Change address

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In cryptocurrencies, a change address (or change output) is an output belonging to the sender that is (usually in an automatical fashion) added by a wallet to the transaction for receiving a change.

When an input for a transaction does not entirely consume the output it is spending, the difference is known as change. The change is sent back to an automatically generated fresh address controlled by the sender. This newly generated address is called the change address.

The Trezor Wallet automatically generates a fresh change address whenever an output is not completely consumed in a transaction. The process takes place in the background and no user action is required.

General section

The concept of change in Bitcoin is similar to the change you receive when paying for something in cash. When you pay a cashier for $15 worth of items using a $20 note, you will receive a $5 note as change. The same is true in Bitcoin, except with Bitcoin it is possible to create custom notes (outputs) of any amount.

When a user wants to spend 0.75 BTC from a 1 BTC output, the entire 1 BTC output is consumed as input for the transaction and split into two new outputs: 0.75 BTC to the receiver and 0.25 BTC to the sender's fresh change address. The change is effectively sent back to the wallet of the sender in the same transaction.