UTxO vs
Account Model
Bitcoin pioneered UTxO. Ethereum chose accounts. Both work, but they make fundamentally different trade-offs.
Like Cash
Your “balance” is the sum of individual outputs you control. Each transaction destroys old outputs and creates new ones.
- ◆ Inherently parallel, no shared mutable state
- ◆ Deterministic, outcome known before submission
- ◆ Privacy-friendly. Outputs can use different addresses
- ◆ Resource use known before submission; on Cardano even the fee is deterministic
- ◆ Used by: Bitcoin, Cardano, Ergo, Nervos
Like a Bank Account
Each address holds a running balance. Transactions directly modify the global state by updating sender and receiver balances.
- ◆ Intuitive, works like banking
- ◆ Simpler smart contract state management
- ◆ Shared mutable state, can cause contention
- ◆ Transactions can fail after submission
- ◆ Used by: Ethereum, Polkadot, Algorand. Solana also uses accounts but requires each tx to declare which accounts it touches up-front, enabling parallel execution.
| Property | UTxO | Account |
|---|---|---|
| State model | Immutable outputs | Mutable balances |
| Parallelism | Higher potential (independent UTxOs) | Serialised per account |
| Determinism | Fully deterministic | Depends on global state |
| Failed transactions | Phase-1 failures rejected for free; phase-2 script failures forfeit collateral on-chain | Can fail on-chain, fees consumed |
| Privacy (in practice) | Many wallets rotate addresses | Same address typically reused |
| Contract patterns | State machines / CEM | Direct state mutation |
| Formal verification | Easier (local reasoning) | Harder (global effects) |
Same Transfer, Two Models
See how the same 20 ₳ transfer from Alice to Bob plays out in each paradigm.
Where the Model Hits Reality
The choice between accounts and outputs isn’t only architectural. It shapes how wallets can be drained.
The ‘approve’ Attack Surface
Wallet drainers exploit exactly this. Phishing convinces a user to sign ‘approve’ on a malicious contract; afterwards ‘transferFrom’ can empty the wallet at the attacker’s pace. Most users forget the permission is even active.
- ◆ Persistent allowances, no per-transaction signing
- ◆ Permissions accumulate quietly across dApps
- ◆ Revocation is the user’s problem
Nothing to Approve
Each UTxO is consumed once, in full. There is no ‘approve’ equivalent, because there are no balances to grant access to. Spending from an ordinary key-controlled wallet address always needs your signature on that exact transaction. Two limits remain: funds you lock at a script follow that script’s rules from then on, without asking you again, and signing a malicious transaction still loses exactly what that transaction spends.
- ◆ No token allowances handed to contracts
- ◆ Wallet spends need a signature per transaction
- ◆ Script-locked funds follow the script’s rules
Subscription vs. Cash
An ‘approve’ is the crypto version of a standing direct debit: convenient until you forget who can still pull from your account. eUTxO is closer to paying with cash. Every transfer is an act, not a permission.
Three quick questions
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