UTXO
PROTOCOLDEFINITION
Unspent transaction output — the actual form bitcoin takes on-chain. Your balance is not a number; it is a collection of discrete coins of various sizes.
Bitcoin has no accounts. Receiving 0.1 BTC three times gives you three UTXOs; spending works like cash — you hand over whole coins and receive change as a new UTXO. Wallets hide this, summing everything into a balance.
Why care? Fees scale with how many UTXOs a transaction consumes, so many tiny UTXOs get expensive to spend when fees spike. Consolidating during quiet mempool periods — and coin control in wallets like Sparrow — is UTXO management, a real skill for heavy users.
IN A SENTENCE
“He consolidated forty small UTXOs into two while fees were a single sat per vbyte.”
Key facts
Common questions
Do normal users need to think about UTXOs?
Rarely — until fees spike and a wallet full of dust becomes expensive to move. DCA stackers accumulate many UTXOs; occasional consolidation helps.
What is dust?
UTXOs so small the fee to spend them exceeds their value — effectively stranded sats.