Change — a concept relevant to cryptocurrencies that use the UTXO model — is the number of coins sent back to a user after they use their unspent outputs to initiate a transaction.
) and many other cryptocurrencies
are based on the so-called unspent transaction outputs (UTXO
In the UTXO model, transactions
are made up of inputs and outputs: when a user wants to send coins to someone, they feed inputs to the network. The latter, after processing the transaction, produces outputs that can be later used as inputs for new transactions.
Perhaps counterintuitively, the balance of a Bitcoin address
is not actually a certain number of coins that are stored on it, but rather a collection of yet-unspent outputs from previous transactions. When you send Bitcoin, you can only send them in a whole output, and the rest are sent back as change
As an example: user A has a Bitcoin address with a single unspent output of 0.5 BTC and wants to send 0.3 BTC to user B. They cannot split their UTXO of 0.5 coins; instead, they have to send the full amount to the network as the sole input of the new transaction.
The network then destroys that input and creates three new outputs that add up to the same amount: 0.3 BTC to be sent to user B, a certain small fee to be sent to the miner
who helps process the transaction and 0.2 BTC, minus the miner fee
, to be sent back to user A.