Change Output

A change output is the portion of a bitcoin transaction that returns excess funds to the sender. Bitcoin transactions must spend previous outputs in their entirety, so paying 0.3 BTC from a 1 BTC output requires sending the remaining 0.7 BTC, minus the mining fee, back to an address the sender controls, much like receiving change from a cash purchase.

Why it matters

Change outputs are one of the main leaks chain analysts exploit. If an observer can guess which output of a transaction is the change, they can follow the sender's remaining balance through every subsequent transaction. Wallets defend against this by sending change to a fresh address each time and by trying to avoid patterns, such as round-number payment amounts, that make the change output obvious. Poor change handling has deanonymized users years after the fact.

How it works

When constructing a transaction, the wallet selects unspent outputs whose combined value covers the payment plus fees, then adds an output paying the difference back to a newly derived change address. Modern wallets sometimes search for input combinations that match the payment exactly, producing no change at all, which saves fees and removes the privacy leak. The change output is indistinguishable from any other output at the protocol level; only statistical patterns give it away.