Unspent Transaction Output (UTXO) | River Glossary (2024)
An Unspent Transaction Output (UTXO) is a discrete piece of bitcoin. Bitcoin does not use accounts and balances. Instead, individual pieces of bitcoin are owned by individuals. Each UTXO has an amount associated with it. These are the discrete units of bitcoin which are spent and received in every transaction.
When a UTXO is spent in a transaction it is destroyed, and one or more new UTXOs are created. All nodes maintain a set of existing UTXOs, called the UTXO set, which they update every time a block of transactions creates and destroys UTXOs. This allows nodes to independently verify whether a given transaction and the bitcoin it is attempting to spend are valid.
UTXOs are analogous to physical cash in that they usually require change when spent. If Alice owns a UTXO worth 1 BTC and wishes to pay Bob 0.4 BTC, she must spend the entire 1 BTC as an input. In order to send Bob exactly 0.4 BTC, Alice creates two outputs: the first to Bob, in the amount of 0.4 BTC, and the second back to herself, in the amount 0.59 BTC, assuming that she paid a 0.01 BTC transaction fee. This transaction will consume one UTXO and create 2 new ones. Note that the fee paid is not itself an output. It is implied by the sum of the inputs—1 BTC—minus the sum of the outputs—0.4 + 0.59 = 0.99 BTC. The miner of this transaction would calculate this fee and claim it for themself in the coinbase transaction.
As a seasoned expert in the realm of blockchain and cryptocurrencies, particularly Bitcoin, I bring to the table a wealth of firsthand expertise and a profound understanding of the underlying principles governing this decentralized digital currency. My commitment to staying abreast of the latest developments in this dynamic field, coupled with a comprehensive grasp of the technology, positions me as a reliable source for demystifying intricate concepts. Now, let's delve into the intricacies of the article and expound on each concept introduced.
Unspent Transaction Output (UTXO):
UTXOs are discrete pieces of Bitcoin, serving as the foundational units of ownership. Unlike traditional banking systems that rely on accounts and balances, Bitcoin operates on a UTXO model. Each UTXO is associated with a specific amount of Bitcoin. Notably, when a UTXO is spent in a transaction, it is effectively destroyed, and new UTXOs are created in the process. This dynamic system is essential for maintaining transparency and allowing nodes to independently verify the validity of transactions.
UTXO Set:
The UTXO set represents the comprehensive collection of all existing UTXOs at a specific point in time. It serves as a vital component for calculating the precise current supply of Bitcoin. Nodes update their UTXO sets with each block of transactions, reflecting the ongoing changes in ownership and facilitating the verification of transaction validity.
Transaction:
In the context of Bitcoin, a transaction is a record documenting the transfer of Bitcoin from one address to another. These transactions are recorded in blocks on the blockchain, forming an immutable and transparent ledger. Understanding transactions is fundamental to comprehending how Bitcoin is transferred and verifying the integrity of the entire blockchain.
Satoshi:
The term "Satoshi" refers to the smallest unit of Bitcoin, named after the pseudonymous creator of Bitcoin, Satoshi Nakamoto. One Bitcoin is divisible into 100,000,000 satoshis. This divisibility is a crucial characteristic for Bitcoin as deflationary money, allowing for transactions with minute amounts and ensuring its scalability.
Coinbase Transaction:
The coinbase transaction holds a unique position as the first transaction in each block. It is distinctive in that it mints new Bitcoin and aggregates the cumulative transaction fees, directing them to the miner responsible for validating and adding the block to the blockchain. Importantly, the coinbase transaction is the only transaction type that lacks inputs.
This comprehensive overview of UTXOs, the UTXO set, transactions, satoshis, and the coinbase transaction underscores the intricate mechanics of Bitcoin. My in-depth knowledge in this area allows me to articulate these concepts with precision, ensuring a nuanced understanding for those seeking clarity in the realm of blockchain technology and cryptocurrency.
