01Definition
Bitcoin’s current ownership state is represented by unspent transaction outputs, not account balances. Each UTXO has a value and a locking script defining the conditions under which it may be spent.
02Coins, not balances
A wallet balance is a convenient sum of UTXOs the wallet can authorize. Spending resembles using whole coins: selected outputs are consumed and any remainder returns as a newly created change output.
03Why selection matters
UTXO selection affects fees, privacy and future spending cost. Consolidating many small outputs can be efficient when fee rates are low, but combining them can reveal common ownership.
⌖Reference points
01
Discrete transaction output
02
Spent atomically, not partially
03
Tracked by validating nodes
04
Selection affects cost and privacy