Change Address Definition
A Change Address in the world of cryptocurrencies refers to a new address created by a user’s wallet to receive the ‘change’ after a transaction is made. In a Bitcoin transaction, for instance, if the amount of bitcoins in a user’s wallet is greater than the amount to be sent, the wallet will send the excess amount to a new address, known as the Change Address. This is done for privacy and security reasons.
Change Address Key Points
- A Change Address is an address where the leftover funds from a Bitcoin transaction are sent.
- It is a security feature designed to prevent third parties from tracking a user’s Bitcoin transactions.
- Change Addresses are automatically generated by a user’s Bitcoin wallet.
- It is part of Bitcoin’s UTXO (Unspent Transaction Output) model.
What is a Change Address?
A Change Address is a new address created by a Bitcoin wallet to receive the ‘change’ after a transaction is made. It is a part of Bitcoin’s UTXO (Unspent Transaction Output) model, where each transaction consumes one or more UTXOs and creates one or more new UTXOs. The Change Address receives the leftover amount from the consumed UTXOs that is not sent to the recipient.
Why is a Change Address used?
A Change Address is used for privacy and security reasons. By sending the ‘change’ to a new address, it makes it harder for third parties to track a user’s Bitcoin transactions. It also prevents the possibility of a user accidentally spending the ‘change’ as a transaction fee, which can happen if the ‘change’ is sent back to the original address.
Where does the Change Address come from?
The Change Address is automatically generated by a user’s Bitcoin wallet. Most Bitcoin wallets support the use of multiple addresses and will automatically generate a new address for each transaction.
When is a Change Address used?
A Change Address is used every time a Bitcoin transaction is made. If the amount of bitcoins in a user’s wallet is greater than the amount to be sent, the wallet will send the excess amount to the Change Address.
How does a Change Address work?
When a user makes a Bitcoin transaction, their wallet will consume one or more UTXOs. If the total amount of the consumed UTXOs is greater than the amount to be sent, the wallet will send the excess amount to a new address, known as the Change Address. This is done automatically by the wallet, and the user does not need to manually create the Change Address.
