Remember the UTXO model? Bitcoin doesn’t have “accounts” with associated bitcoin tallies.
Rather, you can think of each transaction as outputs from previous transactions feeding into new inputs.
Transactions contain the signature of the owner of the unspent funds.
These unspent transactions are UTXOs.
So how do you spend your bitcoin, or“your UTXOs”? This is important: spending bitcoin is the act of redeeming previous outputs with a proof that you are the legitimate redeemer, and then specifying who can redeem the output you are now creating by encoding that person’s information in your transaction.
For example, if I send bitcoin (in the form of UTXOs) to Rustie, then in that transaction it’s encoded that only Rustie can redeem those UTXOs.
That proof that Rustie would use to redeem his bitcoin is constructed with two things: a public key, and a signature.
We’ll go more into detail later.