Certified Bitcoin Professional Practice Exam

What is the benefit of having multiple UTXOs in a wallet?

1. They increase the total balance available

2. They allow for more transactions to be processed simultaneously

3. They offer greater flexibility in transaction outputs

4. They minimize transaction fees

The correct answer is: They offer greater flexibility in transaction outputs

Having multiple UTXOs (Unspent Transaction Outputs) in a wallet provides greater flexibility in transaction outputs. This flexibility comes into play when constructing transactions, as users can choose which UTXOs to spend based on their needs. By having several UTXOs, a user can combine smaller amounts into a larger transaction if needed or select specific outputs to spend, which can help manage available funds efficiently. This method allows users to optimize their transactions, such as consolidating UTXOs or splitting larger sums as necessary. Thus, when constructing a transaction, the user can decide how much to send to a recipient and how much to return to themselves as change, which is particularly useful for managing wallet balance and facilitating diverse transaction sizes. While other options may hint at benefits related to multiple UTXOs, flexibility in choosing outputs primarily stands out as a key advantage. This flexibility is especially useful in avoiding pitfalls related to transaction limits or managing the inputs to achieve desired outcomes, ultimately impacting how a wallet functions within Bitcoin's ecosystem.