UTXO
TL;DR
UTXO stands for Unspent Transaction Output — Bitcoin's 'coins': unspent outputs from earlier transactions available to be spent.
Bitcoin has no classical 'balance' — a wallet owns a collection of UTXOs of varying sizes. A transaction consumes UTXOs as inputs and creates new UTXOs as outputs. The difference is the fee. The UTXO model enables parallel validation, better privacy, and atomic scripting.
Example
Your wallet holds three UTXOs: 0.5, 0.3 and 0.2 BTC (total 1 BTC). To send 0.4 BTC, the wallet uses the 0.5 UTXO as input, sends 0.4 to receiver and 0.09999 back as change, minus 0.00001 fee.
Frequently asked questions
Why UTXO instead of accounts?
UTXOs enable parallel validation, better privacy (no persistent balance) and atomic scripting. Ethereum chose the account model — both have trade-offs.
Related terms
Further reading
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