When you send Bitcoin, you might notice that your original address becomes empty — even if you only sent part of your balance. Don’t worry: your remaining funds haven’t disappeared. They’ve simply been sent to a change address, a new address generated and controlled by your wallet.
How It Works
Bitcoin uses a UTXO (Unspent Transaction Output) model. Each transaction consumes one or more previous outputs in full and creates new ones.
If the total input amount is greater than what you’re sending, your wallet automatically:
Sends the intended amount to the recipient.
Sends the leftover (minus fees) back to you at a change address that your wallet manages internally.
For example, if your wallet holds 1 BTC and you send 0.3 BTC to someone, your wallet will create a transaction that:
Spends the full 1 BTC input.
Delivers 0.3 BTC to the recipient.
Returns about 0.7 BTC (minus fees) to a new change address.
Why Use Change Addresses?
Change addresses are primarily a privacy feature.
They make it harder for others analyzing the blockchain to distinguish which output was payment and which was change, helping prevent outside observers from easily linking all your transactions together.
While change addresses improve privacy, they don’t make Bitcoin transactions anonymous. In some cases—such as when using different address formats—the change output can still be identified.
Change addresses were not part of Bitcoin’s first release in 2008. They were introduced by Satoshi Nakamoto in 2010 to improve user privacy and usability as the protocol evolved.
Key Takeaways
Change addresses are automatically generated by your wallet; you don’t need to manage them manually.
They belong to your same wallet and are derived from your seed phrase.
They enhance privacy but do not guarantee full anonymity.