UTXO
UTXO (Unspent Transaction Output) is a unit of cryptocurrency from a previous transaction that remains unspent and serves as input for new transactions in blockchains like Bitcoin.
What Is a UTXO?
A UTXO (Unspent Transaction Output) is a discrete unit of cryptocurrency from a previous transaction that remains unspent. It acts as the input for future transactions on UTXO-based blockchains like Bitcoin. Think of UTXOs as individual "coins" with specific amounts and ownership conditions.
Transactions work by consuming existing UTXOs as inputs and creating new UTXOs as outputs. For example, if Alice has a 1 BTC UTXO and sends 0.3 BTC to Bob, her transaction uses the 1 BTC input. It then outputs 0.3 BTC to Bob and 0.7 BTC back to Alice as change (minus fees). This process ensures no double-spending, as spent UTXOs become invalid.
UTXOs matter for security and efficiency. They enforce strict ownership via cryptographic scripts without relying on account balances. Blockchains process transactions in parallel since UTXOs are independent. Wallets calculate your balance by summing your UTXOs.
Key characteristics include:
- Immutability: UTXOs exist until spent.
- Discreteness: Each has a fixed amount; no fractions within a UTXO.
- Synonyms: "Unspent transaction output" or informally "coin."
Bitcoin contrasts with account-based models like Ethereum, where balances update directly.
Cryptocurrency is a digital or virtual currency secured by cryptography, operating on decentralized blockchain networks to enable secure, peer-to-peer transactions.
Read full definitionBitcoin (BTC) is the first decentralized cryptocurrency, launched in 2009. It uses blockchain technology for secure, peer-to-peer digital transactions without intermediaries.
Read full definitionEthereum is a decentralized blockchain platform that enables smart contracts and decentralized applications (dApps). Its native cryptocurrency is Ether (ETH).
Read full definitionReal-World Examples
Example 1: Everyday Bitcoin Payment
Alice owns a 1 BTC UTXO. She buys coffee for 0.05 BTC. Her wallet spends the 1 BTC UTXO as input. It creates two outputs: 0.05 BTC to the merchant and 0.94 BTC change back to Alice (minus fees).
Example 2: Checking Wallet Balance
Bob's wallet lists three UTXOs: 0.2 BTC, 0.3 BTC, and 0.15 BTC. It sums them to show a 0.65 BTC balance. Bob sees no single large UTXO risks total loss if compromised.
Example 3: Hardware Wallet Signing
On a Trezor, you prepare a transaction spending two UTXOs (0.4 BTC and 0.6 BTC). The device displays inputs and outputs. You verify 0.8 BTC total pays 0.5 BTC to a recipient plus change, then sign.
Example 4: Multi-Input Transaction
- Charlie has small UTXOs: 0.1 BTC, 0.2 BTC, 0.15 BTC.
- To send 0.3 BTC, his wallet combines two UTXOs as inputs.
- Outputs include 0.3 BTC payment and change UTXO.
Bitcoin (BTC) is the first decentralized cryptocurrency, launched in 2009. It uses blockchain technology for secure, peer-to-peer digital transactions without intermediaries.
Read full definitionTrezor is a hardware wallet by SatoshiLabs. It stores private keys offline to secure cryptocurrencies.
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