utxo

On February 17, CKB Co-founder/Khalani Network CEO Kevin, CKB Ecological Fund CMO/SeeDAO founder Baiyu, and CKB community ambassador CyberOrange shared their views on the UTXO model and its ecology during an X Space live broadcast.

The live broadcast lasted for 1 hour and 40 minutes and contained a lot of information. The following are the key points based on the audio:

1. The difference between UTXO model and account model
Regarding the UTXO model, host Baiyu used a very easy-to-understand metaphor: When you walk on the street, you cannot know how much money the people on the street have in their pockets unless you go through their pockets one by one. In contrast, Ethereum, which uses the account model, has a world state tree, which saves the status of all Ethereum accounts in the world (such as account balances, contract information, etc.).

The @Bitcoin network is built on the principles of decentralization, security, and economic incentives. Over the years, its underlying protocols have seen innovative use cases beyond just financial transactions. One such innovation is #OrdinalTheory , which assigns unique identifiers to individual satoshis, the smallest unit of #bitcoin . The recent trend of splitting rare ordinal sats into individual #UTXOs (Unspent Transaction Outputs) has generated significant interest. These sats, particularly from early blocks such as Block 9, are now being viewed not merely as units of value but as historical artifacts with cultural and economic implications.
Understanding the Dust Limit
Before diving into the world of Ordinals, it is essential to understand the concept of the "dust limit." On the Bitcoin network, the dust limit refers to the minimum amount of #BTC in a UTXO below which it becomes uneconomical to spend. For instance, if a #UTXO contains 1 satoshi (0.00000001 BTC), the transaction fee required to transfer it would far exceed its value. These minuscule amounts are often considered "dust" and are usually consolidated or abandoned because of their impracticality.
However, Ordinal Theory has redefined how we perceive such dust-like UTXOs. By attaching historical significance or metadata to individual sats, even the smallest UTXO can hold value far beyond its monetary worth.
What Is Ordinal Theory?
Ordinal Theory assigns a serial number to each satoshi based on the order in which it was mined. This makes every satoshi theoretically traceable, providing it with a unique identity. While most sats are indistinguishable, certain sats gain rarity due to their association with early blocks, specific events, or inscriptions.
For example, sats from Block 9, mined in the earliest days of Bitcoin, are considered rare due to their proximity to Bitcoin’s genesis and association with its anonymous creator, Satoshi Nakamoto. This rarity has fueled a market for collectible sats, much like rare stamps or coins.
Splitting Rare Sats into Individual UTXOs
The image below demonstrates a process where rare sats from Block 9 are being split into individual UTXOs, each containing exactly one satoshi. This allows the sats to be sold or inscribed separately. Here’s how it works:
Transaction Crafting: The owner uses Bitcoin scripts or specialized tools to create a transaction that splits a larger UTXO containing rare sats into multiple smaller UTXOs, each with a single satoshi.Economic Implications: Although these UTXOs are below the dust limit and inefficient to transact under typical Bitcoin use cases, their rarity and collectible value justify the effort and fees.Future Use: These sats can be inscribed with metadata using the Ordinals protocol, turning them into unique digital artifacts. For instance, they could carry images, text, or other data akin to NFTs (non-fungible tokens) on Ethereum.
Technical Challenges
While splitting rare sats and inscribing them has its appeal, it comes with technical hurdles:
High Transaction Fees: Bitcoin’s fee market makes splitting and transferring dust UTXOs expensive, especially during periods of network congestion.Network Bloat: Splitting sats into individual UTXOs increases the UTXO set—the database of all unspent Bitcoin—leading to inefficiencies in node operation.Complexity in Recovery: Managing numerous small UTXOs requires careful bookkeeping to avoid losing access due to misplaced private keys or insufficient fees for consolidation.
Cultural Implications of Ordinals
The rise of Ordinals reflects Bitcoin’s evolution from a purely financial tool to a cultural phenomenon. Much like collectors value artifacts for their historical significance, Bitcoin enthusiasts see rare sats as pieces of Bitcoin’s origin story. Early blocks, such as Block 9, hold a mythical quality, as they represent the dawn of a revolution in decentralized finance.
The act of inscribing sats also carries artistic significance. By attaching data to sats, users can create digital artworks, poems, or records that are immutable and censorship-resistant, preserved on the Bitcoin blockchain for eternity.
Economic Implications
The market for rare ordinal sats is speculative and driven by community interest. Factors influencing their value include:
Provenance: Sats from early blocks or blocks associated with notable events (like the halving) command higher prices.Inscription Potential: Collectors may pay premiums for sats that can be inscribed with unique data, turning them into one-of-a-kind artifacts.Scarcity: The limited number of sats in early blocks creates an inherent scarcity, driving up demand among collectors and investors.
However, the market remains niche. Unlike traditional collectibles, ordinal sats face challenges in mainstream adoption due to their dependence on Bitcoin’s technical infrastructure and the speculative nature of their value.
Broader Implications
The development of Ordinals and the market for rare sats highlights the adaptability of Bitcoin as a protocol. It also raises important questions about the balance between financial utility and cultural or speculative use cases. As the Bitcoin network continues to evolve, it is likely that new innovations will emerge, further expanding the range of what can be achieved with this groundbreaking technology.
In conclusion, the splitting of rare ordinal sats into individual UTXOs reflects a fascinating convergence of history, technology, and culture. While it challenges traditional notions of value and efficiency on the Bitcoin network, it also underscores the limitless potential of a decentralized, programmable financial system. Whether as collectibles, digital artifacts, or economic experiments, ordinal sats offer a glimpse into the future of Bitcoin as both a financial and cultural phenomenon.
$ORDI

