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Lesson 03 / 21 · Advanced

UTXOs, change and accounting

Read a transaction as a set of consumed and created outputs.

14 MIN WITH PRACTICEREAD → TRY → REFLECTNO WALLET NEEDED

By the end, you’ll be able to…

  • Balance inputs, outputs and fees.
  • Explain why change is a new output.
The idea, at a glance

Every sat has a place in the calculation.

12,000Input value in fictional sats
10,000Recipient output
1,500 + 500Change output + illustrative fee
Input value = recipient value + change + fee. Real transaction construction has additional rules.

Outputs are the units of spendability

A UTXO is an unspent transaction output. An input references a previous transaction and an output index, and supplies what is needed to satisfy that output’s spending conditions. Spending consumes the referenced output as a whole. A wallet balance summarizes many such outputs rather than representing one account row in a central database.

Change preserves the difference

Imagine a wallet spends a 100,000-sat output, pays 30,000 sats to a recipient and leaves 1,000 sats as a fee. It can create a 69,000-sat change output under its own control. That change is a newly created output, not a reduction of the original one in place. A recipient and change output can look similar to an outside observer; labels require context.

Do not mistake visible totals for economic activity

Adding every output in a transaction can overstate the amount paid to someone else because change is included. Multiple inputs may also link previously separate histories. A donation report needs wallet accounting and purpose records, not simply an explorer’s displayed transaction total. For practice, use synthetic amounts and labels so no real wallet graph is exposed. Later coin-control decisions must consider both fees and privacy.

Your turn / A paper experiment

Practice on paper

Two fictional inputs contain 40,000 and 70,000 sats. A recipient receives 65,000 and the fee is 2,000. What change remains?

I’ve tried it — show the worked answer

The inputs total 110,000 sats. Subtracting 65,000 and 2,000 leaves 43,000 sats of change. The original inputs are consumed; the remaining value exists in a new output.

Want to explore with buttons and instant feedback? Try the practice lab ↗

Think it through

Make a choice. Discover why.

Choose an answer and check the explanation. You can retry as often as you like. These are practice questions, not a test of mastery; answers are not saved or sent.

1. Is change the unspent remainder inside the original consumed output?
  • Yes
  • No
Read the explanation

No. It is a newly created output.

2. Does the sum of all outputs necessarily equal a merchant sale?
  • Yes
  • No
Read the explanation

No. Some outputs can return change or serve other recipients.

One idea to take with you

Reconcile value while keeping ownership labels separate from chain data.

Your learning, at your pace

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