UTXO stands for “Unspent Transaction Output.” It refers to a specific method of tracking and managing balances in certain blockchain networks, most notably Bitcoin. In this system, every transaction generates outputs which can be used as inputs for future transactions.When a user initiates a transaction, they spend one or more UTXOs, which represent the available balance. Each output can be thought of as a “coin” that is yet to be spent. Once a transaction uses these outputs, they become spent and can no longer be used. Consequently, only UTXOs that have not been utilized remain available for spending.The UTXO model offers advantages in terms of privacy and efficiency. By minimizing the need to track account balances, each transaction can remain discrete, and network resources can be optimized because transactions are processed independently. This protocol enhances security and helps in preventing double-spending while providing a clear picture of users’ available funds.