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If I want to spend 0.4BTC and I only have a UTXO for 1.0BTC, I will send 0.4BTC to the seller's address and 0.6BTC to my address. The seller has one UTXO and I have the other.

One UTXO has become two.

As time passes and more transactions occur, the number of UTXOs increases monotonically and the value of each will fall monotonically. (Right?)

If we extrapolate, the value of the individual UTXOs will tend to 1 Satoshi.

Or to ask the question differently, can two UTXOs ever be combined into one UTXO?

Thanks

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  • what about the fees? can we have fractional satoshi for fees? if not either fee =0 or it's simply not possible.
    – Cisco Mmu
    Jul 10, 2020 at 15:36

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Can two UTXOs ever be combined into one UTXO?

Yes, absolutely. Each transaction can have any number of inputs and outputs; it can certainly have fewer outputs than inputs.

Here for example is a transaction with four inputs and one output, leading to a net decrease of three UTXOs.

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