Original author: Nan Zhi
Original source: Odaily Planet Daily
Recently, runes have once again ignited the heat of the Bitcoin network ecology, but many new wallets often have sufficient balances when performing on-chain operations, but indicate that the UTXO is insufficient. In this article, Odaily will explain what UTXO is, why there is a shortage of UTXO, why it should be split, how to split UTXO, etc.
What is UTXO?
One of the core concepts of Bitcoin is UTXO (Unused Transaction Output) by a more standard definition, and UTXO is a way of recording the state of a transaction output by keeping track of each unused transaction output to determine which bitcoins belong to which address.
To understand simply by analogy, each UTXO is like a banknote that has a specific face value (the number of bitcoins) and has a lock attached to it that can only be opened by a private key. When you want to send Bitcoin, you need to select some banknotes, merge them into a new one, and relock them with the recipient's lock.
For example: if you have two UTXOs, one worth 10 BTC and the other worth 20 BTC, you can merge them into a new UTXO with a total value of 30 BTC and then re-lock them with the recipient's address. In this way, you complete a transaction that sends 10 BTC and 30 BTC to the receiver while generating a new UTXO.
For example, Cathy in the figure below has obtained 10 BTC UTXOs from Bob and 30 BTC UTXOs from Alice, and its "balance" can be understood as 30 BTC, and Cathy can disassemble, combine and send these UTXOs to the outside world.
Why do you need to split UTXOs?
As an example of the image above, BOB owns a UTXO with 20 BTC written on it, while Cathy owns two UTXOs with 10 BTC and 20 BTC written respectively.
Platforms such as Magic Eden prohibit transactions using UTXOs that have not yet been confirmed by the Bitcoin network, so no matter how large the amount of money you have in a UTXO, once it has been used and not confirmed, no other operations can be performed. This is why users often encounter situations where the wallet balance is sufficient, but the UTXO is insufficient.
For example, both Cathy and Bob inscribed Ordi and both were unconfirmed, and since Bob had no other UTXO, no further action was possible, while Cathy was able to initiate a transaction using another UTXO.
The answer is also no, when UTXOs are too fragmented and the individual amount is too small, a large amount of UTXOs will need to be combined when making a large payment, which will cause an increase in fees, and the current high transaction fees on the Bitcoin network will further increase transaction costs.
How do I split a UTXO?
The most commonly used tool to split and merge UTXOs is Wizz.Cash.
- After entering the website, users can link their wallets in the upper right corner;
- 点击“Add Amount And Recipient”增加行数，每增加一行意味着新增一个 UTXO；
- Fill in the quantity of each UTXO in Amount, and fill in the address that accepts UTXO in Recipient.
Generally speaking, UTXOs will increase with the transaction usage of wallets, but the funds just withdrawn from the exchange are often a single large amount of UTXO, and if users have a large number of etching runes/inscriptions, they can prepare for splitting in advance.