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For instance, if I am trying to send 1 BTC to an address, however, I do not have enough BTC. What will happen to this transaction?

Will the sender and the recipient both receive notification regarding the status of transaction?

2

Unless you are using modified software, your software will not allow you to create such a transaction.

Even if you succeeded at creating it, the transaction is invalid. Invalid transactions don't get relayed on the network, so your recipient would never learn about it.

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