Homework on Bitcoin Transactions and UTXO - Questions

[gllan005]

1. UTXOs are the input transactions going into a wallet that are also outputs of the previous transactions being sent to the wallet.
2. The transaction won’t be added to the network.
3. The wallet calculates the amount it would take to make the transaction process faster, since miners process higher transaction fees first.
4. I assume someone send hold more than one private key create transactions the would output to different private keys that they hold.

[cryptomarls]

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?

A1. UTXO’s are input (unspent transactions) from a previous output sent to your wallet.

A2. You would have to use more than 1 UTXO to cover the transaction plus the fee, as the UTXO has to be spent in full. for example if you have 2 UTXO’s 0.3 and 0.5 but the item you wish to purchase cost 0.6, you would have to use both UTXO’s (0.8), assuming the fee is 0.1 you would have a balance of 0.1 which you would send back to yourself.

A3. The wallet would calculate your fee by looking at your transaction amount and your total balance and calculate the fee that would get you through the chain as quickly as possible.

A4. The inputs (UTXO’s) to your wallet are outputs from a previous transaction to your wallet which are stored on the blockchain. When you create a new transaction your wallet will query the blockchain asking for verification as to which UTXO’s can be spent against the private key that is asking. In reply the blockchain will send back a list of the UTXO’s that are available to be spent. The address of the inputs and outputs does not show who they belong to therefore this adds privacy.

[sweeesh]

1- UTXOs are the sum of your inputs associated with your private key. And what you are available to spend.

2- If you dont have a single UTXO, but do have more than one UTXO that adds together to cover your transaction. Then you will send some output for your transaction and some for your fee; the rest will be go back to your wallet as another UTXO.

3- It will look in the meme pool and make an estimate based off of the network congestion.

4- To increase your privacy you would want to use a brand new address.

[jwhite]

1. A UTXO is a transaction sent out from a wallet. This becomes the input for the receiving wallet, but has not been spent yet.

2. After a wallet queries the blockchain to determine which UTXOs a particular private key can spend, the blockchain provides it with a list of transaction outputs and amounts. The wallet then provides the available balance (blockchain does not do this). If there was only one UTXO and the amount was insufficient, the transaction would be declined. However, the wallet could also determine if the balance of several UTXOs is enough to cover the cost + fees. If so, it would complete the transaction.

3. While some wallets let you choose it yourself; after reviewing the blockchain, most propose a fee that will get you into the blockchain fast enough.

4. When you send a transaction for a certain amount (i.e. purchase), you can send the remaining amount leftover to another address you control. This makes it very difficult to track back to the individual.

[Cryptojuice]

1. UTXOs are unspent outputs from a previous transaction
2. The wallet having already summed all UTXOs would not consider it a valid transaction so would never be sent.
3. The transaction fee is implied but not specified. The amount sent will be less than all of the UTXOs. The difference is the transaction fee.
4. Have multiple output addresses

[Nishadow]

1. A UTXO is the output from a transaction performed by a node, before that output is used as input in another transaction, either by another node or the same node . Essentially, a UTXO represents recieved funds.

2. If any single UTXO is not large enough to cover a transaction, the node/wallet will check for other UTXO’s to see if it can accomodate the transaction amount. If there are no other UTXO’s or the UTXO’s you have are not large enough, then the transaction may not be able to be carried out.

3. A Bitcoin wallet specifies the transaction fee by subtracting the output from the input. The fee is not specified , rather it is implied and will be transaction specific, according to the sizes of the various UTXO’s involved. Thus there is no linear standardisation of fees. Although fees are optimized/balanced 2 transactions with the same output may be constructed with differing UTXO’s and thus have a differinf transaction fee. Miners will choose the transaction with the (usually slightly?) higher fee, first.
   4), To increase privacy in your transaction, you could construct it so that you are the recipient of some of the outputs. i.e, you could spend your UTXO via another address which is also controlled by you, or direct UTXO’s back the address the originated from. When seen from outside the system, no-one can tell who the recipents are, without a lot of digital pathology.

