Homework on UTXO vs Account Model

Ethereum 101
#421

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Homework on UTXO vs Account Model - Questions

1. The account model doesn’t require much space as the UTXO model, why is that a benefit?

These systems indeed have various trade-offs.

Ethereum maintains the account balance as part of the global state,

A Bitcoin user’s UTXO/balance is the total value for which the user has a private key capable of producing a valid *signature - *which uses over 50% of the space in each block.

Two types of record-keeping models are popular in today’s blockchain networks.

  • UTXO (Unspent Transaction Output) Model employed by Bitcoin
  • Account/Balance Model used by Ethereum

UTXO (Unspent Transaction Output) Model:
In Bitcoin, each transaction spends output from prior transactions and generates new outputs that can be spent by new future transactions; hence this Bitcoin model is named “UTXO”. All of the UTXO are kept in fully-synchronised network of nodes.

A Bitcoin wallet keeps track of a list of UTXO associated with all addresses owned by the owner, and the balance of the wallet is calculated as the sum of those unspent transactions as your total balance.

Account/Balance Model:
On the other hand, the Account/Balance Model keeps track of the balance of each account as a total. The balance of an account is checked to make sure there is sufficient Ether to send a transaction amount.

The record-keeping for Ethereum is just like a bank. The bank tracks how much money a debit card has, and when we need to spend money, the bank checks its record to make sure we have enough balance before approving the transaction.

In Ethereum, every account has a public viewable nonce and every time a transaction is made, the nonce is increased by one. This can prevent the same transaction being submitted more than once

Both models achieve the same goal of keeping track of the distributed ledger (UTXO and Account Balances) by consensus mechanisms.

2. How is the account model not as great as the UTXO model for privacy?

Advantages of the UTXO Model versus the Disadvantages of the Ethereum Account Balance model:

Scalability : Since it is possible to process multiple UTXOs at the same time, it enables parallel transactions and encourages scalability innovation.

Privacy : Even Bitcoin is not a completely anonymous system, but UTXO provides a higher level of privacy, as long as the users use new addresses for each transaction. If there is a need for enhanced privacy, more complex schemes, can be considered, i.e. ring signatures

The Advantages of the Account/Balance Model versus the Disadvantage of the Bitcoin UTXO model:

Simplicity: Ethereum opted for a more intuitive model for the benefit of developers of complex smart contracts, especially those that require state information or involve multiple parties.

Efficiency: The Account/Balance Model is more efficient, as each transaction only needs to validate that the sending account has enough balance to pay for the transaction.

Large space savings: because every transaction need only make one reference and one signature and produces one output

Greater fungibility : the ability of commodity/goods or assets to be interchanged with other individual goods or assets of the same type. Fungible assets simplify the exchange and trade processes, as fungibility implies equal value between the assets.

As mentioned above, like most things in computer architecture, both models have trade-offs

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#422

  1. The account model doesn’t require much space as the UTXO model, why is that a benefit?
    This is a benefit because there is more room to fit other transactions on the block. This also makes it where the transactions are not only faster but they are cheaper. This also makes it an easier way to understand one’s balance.

  2. How is the account model not as great as the UTXO model for privacy?
    In the account model you can see which account it went from and to who so this is easier for people to track. For UTXO it is harder because transactions can have multiple outputs.

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#423
  1. The benefit of the account model that doesn’t require much space is that we can include more tx in a block, they are confirmed sooner.
  2. The account model is not as great as the UTXO model for privacy, because we cannot send tx to multiple accounts and back to us. Txs in the account model are easier to track.
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#424
  1. The account model of ethereum does not require as much space as the UTXO model of Bitcoin because it does not have to store the inputs and outputs every transaction can have. This keeps the transaction simpler and smaller.
  2. The account model of ethereum is not as private as the UTXO model of Bitcoin because you always know where the money went; there is only one output. The UTXO model allows you to send to multiple outputs, one of which can be you. This makes it a little harder to know who received the money.
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#425
  1. The block is smaller because the account model only store the balance not each UTXO.
  2. Account model gives a clearer picture of the transaction. So you can see the inputs and outputs.
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#426
  1. It means that transactions are faster
  2. The account model can’t hide the direction of the transactions as you cannot send money back to yourself.
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#427

  1. Less data = less computing power needed, faster transactions.

  2. It’s easier to follow the money trail.

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#428

1.) Less space mean less Tx fees also helps the network with efficiency in propagated the data between the nodes.

