Abstract
Unspent Transaction Outputs (UTXOs) are the internal mechanism used in many cryptocurrencies to represent coins. Such representation has some clear benefits, but also entails some complexities that, if not properly handled, may leave the system in an inefficient state. Specifically, inefficiencies arise when wallets (the software responsible for transferring coins between parties) do not manage UTXOs properly when performing payments. In this paper, we study three cryptocurrencies: Bitcoin, Bitcoin Cash and Litecoin, by analysing the state of their UTXO sets, that is, the status of their sets of spendable coins. These three cryptocurrencies are the top-3 UTXO-based cryptocurrencies by market capitalization. Our analysis shows that the usage of each cryptocurrency presents some differences, and led to different results. Furthermore, it also points out that the management of the transactions has not always been performed efficiently and therefore, the current state of the UTXO sets is far from ideal.
Highlights
Blockchain-based cryptocurrencies are built on top of an appendonly ledger shared among all the users of the system
The system becomes inefficient since it has to track the status of that particular coin, that may never be spent due to an economic disincentive to do so. To avoid such inefficiencies and to minimize the fees that users pay for their transactions, wallets should perform accurate management of the UTXOs that they use for their payments
We propose two metrics to evaluate whether an output is worth spending and analyse the 3 UTXO sets of the three above-mentioned coins in terms of these metrics
Summary
Blockchain-based cryptocurrencies are built on top of an appendonly ledger shared among all the users of the system. For a simple payment transaction where user A pays an amount x to user B, the account-based model can perform such operation efficiently but the UTXO approach may generate some inefficiencies if A does not have a coin with the exact amount x. The system becomes inefficient since it has to track the status of that particular coin, that may never be spent due to an economic disincentive to do so To avoid such inefficiencies and to minimize the fees that users pay for their transactions, wallets should perform accurate management of the UTXOs that they use for their payments. The paper provides insightful details about both the current and the evolution of the status of the UTXO sets of those coins This analysis allows to compare the usage of the three cryptocurrencies.
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