[Nishadow]

1. A UTXO is the output from a transaction performed by a node, before that output is used as input in another transaction, either by another node or the same node . Essentially, a UTXO represents recieved funds.
2. If any single UTXO is not large enough to cover a transaction, the node/wallet will check for other UTXO’s to see if it can accomodate the transaction amount. If there are no other UTXO’s or the UTXO’s you have are not large enough, then the transaction may not be able to be carried out.
3. A Bitcoin wallet specifies the transaction fee by subtracting the output from the input. The fee is not specified , rather it is implied and will be transaction specific, according to the sizes of the various UTXO’s involved. Thus there is no linear standardisation of fees. Although fees are optimized/balanced 2 transactions with the same output may be constructed with differing UTXO’s and thus have a differinf transaction fee. Miners will choose the transaction with the (usually slightly?) higher fee, first.
   4), To increase privacy in your transaction, you could construct it so that you are the recipient of some of the outputs. i.e, you could spend your UTXO via another address which is also controlled by you, or direct UTXO’s back the address the originated from. When seen from outside the system, no-one can tell who the recipents are, without a lot of digital pathology.

[Gerard_Goldski]

1. UTXOS are inputs that are not spent… The blockchain records them and a wallet will query the block to track what UTXOs are available…
2. It will add up individual UTXOS to cover the transaction+fees and return the excess to the wallet holder.
3. transaction is input-output+fee therefore fee= inputs - output.
   4.Bitcoin transaction can be sent to multiple addresses including the sender. Due to encryption the reader of Block Explorer cant decipher if the sender sent the bitcoin to himself. Also the blockchain holds no balances just the record of UTXOs. Unless you have access to the senders private key ones financial information is safe.

[MSeeman]

1. UTXO(s) are output from other transactions which are now associated with a private key that can use associated “Unspent Transaction Output” as input for new transactions. The sum of accumulated UTXO(s) equate to the “balance” associated with a private key or wallet.

2. Multiple “single” UTXOs, which sums are equal to or greater than transaction amount (plus fee), would need to be added as inputs to the transaction, else the transaction would be ignored.

3. Simplified, Fee’s are equal to Input (minus) Output.

4. By creating multiple outputs with each transaction that send UTXO to other accounts under ones control.

[Sarah]

1. UTXOs are bitcoins received into your address (input) but not sent out to other addresses or even own address.
2. The transaction will not be verified it will be declined. Your wallet is in contact with the blockchain regularly.
3. The transaction fee and the output makes the input.
4. By sending other bitcoins to your addresses.

[Macmillen1]

1. UTXOs are BTC that have been received but are not yet spent

2. More than the necessary bitcoin will be output, but the difference is sent back to you

3. Input = Output + Transaction Fee

4. Use multiple addresses

[wafflemakr]

@whip23

Not enough funds, no transaction can be made.

@tcoltman

Wont be valid

@David_Walsh

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

@CitizenGain

If a UTXO is not large enough to cover a transaction thtet transaction is declined by the wallet.

@AJade

The transaction will be ignored/rejected by the network.

@Cobrati21

If you don’t have a single UTXO you will not be able to complete your transaction.

@gllan005

The transaction won’t be added to the network.

Hi there!! But what if I have 2 UTXO of 1 BTC each, and I wish to send a transaction of 1.5 BTC to a friend? Is that possible?

[wafflemakr]

@RLion

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

@JustG

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.

@tcoltman

A bitcoin wallet recommends a reasonable fee, bases on the current and previous transaction fees.

@Lacho

The fees are calculated by the wallet.

@gllan005

The wallet calculates the amount it would take to make the transaction process faster, since miners process higher transaction fees first.

Hi there! And how is the fee related to the inputs and outputs of the transaction?

[wafflemakr]

@jachinto_w

will utilize UTXOs close to covet transaction and the fees

Hi there! Can you explain us a little more what you mean but utilizing UTXOs close? Thanks

[wafflemakr]

@Atlas

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

Good!! But sometimes the UTXO is not a leftover of past transactions, as maybe you get newly created coins from mining.

[wafflemakr]

@CryptoPadawani

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?

Hi there!! Each UTXO is meant for a specific address, so that’s why it can only be spent using your private key. If you have a 2 BTC UTXO and want to send 1BTC, you will get back the change to the same address you are using.

Hope that answers your question! Let us know if you need anything else!

Felipe.

[wafflemakr]

Hi!! Yeah, so the wallet will try to use enough UTXOs to cover for the amount you want to spend + fee.

[CryptoPadawani]

But it’s possible to generate different addresses with your wallet right?

[wafflemakr]

@Francois_Rwabukwandi

All inputs have to be spent because inputs equal outputs and this happens after a successful transaction.

Hi there! Then, what is a UTXO, according to what you mention here?

[wafflemakr]

Oh yes, definitely. You can have multiple addresses, so multiple private keys!