UTXO means Unspent Transaction Output. Its unit is an outpoint, txid plus output index, not an address or account; one address can have several separate UTXOs.
An output carries a satoshi amount and scriptPubKey defining future spending conditions. Node state also needs creation height and the coinbase flag for maturity and time-lock rules. Knowing an address or outpoint does not imply the ability to satisfy those conditions. [Bitcoin Core v29.0: transaction checks]
A transaction can combine several UTXOs and create others. Old outputs are consumed entirely; no fraction of an existing output is moved directly. Remainder usually becomes a new change output and the sum difference is the fee. Two new outputs to one address remain two outpoints. [Bitcoin Developer Reference: Transactions]
The confirmed UTXO set corresponds to a particular chain tip. A mempool can also contain spends or new unconfirmed outputs; reorganizations change confirmed state. gettxout therefore also depends on include_mempool. A null result alone cannot distinguish a nonexistent output from a spent one. [Bitcoin Core v29.0: gettxout]
A wallet totals known outputs whose conditions it can monitor or satisfy. A watch-only balance proves no private key; coinbase may be immature and a script may impose a time lock. A very small UTXO can cost more to spend at high fee rates than its value. [Bitcoin Core v29.0: transaction checks]
More inputs generally enlarge a transaction and its fee. Combining them can suggest common control to observers, but is not universal proof. Coin control can restrict selection; consolidation lowers future management costs only at today’s fee and possible linkage of histories. [Bitcoin whitepaper: privacy]
Spending a whole output
A wallet selects a 1,000,000-sat UTXO to pay 600,000 sats. If the fee is 1,500 sats, the transaction creates a 600,000-sat payment output and a 398,500-sat change output. The original UTXO is consumed completely.
For the clearest picture, read this entry together with Transaction, Full Node, Private Key, Bitcoin wallet, Mempool. The reverse links also lead from Full Node, Transaction, Private Key, Bitcoin wallet.
01Is a UTXO the same as a wallet balance?+
No. A balance is the sum a wallet calculates from the UTXOs it can spend. The network tracks individual outputs and their spending conditions, not one mutable account balance.
02Why do many small UTXOs increase fees?+
Each selected input adds data to a transaction. Spending many small outputs therefore creates more virtual bytes than spending one larger output and usually costs more at the same fee rate.