Input-Output Linkage

Input-output linkage is the fundamental mechanism of linking transaction inputs to outputs to trace the movement of value. In the UTXO model, every transaction consumes existing unspent outputs and creates new ones, effectively forming a chain of ownership.

By analyzing these linkages, researchers can construct a complete history of an asset's journey through the network. This process is the backbone of all on-chain analysis, enabling the identification of spending patterns, fee structures, and the interaction between different participants.

In complex transactions involving multiple inputs and outputs, such as those found in coinjoins or batch transactions, identifying the correct linkages becomes a challenging but necessary task for accurate analysis. It provides the raw data required for quantitative finance models that assess liquidity and risk.

Mastering this linkage is essential for anyone involved in protocol security or forensic investigations.