UTXO Paradigm

Definition ∞ The UTXO paradigm, or Unspent Transaction Output model, is a method for tracking the ownership of digital assets, notably utilized by Bitcoin. In this model, every unit of currency is an unspent output from a previous transaction, acting like a discrete bill or coin. When a transaction occurs, old UTXOs are consumed, and new ones are created as outputs. This system provides a clear, auditable history of asset provenance.
Context ∞ The UTXO paradigm is a core architectural element often discussed in comparisons between Bitcoin and account-based blockchains like Ethereum. News articles might highlight its advantages in transaction privacy, parallel processing capabilities, and simplified transaction verification. Understanding the UTXO model is essential for comprehending the fundamental operational differences and security properties of various cryptocurrencies.