WHAT: An “Unspent Transaction Output” (UTXO) is basically just change waiting to be spent.
WHY: Each Bitcoin transaction has at least one input and one output. Each output waits as a UTXO until a later input spends it. UTXOs are outputs of a transaction which aren’t yet inputs of another transaction (you can see them in the charts section at blockchain.info).
EXAMPLE: When you receive Bitcoin in your wallet you really just have one or more UTXOs for that amount. Spending in Bitcoin does not take place using a single data byte. Instead, multiple fractions of Bitcoin are retrieved by the algorithm to fulfill a spending request.
In the example above, a 1.5 BTC purchase gets 1 BTC from one byte and 0.75 BTC from another. Change of .25 BTC from each is sent to a UTXO database, and a record of the spent coin will be on the blockchain/ledger.
« Back to Glossary Index