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Unspent Transaction Output (UTXO)

Unspent Transaction Output (UTXO)

Unspent Transaction Outputs (UTXOs) are sums of a cryptocurrency sent from one address to another but not yet redeemed by the reciever in order to send the funds to somebody else in a subsequent transaction.

Unspent Transaction Output (UTXO) is a phrase used with cryptocurrencies to describe a balance of a given digital currency that has been sent from one wallet address to another but has not yet been transferred from the receiver to somebody else. 



For example, if Alice sends 1 Bitcoin to Bob, Bob is then in possession of a UTXO for as long as he hasn't spent the BTC he received from Alice. As soon as Bob spends the 1 BTC, the lifespan of the UTXO ends.



The purpose of classifying UTXOs as such is to enable transaction validators in a cryptocurrency network to easily distinguish valid transactions from invalid transactions.



Supposing that Bob's wallet has only ever been involved in one transaction in which Bob receives 1 BTC from Alice, transaction validators know that Bob's UTXO balance is 1 BTC. If Bob sends that 1 BTC to Carol, his UTXO immediately becomes 0 BTC. If Bob then tries to double-spend his coins in a second outgoing transaction, validators will see that his UTXO balance is insufficient to be used as an input in the second transaction and the honest validators will not propagate or confirm his double-spend transaction.

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