UTXO

Definition

UTXO (Unspent Transaction Output) is the fundamental unit of Bitcoin's accounting model. Instead of balances like at a bank, Bitcoin works with outputs from previous transactions that have not yet been spent. When you send Bitcoin, you reference one or more UTXOs as inputs and create new UTXOs as outputs. The UTXO model is fundamental to privacy and to independent verification of the network's state. It also determines the structure of fees: the more UTXOs used as inputs, the larger the transaction size and the higher the fee.