UTXO stands for Unspent Transaction Output. It refers to the portions of cryptocurrency that have not yet been spent and can be used as inputs for future transactions.Each transaction consists of inputs and outputs. When someone sends cryptocurrency, the output creates a new balance that can be spent later. These outputs are stored in the UTXO set, which contains all available unspent outputs at any given time.The UTXO set is crucial for maintaining the integrity of the blockchain. Miners and nodes use it to verify transactions and ensure that the sender has enough balance to complete their transaction. When a transaction is created, UTXOs are marked as spent, and new UTXOs are generated for the recipients.The size and management of the UTXO set can impact network performance. A larger UTXO set can slow down transaction processing, leading to higher fees and longer confirmation times, while an efficiently managed UTXO set helps improve transaction speed and reduce costs.