The UTXO Model
When you think about how your bank does the accounting for your bank account, it is pretty intuitive. You hold a certain amount of funds in your account, which has an account number. If you receive an incoming transaction, the amount is added to your balance. If you spend money, then the amount you spend gets subtracted from your balance. With cryptocurrencies, the accounting works a little different.
The blockchain does not create an “account” for you to maintain a balance. There is no final balance stored on the ledger. The blockchain only stores individual transactions, and to check your balance, there is an additional step involved. For this step, you are going to use your wallet, which does this automatically whenever you open it and it shows you your balance, or you can do it manually using the block explorer. What happens in the background when you use either of these tools is that they search the ledger for all transactions that involve your address(es). The wallet (or explorer) then adds all incoming transactions together and subtracts all outgoing transactions to derive your current balance.