Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#1592

Hope you don’t mind for correcting you that much :smiley: privacy is increased by using a different address each time you receive coins as well by sending your change back to a new address :slight_smile:

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#1593

No, not at all :rofl: it’s all learning to me, I appreciate the feedback… Perhaps I worded it wrong as the question above was referring to inputs / outputs (which are basically the transactions?)… My thought process was if you made multiple transactions to multiple addresses (creating multiple inputs/ outputs) it would make the transactions more private?

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#1594

I agree the money is stored on the blockchain. I’m using wallet as analogy…there is no need to do balance accounting if you carry cash in your wallet because the unspent cash is all you have…unlike a bank account in which you have to balance spent vs unspent amounts to know the real total. Double spend is also impossible with UTXOs similar to physical cash.

Send your 2 BTC and get change of .5 BTC sent back to an address that you own.

by grouping transactions into one transaction privacy can be increased.

-Thanks for the feedback

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#1595

Yeah, I just wanted to clarify that the wallet does not store money, but the private keys. The wallet will show a balance but this is the amount of UTXOs your private keys can unlock, that then forms the total amount of BTC. In Bitcoin is all about UTXOs and not actually coins in your wallet or in the blockchain.

Hope this makes sense! Let me know if you have any other question!

Felipe.

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#1596

My Answers:

  1. UTXO are like input or funds you have received from someone
  2. As long as your wallet balance has enough to cover the transaction, it will be approved. So basically if a single input is not enough, but you already had other UTXO’s in your Wallet that will cover TX, then it’s approved. otherwise… Denied Transaction.
  3. Based on the Fastest way into the Blockchain. The wallet looks a previous fees in the blockchain
    4.Use different addresses for your outputs, so that no one can guess what goes back to you versus outputs or Fees
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#1597

Well it makes it kind of more private, it makes it harder to track :slight_smile:

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#1598

  1. UTXOs are unspent transactions you have received from others. They represent the balance of crypto you have available to spend in your wallet.

  2. If you do not have a single UTXO big enough to cover a transaction, then your wallet can combine several UTXOs to create the necessary amount to complete the transaction. You will receive change back from the transaction.

  3. The fee is determined by taking the Input minus the Output of the transaction.

  4. Transaction inputs and outputs are completed using wallet addresses and these addresses are not easily tagged to any one person so in that since they are private.

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#1599

Correct. That is how we calculate the total fee. A wallet sets the fee using a unit of measurement called “satoshi per byte”. :slight_smile:

What if I connect your identity to a public address you own? Is there anything you can do to make yourself more private again?

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#1600

You could generate a new public address or incorporate a swap application in the transaction??

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#1601

Yes, you could use mixing services. But the most simple example would be to create a transaction with multiple outputs. This way I wouldn’t be sure which outputs you still own and which you don’t. Its easier to assume with 2 outputs then with 10 outputs. :smiley:

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#1602

  1. UTXO is the balance left in the wallet

  2. the transaction would be unsuccessful

  3. fee = input - output

  4. use new addresses

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#1603

Just to be sure. Is there only one UTXO? :slight_smile:

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#1604
  1. Part of your total fund?
  2. No tx
  3. Automatically calculated from other recent transactions in the blockchain.
  4. Use many inputs and outputs and send money to yourself.
#1605

  1. A UTXO is an amount of bitcoin sent to an address but not yet spent by that address.

  2. If an address does not have a large enough UTXO for the transaction, multiple UTXOs which add up to an amount greater than or equal to the transaction size are sent. Any remaining balance a UTXO is then sent back the address which created the transaction.

  3. Wallets determine fees by observing the fees of previous transactions. The wallet then chooses a fee which is likely to get the transaction added to a block within an acceptable timeframe based on the fees observed from the other transactions.

  4. Because there does not have to be an identity associated with each address it is difficult tell who is in control of the address in which the transaction is sent. A transaction could be sent to an address controlled by the sender or someone else which may be difficult to determine.

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#1606

Kind of, the sum of all UTXOs is your balance :slight_smile:

You can send money to other people if you want :stuck_out_tongue: the way you would improve privacy is by creating a new address each time you receive funds (which includes the change)

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#1607

Not necessarily. If you were creating a raw transaction you have to set where to send the change yourself, otherwise all the remaining funds would be sent to the miner as a fee. It is a good practice to use a new address for sending the change back thus increasing privacy :slight_smile:

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#1608

Describe what Unspent Transaction Outputs (UTXO) are.
UTXO’s are transactions you got through an input what you did not spend yet. The ammount of BTC in UTXO’s determin how much you can spend in a transaction output.
As you have received several inputs in value of 0,9 BTC then that amount is your UTXO… as soon as you want to purchase something , your UTXO becomes an input for an output.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction? then the transaction won’t be prooved…

How would a bitcoin wallet specify the transaction fee when creating a transaction?
The fee is not specified, it is the diffence between the input and the output

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

The transaction does not show where the transaction comes from… the hashes are not reversable, the inputs are hashed ( cryptography ) and can not be decrypted

#1609

Each transaction you receive is a separate UTXO. The sum of all your UTXOs is your balance :slight_smile:

You can always track where the transaction came from all the way back to when the coins were mined as these are not hashed :slight_smile:

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#1610
  1. UTXOs are all the transactions in which te stored bitcoins are not spent and are held by the person whose bitcoin address has been mentioned.
  2. The transaction will not be confirmed/ will be invalidated.
  3. It looks at the recent transaction fees on the blockchain and proposes the value based on the difference between the input and the output.
  4. It can generate new output addresses, as well as having multiple output addresses.
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#1611
  1. the transaction sent to you that you can spend
  2. no transaction
  3. input-output= fee
  4. have more outputs makes traking more dificult
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