Lesson 1 of 4
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Your balance is a collection of outputs
Explain why a payment can create change.
A wallet shows one balance. Underneath it are separate pieces available to spend.
- Earlier unspent outputs
- Signed inputs
- Recipient + change + fee
Pieces, not a bank row
Bitcoin spends unspent transaction outputs, called UTXOs. An input identifies an earlier output. A transaction can combine several inputs to fund new outputs.
Where the change goes
An input spends its referenced output in full. A typical payment creates a recipient output and another returning change to the sender. The difference between total inputs and outputs is the fee.
Make change on paper
Use fictional units only.
- Draw one input worth 10 units.
- Allocate 6 to a recipient and 1 to a fee.
- Label the remaining 3 as change.
Change is a new output, not an untouched remainder of the old one.
Before sending, understand both the payment and its change.
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