UTXO vs Account model with simple example

I think switching from a UTXO model blockchain (like Cardano) to an account base model (like Eth) is not hard.

The problem starts when you are addicted to the account model and begin to use UTXO!

What is UTXO?

let’s start with its meaning: U: Unspent TX: transaction O:output

So you may guess here unspent outputs are the base of this model! When you send a transaction, the input is all balance, and the output is again your wallet address for the unspent amount and the destination addresses you wish to send them.

Simple Example

This example is with ADA , Cardano’s native coin.

Imagine you have 100 ADA. And you wish to send 20 ADA to Person X.

In account-based models, You and Person X have accounts, and a simple transaction does this transaction.

You —-> Person X : 20 ADA

You —–> Transaction fee : 1 ADA

But in the UTXO model, the whole 100ADA is supposed as input, and there are three outputs!

Input: 100 ADA

Output 1: Person X : 20 ADA

Output 2: Transaction fee : 1 ADA

Output 3: You! : (100-20-1) 79 ADA

I think you can easily understand what’s happening in the picture below.

There are many words about the comparison of these models. And for sure, in the future, we should talk about it.