Remember to Specify the Change Address Parameter when Sending Funds from One Bitcoin Wallet to Another Address

The Bitcoin (BTC)

In Bitcoin transactions, there is a “change” parameter. See the following NodeJs code to send amount of bitcoins from “fromAddress” (aka unspent transaction outputs – UTXOs) to “receivingAddress”, and the “changeAddress” needs to be specified to receive the remaining of the funds.

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var transaction = new Transaction()
  .from(fromAddress) // UTXOs. Feed information about what unspent outputs one can use
  .to(receivingAddress, amount) // Add an output with the given amount of satoshis
  .change(changeAddress) // Sets up a change address where the rest of the funds will go
  .sign(privateKey) // Use private key to sign the transaction

var transaction = new Transaction()
  .from(fromAddress) // UTXOs. Feed information about what unspent outputs one can use
  .to(receivingAddress, amount) // Add an output with the given amount of satoshis
  .change(changeAddress) // Sets up a change address where the rest of the funds will go
  .sign(privateKey) // Use private key to sign the transaction

How do I interpret the “change” parameter where I need to specify the rest of the funds to go to?

In the provided JavaScript code, the “change” method is used to specify the destination address for any remaining funds from the transaction after deducting the transaction amount and transaction fees.

When sending Bitcoin, the inputs for the transaction are typically unspent transaction outputs (UTXOs), which are essentially unspent funds from previous Bitcoin transactions. The from method is used to specify which Bitcoin Wallet Address to use as inputs for the transaction.

The to method is used to specify the recipient address and the amount of Bitcoin to be sent to that address wallet. The change method is used to specify the change address, which is the Bitcoin address that will receive any remaining funds from the inputs after deducting the transaction amount and fees.

For example, let’s say you want to send 0.1 BTC to a recipient address, and you have 0.2 BTC in your input address. The to method will specify the recipient address and 0.1 BTC, and the change method will specify your change address where the remaining 0.1 BTC will be sent.

In the code provided, address is the change address where the remaining funds will be sent after deducting the transaction amount and fees. This address should be one that you control and have access to the private key for, so you can later spend the remaining funds if needed.

If I don’t specify change address to receive the bitcoin, will I lose the remaining 0.1 BTC?

Yes, if you don’t specify a change address, the remaining funds from the inputs after deducting the transaction amount and fees will be lost. In the example I gave earlier, if you don’t specify a bitcoin change wallet address, the remaining 0.1 BTC will be lost.

It is important to always specify a change address when sending Bitcoin transactions to ensure that any remaining funds are returned to an address you control. The change address should be an address that you have access to the private key for, so you can later spend the remaining funds if needed.

It is also worth noting that some Bitcoin wallet software may automatically handle change addresses for you. However, if you are writing your own transaction code, you need to ensure that you include a change address in your transaction to avoid losing any remaining funds.

–EOF (The Ultimate Computing & Technology Blog) —