UTXO
Unspent transaction output — a discrete chunk of coin that a wallet must spend whole, like a bill in cash.
Bitcoin does not store account balances. It tracks UTXOs — unspent transaction outputs — each a fixed chunk of coin locked to an address. Your 'balance' is just the sum of every UTXO you control. To spend, you consume whole UTXOs and create new ones, much like paying cash and getting change back.
Send 0.7 BTC from a 1 BTC output and you produce two new outputs: 0.7 to the recipient and roughly 0.3 back to yourself, minus the fee. Ethereum took a different path, using account balances instead. The UTXO model is harder to reason about, but it supports cleaner parallel validation and better privacy.
Related terms
A signed instruction that moves value or data on a blockchain, recorded permanently once miners or validators confirm it.
AddressA short string of letters and numbers that identifies where crypto can be sent on a blockchain.
WalletA tool that stores the keys controlling your crypto and lets you send, receive, and sign transactions.
Transaction FeePaid to the network for processing a transfer, this charge rises and falls with how busy the chain is.