Bitcoin explained in 60 seconds - part #1

What is a UTXO?

When you make a Bitcoin payment, a lot of things happen that you don't see as a user. For example, you sign a UTXO with your private key.

UTXO literally stands for Unspent Transaction Output.

A UTXO is a bit of Bitcoin that you can prove you are in control of because you have the private key

It is actually just a transaction that has not yet been spent.

Every Bitcoin transaction consists of (multiple) input(s) and output(s). These contain information about the sender, receiver, and the amount.

The output of a transaction includes a so-called scriptSig. This refers to the secret key required to issue this UTXO.

In addition, it also refers to a value. This is the number of satoshi (sats) you can send with the combination of keys.

If you want to make a Bitcoin payment, you turn this UTXO into a (number of) new UTXOs.

For example:

You have 1 BTC and you want to send 0.5 BTC to someone else. In this way, you create two new UTXOs. You create an output that you are in charge of and one that the recipient is in charge of.

So a UTXO is really nothing more and nothing less than a bit of Bitcoin whose output contains a reference to your private key. And the total of all these UTXOs is the balance that you read out in a wallet or an app.