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I understand that I can only spend the amount of a full transaction associated with an address. Often this will result in change being sent to a change address that I provide. One question at this point is, why does the receiver bother sending back the change. Do you send way more than the original cost for an item?

Say they do, don't they have the same problem, not having a transaction for the exact amount so that they too might end up sending too much to you, so that a cycle of change happens - what could have been one transaction ends up being many which seems like this is a burden on the system?

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Why does the receiver bother sending back change?

This assumption is wrong. Nevertheless, you are correct saying, that you need to spend the whole transaction input (UTXO) balance on your address, but the person who makes the change is the sender, not receiver.

Example, You have unspent balance (UTXO) of 1 Bitcoin and you want to pay 0.2 BTC for coffee. You create a transaction spending 1 whole Bitcoin to two separate receivers. 0.2 BTC (tx output) goes to merchant and 0.7 BTC you direct back to your address (the change). The difference between UTXO and sum of tx outputs is called fee, in this case 0.1 BTC.

Does the inability to spend only part of a transaction result in “too many” extra transactions?

No, since it is still 1 transaction with just two output in case there is a change. No extra transaction is made.

  • Thanks. I was under the impression, just like in the real world that if I had a 10 dollar bill and I gave it to pay for a 1 dollar purchase, it would be the receiver giving me change. But I in the case of Bitcoin give the change to either a new address or the original address, right? I was really baffled -- it seemed for a moment like this was at least an awkward feature of Bitcoin -- was it that dumb of a question? – Jeff Feb 4 '15 at 8:46
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    @Jeff Many newcomers are having trouble understanding this, specifically non-programmers, otherwise it makes perfect sense. The real world application would be: I have 10 dollars, purchase for $1, so I tear 1/10 of the note, which goes to cashier and 9/10 of banknote is still mine. Not dumb question, but you might have found the answer just by googling. – Marek Feb 4 '15 at 8:51
  • I did indeed google and while I found a lot of info about change addresses and maybe even some examples that implicitly showed your answer none that I saw came out and said, "You might think that the receiver has to give you change, but that is wrong..." Thanks again, I was baffled for a bit. – Jeff Feb 4 '15 at 8:54

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