Unspent Transaction Output

An unspent transaction output, usually shortened to UTXO, is a discrete chunk of coin left over from a previous transaction that has not yet been spent. In a UTXO-based chain such as Bitcoin, a wallet does not hold a balance field; it holds a set of these outputs, and what you see as your balance is simply their sum. Spending consumes whole outputs as inputs and creates new ones, often including a change output back to yourself. Because each output is used once and referenced explicitly, validation is simple and parallelisable, and double-spends are easy to detect. The trade-off is bookkeeping: many small outputs make transactions larger and therefore more expensive in fees.