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UTXO

A UTXO is a piece of crypto from an earlier transaction that hasn’t been spent yet. The abbreviation stands for Unspent Transaction Output.

Last updated • 2 min read
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What is a UTXO?

Think of a UTXO as a separate digital note with a fixed value. Bitcoin uses this system to keep track of which amounts can still be sent.

When you make a payment, your crypto wallet uses one or more existing UTXOs. Those UTXOs are no longer available afterward. The transaction then creates new UTXOs: one for the recipient and often another for the change returned to you.

Your balance is the sum of all the UTXOs your wallet can spend. You can’t spend part of a UTXO.

An example of a UTXO

Suppose your wallet has one UTXO worth 1 bitcoin. You want to send 0.4 bitcoin.

The entire 1-bitcoin UTXO is used for the transaction. A new UTXO worth 0.4 bitcoin is then created for the recipient. The amount left over after transaction fees is returned as a new UTXO to an address you control. This is like getting change after paying with cash.

Why are UTXOs important in crypto?

UTXOs are mainly used by Bitcoin and other blockchains that use this model. For every transaction, the network checks whether the UTXOs being used have already been spent. This helps prevent double-spending.

You may come across UTXOs in crypto news when reading about Bitcoin transactions, wallets, or differences between blockchains. Ethereum, for example, works differently: it mainly keeps track of the current balance for each account.

A UTXO model doesn’t automatically make a blockchain safer, cheaper, or better for privacy. It also doesn’t mean that smart contracts are impossible: more advanced UTXO models can support more complex rules.

Disclaimer: This content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. The information provided may be incomplete, inaccurate, or outdated and should not be relied upon as such. Nothing on this website should be considered a recommendation to buy, sell, or hold any cryptocurrency. Investing in crypto-assets involves risk of loss.