Post
Topic
Board Nigeria (Naija)
Re: How Bitcoin Uses UTXOs Instead of Balances
by
Dulen007
on 29/07/2025, 22:55:57 UTC
I know many here think that in their bitcoin wallet the  balance showing are bitcoin. But nah is not bitcoin rather is UTXOs which stand for ( Unspent transaction Output ) . I am going to use this post to break it down for folk here (I know shey some of nah Dey aware already)on how it works , for those that don’t this is how it works .

Let me say Mr A received BTC from three separate transactions,

1st 0.5 BTC

2nd 0.3 BTC

3rd 0.2BTC
 
So those BTC above shows that Mr A has three UTXOs , totaling will be 1 BTC . So Aslong he never spend anything Mr A is still holding his UTXO until sending to another wallet as coin if am not mistaken.

So for instance Mr A want to do any transactions , like for instance 0.85 BTC . He go need to choose enough UTXO wey go fit cover that exact transaction of  0.85 BTC so e got use the three UTXO wey Dey he wallet  as his new input inorder to coverup the 0.85 transactions . Then create 2 new outputs , one to the person his sending 0.85 BTC to while the other to himself as change of 0.15 BTC (the remaining digit wey go Dey show for the balance after the transaction).

Nice explanation OP, But I have a question sha...
If someone has many small UTXOs (tiny amounts), does it affect the transaction fee when sending BTC?
Like, will using many small inputs make the fee higher?
Just want to know if it’s better to combine them sometimes to save on fees later.