The UTXO is really what you can get whenever someone pays you some Bitcoin. The output of these transaction could be the cash they paid to you personally. And it is, obviously, unspent whilst it sits in your wallet. Thus transaction output that isunspent.
That they have not yet spent so you can think of the current state of the Bitcoin system as being a huge pool of UTXOs: all the payments that have been received by Bitcoin users:
Every re payment who has maybe perhaps perhaps not it self been invested is modeled within the Bitcoin system as a unspent transaction output. As a whole, each UTXO can just only be invested because of the master of this address to which it absolutely was delivered (not at all times, and this may be the true point; see later). And every UTXO has an identifier (the deal 
it starred in and its particular place within the a number of outputs of this deal) and a value: exactly how numerous Bitcoins are represented by that UTXO.
Exactly what individuals usually skip is the fact that these UTXOs are now small small computer programs that go on the ledger, control use of bitcoins and run in response to specific incoming events. Smart Contracts, in the event that you shall. As well as the only method you are free to invest the income managed by that agreement is that it returns if you can provide some input data that allows every node on the system to execute the program and check TRUE
Whenever you can make the system return TRUE, you are free to state what the results are to your funds. If you cant, then you dont.
Therefore, when you wish to blow your hard earned money, heres everything you do:
Your wallet pc pc computer software writes only a little computer system into the bitcoin network for you and then sends it. It effortlessly states towards the community: Please run this little system Ive simply provided you. Then please look for a scheduled program(smart contract?) on the working platform with this specific ID in my situation. Once youve done that, feed the production from my system into system you just located. Which means this is a two action procedure: you offer your very own small system while the output of the is given towards the UTXO program you want to pay.
The manner in which you spend some money in Bitcoin would be to ask the working platform to operate a tiny computer system that you provide and feed the production of the system towards the smart contract that is keeping the funds you wish to invest. Whenever you can get this to second system run effectively, you can invest the amount of money. In Bitcoin terminology, this system you offer is scriptSig as well as the UTXO program is scriptPubKey. Your objective would be to offer a scriptSig whose output could be given into scriptPubKey to really make it get back TRUE
What exactly are these small programs? Theyre really simple in the common case. The UTXO program just claims: provide me by having a digital signature that demonstrates you own the key linked to the following Bitcoin target (and please additionally demonstrate that you understand the general public key that corresponds to your bitcoin target). Thats why it is called the scriptPubKey.
While the system you provide is merely an approach to make sure the bitcoin system delivers this evidence in to the scriptPubKey system into the right means. Its a means of supplying a electronic signature. Ergo it is called the scriptSig
In the event that you dont understand the personal key then chances are you cant produce the proper signature and that means you cant produce the input essential to have the smart contract (scriptPubKey) to operate successfully and also you dont get to invest the funds. Which means this, apparently complex model, is simply a method to make certain that the sole one who can spend cash at address 1abcde could be the one who understands the personal key just as we’d desire.
Exactly why is it this complex?