Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#1327

Describe what Unspent Transaction Outputs (UTXO) are.
All UTXOs of a bitcoin adress together are the available fund in your wallet you are able to spend.

What would happen if you don´t have any single UTXO that is large enough to cover your transaction?
A transaction could not be processed / accepted and will be rejected by the network when the total amount of all available UTXOs is lower than the desired transaction. Everytime a wallet creates a transaction, all UTXOs have to spend, the available funds that are not required for the transaction will be send back to original wallet as new UTXO.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
The wallet is monitoring the transaction fees of latest transactions added to blockchain. It will choose automatically a transaction fee that results in the transaction being accepted by the miners in a reasonable amount of time. Transaction fees are calculated depending on digital length of transaction and not on amount of funds transferred. The higher the number of UTXOs (inputs) and the higher the number of outputs, the higher will be the transaction fee. Transaction fees are assesed in sat/B (fee(satoshies) per Bit). Current fees range between 1$ and 6$ USD.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
As all available UTXOs have always to be spend in a transaction, in most cases parts of the funds are transferred back to your own wallet. By even increasing the number of outputs going back to wallets owned by yourself. It is not possible to see from the outside how much of the fund have been transferred to an external wallet and how much of it went back to bitcoin adresses controlled by yourself

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#1328
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXOs are the unspent inputs from previous transactions, and collectively are 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?
    The transaction cannot be confirmed.
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    It does not. The tx fee is difference between the UTXO’s inputted and the UTXO’s outputted
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Outputs can be inputs to the same person who initiated the outputs, and will therefore not be possible to know whether it is same person someone else.
#1329

You are correct about the fee, my bad. I just wanted to let you know that if I want to send 1 BTC, you can actually use multiple UTXO. Better example was 1BTC and 11 UTXO with 0.1 BTC each, so you could specify the fee! :sweat_smile:

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#1330

Hi there! Basically, the fee is the amount left when subtracting outputs from inputs. So, if you have a UTXO of 1BTC and your outputs is a transaction where you send 0.99 BTC to a friend, the fee will be 0.01BTC

Hope it helps!

#1331

What if I have 5 UTXO of 1 BTC each, and I need to send 2BTC?

#1332
  1. Describe what Unspent Transaction Outputs (UTXO) are.

These are bitcoin receipts from senders or donate of bitcoin to you that have yet to be spent. The Blockchain record these UTCOs, your wallet adds them up to create your balance. The Blockchain does not store your balance.
2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?

You would need to add another utxo to your input, you would then send the ‘difference’ back to yourself less the fee, which most wallets will calculate.

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

The wallet checks for fees in recent transactions on the block almost to guess the going rate. You have to make it worth the miner’s while, so the fee should be at a level that gets the transaction recorded in a relatively quick time.

  1. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction? Create multiple outputs back to your other wallets as well as the recipient. I’m not quite sure in this one.
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#1333

1 - UTXOs are the balance of unspent coins that are present in your “wallet”
2 - It will fail the transaction
3 - it is sent amount minus received amount
4 - inputs can be from other UTXOs you control along with UTXOs from others; outputs can also sent coins to yourself as well as others.

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#1334

  1. Describe what Unspent Transaction Outputs (UTXO) are?
    UTXO’s is received unspent outputs from previous transactions.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    TX + fee must be equal or less to the sum of all your UTXO’s or it will not be validated.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    A bitcoin wallet will automatically suggest the most suitable fee for a certain TX. You can manually overwrite it and choose a faster (more expensive) or slower (cheaper) TX fee.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    A transaction can have multiple inputs and outputs. You can increase your privacy, when sending UTXO to multiple recipient where one or more can be controlled by yourself.

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#1335

  1. UTXOs are all the funds that a wallet has available for spending from previous transfers.

  2. The network would reject your transaction.

  3. It would look at previous transactions on the blockchain and suggest a fee that would get your transactions on the blockchain reasonably fast…

  4. Since inputs equals outputs, this means that there will always be some Bitcoin that will be send back to the sending wallet. However, since especially with a lot of transactions it is not certain which of the sent amounts go back again, this increases privacy.

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#1336
    • Describe what Unspent Transaction Outputs (UTXO) are.
      A: UTXO’s are the total of unspent bitcoin available within a particular wallet.
    • What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
      A: Multiple UTXO’s will be combined to cover the transaction amount plus the tx fees and the wallet will receive back whatever is left over, similar to purchasing an item for $7 and paying with two $5 bills and receiving $3 back. In the case there are not enough UTXO’s in the entire wallet to cover a transaction output, the transaction will not go through due to “insufficient funds”.
    • How would a bitcoin wallet specify the transaction fee when creating a transaction?
      A: Most wallets propose transaction fee amounts based on recent fees and what it will take to get the tx to be added to the blockchain “fast enough”. The fee is the difference between the tx input and output.
    • How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
      A: You could send outputs to multiple wallet addresses that you control, thus obfuscating the identity of who controls each wallet.
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#1337

1.) Basically UTXO’s is the balance in your wallet that has not been spent.
2.) Not enough funds, no transaction can be made.
3.) The wallet will figure the approximate amount for a speedy transaction based on the difference between the input and the output.
4.) Do to the many input and output addresses it is impossible to track.

