What is UTxO?
Description on UTxO
Let's imagine that you have 10 BTC and have to pay 5 BTC for a purchase
Unlike account-based transactions where you can send exactly 5 BTC to another person's account, Bitcoin uses UTxO which can be comparable to cash.
In order to pay 5 BTC by sending UTxO, you will need to pay over or the same amount as the price like cash.
For example, if you have 4 UTxOs in your wallet which contains as stated below there would be various methods to pay 5 BTC
Size of 1st UTxO: 10 BTC
Size of 2nd UTxO: 5 BTC
Size of 3rd UTxO: 4 BTC
Size of 4th UTxO: 3 BTC
The first method is to overpay and gets changes. It is possible to pay with
1) Using only 1st UTxO ( 10 BTC) and get change return of 5 BTC
2) Pay both 2nd-3rd UTxO ( combined 9 BTC) to get 4 BTC worth of UTxO(s) back in change
3) Pay both 3rd-4th UTxO ( combined 7 BTC) to get 2 BTC worth of UTxO(s) back in change
The second method is to pay at the exact payment amount
1) Pay 2nd UTxO of 5 BTC
1) It is important to note that the payment should be a minimum BTC of over 5 BTC
2) The change you get back is also independent UTxO(s)
3) Just like if you splitting the cash into several pieces makes cash worthless, once UTxO is created, it can't be divided like cash.
4) UTxO can appear as any amount of BTC unlike cash has a certain standard amount but is more like checks.
5) There are fees that are paid to miners who recorded transaction.
When UTxOs are used to pay or transfer, it is no longer a former valid UTxO. Just like checks can be used once if it is used, UTxO works the same way. When UTxOs get out of the wallet that was stored, it is could be called a destroyed state.
Upon destruction of UTxO, the creation of UTxO usually takes place as transactions could result in the procedure of getting changes. To sum up, the creation and destruction of UTxOs take place when any UTxOs get out of a wallet in the transaction process.
After the creation of UTxOs, UTxOs stay in the wallet dormant and the days it stays dormant are documented. This is possible due to the blockchain system of inscribing the time of transaction and the time the block that transaction is written was created.
Thanks to the feature of UTxO's age, various indicators and data were created to draw any indications that blockchain is going through. There are many ways of using such ages such as
1) Focusing on the alive days of certain or all UTxOs
2) Focusing on the destroyed days of certain or all UTxOs
3) Comparing each price at the moment of creation and destruction of UTxO(s)