OKX Blockchain 60 Lectures | Episode 21: What is the UTXO Model?
"OKX Blockchain 60 Lectures" is a blockchain educational animation video jointly produced by OKX & Sina Tech, designed for users with zero blockchain knowledge. Through series articles, educational animations, and other forms, it vividly explains blockchain concepts from the perspectives of concepts, technology, and applications, covering 5 major sections and 60 knowledge points. The content of this episode was completed under the guidance of Huang Lianjin, a member of the Blockchain Expert Committee of the China Institute of Electronics.
Hello everyone, I'm Little K. Today we're going to talk about: "What is the UTXO Model"?
In the previous lesson, we discussed what the double-spending problem is. The first type of double-spending problem occurs when the processing party, due to synchronization delays during record-keeping, allows the same money to be spent twice repeatedly. Therefore, to solve this situation, some blockchain projects have introduced the UTXO mechanism on top of the consensus mechanism.
The so-called UTXO model, simply put, is a special accounting model. Its Chinese meaning is called "Unspent Trading Output," and it has a major difference from traditional bank account models in that this model only records the trading itself, not the result of the trading.
Like traditional bank account models, they directly record results. For example, if I have 10,000 yuan in my account and I want to transfer 3,000 to you, 3,000 will be deducted from my account, my account balance becomes 7,000, and your account increases by 3,000.
But the UTXO model doesn't record it this way. It records the entire trading process. The principle is this: still assuming I have 10,000 yuan in my account and I want to transfer 3,000 to you. When UTXO records, it first records that all 10,000 yuan was transferred out, then records that 3,000 was transferred to your account, and 7,000 was transferred from my account back to my own account.
Throughout the process, it records all information including the account funds involved, trading addresses, transfer amounts, fund sources, etc. This makes it possible to trace the original source of every trading. Therefore, the essence of UTXO is actually a sequential accounting method that records the trading process.
The advantage of this model is that it makes every trading process clearly recorded and can trace the source of every fund. It is precisely based on this characteristic that UTXO can work together with the consensus mechanism to solve the double-spending problem.
Blockchain solves the first type of double-spending problem by also borrowing from traditional banking methods, processing trading sequentially one by one. When a node processes a trading, it first uses the UTXO model to verify whether the trading funds exist, then traces the source of the trading, and after confirming there are no issues, broadcasts it through the consensus mechanism and records it on-chain.
If someone wants to use the same money to make two payments, the blockchain network will only confirm the first one received. For the subsequent trading, when nodes query the UTXO, they will discover that these funds have already been spent and do not exist in your account, thereby rejecting the trading. This solves the first type of double-spending problem.
However, UTXO cannot solve double-spending problems caused within the rules. The so-called double-spending problem caused within the rules refers to using the consensus mechanism rules themselves to tamper with already recorded trading, commonly seen in 51% hashrate attacks. For example, if there's a blockchain using PoW consensus mechanism, because the overall network has relatively few participants, a node controls 51% of the entire network's hashrate. At this point, they can first conduct a trading, wait for the trading to complete, then use the consensus mechanism to tamper with the previous trading record, deny the previous trading, and make the already spent money return to their account to use again.
This type of double-spending problem can only be solved by increasing the overall network hashrate. Therefore, in blockchain, the more users there are, the higher the overall network hashrate, and the safer the entire network becomes.
In summary, UTXO not only helps the consensus mechanism solve the first type of double-spending problem in blockchain, but also gives blockchain the characteristic of traceability. Blockchain can also use this as a foundation to ensure the authenticity and reliability of every trading.
Thanks to Teacher Huang Lianjin for his help and guidance with this episode's content.
Sina Weibo: @黄连金Ken Huang
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