BA-05 · LESSON 01

The UTXO model

KEY DEFINITIONS

Terms used in this lesson

UTXO: Unspent transaction output: one discrete chunk of bitcoin that can be used as a transaction input.
Outpoint: A transaction ID plus output number that identifies one exact prior output.
Witness: Signatures, scripts, or other data supplied to satisfy a Bitcoin output’s spending condition.
Transaction ID: The identifier produced by hashing a Bitcoin transaction’s non-witness serialization.
Identifier: Identifier: a value used to distinguish one request, object, or participant from another.
BTC: The common market ticker for bitcoin.

A UTXO is a specific unspent transaction output; transactions consume whole outputs and create new ones.

35 min Difficulty 1/5 Not started

VISUAL MODEL

See the whole mechanism before going step by step

Use the diagrams to orient yourself. Then the guided explanation below teaches every part in depth.

4 explanatory views

CONCEPT-SPECIFIC MAP · utxo transitionWhole previous outputs become whole new outputsSelect any state to inspect its exact role.

RELATIONSHIP MAPInputs, rule, and outputs

01
INPUT A70,000 sats
The input names one prior txid and output index. It cannot spend only part of that output.
02
INPUT B45,000 sats
A second complete output supplies the remaining value.
03
PAYMENT80,000 sats
The recipient output is newly created with its own locking script.
04
FEE1,200 sats
Fee is implicit: inputs minus outputs. It is not a separate output.
05
CHANGE33,800 sats
Change is another new output controlled by the sender's wallet.

Rule shown: A valid transaction spends each referenced output at most once and requires total input value to cover outputs plus fee.

STAGE 1 OF 5INPUT A: 70,000 sats

The input names one prior txid and output index. It cannot spend only part of that output.

Governing relationship: A valid transaction spends each referenced output at most once and requires total input value to cover outputs plus fee. Complete path: 1. INPUT A, 70,000 sats. The input names one prior txid and output index. It cannot spend only part of that output. 2. INPUT B, 45,000 sats. A second complete output supplies the remaining value. 3. PAYMENT, 80,000 sats. The recipient output is newly created with its own locking script. 4. FEE, 1,200 sats. Fee is implicit: inputs minus outputs. It is not a separate output. 5. CHANGE, 33,800 sats. Change is another new output controlled by the sender's wallet.

1. State transitionWhat exists, what changes, and what results

BEFORE

Alice’s wallet controls two UTXOs: 0.7 BTC and 0.4 BTC. It chooses both, giving the transaction 1.1 BTC of input value.

MECHANISM

Each output states an amount and a locking condition, usually one derived from a recipient’s key. Once confirmed and not yet spent, that output is a UTXO.

AFTER

Alice did not subtract 0.8 BTC from an account. She destroyed two spendable outputs and created two new ones.

Text equivalent: Starting from Alice’s wallet controls two UTXOs: 0.7 BTC and 0.4 BTC. It chooses both, giving the transaction 1.1 BTC of input value. The mechanism begins when Each output states an amount and a locking condition, usually one derived from a recipient’s key. Once confirmed and not yet spent, that output is a UTXO. The resulting lesson is Alice did not subtract 0.8 BTC from an account. She destroyed two spendable outputs and created two new ones.

2. Mechanism pathSelect a stage to inspect its job

STAGE 1 OF 4

A transaction creates outputs

Each output states an amount and a locking condition, usually one derived from a recipient’s key. Once confirmed and not yet spent, that output is a UTXO.

Complete path: 1. A transaction creates outputs: Each output states an amount and a locking condition, usually one derived from a recipient’s key. Once confirmed and not yet spent, that output is a UTXO. 2. An outpoint names one exact output: A UTXO is identified by the transaction ID that created it plus its output index. An input points to that pair; it does not point to an account balance. 3. An input consumes the whole UTXO: The spender supplies the required witness, such as a signature. Every validating node checks the referenced output exists, is still unspent, and that its spending condition succeeds. 4. The transaction creates replacement outputs: If the selected UTXOs exceed the payment, the transaction normally creates a payment output and a change output. The old UTXOs disappear from the live set; the new outputs enter it.

3. Rule and failure boundaryWhat accepts the result and where it can stop

ACCEPTED PATH

Every named outpoint must be live and uniquely consumed, every witness must authorize its prior output, and integer input value must equal outputs plus fee before the UTXO set changes.

CHANGED CONDITION

A missing outpoint, bad witness, duplicate input, or output value above inputs rejects atomically and preserves the complete prior UTXO set.

Important distinction: A wallet can shave part of a UTXO and leave the rest where it was. False. A UTXO is consumed whole. Any remainder must be represented by a newly created change output.

Text equivalent: The accepted path is enforced by Every named outpoint must be live and uniquely consumed, every witness must authorize its prior output, and integer input value must equal outputs plus fee before the UTXO set changes. If the required condition changes, A missing outpoint, bad witness, duplicate input, or output value above inputs rejects atomically and preserves the complete prior UTXO set.

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Learn the idea

Bitcoin does not keep a balance beside your name. It keeps a set of spendable outputs. Each output is a discrete chunk of bitcoin with an amount and a condition that must be satisfied to spend it. UTXO means unspent transaction output.

GUIDED EXPLANATION1/4 ideas inspected

A transaction creates outputs

Each output states an amount and a locking condition, usually one derived from a recipient’s key. Once confirmed and not yet spent, that output is a UTXO.

The worked example follows the explanation

Inspect every idea above to open it.

Important distinction“A wallet can shave part of a UTXO and leave the rest where it was.”

False. A UTXO is consumed whole. Any remainder must be represented by a newly created change output.

FINISH LEARNING FIRST

The questions unlock after every required learning activity

Inspect every guided idea, open the worked example, rebuild its mechanism, and complete the deterministic lesson tool. Your progress is saved automatically.