UTXO (unspent transaction output)

A UTXO, or unspent transaction output, is a single bitcoin deposit that hasn’t been spent yet. A wallet’s balance is the sum of all its UTXOs.

Bitcoin doesn’t keep accounts with a single balance. Every deposit to a wallet address creates a separate item, like a banknote in a wallet. You spend it whole: if you pay 30 with a 50 note, you get change, and in bitcoin the change returns to a new address in your wallet as a new UTXO.

A few practical things follow. Many small deposits mean many items, and a transaction with many items costs more, because it takes more room in a block. That’s why people sometimes merge them into one beforehand. So the fee depends on the number of items and network load, not on the amount. Also, an extended public key shows all the items, so it reveals more than one address.

Why it matters for your family

When your family recovers a wallet, the software scans the network and finds all the items. If someone deposited a little at a time over the years, there may be dozens, and moving them is a larger transaction with a higher fee. It’s also worth knowing that an heir doesn’t need to know any address, because they can rebuild them all from the key. How this process looks in practice is shown in the guide on inherited crypto.