Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#161
  • UTXO are the balance left in your wallet that it keeps track of.
  • The transaction would be declined if your UTXO is not large enough to cover it.
  • The wallet checks the blockchain and figures out the correct fee.
  • Several addresses and outputs can result from one input.
#162

*** Describe what Unspent Transaction Outputs (UTXO) are**.
Unspent Transaction Output - not yet spent crypto

*** What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?**
Your UTXOs are added together in the wallet and then the funds sent, Balance is returned minus the the fee

*** How would a bitcoin wallet specify the transaction fee when creating a transaction?**
It determines a fee based on difference between input and output

*** How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?**
The privacy is increased because the input and output are not the same number as the fee is removed. This makes the transaction obscure to anyone reading the chain

#163
  1. Describe what Unspent Transaction Outputs (UTXO) are.
  • UTXOs are a balance in your wallet that has not been spent, there are no coins there are only UTXOs. Your wallet adds up all the UTXOs that you haven’t spent.
  1. What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
  • The transaction will not be valid and will not send because the blockchain network know how much UTXOs have been sent to your wallet
  1. How would a bitcoin wallet specify the transaction fee when creating a transaction?
  • The fee is part of the transaction, it is the difference between both the input and output
  1. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
  • Multiple transactions can take place to the recipients and to yourself, this in turn will add anonymity to yourself and others you sending UTXOs to. Making it almost impossible for anyone to track where the transaction is going.
#164
  1. UTXO is like change. You send all of your coins to pay and get back the unspent portion.
  2. If no single UTXO is large enough to cover a charge then a combination of UTXOs will be used.
  3. Fees depend on the wallet. Some will allow you to set your own fees, others set a fee based on recent blockchain transactions.
  4. You could generate several wallets, or just A new wallet every transaction output. If the original wallet was never associated with an IP or KYC account then the original wallet would still remain anonymous. So I think.
#165

  1. UTXO’s are outputs which are not yet spend by the private key (wallet) which received this output.

  2. You are just unable to create this transaction than. Error.

  3. Input = Output + fees - Therefore, the fees will be the output minus the input. Calculated often by the wallet itself.

  4. Multiple outputs ??

#166
  1. Describe what Unspent Transaction Outputs (UTXO) are.

UTXO are the bitcoin inputs received but remain unspent , ie no outputs, what we call the “balance in the wallet”

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

It would remain unspent. You would have to increase your balance with more inputs to enable the transaction. IOW, “Top up your wallet”

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

Input minus output = fee

I guess the wallet polls the blockchain nodes to determine the amount of the fee. There must be an algorithm built into bitcoin code that defines that at any given time.

This was a good explanation!

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

Bitcoin enables several outputs in one transaction. Each output can get sent to different addresses specified in the transaction, including one or more addresses that you control the private keys of. The address format means owners are anonymous.

#167

  1. Total unspent inputs. (Viewed as balande in the wallet).

  2. You will spend 2 or more inputs, and the balance that exceed the specified amount will be sent back to you, minus fees.

  3. Input-output

  4. You can’t really, but you can make tracking harder by generating multiple outputs, and have multiple addresses.

#168

1 They are transactions that are sent and not spent.
2 Then multiple UTXO’s would be used to fulfill the transaction with the remainder sent back to you.
3 Your wallet calculates the fee by the difference of the input and output.
4 In possible to tell which output is spent or going back to wallet, its a guess.

#169

Unspent change sent back to public address
You could lower the fee risk not being picked up by miners or unable to send not enough
Would add to the amount sent
Create a new address to send utxo to

#170

  1. The total of UTXO is the wallet balance

  2. Absolutely no transaction at all.

  3. UTXO minus UTXO input = fee

  4. The use of a private blockchain

#171

Bitcoin Transactions and UTXO - Questions

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

UTXOs are bitcoin that have been sent to you wallet address that you have not yet spent.

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

You would send all UTXOs while sending the remainder of the transaction back to yourself.

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

The transaction fee is specified by the total bitcoin from UTXOs subtracted by bitcoin sent in the transaction and the bitcoin sent back to yourself.

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

When sending a bitcoin transaction, it is not specified which of the addresses point back to the sender’s wallet and which of the addresses are actually the recipient’s.

#172

Question 1

Describe what Unspent Transaction Outputs (UTXO) are.

