Homework on Bitcoin Transactions and UTXO - Questions

Blockchain and Bitcoin 101
#1832

Describe what Unspent Transaction Outputs (UTXO) are.
Unspent Transaction Outputs that are received as inputs (either a single or a multiple number of inputs) to your wallet that are then constructed, signed and sent by your wallet to another blockchain address.

What would happen if you don’t have any single UTXO that is large enough to cover for your transaction?
The wallet will wait for additional UTXO(s) to be received as inputs to wallet, sum the UTXO’s, then send the total UTXO’s needed for the transaction including any unused remainder amount that can then be sent to a blockchain address you control.

How would a bitcoin wallet specify the transaction fee when creating a transaction?
The wallet will examine the blockchain and use that information to calculate a fee that is estimated to allow the processing of the transaction on the blockchain within a reasonable amount of time.

How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
By using multiple UTXO inputs and outputs in the same transaction, you can to an extent obscure the details of transactions in terms of amount of cryptocurrency that was actually exchanged from one party to another party.

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#1833

  1. A UTXO is the sum of unspent bitcoin ‘held’ in a bitcoin wallet.

  2. The transaction would be rejected and would not be added to the blockchain.

  3. The wallet will choose the fee based on previous transactions by looking at the blockchain, in order to make the transaction as quickly as possible. The fee can also be chosen manually if preferred.

  4. You could use several wallets to send bitcoin to yourself, and no one would know the recipient is the same person.

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#1834

Describe what Unspent Transaction Outputs (UTXO) are.

UTXO tells the private key how much it can spend, UTXO show the balance of the private key. In a simple way it is inputs which isn’t spend yet!

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

The transaction will be denied.

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

Difference between input and output

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

Outputs is used to send to different adresses, nobody knows which of this adress belongs to who and which one is mine.

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#1835

The wallet will not wait to recieve more UTXOs, if there aren’t enough at the time of creating a tx, you won’t be able to create it :slight_smile:

Not exactly, you use a different address each time you receive funds :slight_smile:

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#1836

Why not just use a lot of addresses in the same wallet? :slight_smile:

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#1837

  1. A UXTO is the amount of money sent to, for example, a Bitcoin address during a transaction.

  2. In the case that you do not have any single UTXO that is large enough to cover a transaction, you can then utilize UTXO from a different UTXO to complete the transaction.
    Then with the remaining UTXO you would send back to your address in another transaction.

3.The transaction fee is the input minus the output.

  1. When a transaction contains many different wallet address in the input and the output makes it a much more private. Any bitcoin user can have an infinite amount of wallet addresses.
#1838

Thank you @Alko89 - simpler situation than I thought.

#1839

Thank you @Alko89 :slight_smile:

#1840

1.- They are available transactions that I can spend. Wallet will ask blockchain which are the UTXO available for my private key and will it do the balance for me.

2.- I will not be able to send that transaction.

3.- By subtracting the amount of total output minus total input.

4.- By receiving a transaction to a new wallet address and spend the all balance at once or with less possible transactions.

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#1841

  1. The UTXO calculation determines the balance in your wallet

  2. Miners may not process your UTXO and the transaction will fail

  3. By finding the difference between the input and the output transaction

  4. Use different addresses each time do a transaction

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#1842

  • Describe what Unspent Transaction Outputs (UTXO) are.

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

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

TX fee is equal to input - output.

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

All wallet address are a series of numbers and letters which is anonymous and private

#1843
  1. UTXO’s are unspent transaction outputs. They are basically the output of a previous input that the network states is waiting for you to spend.
  2. You create a transaction that combines the two UTXO’s and send the rest back to yourself minus network fees.
  3. It will either present you with a choice likely based on expediency or tell you based on a previous transaction.
  4. You could send BTC to yourself pseudo-anonymizing the transaction.
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#1844

You don’t need to spend the entire balance at once and you do need to use the entire UTXO. Using a new address for each receiving transaction is sufficient. :slight_smile:

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#1845

You just wrote the first two questions, but forgot to answer them :slight_smile:

They are pseudo anonymous, which means if someone can link an address to you it can track your balance :slight_smile:

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#1846

  1. Describe what Unspent Transaction Outputs (UTXO) are.
    UTXo’s are unspent inputs in your wallet.

  2. 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 accepted from the network and it will fail.

  3. How would a bitcoin wallet specify the transaction fee when creating a transaction?
    The transaction fee is based on how fast you would like the network to approved. To determine the specific amount one has to subtract the input and the output.

  4. How could you use the notion of transaction inputs and outputs to increase privacy in your transaction?
    To increase the privacy one can change the address for every transaction.

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#1847

  1. UTXOs are the the outputs which are the result of someone sending you btc as an input. It is a transaction which transfers ownership from the sender to the receiver.

  2. One would combine other inputs so that it adds up to cover the transaction and the fee. You could also send the change back to yourself.

  3. The btc wallet will look at the past transaction fees and try to give you the best possible fee to get your transaction processed in a timely manner.

  4. One could use the btc inputs and outputs to hide their or confuse their transactions. One could own all inputs and outputs and thus, just move their btc from one wallet to other wallets.

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#1848

Describe what Unspent Transaction Outputs (UTXO) are.

• UTXOs are unspent transactions from addresses sending i.e. BTC to your BTC wallet, or unspent transactions from one’s wallet to another wallet/address.

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

• There would be no transactions. You would have to have another UTXO to cover the difference.

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

• It would compare fees that are already on the blockchain and then pick the best one that would do your transaction in a timely manner and for the best price. To find the fee you would subtract the UTXO input from the UTXO output and the difference would be the fee.

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

• The more UTXOs used in a transaction, the more addresses being used therefore creating more avenues that would have to be tracked to determine the addresses of wallets involved in any particular transaction.

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#1849

Frank,

Welcome to the community.

I do believe that the answer to number two is that your wallet combines the UTXO’s it contains in order to cover your transaction. It would only reject your transaction if your balance is not sufficient to cover it plus any fees.

I hope you find the learning experience here excellent.

Omar

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#1850
  1. The balance in your wallet that can be used for transaction
  2. the wallet will take multiple UTXOs that will cover the transaction and send the balance back to you
  3. it subtracts the output from the input to determine the fee, some wallets you can specify the fee
  4. use a different address for each transaction
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#1851

1 It describes how a transaction ends, by telling from which wallets the transaction amounts comes, and to which wallets the transaction amounts the difference is the transaction fee.
2 the transaction is rejected due to lack of funds.
3 by the difference between the total input utxo’s and total output of utxo’s, if there is reamaing amounts of bitcoin in the wallet, the transaction should transfer to itself.
4 the output transaction could be transfered to a different wallet that you own the private key as well.

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