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Unspent Transaction Output (UTXO) Meaning

Unspent Transaction Output (UTXO) is a term used in Bitcoin and similar blockchains to describe the portion of a transaction’s output that has not yet been spent and is therefore available for use in future transactions. When a user sends funds, each input references a previous UTXO, and the transaction creates new outputs; any leftover amount not sent to a recipient is returned to the sender as a new UTXO.

The collection of all UTXOs constitutes the spendable supply of a cryptocurrency. Unlike account-based systems, UTXO-based ledgers require validating the entire transaction history to confirm that each UTXO has not been spent before.

This method provides an inherent form of double-spend protection, though it requires more computational work to track and manage individual UTXOs in a wallet.

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