The Infinite Machine

by Camila Russo

One significant difference between Ethereum and Bitcoin is their record-keeping method. Bitcoin uses the Unspent Transaction Output model, or UTXO. The balance on each Bitcoin account is composed of unspent coins left over from other transactions. One balance usually includes many UTXOs as with a physical wallet, which might contain many denominations of bills and coins. To buy something with your bitcoin, you may have to use a combination of UTXOs, just like you would use a $10 and a $5 bill to buy something worth $12. The $3 left over from that transaction would become a new UTXO.1 Ethereum uses the Account/Balance model, which keeps track of the total balance, or “state,” of each account. If Bitcoin’s UTXO model is similar to bills and coins, Ethereum’s model is more like a checking account, allowing for fine-grained control over the amount that can be withdrawn, and making more complex programs easier to implement.