Bitcoin was the first currency to introduce the UTXO model
UTXO (unspent transaction output) — an unspent transaction output — indivisible chunks of bitcoins, tied to a specific owner, recorded in the blockchain, and recognized as currency across the entire network.
In Bitcoin there is no concept of accounts or balances; there are only unspent transaction outputs (UTXO).


A new Delphi Digital report sheds light on the state of the bitcoin economy. In particular, the report quantifies how many bitcoin tokens are in active circulation and how many remain inactive and unused in wallets. This is called UTXO. Understanding UTXO UTXO is the English abbreviation for Unspent Transaction Output. To understand what it is, it is important to understand how transactions are carried out on the bitcoin blockchain, since they do not function the same way as operations with paper currency. Say you want to pay for a product in a store. Using the said currency, you hand over the amount needed for payment and leave the rest in your wallet untouched. However, if you pay for the same product using bitcoins, the transaction will work differently. On the Bitcoin blockchain, partial payments are not possible. This means that when you make a transaction, you receive the entire amount into your wallet. The payment is deducted and sent to the recipient's wallet, while your remainder is sent to a new address. The difference is that the new address is still under your control. This new address is called a change address. Simply put, UTXO means the amount of bitcoins in possession that have not been spent in the course of a transaction. Every bitcoin transaction has a spent output and an unspent output (the remainder, as in the case of fiat). If at the end of a transaction there is no UTXO, it means there are no more bitcoins at that particular address. In the early days of bitcoin, users had to manually enter the recipients of their transactions. This includes the recipient's address as well as the change address. If a user made a mistake and sent unspent bitcoins to an address that is not under their control, they would lose access to the UTXO. However, nowadays the development of technology has led to the emergence of deterministic wallets, which process transactions in a much more user-friendly way. Now users do not need to enter a change address when conducting a transaction, only the recipient's address. Deterministic wallets have simplified the transaction process and reduced the percentage of losses that can occur due to an erroneous change address. Distribution of bitcoin UTXOs Bitcoin was coded in such a way that, after all coins have been mined, only 21 million units are in circulation. In addition, using the data available to view on the bitcoin chain, we know that the number of bitcoins currently in circulation is approaching 17.4 million. These facts are indisputable, but there has been speculation or questions concerning the number of bitcoins that are actually used in transactions, unused and inactive, sitting in wallets. As of December 2018, Delphi Digital stated in its report: "By analyzing the distribution of bitcoin by UTXO age, we can observe that approximately 1/3 of all bitcoin in circulation has not moved in at least the last 3 years." In other words, approximately 5.8 million BTC have not been moved from their addresses for at least three years. At current market prices, this figure amounts to about 18 billion dollars. At bitcoin's record prices (20 thousand), 5.8 million BTC would have been worth significantly more. Analyzing the conclusions Considering the significant amount of value held in UTXOs, the question arises as to why users hold these coins. The first plausible explanation is that they are inaccessible to their owners due to errors when entering the relevant transaction data. As written above, this scenario was a common occurrence in the early days of bitcoin. Delphi Digital states: "The private keys that access these bitcoins have been lost and will remain lost indefinitely. Another crypto research company, Chainalysis, completed a thorough analysis of bitcoins that are likely lost and estimates their number at 2.78–3.79 million coins." Although for the owners of lost bitcoins this is a sad reality, for the bitcoin economy, on the contrary, it provides an advantage. Bitcoin is designed for scarce supply. Scarcity is an important feature of something that can be effectively used as a store of value. Bitcoin's digital scarcity was one of the key factors in its price growth and led to the No. 1 cryptocurrency being called "digital gold," genuinely comparing it to the yellow metal. Ultimately, even fewer units of bitcoin will remain in circulation, which should help the bitcoin price rise substantially. However, according to research conducted by Delphi Digital, this number (the number of coins in circulation) is only about half of the total UTXO. Consequently, there must be another reason for the remaining unspent blocks to be held in addresses. The second plausible reason is that a significant portion of users use their bitcoins as a long-term investment. Delphi Digital explains: "In Bitcoin there are long-term holders with sufficiently strong conviction that they are not interested in liquidating at today's levels." Such long-term "wanderers" demonstrate substantial faith in the future of bitcoin. This can be regarded as a de facto vote of confidence and confirmation of the reliable nature of the technology underlying bitcoin, as well as its ability to reach higher prices than we saw in 2017. Although the large number of UTXOs on the bitcoin chain may seem alarming at face value, ultimately it points to a bright future for bitcoin investors.