Change Address

Change address is the address that the network uses temporarily to store the amount for the change of the sender. Change address is used in the Unspent Transaction Output (UTXO) model. There are many cryptocurrencies that use this model, such as Bitcoin and Litecoin. These blockchain networks use change addresses to store the change of the transaction for a limited time. Change is calculated after the input is given, and the network creates new outputs, which also can be used as inputs for future transactions.

How Does Change Address Work?

When an input of a transaction can not be calculated specifically, the blockchain network “change” the whole amount by taking all of the whole and transferring it to the new address to create the outputs, then the blockchain network sends back the unspent amount to the sender as an output. The change address works as this temporary wallet that the blockchain network uses for storing the change.

In the case of the amount for the input of the transaction being insufficient, then the transaction fails.

The input of the transaction is larger than the requested amount. Then the blockchain will send the remains of the transaction by deducting the amount transferred with the miner fee from the input. After that, this change will be sent to the change address temporarily. After seconds the sender of the transaction will get the change of the transaction back to their account.

The blockchain calculates this whole process automatically, and it happens in the background. Therefore a lot of users do not notice that such transactions occur. However, it is visible in the transaction details.

What is The Use of Change Address?

Change addresses used for privacy reasons. Functioning as the middle account in the transaction using a change address provides anonymity. Without a change address tracking, someone’s financial history using applications such as block explorer would be much easier.