What Are Unspent Transaction Outputs (UTXOs)?
When a Bitcoin transaction takes place, there are two UTXOs created:
- one that is the actual coins sent to the recipient,
- and another which is the change output , which goes back to the sender’s wallet.
These Unspent Transaction Outputs (UTXO) is what the Bitcoin network recognizes as the balance that is available on your wallet.
The change output that is returned to the sender’s wallet, generates a new address for the following reasons:
- To prevent double spending
- For privacy of your wallet address
This is part of the protocol designed by Satoshi Nakamoto when he created Bitcoin.
Besides Bitcoin (BTC) , there are also other blockchains that has this same feature, namely;
- Bitcoin Cash (BCH)
- Litecoin (LTC)
- Dogecoin (DOGE)
- Ravencoin (RVN)
- Digibyte (DGB)
These other blockchains are forked from the original code of Bitcoin and thus follow the protocols.