answered above in quote
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UTXO’s are a blockchain ( bitcoin ) representation of what your wallet holds. A wallet may
have many UTXo’s that can then be used to send bitcoin in effect spending the UTXO’s.
Generally the amount you send is greater than what is required since a single UTXO may not
match exactly what is spend then your wallet received a new UTXO with the remaining
amount of coin. This is similar to purchasing something worth 7 dollars, sending two 5 dollar
bills and getting back 3 dollars ( minus any transaction fees ) -
You wallet would then combine multiple UTXO’s to be large enough for the transaction
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By subtracting the UTXO’s input from the output.
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You could combine UTXO’s with a third party wallet or defi wallet which would then further hide the original transaction source, a bit like a VPN.
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1 : It’s an unspent balance from all of your inputs. (“coins” you received, sitting in your wallet, waiting to be spent).
2: More UTXOs are pooled together until you reach your transaction value + fees. If you have 1 + 1 utxos and you need to pay 1.5. You will send out 2 to a third party, and 0.5- fees (going to the miner who verified your TX) back to yourself.
3:It would show for TX Input for example 1 btc, TX output 0.9995 btc . TX fees 0.0005 btc. All this info can be publicly accessed by using an online blockchain explorer.
4:inputs and outputs are just random numbers belonging to someone’s public keys. They are actual addresses. Unless you know who owns the private keys, you can’t find out who these addresses belong to. Protecting your privacy.
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Hi there! Actually, this is done by the wallet. But yes, you can specify that the remaining balance should be sent to another address you own, different from the originating address. So combining multiple outputs obscures the real addresses you own.
Hi there!! What do you mean by assigned?
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Hi there!! What if you have a 2 UTXO of 1 BTC each and you want to send 1.5 BTC to a friend?
Hey wafflemakr. Yep assigned is the wrong word. Identified would make be more correct. Cheers 
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unspent transaction outputs are the transactions available for a private key to spend.
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the wallet will enter enough utxo’s to cover the transaction output and send the remaining back to the wallet in a new utxo.
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the wallet will look at the previous transaction fee to estimate a fee that would get the transaction on the blockchain in a reasonable amount of time.
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without the private key, veiwing the trancation there is no way to determine for sure which address is being paid and which address is returning utxo to the wallet thus adding anonymity and privacy to the blockchain
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- Describe what Unspent Transaction Outputs (UTXO) are.
A. UTXOs are what you have available on the blockchain to spend. Generated from the Inputs in a transaction from other UTXOs.
- What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
A. You wallet will add up all the available UTXOs to cover the price of the transaction. Then you would pay for what ever you are buying, pay the fee, and the rest comes back to you.
- How would a bitcoin wallet specify the transaction fee when creating a transaction?
A. Some wallets let you choose your own, but most wallets check the blockchain for the fees of other recent transactions and selects the one that will get you into the blockchain the fastest.
- How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
A. You could send multiple transactions to separate wallets, making it look like you sent to several people, but in reality the wallets are all owned by you or some other one person.
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- It is the total value your wallet is able to spent. The sum of all would be your balance.
- It will group multiple UTXOs until it is large enough to cover the transaction. The surplus is sent back to yourself on another address.
- It would be related to the estimated time for the transaction to be put on the blockchain
- A the difference between the value that you spent and the utxo’s may or may not be sent to an address you have control of
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1. Describe what Unspent Transaction Outputs (UTXO) are.
Basically a UTXO is like a banconote. Something you can spend. A normal Transaction in bitcoin have 1…n inputs and 1…n outputs. that I/O are UTXOs.
2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
You (your wallet) need to user more UTXO (add up) to cover your transaction output value.
3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
It is implicit specified and it is the difference between Input UTXOs and Output UTXOs
4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Mix up. Use many inputs and outputs to make UTXOs tracking more challenging
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Bitcoin Transactions and UTXO
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Describe what Unspent Transaction Outputs (UTXO) are.
UTXO (unspent transaction outputs)consist of multiple transactions, that have not been spent. The nodes communicate with each other and with your wallet, to show what unspent balance you have available. UTXOs are unspent outputs that your wallet address has received. If you plan to spend the UTXOs, the nodes in the network, will communicate to each other, agreeing that your wallet has a valid amount of UTXO to use. -
What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
Attempting to spend a UTXO that does not cover your transaction, will be ignored by the blockchain. The nodes will communicate the transaction with each other, and if the UTXO is not enough, the nodes will deem the transaction invalid. -
How would a bitcoin wallet specify the transaction fee when creating a transaction?
A bitcoin wallets function is to assess the blockchain of previous fees calculated and estimate a fee that can append your transaction into a block, within a reasonable time.The input balances, subtract the output balances to confirm the fee also. If your transaction is a larger one, the fee will become a higher amount or if you chose to add your transaction, at a faster speed into a block. -
How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Increasing privacy in a transaction is possible in Bitcoin. With multiple inputs. there can be multiple outputs. Sending funds to multiple addresses, can increase privacy. Seeing different addresses as outputs, will make it more difficult to monitor one address. Some wallets also change the wallet address when funds are transacted.
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The fee would be larger but you wouldn’t pay anything crazy.
If you have a utxo of 0.5 btc and you wanted to send 0.4 btc, you would send 0.4btc to the address you wanted and 0.09btc to yourself again. The fee would be 0.01btc. Total input - total output = fee. In this case 0.5 - 0.49 = 0.01. The fee is determined by the wallet with a unit of measurement we call “satoshi per byte”. If you are still confused feel free to message me back. I will try to explain it again.
UTXO is not a key. A private key can verify that you own an address, therefor giving you the ability to move the UTXO.
Yes could combine more UTXO’s so that you can do the transaction. If you don’t have enough even when combining all the UTXO’s then you would either need to get some more or you wouldn’t be able to do the transaction at all. Funds cannot be stolen if you lose your private key. If you lose your private key, the funds would be unmovable. They would be lost forever. 
Great example.
The wallet sets the fee with a unit of measurement we call “satoshi per byte”. The wallet is saying how much satoshi are you willing to pay per the byte of space that will be taken in a block. This is a very good way to specify the fee. As the block space is limited.
Exactly. And the wallet will set the fee according to the current average fee. It must set a unit of measurement we call “satoshi per byte”.
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