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: Bitcoin.org)