How does UTXO work in the context of digital currencies?

3 answers

• Dec 17, 2021 · 3 years ago
  The UTXO model is a fundamental concept in digital currencies like Bitcoin. It represents the unspent outputs of previous transactions. When a new transaction is created, it consumes some UTXOs as inputs and creates new UTXOs as outputs. These outputs can then be used as inputs in future transactions. This model ensures that every transaction can be traced back to its origin and prevents double spending. It also provides transparency and security in the transaction process.
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• Dec 17, 2021 · 3 years ago
  UTXO works by maintaining a record of all unspent transaction outputs. Each output has an associated value and a locking script that defines the conditions for spending it. When a transaction is initiated, it references the UTXOs it wants to spend and creates new UTXOs as outputs. These new UTXOs can only be spent by the owner who possesses the corresponding private key. This model allows for efficient verification of transactions and provides a clear ownership history for each coin.
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• Dec 17, 2021 · 3 years ago
  In the context of digital currencies, UTXO plays a crucial role in ensuring the integrity and security of transactions. It prevents double spending by keeping track of all unspent outputs and verifying the ownership of each coin. This model also allows for efficient transaction verification and scalability, as each UTXO can be independently processed. By using the UTXO model, digital currencies can achieve a decentralized and trustless system where transactions can be securely conducted without the need for intermediaries.
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