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What is a UTXO
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UTXO: Unspent Transaction Output.

Customize UTXO, which allows you to choose which UTXOs to use when sending a transaction, to use a more economical combination of UTXOs, or to specify a specific UTXO to spend on the transaction.

A Bitcoin transaction is composed of a transaction input and a transaction output. UTXO is part of the transaction input and output. Each transaction consumes the old UTXO and generates a new UTXO. UTXO is short for Unspent Transaction Output.

The UTXO model of BTC is very different from the account/balance model of Ethereum or a bank card. The UTXO-based BTC balance is the sum of the number of BTCs in several UTXOs.

Such as:

A transfers 1BTC to B

C transfers 0.5BTC to B

At this time, B has two UTXOs on its BTC address, and B's balance is 1.5BTC. B has two UTXOs available in its wallet, which are:

BTC UTXO1:1

BTC UTXO2:0.5

If the account/balance model is used, for example, Ethereum stores a summary ETH balance in the account, i.e. 1.5ETH.

UTXO is similar to the different denomination notes we have in our wallets, such as five 100 yuan bills and six 50 yuan bills...... The amount of money in the wallet is nothing more than the total amount after adding up these different denominations.

Once you understand the concept of UTXO, the process of using UTXO to transfer money becomes easy to understand. When a transfer is made, the payment is UTXO or UTXO combination. In fact, the process of using UTXO to transfer money is the same as the process of paying with paper money when we go shopping.

For example, in the above example, B has two UTXOs in its address, which are 1BTC and 0.5BTC respectively. Now, B wants to transfer 0.3BTC to D. Then, in theory, B has two transfer schemes (transfer fees are not considered for the sake of understanding) :

The first scheme: B uses UTXO of 1BTC to transfer 0.3BTC to D, and will receive change of 0.7BTC;

Second scheme: B uses UTXO of 0.5BTC to transfer 0.3BTC to D, and will receive 0.2BTC change;

If B transfers 1.4BTC to D, then both UTXOs need to be spent and change of 0.1BTC will be received. (Miners' fees are ignored in the above cases for the sake of explanation.)

The amount of a miner's fee depends on the type of wallet, the number of UTXOs spent, and the number of new UTXOs exported.

TokenPocket's BTC wallet supports custom UTXO function, that is, when transferring transactions, you can choose which UTXO to use, so as to use a more economical combination of UTXO or specify a specific UTXO to carry out transactions, so as to save miners' fees and other purposes.
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