A UTXO (unspent transaction output) is an amount that an earlier TransactionTransactionA record of crypto moving from one wallet address to another, signed with the sender's private key and stored permanently on the blockchain. sent to a wallet address and that hasn't been spent yet. Bitcoin doesn't keep track of balances the way a bank does. The network only remembers these unspent amounts and who they belong to.
Like notes in a wallet
Picture a wallet holding one ISK 5,000 note and two ISK 1,000 notes. You have ISK 7,000, but in the form of three notes. A Bitcoin wallet works in a similar way. The balance it shows is the sum of all the UTXOs that belong to your wallet addresses.
When you pay, the transaction uses one or more whole "notes" and returns the change to you. Say you hold 0.1 bitcoin in a single UTXO and send 0.03 bitcoin. Two new unspent amounts are then created: 0.03 bitcoin for the recipient and the rest, minus the network feeNetwork feeA fee paid to a crypto network, not to a bank or company, for including your transaction in a block., for you. The original amount now counts as spent and can never be used again.
The network's nodes keep a record of every unspent amount. If someone tries to spend the same amount twice, they spot it straight away. This is called double spendingDouble spendingSpending the same digital money twice; the problem Bitcoin was the first system to solve without a bank or other middleman..
Ethereum's account model
EthereumEthereumAn open blockchain that can run applications and smart contracts, with its own cryptocurrency called ether (ETH). uses a different system, known as the account model. There, each address has a single balance, like a bank account. A transaction subtracts the amount from the sender's balance and adds it to the recipient's. No change is created that needs returning. This model is considered better suited to applications such as smart contracts.
What to keep in mind
The fee on the Bitcoin network depends on the size of the transaction, not the amount. If your wallet holds many small UTXOs, for example after lots of small deposits, a payment has to use many of them at once. It then becomes larger and more expensive than if the same amount sat in a single UTXO.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.