The .txt extension indicates a plain text file. These are preferred because:

If you choose to use these, always:

Xtream Codes is an API-based system. Unlike traditional M3U playlists, which are essentially long text files containing stream URLs, the Xtream Codes API allows for a more dynamic interaction between the server and the client application. It typically requires four pieces of information for a connection: A Server URL (including the port) A Username A Password