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Cardano Ecosystem

Cexplorer

10/11/2023

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Understanding UTxO

In this article, we will describe how the UTxO model works through an analogy with banknotes. We will refine this simplified view further.

Understanding UTxO

In this article, we will describe how the UTxO model works through an analogy with banknotes. We will refine this simplified view further. UTxOs are like Banknotes People perceive a bank account as a balance. 

It is a number that increases if someone sends money to the account, or decreases if the owner of the account spends money. The account-based model that Ethereum uses works similarly. 

If Alice has 3 ETH in her account and sends Bob 1 ETH, the Ethereum transaction will subtract 1 ETH from Alice's account and add it to Bob's account. An Ethereum transaction is an atomic operation. 

This means that it happens in one moment through the change of state that occurs through the blocks. In the case of Cardano, forget the bank account analogy. 

The UTxO model behaves completely dif Read article: Understanding UTxO

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