Unspent Transaction Output

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Pronunciation

[uhn-spent tran-zak-shuhn out-poot]

Analogy

Think of UTXOs like individual bills and coins in your physical . When you buy something, you don't tear a portion off a $20 bill—you hand over the entire bill and receive change as needed. Similarly, transactions consume whole UTXOs and create new ones, rather than just deducting from a balance.

Definition

A output that has been received but not yet spent, representing a specific amount of that can be used as an input in a new . UTXOs are the fundamental building blocks of value transfer in and similar cryptocurrencies.

Key Points Intro

UTXOs represent discrete units of ownership that must be consumed in their entirety when spent.

Key Points

Represents a specific amount of cryptocurrency locked to a particular address or script.

Must be spent completely in a transaction, with change returned as a new UTXO if needed.

Cannot be partially spent—the entire output must be consumed as an input.

The sum of all UTXOs assigned to an address constitutes that address's effective balance.

Example

If Alice has received in two separate transactions creating UTXOs of 0.5 BTC and 0.7 BTC, and wants to send Bob 0.6 BTC, her would use the 0.7 BTC as input, send 0.6 BTC to Bob as a new , and return 0.1 BTC (minus ) to herself as another new for change.

Technical Deep Dive

UTXOs contain several key components: (1) A value specifying the amount of ; (2) A locking script (scriptPubKey) defining the conditions required to spend it, typically requiring a signature matching a specific ; and (3) References to the that created it. When spending UTXOs, the owner creates inputs referencing these specific outputs and provides unlocking scripts (scriptSig) that satisfy the conditions. The model offers several advantages over account-based models: it simplifies validation, enables greater privacy through rotation, prevents double-spending without checking account history, and allows parallel processing of unrelated transactions. Advanced implementations include time-locks, multi-signature requirements, -locks for cross-chain swaps, and even limited functionality through innovations like Pay-to-Script-Hash (P2SH) and Taproot.

Caveat

While the model provides advantages in security and privacy, it creates challenges for implementation compared to account-based systems. It also requires more complex logic to optimize selection for efficiency, privacy, and fee management.

Related Terms

UTXO

Address

Blockchain & Cryptocurrency Glossary

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