Understanding UTXOs
A comprehensive guide to Bitcoin's revolutionary transaction model.
Core Definitions
UTXO
An unspent transaction output - like an individual digital coin.
Transaction
The process of sending Bitcoin from one person to another.
Double-Spending
Attempting to spend the same UTXO (coin) more than once.
Chain of Ownership
The history of who owned a Bitcoin and when.
Technical Concepts
How UTXOs are locked and unlocked
- Locking Script (scriptPubKey): Specifies conditions for spending the UTXO.
- Unlocking Script (scriptSig): Provides data to satisfy the locking script.
- Stack-based execution: Ensures conditions are met using a simple stack language.
The current state of all spendable outputs
- Maintained by full nodes to track unspent outputs.
- Used for transaction validation during block creation.
- Efficient data structures ensure minimal memory usage.
The anatomy of a Bitcoin transaction
- Inputs: Reference previous UTXOs to spend.
- Outputs: Define new UTXOs with specified values.
- Scripts: Encodes locking and unlocking logic.
Additional Resources
A UTXO is Born
Bridget receives 1 BSV as payment for graphic design.
Unlike a bank balance that's just a number in a database, this 1 BSV UTXO is a unique digital entity. Ownership is tied to Bridget's digital signature, ensuring that only she can spend it. While transactions are visible on the blockchain, they don't inherently reveal personal identity. The system's design balances transparency and privacy, operating within the broader legal and regulatory framework.