Preface

During the fourth Bitcoin halving cycle, the explosive adoption of the #Ordinals protocol and similar protocols made the crypto industry realize the positive externality value of issuing and trading assets based on the Bitcoin L1 layer to the consensus security and ecological development of the Bitcoin mainnet. This can be described as the "Uniswap moment" of the Bitcoin ecosystem.
The evolution and iteration of Bitcoin’s programmability is the result of the Bitcoin community’s opinion market governance, rather than being driven by teleology such as for BTC Holders or for block space Builders.
At present, enhancing the programmability of Bitcoin and thereby increasing the utilization rate of the Bitcoin mainnet block space has become a new design space for the Bitcoin community consensus.

When I first dove into @Plasma I was fascinated by the concept of Plasma Cash and its use of the UTXO (Unspent Transaction Output) model. To be honest it feels like a clever bridge between traditional blockchain mechanisms and the scalability demands of modern applications.

Plasma Cash is a scalable #layer-2 solution that leverages the UTXO model to track individual coins rather than account balances. If you are familiar with Bitcoin, the UTXO model might sound familiar it’s essentially a way to represent ownership of discrete coins that can be spent and tracked independently. For Plasma, this means that instead of having to verify every transaction across the entire network, you only need to verify the specific coins you are interacting with. From my point of view this is incredibly efficient it drastically reduces the computational load while keeping security intact.

One of the biggest advantages I have noticed is fraud-proof simplicity. Each coin in Plasma Cash has a unique identifier and a transaction history. If someone tries to double-spend or commit fraud, users can submit proof to the root chain to exit securely. It’s a neat mechanism because it does not rely on trusting validators blindly users have cryptographic guarantees of ownership. From my experience, this feature alone makes Plasma Cash appealing to both developers and users who care about security without sacrificing scalability.

Another aspect I find exciting is how Plasma Cash supports non-fungible tokens (NFTs) and asset-specific applications. Because each #UTXO represents a unique coin, it naturally aligns with the concept of token uniqueness. This opens up a range of possibilities for digital collectibles, gaming assets, and even real-world tokenization of property or commodities. I like to think of Plasma Cash as not just a scalability solution, but a platform for innovation that can handle both fungible and non-fungible assets efficiently.

There are nuances that users and developers should understand. One challenge is data availability and coin tracking. Since each coin has its own transaction history, users must reliably track these histories to ensure security. If history data is lost, it can complicate exits. That’s why many implementations emphasize light client proofs, dedicated wallets, and cryptographic verification techniques to make coin tracking seamless and secure.

I have observed that Plasma Cash’s UTXO model also improves transaction privacy. Unlike traditional account-based models where balances and histories are visible globally, UTXOs allow for more granular control over coin movement. Each transaction can be tracked individually without necessarily exposing the full account activity, which adds a subtle layer of privacy for users who value discretion.

I see Plasma Cash and the UTXO model as foundational building blocks for Layer-2 scalability. Retail adoption, DeFi applications, and NFT marketplaces all benefit from faster, cheaper, and secure transactions, and Plasma Cash delivers precisely that. It’s not just a technical improvement it’s a user experience improvement, allowing people to engage with blockchain technology without feeling the friction of high fees or slow confirmations.

Plasma Cash combined with the UTXO model is one of the most elegant solutions for scaling blockchain networks. From my point of view it balances efficiency, security, and flexibility in a way that supports both traditional fungible tokens and unique digital assets.

For anyone exploring Plasma, understanding this model is crucial not just from a technical perspective, but also to appreciate the opportunities it unlocks for innovation and mass adoption.

@Plasma
#Plasma
$XPL

Next, we will have core insights on learning Bitcoin - Trading

#比特币 #UTXO

The English name of #UTXO is Unspent Transaction Output, which means “unspent transaction output”. It should be said that the core concept of Bitcoin transaction and the core knowledge point of transaction is UTXO, so let’s talk about UTXO in this article.
Transaction components
There is no concept of accounts in Bitcoin. The so-called balance of an address is actually calculated by counting all transactions related to this address. So let's adjust the focus of the microscope and take a look at what elements are included in a transaction.

