UTXO model vs. account Model
Cryptocurrencies that utilize the UTXO model function differently compared to those using the account model. In the UTXO model, individual units of cryptocurrency, termed as unspent transaction outputs (UTXOs), are transferred between users, analogous to the exchange of physical cash. This model impacts how transactions and ownership are recorded and verified within the
blockchain network. The account model preserves a record of each account and its corresponding balance for every block added to the network. This setup enables quicker balance verification without the need to scan historical blocks, but it increases the raw size of each block (though data compression techniques can be utilized to alleviate this). However, both models necessitate the inspection of past blocks to fully authenticate the origin of coins. In the UTXO model, each object is immutable - units of coins cannot be 'edited' in the same way an account balance is modified when a transaction occurs. Rather, the balance is computed from the transaction history dating back to when the coins were first minted. This simplicity enhances security, as a UTXO either exists in its anticipated form or it does not. In contrast, the account model requires meticulous verification of the account's status during transactions, which can lead to oversights if not conducted correctly. In valid blockchain transactions, only unspent outputs (UTXOs) are permissible for funding subsequent transactions. This requirement is critical to prevent
double-spending and fraud. Accordingly, inputs in a transaction are removed from the UTXO set, while outputs create new UTXOs that are added to the set. The holders of private keys, such as those with
cryptocurrency wallets, can utilize these UTXOs for future transactions. ==References==