UTXO Model

Two accounting models

Cryptocurrencies track ownership one of two ways:

• Account model (Ethereum and most smart contract chains): a global ledger of balances. A transaction mutates balances in place.
• UTXO model (Bitcoin, Kaspa): no balances stored anywhere. The ledger is a set of unspent transaction outputs - discrete coins, each locked to a script. A “balance” is just the sum of the UTXOs an address can spend.

Kaspa uses UTXO accounting, inherited from Bitcoin.

How it works

• Every transaction consumes existing UTXOs as inputs and creates new UTXOs as outputs.
• An input spends a UTXO entirely - there is no partial spend. Paying 0.2 KAS from a 10 KAS UTXO means creating two outputs: 0.2 to the recipient and ~9.8 back to a change address.
• The fee is implicit: sum(inputs) - sum(outputs).
• A UTXO is spendable by whoever can satisfy its locking script - usually a signature matching the address, or a P2SH redeem script.
• Validation is local: whether a UTXO is spendable depends only on the current UTXO set, not on the history that produced it.

Why UTXO fits a blockDAG

Kaspa’s parallel blocks make UTXO accounting a structural fit, not just an inheritance:

• Conflicts are explicit. A double spend is two transactions consuming the same outpoint (transaction ID + output index). Once GHOSTDAG orders the blocks, the first spend is accepted and the second is rejected mechanically - no ambiguity about “account state” in between.
• Duplicates are harmless. Parallel blocks routinely include the same transaction. Under UTXO accounting it can only apply once (its inputs are gone after the first application); it is accepted once and counted as one unique transaction.
• Independent transactions commute. Transactions spending disjoint UTXOs can be applied in any order with the same result, so merging blocks from across the DAG is mostly conflict-free.

The UTXO set as durable state

The UTXO set is what a node actually keeps. Old block data is pruned after ~30 hours; the UTXO set persists as the complete spendable state of the network. Blocks are the broadcast medium; UTXOs are the ledger.

Note wallet balance displays follow directly from this: a wallet scans/subscribes to UTXOs for its addresses (requires a node with --utxoindex), and “balance” is a sum over them. See the getUtxosByAddresses flow in Build a Transaction.

See Also: Transaction Structure, Pruning, BlockDAG Basics