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Bitcoin follows a Unspent Transaction Output (utxo) model.
Our modern banking systems follow an account model - you're assigned a bank account number (similar to an address), and send and receive money from it. Any incoming funds increase your total account balance, and any outgoing funds decrease it. The bank does not keep track of which funds came from ...
18
I like to suggest a mental model where the network is a metals forge:
You have a 1 oz gold coin stamped with your key on it, with your transaction you send it to the forge to be melted down and re-formed to two new coins, a .22 with Alice's key stamped on it and a .77 with a key of yours on it, and then the forge keeps the remainder for their fee.
You can'...
17
The information in David's answer is correct, but it may not answer the actual question -- it's unclear whether the question is about change in general, or specifically sending change to a new address.
If the latter, nothing needs to be added. If, however, the question was about the practice of change in general, then yes, it is necessary.
The reason for ...
15
At the protocol level, there is no such thing as "balance of an address". There are individual unspent outputs (like coins in a wallet), which must be individually spent. You can't partially spend an output, but you can split/combine it.
So for example, you have a 70 BTC output assigned to an address, and a 80 BTC output assigned to the same address. Some ...
14
Receiving addresses are addresses generated specifically for sharing with people to send payments to you. Change addresses are generated by your wallet automatically when you send funds to someone else.
To understand how change addresses work, consider this example. Say you received 0.1 BTC once, and 0.2 BTC another time. Now you have two UTXOs (unspent ...
11
Many wallets let you control where to send the change. In most cases it is advisable to send to a new address to reduce traceability and increase your privacy a little, but not everyone does and sometimes it makes sense not to do it. Most modern wallets will create a new address automatically unless you stop them.
Bad reasons to send change to the same ...
10
Yes it can. See this transaction below.
http://blockchain.info/tx-index/b345c51064074f5d6c0e11187326567765eb4fa3236ca1be440ccb5745775238
10
There are a lot of good answers, but I want to point out the most obvious answer.
Say you have 1 bitcoin and you send 0.2 bitcoin to me and the design leaves it so that you still have 0.8 bitcoin in the same place as the 1 bitcoin you had originally. What stops someone from simply processing that transaction again? You still have the funds.
Designing the ...
7
For transactions with one input it is hard to guess what is the change and what is the real payment. However because they may be have statistics so they can may be guess that for a ~4 BTC input there are 70% of probability that the change is the bigger output and the money spent the smaller one when both output addresses are new.
Now if you have a ...
7
Change is sent to a new address to improve your privacy and the privacy of the other Bitcoin users you interact with. Let's imagine you receive a payment from Alice in one transaction; then you spend some of that money to Bob and the change is refunded to you. Then, in an unrelated transaction, you send Charlie some bitcoins.
Because you keep all of your ...
7
Here is the list of known sources of malleability from BIP62 (which has been withdrawn, and is no longer up to date, but does give some insight):
DER encoded ECDSA signatures Right now, the Bitcoin reference client uses OpenSSL to validate signatures. As OpenSSL accepts more than serializations that strictly adhere to the DER standard, this is a source of ...
7
I'm adding this as an additional answer to the ones that exist, to clarify a comment:
if the outputs can be split exactly, then why the inputs can't be split so I only spend the exact amount I want. – rb612
You're essentially asking for the differences between Bitcoin's UTXO (Unspent Transaction Output) model, compared to the more intuitive Account model....
5
(I assume here that you have a simple single-address paper wallet, like the ones from BitAddress.org. I also seem to have understood that you use the Blockchain.info app to make the payment.)
You should be able to decide yourself where the change goes (using the web-apps's Custom Send feature), but Blockchain.info's default behaviour is to send it back to ...
5
Most clients will return change to a newly-generated change address, which is not the same as the address on the paper wallet. So if you spend a partial amount, the rest of the coins will go to a change address in your client and the wallet will be empty.
You mentioned using Blockchain.info as your wallet. The Blockchain.info wallet behaves differently ...
5
Each transaction can have multiple inputs and thus can have multiple senders.
Here's how you get the sender(s):
bitcoin-cli getrawtransaction 8386a8d2870c0df79f652ef4d981b21649ebf40601948c1c0709de0f02de8c8c 1
(the 1 flag indicates that you want the raw tx to be decoded)
Note: make sure that you have already indexed the blockchain or else this might not ...
