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Nexa’s UTXO Model: Revolutionizing Blockchain Scalability

Nexa’s UTXO Model: Revolutionizing Blockchain Scalability

NEXA2024/07/19 07:20
By:NEXA

Nexa is the future of fast transactions and token scalability. This article will explore how Nexa, developed by the same developers behind Bitcoin Unlimited, is poised to be the most scalable decentralized blockchain ever created on the UTXO Layer-1.

The key to understanding what makes Nexa unique is in comprehending why the UTXO model was utilized in the first place.

A UTXO, or unspent transaction output, refers to the remaining amount of digital currency after a cryptocurrency transaction has been completed.

The UTXO model was a preferable choice for Nexa, for reasons extending to token scalability, transaction speed and capability and importantly, privacy.

We envision a future where financial freedom is synonymous with human rights, where every individual can transact without constraints or limitations.

Our mission is to provide a reliable solution and a suitable platform to enable the builders and the visionaries to create this future; on Nexa.

It is important to understand the UTXO model, if you’re looking for a scalable and reliable blockchain network with limitless potential to grow.

Our mission is to provide a reliable solution and a suitable platform to enable the builders and the visionaries to create this future; on Nexa.

It is important to understand the UTXO model, if you’re looking for a scalable and reliable blockchain network with limitless potential to grow.

Let’s break down the UTXO model further, and why Nexa was founded on it.

UTXO Layer-1 Explained

In blockchain technology, there are two main methods typically used to handle transactions: the UTXO model and the accounting model. These models fundamentally differ in how they process and record transactions.

Nexa is built on the UTXO model, which offers significant advantages over the accounting model by way of scalability and privacy.

The UTXO model operates much like cash transactions do, while the account model is akin to managing a bank account. In the UTXO model, each transaction represents an individual note that can be spent independently. Users keep track of their balance by summing all their unspent tokens, known as UTXOs.

In the account model, all transactions send amounts from one account to another, there are no individual unspent outputs to track, each account has a single value as a balance.

Imagine Anthony buys a $40 jacket with a $50 bill. The shop assistant gives him $10 change. In a UTXO-based blockchain, this transaction would be represented as two separate UTXOs: one for the $40 payment and another for the $10 change. Anthony’s total balance is the sum of all his UTXOs, just like if he were to add up and count individual the notes in his wallet.

Parallel Processing for Scalability, Privacy, and Efficiency

The UTXO model's structure consists of the parallel processing of transactions. This means multiple transactions can be processed simultaneously, increasing efficiency and throughput. This is particularly beneficial during periods of high transaction volume, allowing the network to handle more transactions per second, reduce confirmation times, and improve overall efficiency. Nexa aims to scale to over 10 billion transactions per day, with our Proof-of-Work algorithm targeting a 2-minute block time.

To compare, the accounting model processes transactions sequentially, one after another.

Privacy Advantages for UTXO Model

Bitcoin also utilizes the UTXO model. In UTXO-based systems like Bitcoin, there is no concept of user identity; only UTXOs linked to various wallet addresses. Bitcoin doesn’t track user balances but instead monitors UTXOs and their corresponding addresses. To enhance privacy, cryptocurrency wallets often generate new addresses for each transaction, making it harder for third parties to trace transactions back to a single user. This provides a higher level of privacy compared to the accounting model, which maintains a global state of accounts and balances, simplifying tracking but not offering the same privacy benefits.

Efficiency and Throughput Addressed

The significant advantage of the UTXO model lies in its ability to process transactions in parallel, unlike the accounting model, which processes transactions sequentially, one after the other. Ethereum and Solana, for example, both utilize the accounting model, though Solana claims to use a parallel EVM.

The accounting model has historically led to scaling bottlenecks, higher gas fees and delayed transaction times. Such drawbacks can deter certain use cases and projects from building on-chain; this is why we would recommend you consider building on Nexa.

The parallel processing capability enabled by UTXO is crucial for handling high transaction volumes efficiently. By accommodating more transactions per second, the UTXO model reduces confirmation times and improves the network's overall performance, equaling better efficiency and throughput.

This is why Nexa is a suitable and superior choice when scouting for networks that are built for token scalability.

Why the UTXO Model was our Preference

Understanding the differences between the UTXO and account models is crucial for developers, users, and stakeholders engaging with a blockchain ecosystem to build their next solution or application. No two layer-1’s are exactly the same, and it’s important to determine which option is the best fit for your project and desirable business outcomes.

The UTXO model's ability to enhance privacy and process transactions in parallel makes it a robust and ideal choice for applications and projects that require truly scalable solutions. Nexa leverages these benefits to provide a more efficient and private transaction experience, aligning with Bitcoin's principles while pushing the boundaries of scalability.

The Future is Nexa

Our team has set out on a mission to pave the way of the future for all, with a viable and suitable solution that promises to last and grow.

Nexa is the answer to getting Bitcoin to scale. With superior scalability and functionality, advanced flexibility for many use cases and applications, Nexa is the future for your project if you’re looking for a trustworthy network to build on.

Start building on Nexa now.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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