Bitcoin
Combining and Splitting Value
Context
This figure appears in the Combining and Splitting Value section, which explains how Bitcoin avoids the impracticality of treating each satoshi as a discrete, indivisible coin. The section describes how a single transaction can aggregate multiple small inputs into a larger payment and simultaneously produce multiple outputs — typically one for the recipient and one returning change to the sender. This flexibility makes everyday payments workable without maintaining a separate coin for every denomination.
What This Figure Shows
The diagram depicts a transaction with multiple inputs on the left — potentially drawing from several prior outputs of different sizes — and multiple outputs on the right. One output represents the payment to the intended recipient; another returns the remaining value as change back to the sender's own address. The inputs collectively must cover the total value of all outputs plus any implicit transaction fee, which equals the difference between total inputs and total outputs. The section notes that 'fan-out,' where one transaction's outputs feed many subsequent transactions, creates no structural problem because Bitcoin's UTXO model never requires reconstructing a complete standalone copy of a coin's history.
Significance
This figure clarifies that Bitcoin's unit of account is the unspent transaction output (UTXO) rather than a named coin, a subtle but crucial design choice. The ability to combine and split value in a single transaction makes Bitcoin's scripting model flexible enough to handle real-world payments of arbitrary sizes without any denomination-management overhead.
