minus the output.

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

You can’t know how much BTC was actually sent and how much went back to the sender (if any). You could send outputs to multiple addresses that you own, making it more difficult to track down where the BTC really ended up.

[Aaron_C]

Homework on Bitcoin Transactions and UTXO - Questions

1. Describe what Unspent Transaction Outputs (UTXO) are:
   All UTXO’s associated with your wallet combined, add up to your current wallet balance. They are the output from someone else’s wallet to yours, which remain unspent until you decide to send a transaction.

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   The wallet will combine other UTXOs that are associated with your wallet to make up the correct amount required.

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   The transaction fee is the input minus the output.

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   By having some “change” sent back to a different wallet address that you control.

[Nickpuna1]

1. UTXO’S are unspent transactions from your balance.

2. Your transactions would be disregarded.

3. When the transaction is input the fee would be subtracted from output.

4. Use multiple different addresses for each transaction.

[jcampos]

1. It’s transactions that you received and can be spent.
2. The transaction will be declined because you don’t have enough resources.
3. Inputs minus the outputs of a transaction and the wallet can do this for us.
4. output can be sent to multiple channels as well to the same input channel, only the private key owner knows.

[Fabrice]

Thanks Glenn, I really appreciate it!! You’re amazing.

[Fabrice]

UTXO’s are transactions you got to your addresses.

If you buy 1BTC , you will have 1 utxo of 1BTC.
if you spend 0.4 to binance, you make a transaction with 1BTC input
and 0.4 output 1
and 0.6 (- fee) output 2 (you send change back to yourself)

so now you have an utxo of 0.6 and 0.4 on binance.
Utxo’s are like a cash note of some bitcoin. you need to spend everything and get change back.
But on binance and coinbase you are not really using bitcoin. you can’t control your keys and utxo’s on binance because it’s a hosted wallet. You trust your bitcoin with them.

[Fabrice]

@figurin

Thank you Fabrice for your input on my answer I do understand that the total of inputs will create my UTXO and that if the amount of my UTXO ( balance) is not large enough the output + fee won’t be possible unless I reduce the amount of my output, correct ? I also understand that the output can be send to many addresses at once even back to my self , what would be a practical example of me wanting to send money back to my self ?
thank you in advance Fabrice.

You always need to send bitcoin back to yourself unless you have accidentally a utxo of the same amount you want to spend. Every payment in Bitcoin you recieve is a different UTXO. if you want to spend bitcoin, you need to pick 1 or more utxo’s to cover the transaction. The change is sent back to 1 of your addresses wich will be a new UTXO.

for example you have 2 utxo’s of 1 BTC. and you need to spend 1.6BTC to some address.

TRANSACTION:

input:
1BTC
1BTC

output:
1.6BTC (payments reciever address)
0.4BTC - some fee (to 1 of your addresses)

so after the transaction is confirmed, you now have 1utxo of 0.4 BTC (- some transaction fee)

[Mauro]

@ajphminer

3. The wallet does not specify the fee in the transaction. The fee is derived from the amount sent to the recipient and the “change”.

@Hackerman

3. It would be the inputs of the transaction minus the output.

@Crypto_Tax_Fixer

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

The transaction fee is the difference between the inputs and outputs.

@Aaron_C

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   The transaction fee is the input minus the output.

@Nickpuna1

3. When the transaction is input the fee would be subtracted from output.

@jcampos

3. Inputs minus the outputs of a transaction and the wallet can do this for us.

@ajphminer @Hackerman @Crypto_Tax_Fixer @Aaron_C @Nickpuna1 @jcampos

When the transaction had gone through, that formula is exactly how we can see how much we payed. But before we even sent a transaction the wallet still must decide how much satoshi per byte do we want to pay. It has to look at the current state of the mempool or recent transactions to calculate how much satoshi per byte would be enough to get our transaction in the next few blocks. We could always put a custom satoshi per byte if we don’t need our transaction to be confirmed immediately.

