UTXO Model: How Bitcoin Transactions Really Work
Bitcoin Basics · 60 seconds
UTXO Model: How Bitcoin Transactions Really Work — key takeaways
- Bitcoin doesn't track balances like bank accounts do
- UTXOs are unspent transaction outputs—coins waiting to be spent
- Every transaction is a chain of inputs and outputs linked together
- Your wallet is really a key that unlocks and spends UTXOs
UTXO Model: How Bitcoin Transactions Really Work — full explainer
Why does your Bitcoin wallet never show a balance? Because Bitcoin doesn't work like your bank account. Instead, it uses something called UTXOs—unspent transaction outputs. Think of them as digital coins sitting in a box. When you receive Bitcoin, you're actually receiving a UTXO. When you send it, your wallet finds those UTXOs, unlocks them with your private key, and creates new UTXOs for the recipient. It's like a chain where every transaction outputs become the next transaction's inputs. Your wallet balance? Just the total of all UTXOs your keys can unlock. Understanding UTXOs is understanding how Bitcoin actually moves.