A UTXO is one piece of bitcoin held by your wallet. The letters stand for "unspent transaction output": bitcoin that arrived in a transaction and has not been spent yet.
Think of UTXOs as the banknotes in your pocket. A $50 note and a $20 note add up to $70, but they are still two separate notes. In the same way, your balance is all of your UTXOs added together.
How UTXOs are created and spent
- Receiving creates a UTXO. Each payment into your wallet arrives as its own UTXO, whatever its size.
- Sending spends whole UTXOs. A UTXO is spent in full, never in part. When you send, your wallet spends one or more UTXOs, pays the recipient, and returns anything left over to you as a new UTXO. That returned amount is called change.
It works like paying for a $30 item with a $50 note. The $50 note is gone, and the $20 you get back is a new note.
Why UTXOs matter
- Fees. The network fee depends on how much data a transaction carries, not on how much bitcoin it moves. Every UTXO a send spends adds data, so spending many small UTXOs costs more than spending one large one.
- Privacy. UTXOs spent in the same transaction are visibly spent together on the blockchain, and are usually assumed to belong to the same owner. Keeping UTXOs apart keeps those parts of your history apart.
Your UTXOs in the Bitaroo Wallet
Open your Wallet and select UTXOs. The screen lists every UTXO your Wallet holds, largest first, with its amount, where it came from, whether it is confirmed, and its address. From there you can:
- Add a note to a UTXO, or freeze it so that it stays out of your sends. See Freezing a UTXO and adding a note.
- Choose exactly which UTXOs a send may use. See Choosing which UTXOs to send from.
None of this is required. If you never open the UTXOs screen, your Wallet decides which UTXOs to spend each time you send.