A Bitcoin UTXO (unspent transaction output) is a record stored on the blockchain that indicates how many unspent coins are available for use in a given transaction. Each UTXO is associated with an address and contains information about the amount of Bitcoin available, who owns the Bitcoin, and how it can be spent.
When a new transaction is created, a UTXO is referenced to indicate the source of the funds. This UTXO specifies the address the Bitcoin is being sent from and the amount of Bitcoin available. A UTXO is then created at the destination address to represent the new funds.
UTXOs are considered to be “unspent” until they are used as part of a transaction. Once a UTXO is used, it is removed from the blockchain and replaced with a new UTXO. This new UTXO contains the same address and the new amount of Bitcoin available.
Additionally, UTXOs can be used to link transactions together. When two transactions are linked, the UTXO of the first transaction is used as an input for the second transaction. This allows users to trace the history of Bitcoin transactions across the blockchain.
Overall, Bitcoin UTXOs are an essential part of the Bitcoin network. They are used to ensure the validity of transactions and to link transactions together. As such, they are an important part of the Bitcoin infrastructure.