Definition ∞ UTXO transactions are a method of tracking cryptocurrency ownership where funds are represented as unspent transaction outputs. In this model, such as used by Bitcoin, every transaction consumes one or more existing unspent outputs and produces new outputs, which can then be spent in future transactions. Each UTXO functions as a distinct amount of cryptocurrency that has been received but not yet spent, acting as the fundamental unit of value. This accounting method ensures that all transaction inputs are fully spent, preventing double-spending and maintaining ledger integrity.
Context ∞ UTXO transactions are a foundational concept in many prominent cryptocurrencies, frequently discussed in news related to privacy, scalability, and scripting capabilities. The UTXO model provides a robust framework for tracking individual coin states, which offers certain advantages in transaction batching and parallel processing. Debates sometimes compare the UTXO model with account-based models, assessing their respective strengths in terms of security, flexibility, and complexity. Understanding UTXOs is crucial for grasping the underlying mechanics of Bitcoin and similar digital asset systems.
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