Friday, June 9, 2023


by Hideo Nakamura

What is an UTXO?
UTXO stands for Unspent Transaction Output. In the context of cryptocurrencies, it is a record that indicates how much digital currency has been allocated to a specific address along with other details like how old it is and what transaction it was part of. It serves as the foundation of many blockchain networks such as Bitcoin’s, allowing users to spend their funds in complete security while simultaneously preventing double spending.

How does an UTXO work?
When a cryptocurrency transaction occurs, the inputs are spent and new outputs (or UTXOs) are created from within that transaction. These new outputs become available for future transactions, so you can think of them as “coins” or “tokens”. The amount transferred from one user’s wallet to another’s will be represented by multiple UTXOs which have different values associated with them. For example, if one person sends two bitcoins (2 BTC) to someone else, two separate UTXOs may be created – 0.5 BTC and 1.5 BTC respectively – rather than just one 2BTC output due to network fee considerations or other factors related to the individual cryptocurrency being used in the transfer process.

What happens when I use an input in a transaction?
When you initiate a transaction using an input on your wallet address, that input itself becomes unavailable until it is moved out into another unspent output/UTXO via another blockchain operation such as mining fees or through sending funds elsewhere again at some point down the line – this means that each time you use up an existing unspent output/UTXO for something else then its value will not necessarily remain exactly where it originally started off at but could be divided up into smaller amounts depending upon various factors involved in creating its original state initially including any fees payable etc… All these things need considering before executing any particular type of cryptocurrency-related operations involving inputs and unspent outputs/UTXOs otherwise there may end up being issues with regards getting your money back later on!

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