When it comes to UTXO management, it's wise to start by purchasing at least 0.1 Bitcoin and immediately securing it in a Trezor cold wallet(these cold wallets are secure tools for signing transactions outside your computer’s operating system, protecting you from malware. Your UTXOs can be accessed anywhere in the world with just your 12-word recovery phrase. Using bash and open-source libraries like bitcoin-cli or bx, you can connect to the Bitcoin network, recover your private keys, and interact with the blockchain. Since Bitcoin relies on SHA-256, a cryptographic function, your funds are always secure as long as you have your recovery phrase).
UTXOs (Unspent Transaction Outputs) are fragments of transactions recorded on the Bitcoin ledger and locked by your private key. However, as transaction fees increase over time, smaller UTXOs may become "dust" — essentially unusable due to their negligible value in relation to the fees required to spend them. Think of it as specks of gold that are too small to meaningfully store value.
For near-zero fees in everyday payments, use the Lightning Network. While Coinbase recently added support for Lightning channels, there are plenty of non-custodial Lightning wallets available, such as Phoenix, Muun, and Wallet of Satoshi, offering secure and decentralized options for Lightning transactions. (Feel free to set up your self custodial channel).
As Hal Finney predicted, Bitcoin's main chain will likely end up being used mostly for settling big transactions between financial institutions or sovereign individuals. Over time, Bitcoin could also act as a form of collateral for financial transactions, much like gold did in the past, backing a wide range of financial products and services.
I wrote a brief article on this with the same information.
https://dscompounding.com/2024/12/01/understanding-utxo-management-and-bitcoin-self-custody/
