# UTXO Consolidation in inabit ## What is a UTXO? **UTXO** stands for **Unspent Transaction Output**, and it's a fundamental concept in cryptocurrencies\ like Bitcoin. Every transaction output in the Bitcoin blockchain that has not been spent yet is considered an unspent transaction output (UTXO). Each UTXO has an associated value (the amount of bitcoins) and a locking script, which specifies the conditions under which the bitcoins can be spent (usually by providing a public key or a script that corresponds to a private key). ## What is UTXO Consolidation? If you regularly run operations on the Bitcoin blockchain, you will likely notice that the list of UTXOs in your wallets grows very quickly. This can be a major problem for retail-facing operations. A process utilized by most companies is "consolidating UTXOs", or creating a transaction that will take many small unspent UTXOs and turn them into a **single larger UTXO (Consolidated UTXO)**. ## UTXO Consolidation in inabit Every UTXO created from your transactions in Bitcoin or example, is saved in a database table with all UTXO relevant data (such as UTXO amount, is\_spent flag, etc.) inabit developed a unique logic to calculate which UTXOs should be used to send a transaction in Bitcoin, instead of registering a new UTXO from a new transaction. {% hint style="success" %} By applying this logic, inabit takes another step forward towards optimizing Bitcoin transactions, making them much more efficient. {% endhint %}