UTXO: Unspent Transaction Output

UTXO is geek-speak for “unspent transaction output.” Unspent transaction outputs are important because fully validating nodes use them to figure out whether or not transactions are valid– all inputs to a transaction must be in the UTXO database for it to be valid.

From <https://www.google.com/search?q=UTXO&oq=UTXO+&aqs=chrome..69i57j0l5.3565j0j7&sourceid=chrome&ie=UTF-8>

UTXO

1. Unique identifier of the transaction
2. Position of this UTXO in transaction output list
3. Value or Amount
4. Optional script

Transaction contains

1. Reference number of current transaction
2. Reference to one or more input UTXO
3. Reference to one or more output UTXO newly generated
4. Total input amount and output amount

Transaction hashes contain

1. Hash of the current block
2. Hash of previous block
3. Hash of next block
4. Merkle root hash of the block

Double spending problem

The risk that a digital currency can be spent twice. Double-spending is a potential problem unique to digital currencies because digital information can be reproduced relatively easily.

Bitcoin solution

We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work.

https://bitcoin.org/bitcoin.pdf

The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power

As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers.

the chain stitches that data into encrypted blocks that can never be modified and scatters the pieces across a worldwide network of distributed computers or "nodes.

From <https://www.pcmag.com/article/351486/blockchain-the-invisible-technology-thats-changing-the-wor>

Basic operations: what Miners do?

1. Validation of Transactions
2. Gathering transactions for a block
3. Broadcasting valid transactions and blocks
4. Consensus of next block creation / acceptance
5. Chaining blocks

Transaction 0 Index  0 of the confirmed block

1. Created by the miner of the block
2. Does not have input UTXO
3. Only has output UTXO (special UTXO)
4. It generates Coinbase transaction (miner's fee)
5. Miner fee - 12.5 BTC

A standard transaction output can be unlocked with the private key associated with the receiving address. Addresses and their associated public/private key pairs will be covered later in the series. For now, we are concerned with the output amount only.

From <https://www.ccn.com/bitcoin-transaction-really-works/>