When I first started experimenting with @Plasma I was immediately curious about smart contracts. Ethereum’s main appeal is the ability to run complex logic on-chain, so naturally, I wanted to see how Plasma could handle similar tasks off-chain. What I discovered was fascinating and at times frustrating. Early Plasma variants, while excellent for scaling payments, introduced a series of limitations for smart contract execution that every developer and user should understand.


The first thing I noticed is that early Plasma chains are primarily designed for simple token transfers. Payment-focused Plasma works beautifully when transactions are simple, but the moment you introduce complex smart contracts, things get tricky. My initial attempt was to deploy a simple token swap contract on a Plasma child chain. I quickly ran into a problem: Plasma doesn’t inherently support arbitrary contract execution off-chain. Transactions are mostly linear, UTXO-like operations, which means you can’t easily implement state-dependent logic like multi-step contracts. That moment was a reality check. I realized that Plasma’s design prioritizes scalability and security over on-chain programmability.


I learned that stateful contracts are challenging in early Plasma variants. Unlike Ethereum, where each contract maintains persistent state accessible by any transaction, Plasma’s child chains treat state more rigidly. Every transaction is associated with a specific coin or #UTXO , and while you can maintain some off-chain state, it becomes cumbersome as complexity increases. I remember spending hours trying to design a voting contract where multiple participants could update state in a coordinated way. Each modification required careful tracking of transaction history to ensure exits could still be verified. The learning curve was steep, but it gave me deep insights into the trade-offs Plasma makes between scalability and flexibility.


Another limitation I encountered relates to inter-contract communication. On #Ethereum contracts can call each other seamlessly. In early Plasma variants, this becomes tricky because contracts exist off-chain and are only periodically checkpointed on the main chain. I experimented with a small decentralized marketplace, where one contract needed to interact with another to validate payments. Without built-in support for inter-contract calls off-chain, I had to implement workarounds, essentially combining contract logic into a single contract to ensure proper verification. It wasn’t elegant, but it was functional. This experience highlighted a key lesson early Plasma isn’t about general-purpose computation it’s about secure, high-throughput state management.


Exit mechanisms also play a big role in limiting contract complexity. One of the brilliant features of Plasma is that users can exit the child chain to the main chain to recover funds. However, in early variants, this process becomes complicated when contracts maintain complex state. I remember designing a mini-game contract that allowed players to stake tokens and earn rewards. Simulating an exit for a player in the middle of the game revealed a tricky problem: the main chain only validates ownership of coins, not intermediate contract states. Ensuring security during exits required me to carefully encode all necessary state transitions, making contract design more cumbersome than I initially expected. It was a clear limitation that forced me to rethink how much logic to place on-chain versus off-chain.


Performance considerations also influenced contract execution. In my experiments, I noticed that adding complex smart contract logic could reduce transaction throughput significantly. Payment-focused Plasma can handle thousands of simple transactions per second, but as soon as I tried to execute stateful contracts, TPS dropped dramatically. Early Plasma variants are optimized for linear transaction flows and minimal computation, so each additional computation step adds overhead. It became clear that developers need to carefully weigh the benefits of executing logic off-chain versus the potential impact on scalability.


One workaround I explored was offloading contract logic to layer-2 applications or oracles. For instance, instead of executing a complex calculation directly on the Plasma chain, I experimented with sending the data to an off-chain service for processing and then updating the child chain with minimal state changes. This approach works for certain use cases but introduces reliance on external systems and partially undermines the trustless nature of Plasma. Still, it was a valuable lesson: creativity is key when working within the constraints of early Plasma.


I also realized how important clear developer documentation and tooling are. Early Plasma variants often required intimate knowledge of transaction formats, exit proofs, and child chain design. Without proper understanding, implementing even moderately complex contracts is error-prone. I spent countless hours debugging why my state updates weren’t recognized during exits. Over time, I developed a mental model of what works and what doesn’t, which made subsequent projects much smoother. This experience reinforced a broader lesson: early Plasma is powerful, but developers must respect its limitations and design around them.


One of the most valuable takeaways from my journey was thinking creatively about Layer-2 architecture. Early Plasma variants might limit smart contract execution, but that doesn’t mean complex applications are impossible. Instead, you have to combine on-chain and off-chain logic intelligently. My experiments with hybrid designs where simple contract interactions occur on the child chain, while more complex calculations are handled by external services taught me how to build scalable, secure, and functional applications despite early Plasma constraints. It’s a delicate balance, but it’s also incredibly rewarding when you get it right.


Exploring smart contract execution in early Plasma variants was a mix of frustration, discovery, and creative problem-solving. These early Plasma chains excel at scalability and secure token transfers, but limitations in state management, inter-contract communication, and exit verification pose real challenges for complex contracts. My personal experiments ranging from token swaps to mini-games taught me that understanding these limitations is crucial for designing effective Layer-2 applications.


For developers diving into Plasma today, my advice is simple embrace the constraints, experiment creatively, and always think about trade offs between complexity, security, and scalability. The early variants may not support full Ethereum-style smart contracts, but with ingenuity, you can still build impressive and practical applications on Plasma.



@Plasma
#Plasma
$XPL