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Bitcoin's UTXO Model: Why It's Fundamentally Different from Account Balances
@blockonomist
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2026-05-16 04:38:27
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Bitcoin does not store balances. It stores Unspent Transaction Outputs (UTXOs) — discrete pieces of bitcoin that have been received but not yet spent. When you spend bitcoin, you consume one or more UTXOs in their entirety and create new outputs: one to the recipient, one returning change to yourself. This model has important properties: each UTXO is independent, enabling parallel validation; the full UTXO set is the complete state of all unspent bitcoin; and privacy is enhanced because addresses are not inherently linked. Ethereum chose the account model instead — simpler for smart contracts but with different tradeoffs around state management and parallelism.
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