Jan 26 in General discussion
UTXO Management is IMPORTANT! Dont get rekt.
My Video about UTXOs (German) https://www.youtube.com/watch?v=PQpd7aNEXEU
What is a UTXO? A UTXO stands for unspent transaction output. You can think of a UTXO as similar to a 50-dollar bill. If you want to buy something for 70 dollars, you need 2 50-dollar bills. A UTXO can only be spent in its entirety; there is no option to spend just a portion of it.
Therefore, you would need to send 2 UTXOs to make the purchase with Bitcoin, and you will receive another UTXO back as your change. This is important because the more UTXOs needed for a payment, the larger the transaction becomes, and fees are based on the size of your transaction.
The more UTXOs used, the larger the transaction and subsequently higher fees. This is why managing UTXOs is crucial. You can consolidate UTXOs in your wallet by sending them back to yourself, creating new, larger UTXOs. Currently, it's an opportune time for UTXO management as fees have decreased to 30 sat/vb from 600 sat/vb just a few weeks ago.
Another risk of not managing UTXOs is the dust limit; if fees become too high, you may be unable to send your Bitcoin because the fee will exceed the value of your UTXOs.
I recommend UTXOs in the size of 0.01 BTC - 0.05 BTC
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UTXO Management is IMPORTANT! Dont get rekt.