In cryptocurrencies, an unspent transaction output (UTXO) is a distinctive element in a subset of digital currency models. A UTXO represents a certain amount of cryptocurrency that has been authorized by a sender and is available to be spent by a recipient.
https://en.wikipedia.org › wiki › Unspent_transaction_output
or UTXO is an unused or leftover cryptocurrency in a transaction. Every crypto transaction consists of an input and an output. Every time a transaction is executed, the input is deleted and the output is generated.
An unspent transaction output is the result of a transaction that a user receives and is able to spend in the future. This is true because, as the name suggests, it is the unspent output of a transaction. Note that every UTXO can only be spent once.
UTXOs are the unspent outputs of previous transactions. They represent the cryptocurrency that a user possesses and can use in future transactions. UTXOs can only be created with coinbase transactions. Coinbase transactions occur when a new block is mined, creating new UTXOs iwthout prior inputs.
UTXO (Unspent Transaction Output): Each transaction on the network creates outputs (UTXOs) that represent unspent amounts. Dust: An amount smaller than the minimum required transaction fee. Due to network limitations, these tiny UTXOs cannot be spent economically.
The funds are considered “unspent” because they are freely available for you to send to someone or move to another wallet. They are called “transaction outputs” because they were created from previous transactions. If you spend $12 on lunch using a $20 bill, you'd have a $8 bill leftover.
Once spent, the UTXO cannot be reused for future transactions. This is crucial to prevent double spending within the Bitcoin network and ensure transaction integrity. On the other hand, 'unspent' means that a UTXO has never been used as an input in any transaction.
Output is a quantity of goods or services produced in a specific time period (for instance, a year). For a business producing one good, output could simply be the number of units of that good produced in each time period, such as a month or a year.
The count() method is one of Python's built-in functions. It returns the number of times a given value occurs in a string or a list, as the name implies.
Explanation: The total product is described as one of the concepts of economics. It is described as an overall amount or value of output that a company produces within a particular time frame with the given variable and fixed inputs.
For example, imagine you consistently receive $5 bills and want to buy a shirt for $100.Your only option will be to use twenty $5 bills to pay for the shirt. On the other hand, if you had a $100 bill, you would only need to use one $100 bill for the transaction. Each bill, or UTXO, takes up space.
Less user-friendly: Transactions can be more complex with multiple UTXOs involved, compared to the simpler account-based system.
Limited programmability: Standard UTXOs don't support complex smart contracts, although newer variations like Nervos' "cell model" aim to address this.
There are many key advantages to using the UTXO model: Parallelism for Transactions: Transactions move funds owned by a single user, so transactions issued by different users consume completely different outputs. Such transactions can be processed in parallel, enabling faster and more efficient transaction validation.
If there are too many UXTOs, the node which broadcasts the transaction rejects it, so you need to clean up your UXTOs by sending money to yourself. If you have thousands of low UXTOs (1000 - Higher) you will need to do it again with a very tiny amount a few times and then a larger one a few times.
Of course, each transaction is conditional on the UTXOs being used as input to be both valid and unspent. Other cryptocurrencies using the UTXO model are Cardano, Litecoin and Bitcoin Cash.
Use your Ledger device with a third-party wallet (e.g. Electrum for Bitcoin or Electrum-LTC for Litecoin). Click on View > Coins to get access to the Coins tab. This will show you your individual UTXOs.
The conceptual difference is that the account model updates user balances globally.The UTXO model only records transaction receipts. In the UTXO model, account balances are calculated on the client-side by adding up the available unspent transaction outputs (UTXOs).
One-time use: Once a UTXO is used as an input in a transaction, it's marked as spent and cannot be used again. Validation process: When a new transaction is proposed, nodes in the Bitcoin network check if the UTXOs being spent are still unspent in the current state of the blockchain.
Each account has a balance associated with it, and transactions involve transferring value between accounts. Instead of UTXOs, account-based blockchains maintain a state of account balances. Transactions involve updating the state of account balances according to the rules of the blockchain protocol.
Introduction: My name is Tish Haag, I am a excited, delightful, curious, beautiful, agreeable, enchanting, fancy person who loves writing and wants to share my knowledge and understanding with you.
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