The size of a Bitcoin and why UTXOs matter

The size of a Bitcoin and why UTXOs matter

As mentioned in my article ‘Why does the Price in Sats Exist’, we explained what a Bitcoin (BTC) is and how each Bitcoin (BTC) has 100,000,000 (100 million) SATs () associated with it. And whilst each Bitcoin can be divided into 100,000,000 SATs, in reality, unlike pennies or cents your wallet is holding much less than 100,000,000 SATs in the form of UTXOs.
Confused, let me explain


First let’s have some definitions:

  “UTXO” stands for Unspent Transaction Output. Simply put, when you spend bitcoin your ‘change’ is the UTXO.
  “SATS”   is short for Satoshi’s, the smallest unit of Bitcoin (BTC). One Satoshi (sat) is equal to 0.00000001 BTC (one hundred millionth of a Bitcoin). In other words, there are 100,000,000 Satoshi’s in a Bitcoin.


Unlike traditional money, UTXOs are not broken down into fixed denominations like coins and dollar notes. They are the number of SATs left behind once a payment has been made. Let’s use an example to demonstrate the key difference,


Traditional Money


With traditional money, when you buy a good from a shop and pay in cash, the shopkeeper gives back to you, your change. This change will usually be in multiple smaller denominations of the same currency. This could be a few pound notes, a pound coin and maybe a pennies. The total of this change will equal what you are owed, but as mentioned above, it comes in multiple different denominations.


(Image denoting change in GBP)


Bitcoin change

 UTXO Example    

In the example above, you can see a wallet that contains 3 UTXOs, these are

  • UTXO 1, which contains 100 SATS, (0.00000100)
  • UTXO 2, which contains 50 SATS and
  • UTXO 3, which contains 980 SATS.

The wallet has a balance of 1,130 SATs.

The owner of the wallet wishes to buy the steak priced at 1,090 from the shopkeeper. When sending the funds from the owner’s wallet to the shopkeepers, the wallet combines the balances from each of the available UTXOs to pay for the steak and creates a new UTXO (UTXO 4) with the remaining balance left over. This leaves the owner’s wallet with 1 UTXO ( UTXO 4) and a balance of 40 SATs. The shopkeeper, receives UTXO 5, a combination of the previous UTXOs to equal the balance paid.

Hopefully, these examples along with the information above give you a greater understanding of a UTXO (Unspent Transaction Output)

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