Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#924
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    it is basically the balance in your wallet.
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your
    transaction?
    your transaction will not go through/get declined
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    the difference between the input and output(input-output).
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your
    transaction?
    use different addresses when receiving a transaction.
#925

1 UTXOs are funds in the blockchain that are not spent yet. When a wallet receives funds they are UTXOs in that wallet. When the wallet starts a transaction using those funds they are not UTXOs anymore but become inputs of the new tx.

2 In this case the wallet will pick up multiple UTXOs related to your private key so that cumulative input will be enough to cover for transaction. All the excess funds minus the fees will be sent back to the sender.

3 Some bitcoin wallets will let you choose the fee to pay when creating a transaction, but most of them will watch the blockchain’s previous fees and propose you a fee that is enough to reduce your waiting time, because miners will choose transactions with higher fees first.

4 Inputs=Outputs+Fees and there is no way to know who owns all the addresses in the outputs. So you can create multiple transactions sending back to yourself some funds and no one can prove that you own the private key connected to the new UTXOs created.

1 Like
#926

Describe what Unspent Transaction Outputs (UTXO) are. UTXOs are the elements within the blockchain that a wallet can consider as inputs for the construction of a transaction. UTXOs are what effectively can be spent through transactions.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? If there is not any single UTXO large enough to cover a transaction the transaction will not be confirmed by the nodes and it will be rejected before an attempt to initiate it is done.

How would a bitcoin wallet specify the transaction fee when creating a transaction? The output of the transaction already includes the associated fee so the UTXO has to be large enough to cover the intended value to transfer plus the fee.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Since both inputs and outputs of a transaction are written in the blockchain as addresses that cannot be traced back to its owner, I could always allocate a portion of the transaction to send back to me the remaining balance of the available UTXOs I have to spend discounting the intended value to send to the address that is not mine plus the fee. In such a way I can increase the anonymity of my transactions.

#927

  1. Describe what Unspent Transaction Outputs (UTXO) are. UTXO’s are unspent balance from a previous Tx. Transactions that you received and can be spent immediately.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? Your wallet will sum up all the small UTXO’s to make the transaction large enough to cover the transaction, then the whatever is leftover after the transaction plus transaction fee will be credited back to your account.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction? A bitcoin wallet will choose a fee that is reasonable for the transaction being created, it’s also based off of the current and previous transaction fees.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? You can create many transactions that can go to friends and yourself. There could be multiple output addresses making it difficult to know who is receiving a transaction

1 Like
#928
  1. UTXO’s are the balance of previous transactions in your wallet, pretty much change from a cash transaction.
  2. It would combine with other UTXO’s in your wallet to cover the transaction. If you do not have another UTXO you cannot make the transaction.
  3. The bitcoin wallet does not have to specify the transaction fee, it is just applied.
  4. Generate a new receiving address.
1 Like
#929

First, you can try to combine multiple smaller utxo’s together to cover the amount. By using more than 1 input

1 Like
#930

First you can try to combine multiple smaller utxo’s together to cover the amount. By using more utxo’s in the inputs.

#931

Utxo’s are not really your balance. Each utxo is a batch of unspend bitcoins that was send to one of your public keys or bitcoin addresses. Your Wallet will check the blockchain’s utxo-set wich utxo’s your private key can spend. The sum of all UTXO’s you are able to spend, will show up as your balance.

When you don’t have a single UTXO large enough to cover the transaction, you can combine multiple smaller utxo’s together, and send the change back to yourself. Only if the sum of all your available utxo’s isn’t enough to cover the amount, the transaction will fail

#932

Utxo’s are unspend tx outputs. (no input)
In a transaction you can use your utxo’s in the input to change ownership to other addresses. Wich will become a new utxo for the receiver.

So utxo’s are outputs that are not yet spend. And you can use them in the input of a transaction to spend it

1 Like
#933

You can always combine multiple smaller utxo’s together to cover the amount

1 Like
#934

You can combine multiple smaller utxo’s together to cover the amount

2 Likes
#935

You can combine multiple smaller utxo’s together to cover the amount

#936

You can combine multiple smaller utxo’s together to cover the amount

#937

You can combine multiple smaller utxo’s together to cover the amount

1 Like
#938

You can combine multiple smaller utxo’s together to cover the amount

1 Like
#939

Utxo’s are unspend outputs. (not inputs).
You can use utxo’s in a new transaction as inputs to change ownership of them in the outputs.

If you don’t have a single UTXO large enough to pay a transaction, you can combine multiple smaller utxo’s together to cover the amount.

2 Likes
#940

Yes, my mistake, thank you for correction.

pon., 18 maj 2020, 17:36 użytkownik Fabrice Manzo via Ivan on Tech Forum <[email protected]> napisał:

1 Like
#941

So you basically have to add tx’s to cover cost , okay
Question: can you send mulyiple smaller tx’s from different wallets. Maybe I missed it but how exactly do you combine multiple tx’s to cover cost?

1 Like
#942

  1. Describe what Unspent Transaction Outputs are.
    UTXOs is the amount left within the wallet

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Then the transaction would be rejected by nodes and not added onto the blockchain

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Inputs = Outputs + Transaction fees

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    The public key changes for every transaction

#943

ah okay i see, thank you for clarifying :smile:

1 Like