UTXO
A UTXO — Unspent Transaction Output — is the accounting unit of Bitcoin. Instead of an account balance, each user’s wallet is a collection of UTXOs — coins locked to their address from prior transactions — and spending assembles selected UTXOs as inputs to a new transaction.
How it works
Every Bitcoin transaction consumes one or more existing UTXOs as inputs and creates one or more new UTXOs as outputs. A UTXO can be spent only in full; if the user needs to pay a partial amount, the wallet creates a change output back to a wallet-controlled address. Fees are the difference between input and output totals. The chain state is the current UTXO set, not a per-address balance — nodes track which outputs remain unspent.
Why it matters
The UTXO model gives strong privacy properties (each output can go to a fresh address), simple parallel validation (transactions consuming disjoint UTXOs can be verified independently), and clear provenance for every satoshi. It also complicates wallet UX: fee estimation, coin selection, and change management are harder than in the account model that Ethereum and Solana use.
Related concepts
- Seed Phrase — A seed phrase — also called a recovery phrase or mnemonic — is a human-readable list of 12 or 24 words that encodes the entropy behind every private key in a wallet.
- Hardware Wallet — A hardware wallet is a dedicated physical device that stores private keys in tamper-resistant hardware and signs transactions on-device.
- Self-Custody — Self-custody is the practice of holding your own cryptographic keys rather than delegating custody to an exchange or custodian.
- WalletConnect v2 — WalletConnect v2 is an open protocol that lets a wallet on one device connect to a dApp on another — most commonly a mobile wallet paired with a desktop dApp — over an end-to-end-encrypted relay.
Frequently asked questions
Do all chains use UTXOs?
No. Bitcoin, Bitcoin Cash, and Litecoin use UTXOs; Ethereum and Solana use the account model.
What is dust?
A UTXO too small to spend profitably — the transaction fee exceeds the value. Wallets often filter dust out of the spendable balance.
Do I need to manage UTXOs manually?
No. Wallets handle coin selection automatically. Advanced users can select specific UTXOs for privacy reasons.
In Veyrnox
Veyrnox implements standard UTXO coin selection with SegWit and Taproot support. Users see a single balance in the UI; the UTXO management is invisible. See Bitcoin wallet iOS.