What is Unspent Transaction Output (UTXO)? 2025 Update

Summary

• UTXO is the remaining digital currency after cryptocurrency transactions.
• UTXO continues to be processed and is part of every transaction’s start and end.
• Once a transaction is completed, any unspent outputs are saved in the database as inputs for future transactions.
• UTXO is essential for preventing double spending on the blockchain and for users spending non-existent coins.
• By 2025, the number of UTXOs for Bitcoin (BTC) has reached 92.3 million, while advanced models like Cardano (ADA) utilize EUTXO to support more complex smart contracts. New platforms have integrated enhanced UTXO systems that provide anti-MEV protection and optimize transaction costs, while dedicated management tools improve coin selection and privacy.

Latest developments in 2025

By 2025, the UTXO model has significantly evolved, with notable progress in implementation and adoption:

• UTXO Count Growth: The number of UTXOs in Bitcoin has reached a historical high of 92.3 million, an increase of 9% compared to the previous record in 2022.
• Extended UTXO Model: The EUTXO model introduced by Cardano has been widely adopted, enhancing traditional UTXO capabilities through account model features, enabling more complex smart contracts.
• Cross-platform integration: Multiple platforms have integrated the improved UTXO system to enhance security:

• Advanced Management Tools: New tools specifically for UTXO management have emerged, with Sparrow and other wallets offering dedicated interfaces that allow users to optimize coin selection and privacy protection.
• Scalability solution: The implementation of UTXO aggregation technology has reduced the average transaction size of Bitcoin by 34%, addressing the previous scalability limitations.

The UTXO model continues to evolve in 2025, balancing transaction security and efficiency while overcoming past limitations. As blockchain technology matures, UTXO-based systems remain the foundation of the integrity of cryptocurrency transactions.

TL: DR

UTXO is the digital currency that remains after a cryptocurrency transaction.
UTXO is continuously processed and serves as the starting and ending point for each transaction.
After a transaction is completed, any unspent outputs are stored in the database as inputs for future transactions.
UTXO is crucial in preventing double spending on the blockchain and ensuring that users do not spend non-existent coins.

Introduction

Unspent Transaction Outputs (UTXO) and account models are methods of recording cryptocurrency, representing the remaining amount of tokens an individual has after a transaction is completed on the blockchain. These models are crucial for how blockchain architectures maintain an accurate ledger and uphold privacy.
This term essentially defines the outcomes of received transactions that may be spent in the future.
The best analogy for UTXO is physical fiat currency. UTXO cannot be divided into smaller denominations like coins or banknotes. UTXO can be considered discrete chunks of corresponding tokens controlled by the private key of its owner. Bitcoin (BTC), Litecoin(LTC), Bitcoin Other currencies like Bitcoin Cash (BCH) and Zcash (ZEC) use the UTXO model.

What is the Unspent Transaction Output (UTXO) Model?

The amount of digital currency remaining after a cryptocurrency transaction is described as Unspent Transaction Output (UTXO). This is similar to the change you receive after making a purchase, but it is not in lower currency denominations. It consists of transaction outputs in a database generated by the network, allowing for non-exact change transactions.
As an accounting measure, a portion of the total amount of cryptocurrency that has not been spent in transactions (outputs) is used for the next transaction (inputs). Each transaction works like double-entry bookkeeping, with an input and an output.

Consider 10 Bitcoin Become a bucket full of coins. Each coin represents an unspent transaction output (UTXO). If you pay Stephanie 5 BTC to purchase something, the network will give Stephanie the entire coin bucket and return the “change” of 5 BTC that you owe. You now have a UTXO worth 5 BTC, which cannot be further divided.

How does UTXO work?

Imagine you want to send 1.3 BTC from a balance of 1.5 BTC. Bitcoin Wallet address. This 1.5 BTC may be the output from your previous transactions. For example, it could be 0.9 BTC and 0.6 BTC respectively.

Your new transaction has two outputs: 1.3 BTC is spent (sent to the recipient), and 0.2 BTC is an unspent output that will be returned to your address (i.e., the sender). The remaining 0.2 BTC can be used in one of the following ways: sent back to your account, used as part of the transaction fee, or sent as the remaining amount to someone else.

