Unspent Transaction Output (UTXO) refers to a portion of cryptocurrency that has not been spent yet and is available for use in future transactions.
UTXO is an essential concept in the design of cryptocurrencies like Bitcoin, as it helps ensure transactions’ transparency and accountability.
Each UTXO is a unique digital asset that can be assigned a specific value, such as 0.5 Bitcoin, and it can only be spent once. When a user makes a transaction, the UTXO that is used as input for the transaction is considered spent and is replaced with new UTXOs representing the change in the transaction. The sum of all UTXOs in a given blockchain represents the total number of cryptocurrencies available in that particular blockchain.
UTXOs are stored in a database and are verified by the network to ensure that they are not spent more than once. This verification process is essential to prevent double-spending, a potential security issue in the world of cryptocurrency. The UTXO model is a robust and efficient way to keep track of cryptocurrency transactions, and it is widely used in the design of cryptocurrencies like Bitcoin, Litecoin, and others.