Unspent Transaction Output (UTXO)

In the context of cryptocurrency, a transaction output (OT) is an amount of cryptocurrency that is sent from one address to another. An unspent transaction output (UTXO) is an OT that has not yet been spent. When you send cryptocurrency to someone, the OT becomes a UTXO for the recipient. The recipient can then use this UTXO as input in a new transaction, spending it that way.

For example, let’s say Alice wants to send 1 Bitcoin (BTC) to Bob. Alice creates a transaction that has two outputs: one for 1 BTC to Bob, and one for 0.1 BTC to herself (as a return currency). The output of 1 BTC becomes a UTXO for Bob, and the output of 0.1 BTC becomes a UTXO for Alice. Bob can then use the UTXO as input into a new transaction to send to someone else, or he can keep it as is. UTXOs are an important concept in cryptocurrency because they allow the creation of new transactions without the need for a central authority to track balances.

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