5
You can send bitcoins to the same address you are sending from, if you create a raw transaction manually, or if you use a wallet that does not create a new change address each time a transaction is made.
One reason why this new address process exists is to protect privacy. If you consider that the outputs of a transaction with change, where one of the ...
5
Bitcoin Core's wallet interprets Bitcoin transactions as payments. A payment is sending money from one entity to another, and is independent from what exact coins were sent and how much change was given back.
When you have a transaction which spends a coin of yours A, and sends it to addresses X and Y, with X being an address of yours, the payment is ...
5
It's not the value, it's the inputs. If you have 1 input worth 1 BTC and sent Alice .22 BTC as one output and your change would be a 2nd output. A single input can be split into many outputs. If Bob, Alice, and Charlie each sent you 0.33 BTC and you wanted to send someone 0.5 you would need to use more than one input (since each input is only 0.33) to cover ...
5
When a sender creates a transaction, they explicitly define which pieces of bitcoin they spend. We call such pieces of bitcoin Unspent Transaction Outputs (UTXO) and you can think of the UTXO Set as the distributed ledger of Bitcoin's balances. The state of UTXO is ternary: they either don't exist yet, are available for spending, or have been spent. So, you ...
5
And if so, why don't you just send 0.4 BTC in the beginning?
Bitcoin was designed to allow single-in multi-out or multi-in multi-out payments. In Ethereum, only one address fills the whole "to" field of transactions. (This doesn't apply to contracts. Does that mean, in Ethereum, users are 2nd class citizens?)
If you were Satoshi and you were to ...
4
The reason for not sending back to (one of the) previous addresses, is privacy. Not just your privacy - perhaps you don't care - but the privacy of everyone using the system. Reusing addresses this way makes it blatantly obvious which of the output is the real output and which is change, meaning that transaction graph analysis becomes a lot easier.
Wallet ...
4
There is no change transaction type.
Transactions are defined as a list of inputs consumed, and outputs created, and the values assigned to those new outputs. The creator typically makes an output for a entity they wish to pay, and another output which pays excess change back to them.
Any amount of Bitcoin left un-used by the outputs is interpreted as ...
4
Likely the sender didn't have an unspent output that had exactly the amount he wanted to send. So he choose an unspent output that had enough and sent the remainder back to himself.
Accounts do not automatically combine the funds they receive. They have a bundle of unspent transaction outputs which they can only use by completely consuming them.
You might ...
4
The bitcoins themselves never really exist, only receipts from previous transactions. So if received that 1 BTC from a friend, you have a receipt somewhere saying that he sent you 1 BTC. You can then reference this receipt in a future transaction as proof you do own 1 BTC. This is how bitcoins exists, as receipts. But the indivisible part comes from the fact ...
4
It works just fine.
Bitcoin transactions can have multiple inputs and outputs; each input is a "pointer" to an output of a previous transaction (specifically, it consists of a transaction id and output index). So you would create a new transaction with two inputs:
the A1->A3 transaction (or more properly, the particular output of this transaction that ...
4
There are some good answers here, but I'm surprised nobody has mentioned privacy.
Having coins sent to a new change address can improve your privacy in many ways. Consider this simple example: a one-input two-output transaction. Which output is change? If the transaction is carefully constructed, it may be difficult for a third party to tell.
There are more ...
3
The transaction shows that BTC 0.1144 were sent to address 1FCR..., and are still there. If this was the amount of coins you agreed on, and the address you provided the seller, then he has fulfilled his end of the bargain. The other output of that transaction, sending BTC 0.2507 back to 1HxK... (from where they were later spent), represents change and is a ...
3
This is because you did not have a coin that exactly matched the amount you wanted to send to your friend. So bitcoin had to split a larger coin into 2 coins... 1 with the amount to send to your friend and the rest as "change" to send back to you. The address you don't recognize is a new address that was created for the change, and it's in your wallet.
3
Requiring an output to be fully consumed by a single transaction simplifies things -- an output is either spent or unspent, period. The idea is to avoid a proliferation of partially unspent outputs that would be very difficult to track. If a transaction could partially consume an output, then you'd have a whole new category of partially unspent outputs, each ...
3
Bitcoind isn't designed for that. There isn't option for that and probably won't be. If you are interested in keeping paper backup, you should look at clients such as Electrum.
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