UTXO stands for “Unspent Transaction Output.” An UTXO contract is a mechanism used to manage and verify transactions in blockchain systems like Bitcoin. It focuses on the individual outputs from transactions that have not yet been spent.Each Bitcoin transaction references one or more previous outputs as its inputs. Once the output is used in a new transaction, it becomes “spent.” UTXOs are the remaining outputs that can be used in future transactions. This model helps ensure that coins cannot be double-spent, as each UTXO can be used only once.UTXO contracts can set specific conditions for when and how these outputs can be spent. For example, they can include requirements such as multi-signature approvals or time locks. This adds a layer of flexibility and security to transactions, allowing users to create more complex financial agreements.Overall, UTXO contracts enable a clear, decentralized way of managing ownership and transaction validity without relying on a central authority. They represent the building blocks of many decentralized finance applications and enable a wide range of use cases.