Certified Bitcoin Professional Practice Exam 2026 – All-in-One Guide to Success!

In the context of Bitcoin, UTXO stands for "Unspent Transaction Output." This term is fundamental to how Bitcoin transactions are processed and understood. UTXOs are the outputs of a Bitcoin transaction that have not yet been spent, meaning they are available to be used in future transactions. When a Bitcoin transaction is made, it consumes one or more UTXOs as inputs and generates new outputs, which may be spent in the future.

This model allows Bitcoin to keep track of how much Bitcoin is owned by each user by listing all the UTXOs that they have access to. Each time a transaction is created, it references the previous outputs as inputs, ensuring that all transactions are accounted for and that coins cannot be double-spent. The UTXO set is essentially the current state of spendable Bitcoin in the network.

Understanding UTXOs is crucial for anyone involved with Bitcoin, as it underpins the transaction structure, affects wallet balances, and plays a key role in maintaining the security and integrity of the blockchain.