Unspent Transaction Outputs basically are Inputs that can be used as Outputs; for example if I do a job for my friend and he pays me 1 BTC as payment he uses one or more of his UTXO’s and uses them as Outputs to send to me. When the funds reach me my friends Outputs now become my UTXOs/Inputs which I can now use as Outputs

Question 2

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

There are a few things one could do

  1. Gather more inputs from other addresses with unspent funds in them
  2. Get a loan from a friend
  3. Get back to work and get paid

Question 3

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

The wallet specifies the transaction fee the following way. Inputs - Outputs = Transaction Fee Some wallets allow you to specify the transaction fee but normally the wallet is able to look at the blockchain and see what fee’s are currently set at and it will set the fee to a rate which is close to the average and likely to get the transaction processed.

Question 4

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

A way to increase privacy in transactions would be to control multiple addresses. If the funds exist in only one address split the funds in that one address into multiple addresses. Combine these Inputs now into multiple outputs with the real recipient obfuscated among the transactions.

#173

  1. Unspent Transaction Outputs is a total of UTXO is in the wallet and a previous transactions.

  2. It will be declined if you don’t have enough UTXOs.

  3. The bitcoin wallet figures out the correct fee.

  4. By using a private key

#174
  1. Previous outputs from other transactions sent to a wallet, that did not get spent yet.
  2. The wallet will pick additiona, as many as needed, to have enough to cover the transaction.
  3. A bitcoin wallet will check with the blockchain and propose a fee that would get the transaction into the blockchain in a reasonable time.
  4. Using multiple output addresses, where more then one can be yours.
#175
  1. It is money you receive from a previous input transaction that you are holding as Unspent.
  2. The transaction would not confirm, it would be declined.
  3. It would take the total input amount and subtract the total output amount to get the Fee amount.
  4. Through the creation of different addresses each time you transact. Addresses are not linked to an identity, it is linked to an unspent transaction amount.
#176
  1. A UTXO is an unspent output in your wallet.
  2. Your transaction would be declined.
  3. Your wallet will check the blockchain and then calculate the tx fee for you.
  4. Use more than 1 address
#177
  1. UTXos are transactions that have been sent to you as inputs and that are now available for you to spent are labeled as UTXOs.

2.In that case your wallet will combine your available UTRXOs and send the amount combined which can be larger then the sum required for your purchase, it will then send the change back to your adress.

3.It would calculate the fees that have been charged on other transaction and pick a rate somewhere in between the fee value and processing speed. Remember that miners choose to process transactions with higher fees , so the higher the fee the faster your transaction will be processed.

4.Several addresses and outputs can result from one input.

#178
  1. UTXO unspent trans output. Sum of all the UTXO is the balance of your wallet.
    2.Transaction would be denied by chain because i would not have enough UTXO (balance) under my name to cover the transaction and the fees.
    3.Wallet then creates transaction check the block chain and figures out the fee. (tell me if I am wrong but I understand that this fee depends on how crowded network etc is at the transaction moment?)
    4.One transaction can have many inputs and many outputs. And on chain you cant see owners of the wallets, so that means you can make many transactions for your self and soem for others without any way of tracking what is where if everything comes from one transaction.
#179
  1. Unspent Transactions Outputs are inputs (money) from previous senders
  2. The transaction will not occur
  3. inputs - Outputs = Fees
  4. Create multiple addresses when receiving
#180

  1. Unspent Transaction Outputs (UTXO) are the output of a specific transaction that has not yet been spent. So until an output within a transaction has been spent, or been designated as an input for another transaction, it is considered a UTXO.

  2. If a single UTXO cannot cover a specific transaction, then multiple smaller UTXOs can be collaboratively used to cover the transaction. If there are not enough smaller UTXO transactions to cover the whole transaction, then the transaction will be considered invalid and won’t be added to the blockchain.

  3. When creating a transaction, an individual’s wallet will determine a transaction that is efficient for getting the transaction into the blockchain in a timely manner. Some wallets will allow an individual to choose what their transaction fee will be, but most wallets will decide what the transaction fee will be.

  4. If a person has multiple addresses in their wallet, then one address can be used to facilitate the transaction and another address can be used to receive it. Since no one can know where the address is derived from, there would be no way to determine that one of the receiving addresses belonged to the sender.