Homework on Bitcoin Transactions and UTXO - Questions

[jimgriffiths]

1. UTXO is the amount of bitcoin that was sent to you (one or more inputs) and the amount that you send to others (one or more outputs).

2. Wallet can combine UTXOs to reach the amount you want to spend. The amount you can spend is the total of inputs you received and have not yet spent.

3. When the wallet gathers the input UTXOs for a txn it also determines and allocates the appropriate fee amount that will get the txn onto the blockchain. The fee is never stated explicitly. The fee amount is derived as total input - total output.

4. In a transaction, you can send UTXOs to recipients and back to yourself. From the outside, it is impossible to know which, if any of the recipients is you. Therefore the total amount going out is not apparent.

[Mauro]

No problem Yir.
Keep up the great work.

[Mauro]

@CeesQ

The transaction would get rejected, unless you have other UTXOs that can cover it, i.e. a UTXO balance that’s large enough to cover the transaction.

Correct. You could also add them together. If you need to send 0.75btc and you have 2 UTXO’s of 0.3 and 0.5 bitcoiin you can combine them to make the transaction.

[Eric_Toronto]

Hi Mauro,

Thanks very much for your feedback. I now have a clearer picture of how Bitcoin works.
So for the fourth question, the main idea is that a user can have more privacy with his/her balance by owning more than one Bitcoin address and use those addresses for transaction outputs; is it correct?

Best,

Eric

[successfs]

1 - The UTXO is the transaction you receive and can be spend.

2 - The transaction will be declined, invalid, is not enough to cover the transaction.

3 - The transaction fee = inputs - outputs

4 - Use different address if you send back yourself and create a different address to use UTOX to spend.

[Aaron]

UTXO is the wallet balance

2. If there is another UTXO that can make up for the remainder of the balance it will. If there isn’t the tx is invalid

3. Fee is input minus out

4. You could use different addresses every time

[Experimentation]

@ivan

Homework on Bitcoin Transactions and UTXO - Questions

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. UTXOs are the unspent sum of input transactions; the transactions that are not yet spent.

2. The transaction would draw from additional UTXOs to complete. If there are insufficient UTXOs the transaction would be cancelled.

3. A bitcoin wallet would take the input and subtract the output. The difference is the fee.

4. The very nature of transactions encourages privacy. Both input and output can come from various sources that are not necessarily owned by the individual.

[wafflemakr]

@Nick

If you have no UTXO’s, then it’s no transactions…

@BohemianJC

The transaction would fail and not be valid on the blockchain.

@Mroman

You do not be able to send the transaction

@Diego_Sanin

The transaction would not be processed.

@Samuel_Inclan

Transaction it isn’t possible,

@CryptoDD

The transaction will be cancelled.

@JJM

The transaction will not be accepted by any nodes on the network and will be discarded

@Tristan

You will not be able to cover and pay for the transaction.

@Hamze_Dirir

Then the transaction would not go through

@Diego_BM

• No transaction, It will be declined

@Gabriel_Ng

You cannot spend the UTXO. No transaction will be made.

@Kornel

The transaction would be denied as the requirements are not met.

Hi there!! What if I want to send 1 BTC, but I have 10 UTXO with 0.1 BTC each?

[wafflemakr]

@EnglishMom

The wallet negotiates the fee from previous history from the blockchain of fees, or some wallets let you choose a high, medium or low fee depending on the speed you want to send.

@Mercurydan

By looking at the previous transactions on the blockchain to see what is an average and acceptible amount to get you onto the blockchain quickly.

@Tingle

It would look at recent/previous transactions in the blockchain

Good! But once it selects the fee, how will the inputs and outputs relate to that value?

[wafflemakr]

Hi there!! The wallet builds the transaction in a way that inputs - outputs = fee. If you have an UTXO where where you have more bitcoins than what you need to send, your wallet will create an ouput sending the remaining amount to your own wallet again.

Example:

• You have an UTXO for 1 BTC
• Need to send 0.5 BTC to someone else
• You want to pay 0.1 BTC as a fee (I know it’s high, but just for the example)
• The wallet will then create an output where you send 0.5 BTC to an address, and 0.4 BTC back to your own wallet. (1BTC - 0.5 BTC - 0.1 BTC)
• This way, you end up with a new UTXO of 0.4 BTC that you can use later.

Hope that answers your question!!

[almanat]

1. Describe what Unspent Transaction Outputs (UTXO) are.
   the balance, or sum of, a wallet has.
2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
   it gets covered by another utxo in your wallet and change is then give back to your wallet.
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
   its specified, you can also adjust, but its inputs -outputs =fee
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
   any change can be give back to you to a different address.

[wtraveller]

1: They are transaction in a wallet that are inputs of different amount
2:many utxo’s would be joined together as inputs to cover the needed amount if there is a surplus it would be sent to an address controlled by me.
3: it would be calculated input - output or fixed depending exchange used
4:i could specify the output to different addresses under my control

[Mina_Bebawy]

@ivan

Describe what Unspent Transaction Outputs (UTXO) are.

The total change of UTXOs represent the btc wallet balance.

@ivan

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

The tx will be declined, so you can use more than one UTXO

@ivan

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

Fees = input - output

@ivan

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

You can send the output to different addresses

[Tingle]

replying to @wafflemakr : lets assume the inputs were the sum of 10 BTC then the outputs would equal (10 BTC - the Fee) as inputs must equal outputs or it would not balance

[Nick]

Thankyou, that was the best description I’ve read yet. Now I totally understand.

[Brenton]

1. UTXOs act as a balance in your wallet and are used to create new transactions.

2. The transaction would not be confirmed by the nodes and would become nul.

3. Transaction fees = outputs - inputs. With Bitcoin you can manually select your fees aswell as your Bitcoin wallet recommends a fee according to the latest block in the blockchain…

4. UTXOs can be sent to multiple addresses. Increasing the number of outputs will make tracking the transactions more difficult.

[pbrandstater]

[quote=“Alko89, post:6, topic:8436”]

• UTXOs are unspent outputs of the previous transaction.
• The transaction would be rejected / denied.
• The fee is calculated from the remainder of all inputs minus the outputs of a transaction.
• multiple address for each receiving transaction.

[Mercurydan]

the inputs can be an accumulation of the inputs/UTXO you have access to and the outputs would be a combination of the fee, the amount you sent and the change that is sent back to you. The miner gets the fee which is taken off the total in the inputs.

[Gabriel_Ng]

@wafflemakr

Hi there!! What if I want to send 1 BTC, but I have 10 UTXO with 0.1 BTC each?

Yes it would be possible to send if your Tx does not have fees
0.1 BTC x 10 UTXO = 1.0 BTC
Therefore your total of input is the same with the output which you wanted to send

[Restford]

1. The input of other transaction or the transactions to your address. Balance of your account.

2. It combines with other UTXO or it won’t work at all (declined transaction).

3. Inputs-Outputs

4. One can make use of several addresses in a transaction.