Unspent Transaction Output (UTXO) - what is it?

The Unspent Transaction Output is an additional transaction carried out to return funds if the denomination of coins available in the crypto wallet does not correspond to the amount of the completed transaction.

To understand the principle of operation of such an algorithm, it is enough to compare a similar situation with payment in fiat money. If you need to purchase 100 money, but only a 200 bill is available, then the seller changes the amount of 100 units. The situation is similar with crypto coins. Depending on previous transactions, your wallet may contain coins of different denominations. If you need to make a payment, for example, for 11 bitcoins, and your wallet contains the amounts 10, 20, 50, and 100, then none of these values correspond to the selected amount. Therefore, the system takes the nearest value - in this case, 20 coins. This amount is sent to the specified address, and the remainder is returned via a reverse transaction.

Specifics of the refund

In fiat payments, where cash is used, the change amount usually clearly corresponds to the surplus. If these are electronic payments, then there will definitely be a fee for the payment, but only in one direction. Moreover, its size directly depends on the conditions of the selected financial institution.

The situation with the cryptocurrency system is somewhat different: a commission is charged both for the first transaction and the return one. Moreover, the size of the commission can vary, which is influenced by the size of the transaction (weight of the message, taking into account entry points), as well as network congestion. The larger these values, the longer the payment can be processed.