There is a middle way between small UTXOs for privacy preservation on the one hand, and large UTXOs for minimizing transaction fees on the other.
Follow the middle way. nostr:note168m7gq3st0p8m54q6mdswvfdpyacgpzl8mr426ezlljcln7cz8fszl7ale
Discussion
What is the sweet spot in your opinion? I’m thinking around 5M sats.
300K sats is the bare minimum in my opinion. 1M is better. 5M is great but for some may be unrealistic given the low maximum daily withdrawal limits on many Bitcoin exchange apps
I agree with 5M sats being the ideal spending sized UTXO (larger for passing onto next generation) but I would say that 1M should be your target minimum IF you are able to
Say more. How do you choose which utxo to use for a given transaction? How to balance these 2 things?
During a low-fee environment, spend the smaller UTXOs for privacy preservation (recall that people can see the size of your UTXO when you spend on-chain, so the smaller the better from a privacy standpoint).
During a high-fee environment, spend a single, larger UTXO to minimize fees (fewer UTXOs = lower vBytes = lower txn fees).
In all cases, only spend UTXOs that have already been mixed via collaborative transactions (aka coinjoins) for forward looking privacy preservation.
Also in cases, minimize UTXO “dust” by consolidating UTXOs from time-to-time so none of your UTXOs are less than 300K sats, or even better, 1M sats.
Granted, these are rules of thumb only.
But how do you choose to spend a specific utxo in a wallet?
Choose the UTXO that is the closest size to the amount you intend to spend, though it must be slightly larger to account for the transaction fee.
You can select a specific UTXO using any wallet that has that feature (Sparrow Wallet, Blue Wallet, etc)
Think of it like $20 bills, $10 bills, $1 bills.
If you’re buying something that’s $9, use a $10 bill.
One difference, however, is that in fiat world, you get charged based on the dollar value, whereas in Bitcoin world, you get charged based on the vByte file size. So you want to use the minimum number of “bills” or UTXOs that will cover the transaction, regardless of the dollar amount, to minimize fees.
No, like litterally "how" I don't know of anyway to say " use this utxo for this transaction" instead of the wallet automatically choosing
Furthermore, the best tool for UTXO management in my opinion is Sparrow Wallet for Desktop, developed by Craig Raw: https://sparrowwallet.com/
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The sage avoids extremity, excess, and extravagance.
[Tao Te Ching chapter 29]