1. UTXO
Bitcoin's transaction model is not 'account balance-based' (like banks), but rather a UTXO model (Unspent Transaction Output).
Every Bitcoin transaction consists of 'inputs' and 'outputs'.
Your Bitcoin balance is actually the sum of all UTXOs that belong to you.
The transaction process can be understood as 'destroying old UTXOs and generating new UTXOs'.
Example:
Alice has 1 BTC (from a certain transaction's UTXO).
She wants to transfer 0.6 BTC to Bob, so:
Input: 1 BTC (the old UTXO is destroyed)
Output:
0.6 BTC to Bob (new UTXO)
0.39 BTC change to self (new UTXO, deducting 0.01 BTC miner fee)
2. The 'dark play' of UTXO
(1) UTXO Tracking & Address Association
Problem: Bitcoin is pseudo-anonymous, but UTXOs can be tracked by analysis tools (like Chainalysis).
Play:
Exchange deposits/withdrawals: If you withdraw coins from an exchange to a new address but then transfer them back to the exchange, on-chain analysis companies can associate all your addresses.
Change address exposure: If you are not careful with the change address during a transaction, hackers can easily lock onto all your UTXOs.
Defense:
✅ CoinJoin (mixing): Mixing multiple people's UTXOs to obscure the flow of funds (like Wasabi Wallet).
✅ Use a new address: Receive change with a brand new address for each transaction.
(2) Dust Attack
What is dust?
Extremely small UTXOs (like 0.00001 BTC) are usually not usable for normal transactions (the miner fee is higher than it).
Attack method:
Hackers send dust to a large number of addresses (like 0.00001 BTC).
When you spend this dust UTXO, hackers can associate all your addresses (because you exposed the private key signature).
May even trigger bugs in some wallets (for example, Electrum crashed nodes due to dust attacks).
Defense:
✅ Don't touch dust UTXOs, simply ignore them.
✅ Use wallets that support dust protection (such as Samourai Wallet's 'Do Not Spend' feature)
(3) UTXO Poisoning
Play:
Hackers deliberately send illegal funds (like stolen coins, dark web funds) to your address.
When you try to spend these UTXOs, exchanges/compliance institutions may freeze your account (because it is blacklisted on-chain).
Defense:
✅ Use Coin Control features to manually select 'clean' UTXOs for transactions.
✅ Avoid receiving small transfers from unknown sources.
(4) UTXO Reorganization Attack (Fee Sniping)
Play:
Miners/hackers can replace your transaction through RBF (Replace-by-Fee) or double spending, causing your UTXOs to be tampered with.
Common in high-value transactions, for example, when you transfer 10 BTC, hackers can steal the money with higher gas fees.
Defense:
✅ Increase transaction fees to prioritize your transaction for miners.
✅ Use CPFP (Child Pays For Parent) to accelerate confirmation with subsequent transactions.
(5) UTXO Bloat Attack
Play:
Hackers deliberately create a large number of small UTXOs, occupying the memory of full nodes.
Causes the Bitcoin network to slow down, and may even crash some light wallets.
Defense:
✅ Bitcoin core developers have optimized UTXO management (such as UTXO snapshots).
✅ Ordinary users are not significantly affected, but full node operators should pay attention to storage space.
✨👛Ultimate Conclusion
UTXO is the core of Bitcoin, but it has also become a breakthrough point for hackers.
Ordinary users should pay attention to address isolation, avoid dust, and carefully choose UTXOs.
Advanced players can enhance privacy using CoinJoin and Coin Control.
Exchanges/institutions monitor UTXOs, so it's best to 'clean' before large transactions.
Remember: In the world of crypto, your privacy can only be protected by yourself! 🔐