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Rachel Welch

01 October 2022 133 Read Crypto

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What is an Unspent Transaction Output (UTXO)?

UTXO

An UTXO is a digital currency that is left over after a transaction. UTXOs can be used for further purchases. When you send a cryptocurrency transaction, it sends an output to the blockchain instead of sending a specific amount of money. These outputs can be spent in any cryptocurrency transaction.

UTXO set

UTXOs are used to store transaction data. For example, if Alice wants to spend 0.015 bitcoin for a cup of coffee, she needs to make sure that she includes the transaction fee, which is 0.001. This means that her wallet needs to source an UTXO which adds up to 0.016 bitcoin. If this isn't possible, the wallet must create change.

UTXO value

A UTXO is an output of a transaction. It is similar to cash money or traveler's checks. When paying someone in cash, you think about the amount you're paying them, and you use unique indivisible units to represent the total. For example, if you're Alice, you might give Bob two notes worth $100 and one worth $50. You could also give Bob five notes worth $50, or any combination of these.

UTXO size

In Bitcoin, UTXOs are used to settle transactions through the blockchain. For example, a transaction involving 1 bitcoin will require 20 UTXOs to be spent. These will create two outputs, one of which will pay 1 bitcoin to the recipient and the other of which will provide 19 bitcoin in change. This is known as a double spend. As a result, UTXO size is important to avoid double-spending.

UTXO usage

When a cryptocurrency transaction is completed, the output of that transaction is called the Unspent Transaction Output (UTXO). A cryptocurrency transaction has both inputs and outputs, a beginning address and a destination address. The Unspent Transaction Output can be used as an input in another transaction.

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