[Mauro]

@Nicholas

2. If your UTXO in not large enough for the transaction it will be declined until you add more.

You can’t add more to a UTXO. You can only add more UTXO’s to the address. There are no coins, its all about the inputs and outputs. If you deposit 0.5 bitcoins 2 times you would have 2 unspent UTXO’s. If you need to send 0.75 bitcoin your wallet would combine both UTXO’s to complete the transcation.

@Nicholas

3. The transaction fee is calculated from the remainder of inputs and outputs, the most costly.

That’s correct, however the wallet still needs to determine how much you will be paying by setting a proper satoshi per byte. If the wallet sets a 1 satoshi per byte, your transaction may take days to confirm, depending on how much traffic there currently is in the network. That’s why its important for the wallet to set the correct satoshi per byte. It ensures your transaction will be confirmed in the next few blocks.

[Mauro]

@Henk1

2. The transaction will be thrown out.

@johnp

2. The TX will be invalid and not move forward.

@Bunbo_Hue

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

The nodes which are queried from your wallet will disregard the transaction and it will not be accepted in the blockchain.

@Nickpuna1

2. Your transactions would be disregarded.

@jcampos

2. The transaction will be declined because you don’t have enough resources.

@Henk1 @johnp @Bunbo_Hue @Nickpuna1 @jcampos

The wallet could always take up several UTXO’s to complete the transaction. But if combining all the UTXO’s still does not equal to the amount that needs to be send, the transaction will be invalid.

@Henk1

3. Input - output

That’s correct, however the wallet still needs to determine how much you will be paying by setting a proper satoshi per byte. If the wallet sets a 1 satoshi per byte, your transaction may take days to confirm, depending on how much traffic there currently is in the network. That’s why its important for the wallet to set the correct satoshi per byte. It ensures your transaction will be confirmed in the next few blocks.

[Mauro]

@FlippingDave

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   What ever is left over between what you are sending (including back to an addy you control).
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   Send the change left over to different addresses and even differnt wallets.
   Or is that what those merano coins are for??

3. Correct. The wallet however still needs to make sure how much you will be paying for the space in a block. Its calculated in satoshi per byte. Who ever pays more satoshi per byte will be included in a block before all others. Remember, its all about the block space and how much you are willing to pay for it.

4. No monero is different. In monero you can’t even see the input and outputs that are being sent.

[Mauro]

@Crypto_Tax_Fixer

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

By using the private key stored in the wallet.

I think you misunderstood the question. Of course it is important to keep your private key safe. If I know your public address I would know how much money you have, which invades your privacy. In order for you to stop me you would create a lot of outputs, which would confuse me as I would no longer know which of does outputs you still control and which ones you don’t.

[MindFrac]

1. A sum of your inputs that you haven’t spent.
2. Your wallet would have to pull from another UTXO to reach a sum large enough to cover the transaction and fees.
3. In some wallets you can choose the fee yourself but in most wallets, it will look at the previous fees on the blockchain and pick one to get you on the blockchain quick enough.
4. A single transaction input could be sent to multiple output addresses so the individual amounts are smaller and different than the single UTXO

[CryptoTradingTrucker]

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

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

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

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

1. UTXO’S are the transactions that you have in your wallet that you havn’t yet spent, or sent.

2)It would take another utxo that you have, then send you back the change.

3)It is the calculation of input minus the output, this will be the fee.

4)You could keep sending transactions to yourself using different addresses.

[Madsern]

1. UTXO is unspent balance from the previous transaction.

2. You would not be able to do the transaction if you dont have enough to cover the costs.

3. The fee is calculated with the input minus the output and the difference between that.

4. Use different output addresses.

[AR1]

1. UTXOs is Basically money/bitcoin waiting to get spent. These outputs become inputs after a transaction.

2. if you don’t have any single utxo large enough to cover your transactions, your wallet will add all utxo together and pay for the transaction and then pay yourself (give you the change).

3. your wallet sums up all your utxo’s and the transaction fee will be implied in the cost of transaction.

4. with inputs and outputs being just a bunch of characters on the blockchain