Bitcoin UTXOs, short for Unspent Transaction Outputs, are fundamental building blocks in the Bitcoin blockchain. They represent the unspent outputs of a previous transaction and are used as inputs in new transactions.

In the context of a transaction, inputs are the sources of funds being used to make payments and outputs are the recipients of these payments. A single input can be created from multiple UTXOs, and a transaction can have multiple inputs and outputs.

When a transaction takes place, the inputs are combined, verified, and spent, creating new outputs with specific amounts that can be used as inputs in future transactions. The sum of the inputs must equal the sum of the outputs, plus the transaction fee.

UTXOs are important because they help to ensure the integrity and security of the Bitcoin network. They provide a way to track the movement of funds and prevent double spending, as once a UTXO is spent, it cannot be spent again. This is because each UTXO has a unique identifier, called a transaction ID, and spending it creates a new, distinct UTXO with its own transaction ID.

In summary, UTXOs are the basic units of value in the Bitcoin system and are used to track the ownership and movement of funds in the blockchain.