Homework on Bitcoin Transactions and UTXO - Questions

[ggunhold]

Describe what Unspent Transaction Outputs (UTXO) are. A: Unspent transactions are the input transactions accounted for by your wallet and ready to
become output transactions when you decide to spend them.

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

A: Your wallet will create multiple outputs from the multiple inputs residing on your wallet (assuming you have other inputs that add up to enough) to cover your transaction and the transaction fee. If any output is left over from the multiple inputs then the wallet will create a final output back to a new address, different from the one used to send the UTXO, as “change”.

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

A: Your wallet will examine the blockchain and propose a fee, based on other transaction fees past and present, that it calculates will gain entry for your transaction to a block in a reasonable time frame. The wallet will use as many input UTXO’s as needed to cover output and fee.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
A: A transaction sending UTXO’s to a recipient also makes yourself a recipient of the output. This output is sent to a different address then the one you created the transaction from. Additionally, send UTXO’s to multiple addresses that you control which can, in a certain sense, provide cover to the original intended transaction.

[bisks]

Thanks @Mauro. That’s a lot easier to understand than what I’ve been reading.

I take it then that if a developer wanted to they could hard code into their wallet a fee paid to themselves for every transaction processed. I guess it is something to keep in mind and would be a good reason to read the fine print!!

Cheers

Bill

[edstar]

Describe what Unspent Transaction Outputs (UTXO) are.

UTXO’s are input and output transactions from previous transactions via the Blockchain.

They are received and spent via a Bitcoin wallet.

Received UTXO’s are Input UTXO’s, your Bitcoin balance.

Spent UTXO’s are Output UTXO’s.

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

Transaction will be denied by the Blockchain nodes, obviously you do not have enough UTXO’s.

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

Inputs – Output = Fee

If your wallets allow you can also select a fee.

Your wallet will automatically calculate the fee.

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

Use a different address for each input transaction.

[rontrader9]

Thanks! That makes sense

[Mauro]

No problem Debbie. Keep up the great work.

[Mauro]

No problem Billy. I am glad I could help you understand the magic behind it. Keep up the great work.

[Mauro]

@edstar

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

Transaction will be denied by the Blockchain nodes, obviously you do not have enough UTXO’s.

This questions is a bit tricky. Not having a single large UTXO does not mean you don’t have 2 that could be combined to do the transaction. But if all UTXO’s added up are still not large enough to cover the cost, then we can’t do the transaction of course.

[Mauro]

No worries. Keep up the great work.

[Mauro]

@frabosce

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   You can always create transactions with different UTXOs that you also control.

Yes, mixing your funds into multiple addresses will makes us more private.

[edstar]

Point taken, now reading the questions slowly is a tricky one! " Any single UTXO " Thnaks for the update Mauro

[guidonet]

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

UTXO are basically the transactions deriving from a previous payment (or TX) and represent the basic raw data for the calculation of a wallet balance.

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

A transaction would not go through

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

A wallet will interrogate the blockchain and calculate a reasonable fee amount based on the latest trends, to make sure that your transactions gest verified in a fair time and is in line with the average fees…to clarify the fee must be within the total balance, therefore it is represented as the difference between UTXOs and TX Output of the TX you are creating

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   By deconstructing a balance (sum of differente UTXOs into several outputs, some of which may be held by the same private key owner of the UXTOs that are building the transaction.

[Angelo_Canesso]

1. UTXO are the outputs of the transactions. The sum of all UTXO gives the balance of a given public key.

2. You have to use several UTXOs to cover the amount required and send you back the surplus.

3. The transaction fee is not specified. In order to know it you calculate the sum of the inputs minus the outputs.

4. You could do several transaction to yourself using several adresses.

[Mauro]

@guidonet

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

A transaction would not go through

You could always combine multiple UTXO’s.

[Mauro]

@Angelo_Canesso

3. The transaction fee is not specified. In order to know it you calculate the sum of the inputs minus the outputs.

The wallet must specify the fee. It must decide what amount of fee is acceptable at this current time.

[guidonet]

You could, provided you have availability:)

[scornkrypto]

Homework on Bitcoin Transactions and UTXO - Questions

1. Describe what Unspent Transaction Outputs (UTXO) are.
   These UTXO’S are remaining unspent outputs from a transaction that very small amounts that are not enough to spend alone 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?
   The unspent transaction outputs will be accumulated within your wallet and are maintained by your private key within your wallet.

3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   This would be based on the total number of inputs that are compiled together to equal the output.

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Output to multiple addresses from one single input.

[BryanSC]

1. UTXO’s are the amount of bitcoin available in your wallet to spend.
2. If you do not have a single UTXO large enough to cover a transaction, the wallet will know to include another UTXO enough to cover the transaction, and then send you back the change… If the wallet does not have enough UTXO in total, than the transaction will be rejected.
3. The transaction fee is the difference between inputs and outputs. The wallet will recommend a fee based on previous transaction fees.
4. You could increase the amount of addresses used in the transaction.

[CryptoTube]

1. UTXOs are unspent transaction outputs meaning that they are funds that you have received from a transaction that are waiting to be spent.
2. It will add up other UTXOs that you have until you have enough funds and then it will add the change to your account after it subtracts the transaction fee.
3. The wallet would do this by working out the difference between the input and output.
4. You can have multiple addresses which means nobody would know where you have sent your coins and when a input creates multiple outputs it will become difficult to see what amount of funds went to who.

[Crypto_James]

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

UTXO’s are transaction data created from sending and receiving crypto. The wallet calculates all the UTXO’s to come up with your correct current balance.

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

The transaction would not go through if you didn’t have sufficient funds to cover the transaction.

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

The Wallet would display the transaction fee used to process the transaction. The fee would be equal to input minus output.

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

A person can use many different addresses to send the crypto from. They could also send Crypto to themselves as part of the transaction to make it harder to follow.

[Edward_Valencia]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   They are the outputs of a past transaction. When you add them up you calculate the total amount of bitcoin owned.

2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   The input would be made up of more than one UTXO that is equal to or more than the necessary amount. The remainder is sent back to a wallet that is under your control.

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

4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   You can break up the outputs to multiple addresses that can be easily made.