In the blockchain world, specifically in cryptocurrencies like Bitcoin, UTXO stands for Unspent Transaction Output. Here's a simplified explanation:

Imagine you have a piggy bank full of coins (these represent the UTXOs). Each coin has a value, like 1 dollar, 5 dollars, etc. When you want to buy a candy bar, you smash open the piggy bank, take out enough coins to pay for it, and hand them over. The shopkeeper takes the coins, gives you the candy, and also gives you back some change if you paid too much.

In blockchain terms:

• Smashing the piggy bank = Choosing which UTXOs to use for a transaction.

• Coins you hand over to the shopkeeper = Inputs of the transaction.

• Change you receive back = New UTXOs created by the transaction.

So, a UTXO is basically digital currency that hasn't been spent yet. Each UTXO represents a chunk of cryptocurrency that can be used in a future transaction. The blockchain keeps track of all UTXOs, which together form the total balance of a cryptocurrency wallet. When you make a transaction, you essentially "spend" some UTXOs by inputting them into the transaction, and "receive" change in the form of new UTXOs to your wallet. It's a way to keep track of who owns what without having a central record-keeper like a bank.