Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#1612

Thank you Alko !
for giving more explination! :slight_smile: I see now that every input to my wallet is an UTXO.
You tell me that you can track a transaction down till the moment the coins where mined… as I understand now is the blockchain private because you can not see from Whom the transaction comes?

#1613

  • Describe what Unspent Transaction Outputs (UTXO) are.
    Its the balance that gets added to a specific address at the output of a transaction.

  • What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    You can combine multiple UTXOs. If there are no others then you can not do the transaction, it will be rejected.

  • How would a bitcoin wallet specify the transaction fee when creating a transaction?
    Fee = Inputs - Outputs.
    It will look at the blockchain to check the past fees and pick the inputs in such a way the the resulting fee will get the transaction into a block fast enough.

  • How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    You can send outputs to numerous addresses that you control.i.e. signed by your public key.

1 Like
#1614

Thanks for clarifying. Do wallets generally create transactions that properly send change back?

#1615

  1. UTXO is the unspent balance that a wallet keeps track of.

  2. The transaction would be denied and invalid.

3.The fee is the difference between the input amount and the output amount.l

  1. You could use different addresses for each transaction.
1 Like
#1616

Homework on Bitcoin Transactions and UTXO - Questions

Describe what Unspent Transaction Outputs (UTXO) are.
UTXOs are the total of transactions you received on your btc adress.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
More UTXO will be put together untill you have enough. If the sum of all UTXOs are still not enough to cover the fee the transaction will be invalid

How would a bitcoin wallet specify the transaction fee when creating a transaction?
You can calculate the transaction fee by deducting the input from the output.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
Creating multiple adress and making transactions netwerk your on wallets. Also making transactions to multiple adresses in one time.

1 Like
#1617

The Bitcoin blockchain is not really private by itself. If you can make physical connection of one person to an address, you can track his transactions since its a public ledger with all transactions being public. Privacy on bitcoin in a sense only exists when there is no way for someone to make a link between the address and the person owning it.
There are other blockchains that offer privacy by default like Monero where there is no way of knowing how much balance an address (and consequently the person owning it) has and where is it sending the money to. :slight_smile:

2 Likes
#1618

You mean private key? :slight_smile:

1 Like
#1619

Yes :slight_smile: all modern wallets do this for you. Today the only time this must be put into consideration is when you want to construct a raw transaction on your own :slight_smile:

1 Like
#1620

UTXOs are the transactions you received and didn’t spend yet :slight_smile:

1 Like
#1621

Thanks! I hope I learn how to build a raw transaction sometime while enrolled in this academy.

1 Like
#1622

1- Unspent transaction output is simply transaction that are sent to an address and are credited to that address on the block chain ledger. That input from another address becomes ones UTXO and is now available to the new address to send as i/p to another address.
2- If the UTXO is not large enough to cover a transaction it would immediately be recognized as an improper transaction and would be aborted.
3- A bit coin wallett would calculate according to similar fees previously charged for similar transaction as a rule of thumb UTXO - I/P = fees.
4- Transactions can be sent to different output as well as back to the sender, no one knows , anonimity is thus assured.

1 Like
#1623

You will learn how to make raw transactions if you take the Bitcoin Programming 101 course :slight_smile:

2 Likes
#1624

You can group multiple UTXOs into one transaction if you don’t have any one UTXO large enough to cover it. However if the sum of all your UTXOs is not large enough, then the tx will fail :slight_smile:

1 Like
#1625

  1. UTXO are the output of previous transaction to your public address which are not input to other transactions from your wallet. Essentially it is your unspent balance of bitcoin.

  2. If you don’t have any single UTXO that can cover your transaction, your wallet will try to pool together your other UTXO until it is enough to cover the transaction. Any left over amount is sent back to your own wallet. If there are not enough UTXOs to cover the transaction it means your balance is not high enough.

  3. Wallet will look at previous transactions fees in the blockchain and propose a fee that will get transaction confirmed in a reasonable amount of time accordingly. Transaction fee will be the difference between Input and Output values.

  4. You could use the notion of input and outputs to generate many transaction, some of which will go to a 3rd party and others will go to your wallets you control. This would increase privacy.

1 Like
#1626

That’s what I meant :yum:
Thanks for correcting me!

2 Likes
#1627

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    A UTXO represents an amount of cryptocurrency that was sent to a wallet but has not been used/transferred by the wallet owner. So for the blockchain it’s just a transaction.

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    Then as many UTXO as necessary will need to be used to cover the transaction and if there is any leftover cryptocurrency after covering the amount of the transaction and the fee connected, then this leftover will be sent back to the sender’s wallet.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    OK I had to cheat here and look at other people’s answer. Of course the fee is the Input - output. The wallet doesn’t decide what the fee is (that part I knew) but is the fee already set in the program?

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    I’m not sure I understand the question since transactions in bitcoin are already very anonymous and private. Of course by using blockchain.com one can see the inputs and outputs but doesn’t know who they belong too. A different output number can actually refer to the owner of the wallet sending the money (even if this one is represented by a different input number).

1 Like
#1628

  1. Describe what Unspent Transaction Outputs (UTXO) are
    The change received from the past transactions. The spendable amount

  2. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
    The transaction can be constructed using multiple UTXOs.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The difference between Inputs and Outputs is the miners’ fee

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

1 Like
#1629
  1. UTXO= Unspent Transaction Outputs= It’s a piece of DATA that represents FUNDS that can be spent again in the future.
  2. Because there is not enough UTXO to cover your transactions, it simply will be DECLINED.
  3. By checking the BLOCKCHAIN the WALLET figures out the CORRECT FEE.
  4. By using different addresses you can increase your PRIVACY
1 Like
#1630

no, there can be more than one

2 Likes
#1631

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

    • It is the output of transactions that are used by wallets to determine the sum total of credit the wallet has…

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

    • You could bundle a few UTXO’s together to add up to required amount and then some (Fees)
      *Otherwise the transaction will not occur.

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

    • It will look at old fees and determines what fee will get you into the blockchain fast enough

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

    • Make use of output spoofing where more addresses are generated for output to hide the return output.
    • If you are really into safety I guess you could also do the same with input by splitting up input to multiple inputs.
1 Like