An analysis of Bitcoin UTXO consolidation

Bitcoin employs the unspent transaction output (UTXO) model for keeping track of asset ownership in its network. All transactions made on Bitcoin have an input that references a previous unspent output. When users want to transfer bitcoins, their wallet adds up a set of unspent outputs as inputs to construct a transaction. These unspent outputs are considered “spent” when they are referenced in a new transaction. Each UTXO, in theory, could include an unlimited number of bitcoins.

Visualization of Bitcoin’s UTXO model (Source:

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