I gathered information about bitcoin from various resources. All those resources said that when a transaction is done, the transaction get added to a block. So when Alice send 2 btc to Bob, network checks all transactions having Alice's wallet address to calculat balance Alice has. If he has 2 btc then transaction is happen.

So in this process, system just checks for total balance Alice has. There is no file or a record for each bitcoin. There's only blocks containing transaction data.

But I found about bitcoin mixers. Those mixers claims that they mix coins. That is, when you give them some coins, they will give you same btc amount back but you receive different coins than the ones you deposited. Also I found many websites using the term coin ("coins transfered", "coins recieved" etc.) But I could find what exactly the "coin" means. There are 'blocks' and 'transactions' but 'coins'?

So the question is, what a coin is? Is it something like block or transaction? Is it a seperate file, so that bitcoin mixers can mix them up?

What is referred as 'coin'?


TL;DR: When bitcoiners refer to a 'coin' they really mean a UTXO, unspent transaction output of any amount from 1/10,000,000th of a BTC to 21million BTC.

When someone sends bitcoin to another person, it gets added to the blockchain as you said. When signed by the sender's (Alice) key and verified by the miners, that transaction becomes a new UTXO.

When Bob goes to spend the 2 BTC that Alice sent him, his wallet will create a new transaction that says, in effect "take the UTXO from X address (that Alice sent him) and transfer it to the following Y address ..." That then creates a new UTXO.

In this example there is simply two bitcoin in each transaction. But what if Bob only spends 1 of the 2 Alice sent him? His transaction will then say "take the UTXO from Y address, send 1 BTC to 'Z' address (his recipient) and return 1 BTC to my wallet at the following 'change address, A The change address, A, is in Bob's wallet, so it can again be spent by him at a later date. In this example, the single UTXO (aka coin) that Alice sent Bob has become two of half the size each. Thus the absolute number of 21 million bitcoin is preserved.

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What is referred as 'coin'?

A lot of Bitcoin terms don't really make a lot of sense if you look at them closely. There really aren't anything truly like coins.

As Mike answered, the nearest thing to a coin is a transaction output, specifically an unspent transaction output (UTXO). But if this is a coin, it is a type of coin that only gets used once and then is circulated no further but melted down and cast into new coins. It is a type of coin where almost all coins have a different face value. This is a very weird kind of coin.

As I understand it, a coin mixer works by taking as inputs a large number of unrelated UTXOs from a variety of unrelated people and, to follow the coin analogy, melting down those coins and re-casting the total amount of metal into a variety of new coins that are paid to a large number of new addresses. An outsider can't tell which input coins relate to which output coins because the transaction data doesn't keep track of that information.

So coins don't exist in anything like the form of a normal coin that passes unaltered through hundreds of transactions, which is fungible (indistinguishable from other coins), which is contained in only one wallet or pocket or purse at a time.

If a UTXO is a coin, then every coin exists in everyone's wallet at the same time. Every full node contains every UTXO.

The fungibility of Bitcoin does not come from the fungibility of the coins - every UTXO is distinguishable from every other UTXO. It comes from the melting and recasting process.

In a similar way:

  • Bitcoin wallets are not like wallets - they don't really "contain" money.
  • Bitcoin's "ledger" (the blockchain) is not like an accounting ledger - it is more like an accounting journal.
  • Bitcoin balances are not calculated by the network, not by miners, not by other people's wallets - they doesn't need to.
  • Bitcoin addresses don't identify locations or people. Things are not really sent to addresses.
  • Bitcoin keys don't really open locks.

All the things I listed are really just analogies. Like most analogies, if you look at them too hard they don't make sense. So don't look too hard, be happy.

Why do people write about coins? Because it is a convenient shorthand, more familiar seeming than UTXOs - We use the word coins even though coins don't really exist in any especially coin-like way.

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