What Is A UTXO?

Last Updated on November 25, 2022

An unspent transaction output (UTXO) is the technical term for the amount of digital currency that remains after a cryptocurrency transaction.

You can think of it as the change you receive after buying an item, but it is not a lower denomination of the currency—it is a transaction output in the database generated by the network to allow for non-exact change transactions.

  • A UTXO is the amount of digital currency remaining after a cryptocurrency transaction is executed.
  • UTXOs are processed continuously and are part of the beginning and end of each transaction.
  • When a transaction is completed, any unspent outputs are recorded into a database as inputs that can be used later for a new transaction.
  • Nearly all transactions create UTXO because most are not in increments of whole numbers.
  • Multiple fractions of cryptocurrency are retrieved to fulfill a spending request

When you initiate a transaction through your wallet, UTXOs with your information are located, unlocked, and the new owner’s information is associated with the UTXO you transferred to them. As transactions continue, the database becomes populated with records of ownership changes