What is Unspent Transaction Output (UTXO)?

Unspent Transaction Output (UTXO) represents discrete units of cryptocurrency that remain after a transaction is executed, serving as the fundamental accounting model for blockchain networks like Bitcoin1 2 3. Unlike traditional bank accounts that track balances, UTXOs operate as digital “coins” that can only be spent in full, with each transaction consuming existing UTXOs as inputs and generating new ones as outputs4 5. This model ensures transparent tracking of ownership and prevents double-spending by cryptographically linking each output to subsequent transactions2 6.

Examples of UTXO Transactions

Basic Transaction: A wallet containing a 5 BTC UTXO spends 3.15 BTC2.

  • Input: 5 BTC UTXO (destroyed)
  • Outputs: 3.15 BTC (sent to recipient) + 1.85 BTC (returned as change, minus fees)
  • Result: Two new UTXOs created (3.15 BTC and 1.85 BTC)2 7.

Multi-UTXO Transaction: A wallet with UTXOs of 0.2 BTC, 0.15 BTC, and 0.17 BTC (total 0.52 BTC) sends 0.3 BTC4 5.

  • Inputs: 0.2 BTC + 0.15 BTC = 0.35 BTC
  • Outputs: 0.3 BTC (recipient) + 0.05 BTC (change, minus fees)
  • Result: Original UTXOs destroyed; new UTXOs of 0.3 BTC and 0.05 BTC created5 7.

Cryptocurrencies Utilizing the UTXO Model

Cryptocurrency Key Characteristics
Bitcoin Original UTXO implementation, prioritizing security and decentralization1 6 8.
Litecoin Uses UTXO with faster block times for quicker transactions2 8.
Cardano Implements Extended UTXO (EUTXO) for smart contract functionality1 2 6.
Zcash Enhances privacy using shielded UTXOs with zk-SNARKs cryptography6 8.
Dogecoin Mirrors Bitcoin’s UTXO model for transparent transaction tracking5 8.

Methodology and Mathematical Foundation

The UTXO model operates on three core principles2 6 7:

  1. Transaction Inputs = Previous UTXOs: Each transaction consumes existing UTXOs as inputs.
  2. Conservation of Value: Sum of inputs equals sum of outputs plus transaction fees: $\sum \text{Inputs} = \sum \text{Outputs} + \text{Fees}$
  3. Irreversible State Changes: Spent UTXOs are permanently removed from circulation.

Example Calculation:

  • Inputs: 2 BTC (held for 10 days) + 3 BTC (held for 5 days)
  • Outputs: 4 BTC (recipient) + 0.999 BTC (change)
  • Fees: 0.001 BTC
  • Verification: $2 + 3 = 4 + 0.999 + 0.001$2 6 7.

This methodology ensures auditable supply tracking, as every UTXO can be traced back to its minting transaction (e.g., Bitcoin block rewards)4 6.

  1. https://en.wikipedia.org/wiki/Unspent_transaction_output

  2. https://tokeninsight.com/en/tokenwiki/all/what-is-utxo-model

  3. https://www.investopedia.com/terms/u/utxo.asp

  4. https://river.com/learn/bitcoins-utxo-model/

  5. https://www.kraken.com/pt-br/learn/what-is-bitcoin-unspent-transaction-output-utxo

  6. https://www.nervos.org/knowledge-base/utxo_model_explained

  7. https://cointelegraph.com/learn/bitcoin-utxo-model-how-to-manage-utcx

  8. https://bitquery.io/blog/utxo-comprehensive-guide