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@ Jacopo Graziuso
2025-05-30 11:42:49
๐งฑ What is the "UTXO set"? The Invisible Heart of Bitcoin ๐งฎ
You often hear about transactions, addresses, and wallets, but behind the scenes is a fundamental mechanism that makes it all possible: the UTXO set. ๐๐
๐ UTXO stands for unspent transaction output.
Every Bitcoin transaction spends one or more previous outputs and generates new ones. These "unspent" outputs are called UTXOs.
๐ฆ Think of them as ready-to-use digital coins, each with a precise value and a cryptographic "unlock condition."
๐ผ Your BTC balance is not like a bank account!
๐ If you see 0.1 BTC in your wallet, it means you have one or more UTXOs whose values add up to that amount.
There is no aggregate account; rather, there is a set of traceable and verifiable "mini-coins."
๐ง What is the UTXO set?
It is the complete, up-to-date set of all existing UTXOs on the network.
๐ Each complete Bitcoin node maintains its own copy of the set locally and uses it to verify that:
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The inputs of new transactions are still spendable
โ There is no double spending.
๐ The unlock conditions are met.
๐ How does a transaction work?
It takes one or more existing UTXOs as input.
- Creates new UTXOs as output
- Any difference between the input and output is the miner's fee. ๐ฐ
If something is left over, a change output is created for the sender. ๐
๐ Why is this important?
The UTXO model is transparent, secure, and auditable.
- Prevents the creation of bitcoins out of thin air
- Makes transactions verifiable independently of each node
It ensures network immutability and reliability
โ๏ธ Technical Curiosity:
The UTXO set grows over time and can weigh several GB of data. Nodes use optimizations for this reason, but the set is never "pruned" because it must remain intact to guarantee security and validation.
Each transaction changes the set, creating a continuous update cycle.
๐ Bottom line:
The UTXO set is the living ledger of the Bitcoin system. There is no bank or central server; only mathematical rules, cryptographic verification, and total transparency exist.
๐ Every spent satoshi leaves a trace, and every unspent satoshi is ready to be put back into circulation.
๐ถ Stay tuned.
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