Unspent Transaction Output (UTXO): Definition and Examples

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Bittime - Unspent Transaction Output (UTXO) is a technical term to describe the output of a blockchain transaction that has not been used as input in a new transaction. UTXO is a model used by Bitcoin and other cryptocurrencies to calculate and maintain balances in decentralized networks.

UTXO provides advantages such as security, transparency, and efficiency, but also has its own challenges and risks. In this article, we'll discuss what UTXO is, why it's important, and how it works.

What is Unspent Transaction Output (UTXO)?

Unspent Transaction Output (UTXO) is the output of a blockchain transaction that has not been used as input in a new transaction. Output is the address where the cryptocurrency is transmitted, while input is the address where the cryptocurrency is sent from. Each transaction has one or more inputs and outputs, and the number of inputs must be equal to or greater than the number of outputs.

The owner of the output of a transaction can spend it later in another transaction. This is in contrast to a bank account, which records debits and credits and sends a statement with the current balance to the account holder at the end of the month.

In the UTXO model, the total wealth or balance in a wallet is the sum of all UTXOs owned by that wallet. This is the cryptocurrency equivalent of getting change after making one or more purchases, which can then be used for subsequent purchases.

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How UTXO Works

Every bitcoin transaction has inputs and outputs. Input is the address where the bitcoins were sent, while output is the address where the bitcoins were sent.

The owner of the output of a transaction can spend it later in another transaction. This is in contrast to a bank account, which records debits and credits and sends a statement with the current balance to the account holder at the end of the month.

In the UTXO model, the total wealth or balance in a wallet is the sum of all unspent transaction output. This is the cryptocurrency equivalent of getting change after making one or more purchases, which can then be used for subsequent purchases.

UTXO Usage Examples

For example, Bob has 10 coins and wants to send Alice two coins. Bob's wallet first opens a UTXO of 10 coins and uses all 10 coins as input in the transaction. This transaction sends two coins to Alice's address, while the remaining eight coins are sent back to Bob as a new UTXO to the newly created address.

If Alice had three coins before the transaction, her wallet now tracks two UTXOs: one from before and the other from a transaction made by Bob.

In the UTXO model, the total input must equal or exceed the total output. This is one of the initial checks that validators perform to verify if a transaction is valid. UTXO thrives in decentralized systems because it can check double spending in a computationally simple way.

This is the definition of Unspent Transaction Output (UTXO) which is an important concept in blockchain technology, especially used in cryptocurrencies such as Bitcoin. Understanding how UTXO works is important for understanding how cryptocurrency transactions and balances are calculated and maintained in a blockchain network.

How to Buy Crypto on Bittime

You can buy and sell crypto assets in an easy and secure way through Bittime. Bittime is one of the best crypto applications in Indonesia that has been officially registered by Bappebti.

To be able to buy crypto assets on Bittime, make sure you have registered and completed identity verification. In addition, also make sure that you have enough balance by depositing some funds into the wallet. For your information, the minimum asset purchase at Bittime is Rp10,000. After that, then you can make a crypto asset purchase in the application. Learn the Complete Guide on How to Buy Crypto on Bittime.

Monitor the price chart movements of Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.

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DISCLAIMER: This article is informational in nature and does not constitute an offer or solicitation to sell and buy any crypto asset. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices may change significantly from time to time and Bittime is not responsible for fluctuations in crypto asset exchange rates.