#1338

Describe what Unspent Transaction Outputs (UTXO) are.

  • all (your) UTXO’s added together is your spendable balance
  • send to address you own ( the left over / change for example )
  • WHole or fractional outputs of a transaction

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

  • All UTXO inputs are added together to put in the transaction, the leftover-fee is a new UTXO

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

  • Wallet is looking on the blockchain for the last used fees as a average suggestion for fee to you

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

  • The more inputs and outputs are used the more difficult it is to assume ‘your’ wallet address.
  • It also helps to use always new generated addresses as receiving address, this also makes it more difficult to discover your ‘leftover’ address (Which is never the same …)
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#1339
  1. UTXO are the unused transaction inputs
  2. the other UTXO will be taken or if not available, transaction is not valid
  3. will utilize UTXOs close to covet transaction and the fees
    4 by creating more output addresses
#1340

Describe what Unspent Transaction Outputs (UTXO) are.

Balance leftovers from the last transaction to be able to use to construct new transactions at the next payment.

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

Construct a transaction with the other utxos together.

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

By the difference between inputs and outputs: input - output = tx fee.

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

Constructing transactions with multiple outputs blurs the payment process about the destination and the intention…?

Every transaction has new output.

some feedback would be nice in here…

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#1341

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

Unspent Transaction Outputs (UTXO) represent funds received and which can be spent. When sending funds to others, your wallet chooses from the UTXOs available to your private key and then constructs a transaction.

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

In such an instance, your wallet will select two or more available UTXOs to cover the amount of the transaction. Any extra funds (minus the transaction fee) will then be sent back to you as part of the transaction constructed by your wallet.

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

Most wallets will propose a fee amount by looking at previous fees on the blockchain to determine a suitable amount, although some wallets will also allow you to specify the fee.

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

You could increase privacy in your transaction(s) by sending funds to other bitcoin addresses that you control.

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#1342

  1. UTXOs are the inputs that are used to create transactions, they are the outputs of previous transactions. The balance of the wallet is the sum of all UTXOs for that wallet

  2. If I don’t have a single large enough UTXO to cover a transaction then multiple UTXOs will be used to create a transaction that sums to an equal or greater amount than than the transaction

  3. The wallet determines the fee by looking at previous fees and calculates a fee to include the transaction in the blockchain in a reasonable time. The fee is equal to the difference between total inputs and total outputs

  4. Using multiple inputs and outputs can increase privacy

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#1343
  1. Describe what Unspent Transaction Outputs (UTXO) are.
    Basically the balance in yor wallet, All UTXO’s added up for you private key
  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Wont be valid
  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    A bitcoin wallet recommends a reasonable fee, bases on the current and previous transaction fees.
  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    Setnd you bitcoins to new addresses which makes it impossible to track
#1344

  1. UTXOs are transactions stored on the blockchain ledger and your wallet gives you your balance based on the UTXOs that you have received.

  2. Your transaction would not be confirmed by the network if the output exceeds the inputs.

  3. Your wallet would look at the current state of the network and suggest a fee to get the transaction picked up reasonably quickly by a miner. Input = Output + Transaction Fee

  4. You can use multiple wallets and there is no way for those outisde to know who owns which wallets. Also UXTOs have to be sent in full and with you receiving back the balance if you are sending less than your full balance of bitcoin.

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#1345

Describe what Unspent Transaction Outputs (UTXO) are.
UTXOs are old outputs from previous transactions that are not yet spend.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
Your wallet ‘asks’ the blockchain which UTXOs can be send with your private key. It then collects multiple UTXOs to match the cover of the transaction + fee.
If the total of UTXOs is larger than what you really want to spend, the transaction creates an extra output (like change) back to your wallet.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
The wallet looks at the price of previous fees on the blockchain and picks a fee that gets your transaction reasonably fast on the blockchain.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
The output of transactions can also just be send back to your own wallet, or another wallet that you own. From the outside nobody knows to whom you send the tx to.
That makes transactions very private and anonymous.

:question: :question: Question: Does a wallet have multiple bitcoin addresses? Like when you receive a new UTXO as ‘change’ back in your wallet, does that UTXO get a different address?

#1346
  1. UTXO are the output that were send at you from the previous transaction, in this case that output became my input for a new transaction from my wallet
  2. The wallet can arrange the UTXOs mixing them out to cover the expense+fee
  3. Sometimes you can decide the transaction fee, in other cases it appear like total amount send-the recever amount

I totally agree with this

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