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The original Bitcoin whitepaper mentions that there can be at most two outputs:

Normally there will be either a single input from a larger previous transaction or multiple inputs combining smaller amounts, and at most two outputs: one for the payment, and one returning the change, if any, back to the sender.

However, I see transactions like this:

https://blockchain.info/tx/c18ff55d09c596ffbad30321719171c0d5b4d677d3554fc6ab3d12167ea8b9d6

that has many outputs.

Is this contradicting the Bitcoin paper or is there something I'm not getting?

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Note the word normally at the beginning of the sentence. This isn't imposing a restriction but merely describing a common use case.

It's obviously useful to allow more than two outputs, and there's no particular reason to impose any arbitrary limit on the number. I don't think such a limit was ever contemplated.

In any case, the whitepaper isn't considered to be an authoritative description of the protocol; that would be the reference client. For instance, the whitepaper describes a scheme for reclaiming disk space that I don't believe was ever implemented (the "pruning" feature came much later and is somewhat different).

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