A UTXO, short for unspent transaction output, is an amount of bitcoin from an earlier transaction that has not yet been spent. Your Bitcoin balance is made up of these individual amounts, which your wallet adds together for you.
You do not normally need to manage UTXOs yourself. Understanding them helps explain why a payment can use more bitcoin than the recipient receives, why some bitcoin returns to you as change, and why sending many small amounts can cost more in fees.
How UTXOs make up your balance
A Bitcoin transaction creates outputs, each assigning an amount of bitcoin to particular spending conditions, usually represented by an address. An output remains a UTXO until it is spent in another transaction.
For example, if your wallet controls two unspent outputs worth 0.02 BTC and 0.03 BTC, together they make up a balance of 0.05 BTC. They remain separate outputs even though your wallet displays their combined value. One address can have several UTXOs, and a wallet can control UTXOs across many addresses.
Previously received outputs that you have already spent no longer contribute to your balance. A payment to yourself can create a new UTXO too; UTXOs do not only come from other people.
What happens when you spend a UTXO?
When a transaction spends a UTXO, it uses that output in full as an input. This does not mean you must send its whole value to the recipient: the transaction can create separate outputs for the recipient and for change returning to your own wallet. The difference between the total input value and the total output value is the network fee.
Suppose your wallet spends one UTXO worth 0.01000000 BTC to send 0.00300000 BTC, with a fee of 0.00001000 BTC. The transaction creates:
- A recipient output of 0.00300000 BTC.
- A change output of 0.00699000 BTC back to your wallet.
The original UTXO is now spent. Your remaining bitcoin is in the new change output, and your balance has decreased by the payment plus the fee. The fee is not a third output. A transaction may also use several inputs or have no change output.
To interpret these amounts in an actual transaction, see how to use Mempool to explore Bitcoin transactions. An unfamiliar output is not automatically your change; compare the transaction with your wallet's record.
UTXOs in the BitBoxApp
The BitBoxApp normally selects UTXOs automatically when you send bitcoin and handles any change for you. If you need to choose which funds may be spent together, read what coin control is and when to use it. To view individual available outputs or select them for a payment, follow how to use coin control in the BitBoxApp.
Spending more inputs generally makes a transaction larger, which can increase its fee at the same fee rate. UTXO consolidation combines several smaller outputs into a larger output in your own wallet. It costs a fee now and publicly links the inputs you combine; lower fees later are not guaranteed. Our blog explains UTXO consolidation and its fee and privacy trade-offs.
For an illustrated explanation of the underlying transaction model, read our blog article What's a UTXO?.