Homework on Bitcoin Transactions and UTXO - Questions

[Alex912]

1. UTXO’s are output transactions that have been deposited into your wallet and have yet to be used.
2. If you don’t have a single UTXO large enough to cover a transaction, your wallet will use the sum of all your UTXO’s to cover the transaction & fees, and will return the remainder back to into your wallet.
3. A bitcoin wallet could specify a transaction fee by suggesting a fee amount that would get the transaction into the blockchain reasonably fast.
   4.The notion of transaction inputs and outputs can increase privacy because a transaction output can seem like it is going from one person to another, or even multiple people however, that transaction can also just be going to the same person and all they’re doing is just transferring funds into another wallet(s) that they own. It is hard to decipher who the transaction senders and receivers really are.

[iamchaoticcoder]

1. describe what Unspent Transaction Outputs (UTXO) are.
   parts of a previous transaction

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   The transaction will be denied by node validators as invalid.

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   Fees are calculated from the remainder of all inputs less the transaction outputs.

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction
   Breaking up transactions and using mixers like coinjoin

[Fabrice]

@Christian_S

@ivan

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

The transaction would fail.

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

[Fabrice]

@DigzBlockchain

ALTHOUGH, I’ve heard that BTC can be tracked. Is that true?

You can track every bitcoin to it’s origin (till the coinbase transaction) the coinbase transaction is the reward miners get.
Bitcoin is pseudo anonymous. Once you know that some entity has certain bitcoin addresses, you can analyse the blockchain. But it’s really hard since most wallets now are HD wallets. Meaning that for each new transaction you want to receive, your Wallet makes a new recieve address. This makes is really hard to track the identity

[Fabrice]

@pmensonp

The transaction will not be valid and the transaction will decline. it will not be accepted by the minors

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

[Fabrice]

@Frederik

How would a bitcoin wallet specify the transaction fee when creating a transaction?
It would take the sent amount and subtract the received amount. This difference is the transaction fee, which is not specified on the blockchain.

But many wallets will make an estimate for slow, medium or fast transaction confirmation, based on the mempool. If the mempool is full of transactions, it will be more expensive to get your transaction confirmed in time

[Fabrice]

@travis_bazile

if you don’t have enough to cover your transaction. Your transaction will not be put on the blockchain for having insufficient funds.

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

[DigzBlockchain]

Thank you for a very informative reply!
It’s what my suspicion was, and it does sound difficult to do. But not impossible.

You also led me to research what an HD wallet was, and I’m glad you did! Very interesting.

[Jones]

1. UTXO are input transactions send to your wallet and this transactions are called UTXO.
2. the blockchain will refuse to proceed the transaction.
3. the wallet will calculate and create automaticly from the blockchain what fee goes to your transaction.
4. you can send transactions to many of your adresses to increase privacy, which can be impossible to know which are your specific adresses.

[Valerie_Clark]

Homework on Bitcoin Transactions and UTXO - Questions

1. Describe what Unspent Transaction Outputs (UTXO) are.
   Unspent Transaction Outputs are the available transactions resulting from input transactions. They are the “balance” of available transaction amounts.

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? The transaction will not be confirmed and allowed.

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

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   One could set the wallet to generate different address for each transaction and outputs could be sent to other addresses controlled also by the address initiating the address.

[Fabrice]

@Dano

• They are the actual “Bitcoins”. They are the inputs to your wallet (private key) and add up to the balance you have available to spend.
• Inputs must equal outputs so the transaction would not be valid.

Utxo’s are bitcoins locked on an addresses that are not yet spend. Unspend transaction output (not input). If you want to spend it, you can pick utxo’s in the input of a transaction and change ownership in the output.
When you don’t have a single UTXO large enough to cover for the amount, you can combine multiple smaller utxo’s together in the inputs.

[LAVATOR]

1. UTXO’s are inputs. They represent how much BTC you are able to spend.
2. transaction wont take place
3. It looks into the blockchain and sees previous fees so that it gives you a reasonable amount deal for you to get up there for the miners.
4. Output to several wallet key’s so it makes it impossible to track how much was the transaction

[Coinhunter68]

Thanks for correcting me fabrice.
How can i change my answer?

Greetings

[Aki]

1. Its the input/the balance in your wallet
2. Use multiple UTXOs and then sending back funds to yourself
3. By taking a look at previous blocks and calculating
4. Using many transaction inputs and outputs makes it very hard to know the actual btc sent

[petra]

Describe what Unspent Transaction Outputs (UTXO) are.
A UTXO is an unspent transaction output in my wallet, which I can use as a transaction input. So a UTXO is basically change?

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
The wallet will use a second or third, or as many as are available to cover the transaction.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
I’m not sure exactly what the question is.
Transaction fees are determined by amount of data in bytes and network traffic.
Wallets generally calculate fees?
Also, usually you can specify the fee.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Since the change is being sent back somehow (I think I’m understanding this correctly) it is prudent to move your BTC to a new address after each transaction.

Interesting.

Now I’m starting to get it.

[SecretumPrimas]

Homework on Bitcoin Transactions and UTXO - Questions

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

• UTXO’s are Unspent Transaction Outputs, These essentially are the, “coins”, or transaction amounts that are being recorded on the blockchain. The rule is Input’s are equal to Outputs + Transaction Fee the miner takes and that the wallet ultimately sets.

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

• The wallet compiles all of your previous inputs and uses that total to send the necessary output amount. Similarly if you had to pay 25 dollars for something in cash and there is no denomination that is 25 dollars so you would have to pull a 20 and a 5 out of your wallet to make the transaction happen.

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

• Some wallets have a feature that allows you to specify the transaction fee max amount, others look at previous TX fee’s and calculate a fee that is likely to be picked up by the miners.

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

• You could send those outputs as inputs to another wallet that you control. This way making things more complicated to track down.

[sharpest]

1. A ‘UTXO’ (Unspent Transaction Output) is the value of an input of a wallet sent from the output of another wallet.

2. If there is no UTXO on a wallet, it would not be possible to create an output from this wallet.

3. A transaction fee would be added to any output from a wallet. This can be an automatic process, where the wallet checks the last few blocks so that the fee would be appropriate for the transaction to added as quick as possible to the blockchain, or the fee can be adjusted in certain wallets, but it may be some time before this is accepted in a block.

4. To increase privacy in a transaction, an output can be created from one address to another, where both wallet private keys are owned by the same person.

[Royy]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   UTXOs are inputs you received from previous transactions that are available for use in future transactions

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   If you don’t have any single UTXO large enough to cover your transaction then you can combine other UTXOs in your wallet to total the output. Otherwise, the transaction would be invalid.

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   Transaction fee is the different between your input and output.

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   To increase privacy, you can use multiple output wallet addresses.

[Moises]

1 UTXO’s are your ledgers balance.
2 the transaction is not executed
3 input - output = Fee
4 by bouncing the transaction

[Dunga]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   UTXO’s are the transactions in your wallet yet to be spent
2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   The transaction could not be completed
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   The input minus the output equals the transaction fee
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   You could generate a new public key for each transaction you recieve

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