User's Analogy from Reddit for Understanding UTXOs
"It's actually easy to understand if you make an analogy to physical wallet and cash.
Bitcoin wallet is like a your leather wallet, each compartment is an address except that Bitcoin wallet has very large number of compartments. And these are automatically managed so you don't have to remember them.
Each compartment can have multiple bills or coins, just like each address can have multiple UTXOs (unspent output aka note).
If you buy something worth $10 using $50 bill, you got $40 back as change which can go into same previous compartment or new one. For privacy reason, bitcoin wallet usually never reuse old address as change address (compartment) unless you specifically tell it to. That $40 goes into entirely new address and the process continue if you spend that $40.
If you put an address in block explorer you only watch a compartment not your entire wallet. A block explorer can't know all addresses belonging to same wallet."
#Bitcoin
#UTXO
Resonance Cascade The II
npub18h…tq4vy
2024-06-11 05:35:22
Author Public Key
npub18hvyyy7r0t0kka5u3dpzhgzrn4xvf5dgxkjvy3v8xd7kr8qydnqqftq4vyPublished at
2024-06-11 05:35:22Event JSON
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"content": "User's Analogy from Reddit for Understanding UTXOs\n\n\"It's actually easy to understand if you make an analogy to physical wallet and cash.\n\nBitcoin wallet is like a your leather wallet, each compartment is an address except that Bitcoin wallet has very large number of compartments. And these are automatically managed so you don't have to remember them.\n\nEach compartment can have multiple bills or coins, just like each address can have multiple UTXOs (unspent output aka note).\n\nIf you buy something worth $10 using $50 bill, you got $40 back as change which can go into same previous compartment or new one. For privacy reason, bitcoin wallet usually never reuse old address as change address (compartment) unless you specifically tell it to. That $40 goes into entirely new address and the process continue if you spend that $40.\n\nIf you put an address in block explorer you only watch a compartment not your entire wallet. A block explorer can't know all addresses belonging to same wallet.\"\n\n#Bitcoin\n#UTXO",
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