Growing Bitcoin UTXO Set

The function of the UTXO set is to act as a global database that shows all the spendable outputs that are available to be used in the construction of a bitcoin transaction. When a new transaction is constructed, it uses an unspent output from the UTXO set, resulting in the set shrinking. Conversely, when a new unspent output is created, the UTXO set will grow.

A users bitcoin balance is the sum of all the individual outputs that can be spent by their private key. Therefore, when a user initiates a transaction, the outputs from the users UTXO set is used. All the unspent outputs must entirely be consumed when a transaction is being conducted, with change being sent back if the total value of the outputs is larger than the value of the transaction.

The driving force behind growing UTXO set is not completely clear, however better coin selection algorithms used by exchanges probably increase the set. Additionally inefficient services, like gambling & faucet sites, might also affect UTXO set, as they might now be forcing withdrawals to be above given amount.