UTXO vs Account Based Transaction Models

The two most well-known cryptocurrency platforms, Bitcoin and Ethereum, utilize different transaction models for their platforms, each with their own specific advantages and disadvantages over the other. Understanding how they work from a conceptual perspective is important to further understanding of the overall framework of these platforms and other platforms built with the same or similar models.

While consensus in cryptocurrency platforms is necessary to secure the network and validate the state of the blockchain, the transaction model employed by a platform is used to prove ownership over tokens. Bitcoin uses the Unspent Transaction Output (UTXO) scheme while Ethereum uses the Account Based model. Both models are, at their most basic level, models for tracking database state, and the implementation of each in their respective platforms has a specific purpose and role in the larger structure of the platform.

Bitcoin was the first cryptocurrency and thus the first platform…