An Unspent Transaction Output (UTXO) refers to the portion of cryptocurrency that remains after a transaction has been completed but has not yet been spent. Each transaction contains inputs and outputs. Inputs are the funds used to make a payment, while outputs represent the amount sent to a recipient’s wallet.When a transaction occurs, outputs are created. If these outputs are not used in any subsequent transactions, they are classified as unspent. UTXOs essentially serve as digital coins that can be transferred or spent later.This model enhances privacy and security, as each transaction generates new outputs that can be traced back to previous transactions. Users can combine multiple UTXOs to make a larger transaction or split a single UTXO into smaller parts. Understanding UTXOs is crucial for managing balances and keeping track of available funds in a wallet. Unlike account-based systems, where balances are maintained centrally, the UTXO model offers a decentralized and transparent way to handle transactions.