What is a UTXO?

Much like how you are handed change when you don’t pay the exact amount for an item at a shop, an unspent transaction output (UTXO) represents the amount of digital currency left over or ‘unspent’ after a cryptocurrency transaction. 

In the Bitcoin network, a UTXO acts as a bookend for the entire transaction, acting as both the amount that is transferred to a Bitcoin address and the new inputs or records that are created for both parties after it has been completed. 

One is for the recipient that becomes a new UTXO that shows the recorded transaction, while any remaining change is sent back to the sender’s address as a new UTXO that can be used in future transactions. Although confirmation of transaction results in the removal of spent coins from the UTXO database, a record of the spent coins still exists on the ledger.