What Is an Unspent Transaction Output (UTXO)?
An Unspent Transaction Output (UTXO) is a record of an unspent transaction on the blockchain. It is created when someone sends cryptocurrency to another person or address and it remains until it has been spent by its recipient. UTXOs are used in Bitcoin, Ethereum, and other cryptocurrencies as part of their consensus mechanism for verifying transactions. They provide a way to track ownership of coins without having to keep track of individual addresses or wallets.
A UTXO consists of four components: the amount sent, the sender’s public key, the receiver’s public key, and a unique identifier called an output index number that helps identify which transaction was made with this particular output. When someone wants to spend their coins they must use one or more UTXOs as inputs into their new transaction; these will be combined with any additional inputs from other users who wish to join in on the same transaction before being broadcasted onto the network for verification by miners. Once verified, all participants involved in the transaction receive newly minted coins based on how much each contributed towards fees associated with processing said transaction.