Bitcoin Nodes maintain transaction records by tracking these outputs. Each unspent transaction output (UTXO) uses encoded _script_PubKeys to record each transaction, with no specific user associated with it. This allows the network to verify the existence of all related coins without disclosing users’ private information.

The Importance of UTXO
The concept of UTXO greatly simplifies blockchain accounting. UTXO allows each node to track information about unspent coins, rather than tracking and storing every transaction.

It is effective because each coin can only be in Bitcoin The network. This means that each BTC in the wallet is unspent; they are either received as mining rewards or minted as change during transactions.
UTXO is crucial in preventing double spending on the blockchain and stopping users from spending non-existent coins. Each network node maintains a database of each UTXO.

What is an account model?

Debit cards or bank accounts are the most obvious analogy for the account model. Unlike physical fiat currency that cannot be divided into smaller denominations, the account model allows for any arbitrary token amount to be credited (or debited). Account model wallets represent the total balance of the user, while UTXO wallets keep track of the sum of the user’s UTXOs.

Projects using the account model include Ethereum (ETH), Ethereum Classic (ETC), and Ripple (XRP). Unlike the UTXO model, transactions in the account model represent a single transfer of funds or digital currency between accounts, without the need for additional inputs or outputs. Only a change in the ledger is required.

Differences between UTXO and Account Models

Although UTXO and account models have the same goal, they each have their own advantages and disadvantages.

Scalability

The account model can utilize memory better because storing a single balance takes up much less memory than storing all UTXOs that a user owns. Account model transactions are smaller because they only require the amount, sender, recipient, and digital signature. A typical Ethereum transaction is about 100 bytes, while UTXO model transactions are several times larger. The parallelism of UTXO transactions also helps to partition UTXO-based blockchains into shards and sidechains. The UTXO model allows for output aggregation and definition on the client side, thus reducing network computation requirements. The implementation of the account model is more challenging because each node must localize sender and receiver accounts across multiple shards.

Privacy

The UTXO model makes switching between addresses trivial, which makes tracking coin ownership more challenging. Newly generated addresses have no public owner. Therefore, sophisticated chain analysis is often required to link them to specific users. The account model involves the reuse of a single address. Thus, this blockchain makes it easier to identify transaction histories. On the other hand, in terms of fungibility, the account model provides better privacy.

Smart Contract Functionality

Due to the simplification and intuitiveness of account-based transactions, this model benefits greatly from smart contract functionality. Compared to the computational logic of UTXO input/output, the computational power required to verify a single balance is less, making it easier for DApp developers to program multi-party contracts and transactions. For example, the Ethereum Virtual Machine (EVM) can handle transactions between multiple smart contracts by adjusting their respective balances. The UTXO model consumes significantly more resources as it involves explicit UTXO inputs and outputs in each transaction. Smart contracts written with the UTXO model must consider the number of inputs to be combined, or which inputs should be combined if multiple options exist.

•Security:
Validator nodes in the UTXO blockchain, such as Bitcoin Track the UTXO set to determine which coins are in circulation and know who owns them. The UTXO system efficiently and trustlessly solves the double-spending problem because each transaction must reference the exact UTXO to be spent. Blockchains with account models are more susceptible to attacks and often suffer from other issues such as refunds and overdraft smart contracts.
For example, in 2020, the Ethereum Classic project lost millions due to a series of double-spending attacks.

Conclusion

The UTXO model is a method of recording transactions on the blockchain.
Due to the pros and cons of different models, the application of UTXO on any blockchain depends on the project’s goals.
Ethereum adopts the account model because it focuses on deploying powerful smart contracts, and Bitcoin Gate uses the UTXO model because it focuses more on developing secure electronic cash.
New projects are trying to improve these models. For example, Cardano (ADA), Tron (TRX), and Qtum(QTUM) attempts to combine the advantages of both into an advanced hybrid model. These models make it easier for developers to use UTXO while retaining the powerful features of smart contracts.