2.) It is less private because in the UTXO model there can be multiple outputs with some back to yourself automatically which can obfuscate the details of a Tx. Account model uses exact value in payment with no payback in the same tx.

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#429
  1. The smaller transaction the more transactions you can put in one block.
  2. In the account model you can see how much you are sending from one account to another and what is the balance of the accounts. In UTXO model you can have multiple out going transactions and some of them can go back to the sending account.
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#430

1. The account model doesn’t require much space as the UTXO model, why is that a benefit?
The less space the model takes up the more tx can be fit into each block.

2. How is the account model not as great as the UTXO model for privacy?
The account model does not have the option to add to the amounts-addresses sent, in the UTXO model a user can send funds back to their wallet.

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#432
  1. Since in Ethereum there is no UTXOs, hence no inputs, outputs etc, just a simple code instructing the ledger names and the amount to be transferred, Ethereum transaction requires less space then Bitcoin
  2. In Ethereum the privacy is less since I cannot send the funds back to myself hence making identification of remittance to other accounts easier.
    However, In bitcoin as a privacy measure I can put greater amount in Input and then sent amount which is the actual transaction amount and the remaining back to myself. This improves the privacy in bitcoin since it makes identification of the actual transaction difficult.
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#433
  1. The account model doesn’t require as much space as the UTXO model and provides the benefit of smaller blocks and thus better efficiency
  2. The account model reveals the payer’s account and the receiving account as well as the transacted amount so it’s easier to track. A transaction in the UTXO model may have multiple inputs and outputs and thus harder to track, providing better privacy especially for non-specialists .
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#434

I like those two answers.

#435

The account model doesn’t require much space as the UTXO model, why is that a benefit?

The account model gives it the ability to store more transactions and smart contract code in each block.

How is the account model not as great as the UTXO model for privacy?

In the UTXO model you can send transactions to many different recipients including yourself. It is much harder to identify which recipient is receiving any particular transaction. The account model is a simple transfer from one account to another and is easily identifiable as anyone can view the amounts and destinations.

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#436

1)taking up less space in a transaction is beneficial for scalability.more transactions can be added to the block with potential for higher TPS.

  1. UTXO model allows someone to send funds to multiple locations in the same transaction. A person can also send funds back to one’s self and own multiple addresses in the transaction. This makes bitcoin more private, however UTXO can be viewed on an individual basis in order to distinguish the amounts in each transaction.
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#437
  1. Each transaction will require less space, saving space used overall by transactions.
  2. There is no way obfuscate the transaction by sending the “change” to one or more different addresses.
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#438

  1. The account model requiring less space is a benefit because it means that more transactions can put put onto a block, this means the blockchain is more scalable meaning it will have a higher TPS compared to the UTXO model with an equal block size

  2. The account model is not as good for privacy because transactions between 2 users can be seen they are completely transparent. Whereas in the utxo model there is no way of telling which outputs are sent to who. normally at least 2 outputs are made in a utxo model transaction with some of the value being sent to another address controlled by the sender.

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#439
  1. The account model doesn’t require much space as the UTXO model, why is that a benefit?

A reduced block size means better efficiency for txs.

  1. How is the account model not as great as the UTXO model for privacy?

Without multiple inputs/outputs, including those returning to the sender, transactions are much easier to trace.

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#440
  1. Block can contain more transactions.
  2. You can see the sender(s) of a transaction.
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#441
  1. It’s a benefit because it means it’ll take much lesser space and more transactions can be fit into 1 block.
  2. It’s easy to follow who sent exactly how much and to whom.
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