UTXOs are the pieces of Bitcoin you actually own. Imagine them like bills in your wallet. If you have 3 separate $20 bills, you really have 3 UTXOs worth $20 each, not just ‘$60’ in one lump. When you spend, you hand over one or more whole bills, and if it’s too big, you get change back as a new UTXO.
If you always spend big bills, you’ll keep getting lots of small ones as change. Over time, your wallet might fill up with hundreds of $1 bills -which makes it slower and more expensive to pay (since each bill must be counted in the transaction, i.e. more transactions on block leading to higher fees). Good UTXO management means keeping a good mix of bill sizes so payments stay cheap and flexible.
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It’s genuine effort to manage, truly. Consolidate when fees are low, avoid over-fragmenting, and try to use a wallet that allows you to pick which UXTO you want to spend are ways to do it.
But even I struggle to stay consistent with it.
excellent explanation. now I can sort of explain it to normies
#smij #zapd #grownostr
The analogy fails at 'slower and more expensive to pay.'
Counting out 20 or 100 $1 bills from my wallet is indeed slower than handing over a 20 or 100 dollar bill, but there is no expense to do it.
Could you imagine being charged at the counter per dollar bill you handed over. 🤣
Anyway. Carry on. It almost makes sense and was a decent try anyway.
Exactly this is the reason why bitcoin is not easy. Try to explain this to an average person and they see water burning
