Glossary
Change Output
1 min read
Bitcoin does not use accounts and balances. Instead, pieces of bitcoin, called UTXOs, are owned by individuals. These can be likened to physical bills in that when they are spent, they will usually require change to be given as their amount will almost never match the amount being paid.
When a user creates a transaction, they select an input, a UTXO which they own, and create outputs. One output will go to the receiver’s address and the other output will be returned to the sender’s wallet, usually via a different address. The amount for this second output will be the change, which will amount to the sum of the inputs minus the amount spent in the first output and the transaction fee.