Most mysterious concept in crypto

March 07, 2024 • Reading Time:6 minutes

GM. Today on Money Printer Go Brrr newsletter:

Most mysterious concept in crypto: UTXO
MetaMask and Revolut join forces
4 things you should know, today

Most mysterious concept in crypto: UTXO

This UTXO is the least understood term from the crypto glossary.

It’s like the weird uncle that nobody wants to talk about.

Short for Unspent Transaction Output, UTXO is the technical term for the amount of digital currency that remains in wallet after a transaction.

To explain it better, I’ll use the Gold Coin Analogy.

Let’s start from here → UTXOs = GOLD COINS.

So, considering 1 BTC = 1 oz Gold, let’s imagine:

if you snag 1.5 bitcoin, it's like owning a chunky 1.5-ounce Gold Coin.
you want to spend 0.2-oz of Gold coins in a store (you can’t break it down, it’s a freakin’ gold coin, remember?)
you've got to "Melt" it down in a transaction, like tossing it into a "Melting Pot."
this process melts your original 1.5-ounce Gold Coin (UTXO is destroyed), and mints a new set of gold coins with new denominations (UTXO creation):
- 0,001 oz Gold fee for melting operation
- 1 coin of 1,3 oz Gold
- 1 coin of 0.2 oz Gold
You spend 0.2 oz Gold in a store, and remain with 1.3 oz Gold

💡 This transaction created

→ you spent 0.2 ounces of the Gold Coin.

→ you received 1.299 ounces back as change.

→ plus, there's a 0.001 ounce fee for the melting operators (aka miners)

In total, 0.2 + 1.299 + 0.001 = 1.5 ounces, just like the original Gold Coin you started with.

→ To put it simply, UTXOs are the coins remaining in your wallet after the last transaction.

What UTXO means for on-chain analysis

By looking at when and for how much UTXOs were created and destroyed, we can learn about what investors are doing.

It's like tracking when gold coins were made and when they disappeared.

Old UTXOs might be lost or stored safely:

→ imagine a UTXO as that one sock that's been missing for a decade — you either find it eventually, or it’s lost forever. 🧦
Selling old UTXOs can show investor mood:

→ if lots of old UTXOs are suddenly used (destroyed), it might mean that people who held onto their bitcoins for a long time are now selling them.
Calculating profit or loss:

→ by comparing the value of UTXOs when they were created with when they were destroyed, we can figure out if the owner made or lost money
Watching big players' moves:

→ large financial groups like exchanges have unique ways of handling their UTXOs — every time we see whales moving their bitcoin on exchange we all panic (thinking they’re going to sell).

Diving into the world of UTXOs and on-chain analysis is a bit like being a digital archaeologist…

…not many crypto users fully understand UTXO.
(I’ve also had to wrap my head around it quite a bit).

I hope you liked this and found it easier to understand.

Watch this YouTube video with real UTXO examples.

Also, there is a dark side to the UTXOs…. → YouTube video.

Please reply to this email and let me know what you think about the educational portion of the newsletter. 🙏

MetaMask and Revolut join forces 🔥

Finally, we have it. 🥳

Literally 9 out of 10 people I know are on Revolut.

But 2 out of 10 people I know are in crypto, let alone MetaMask 🤤.

But now → Revolut and MetaMask are now BFFs, making buying crypto as easy as pie. Sweet!

They've basically invented an 'easy button' for your crypto buys. Because, let's face it, who wants to solve a Rubik's cube every time they buy Bitcoin?

(we know some of you feel like that)

→ Revolut currently has 40 mil users.

→ MetaMask currently has 20 mil users (and we know they are active).

Where/who?

→ available for UK and European Economic Area

How?

→ Head to https://portfolio.metamask.io/buy

→ Select your country → Card → There you’ll see Revolut.

Cash out, crypto in, and welcome to the crypto world.

4 things you should know:

Meme Of the Day

P.S. Please reply to this email and let me know which type of content you prefer more: News or Educational? 🙏