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xPub, yPub, zPub, and UTXO: Explained for Beginners (2024)

xPub, yPub, zPub, and UTXO: Explained for Beginners (2024)
xPub, yPub, zPub, and UTXO: Explained for Beginners (2024)
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Key Takeaways 

  • Bitcoin protects user privacy by automatically generating a wallet address for each new transaction. 
  • xPub, along with its evolutions yPub and zPub, allows users to easily track all of their transactions across all of their different wallet addresses. 
  • Unspent Transaction Outputs (UTXO) represent the unspent cryptocurrency in your wallet.

If you’re a beginner or intermediate in cryptocurrency, xPubs, yPubs, zPubs, and UTXOs might sound like foreign concepts. In this guide, we’ll explain each term in simple, easy-to-understand language to help you better understand how Bitcoin wallets function!

What is an xPub and why do I need one? 

Why does my Bitcoin wallet address change? 

The Bitcoin protocol is designed to give users a new wallet address for each transaction. While this design helps to promote privacy, it can make it difficult for users to keep track of their different wallet addresses. 

Extended public keys (xPub for short) are designed to solve this problem. All of your wallet addresses are derived from your xPub — so that you essentially have a complete view of your different addresses and transaction history.

What is an extended public key

Unraveling Extended Public Keys (xPub, yPub, zPub)

Let’s walk through the different types of extended public keys. 

  • xPub (extended public key) enables you to oversee transactions and addresses within your Bitcoin wallet. xPubs allow you to keep track of your different wallet addresses while maintaining your privacy. 
  • yPub and zPub are enhanced forms of extended public keys that became popular after upgrades in the Bitcoin protocol. They are tailored for SegWit wallets, which are known for their reduced transaction fees and heightened security.

You can use crypto tax software like CoinLedger to export or track all of your Bitcoin wallet transactions by importing from your xPub, yPub, or zPub address. 

Should I keep my extended public address secret? 

Remember, your extended public keys show all of your wallet addresses. If you want to keep your transactions private, you should not reveal your extended public keys to others. 

Why xPub Matters

If you are regularly making transactions, extended public keys help address the following issues: 

  • Privacy: Allows users to manage multiple wallet addresses, reinforcing your privacy. 
  • Efficiency: Simplifies receiving crypto through various addresses. 
  • Security: Enables a secure way to keep tabs on your wallet addresses and transactions. 

What blockchains use xPub? 

Besides Bitcoin, here are a few other blockchains that use xPub. 

  • Cardano
  • Dogecoin 
  • Litecoin
  • Bitcoin Cash 

What is a UTXO and how does it relate to xPub? 

UTXOs (unspent transaction outputs) are a record-keeping method that shows the amount of unspent cryptocurrency in your wallet. 

One helpful way to think about UTXOs is to imagine them as the physical bills in your wallet. For example, your wallet may have an assortment of $1, $5, $10, and $20 bills — all of which add up to the total amount of cash in your wallet. 

Similarly, an investor who makes wallet deposits of .1 BTC, .24 BTC, and .38 BTC has three UTXOs — which add up to a UTXO of .72. 

How does UTXO relate to xPub, yPub, and zPub? 

When you make a transaction on Bitcoin, all of your UTXO is spent and the remainder is forwarded to a new address. 

To better understand how this works, imagine if Carly has 10 BTC in her wallet. Then, she sends 1 BTC to her friend Robert. In this case, a new wallet address is created with a new UTXO tied to it. 

Example: BTC transaction 

Wallet A (10 BTC) ----------> Wallet B (9 BTC), owned by Robert; Wallet C (1 BTC), owned by Carly

Carly’s unspent UTXOs are forwarded to a brand new wallet with a new wallet address— Wallet C. If Carly wants to track all of her wallet addresses and UTXOs, she’ll need her extended public keys. 

Frequently asked questions

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