What is a change address in bitcoin?

A change address is an address in your own wallet that receives the bitcoin left over after a payment. It exists because of how bitcoin transactions are built. You cannot spend part of a coin, so the wallet spends whole coins and sends the extra back to you, much like getting change from a banknote.

How does a bitcoin change output work?

Bitcoin tracks coins as unspent outputs, explained in what a UTXO is. The Bitcoin Wiki notes that an output must be spent in full. Its example uses a 10.89 BTC coin to pay 10 BTC. The transaction has two outputs, 10 BTC to the recipient and about 0.89 BTC back to the sender as change. Whatever is left between the inputs and outputs goes to the miner as the fee. So if the change output were 0.88 BTC, the fee would be 0.01 BTC.

Most wallets do this automatically and simply show your new total balance. You usually never see the change address unless you open the transaction in a blockchain explorer.

Why did my bitcoin go to a different address?

When you look up a payment you sent, you may see part of your bitcoin going to an address you do not recognize. In most cases that is your own change address. Modern wallets use a fresh address for change instead of reusing your old one.

In wallets that follow BIP 44, each account has two chains of addresses. Chain 0 is the external chain, used for addresses you share to receive payments. Chain 1 is the internal chain, used for change. That is why a path such as m/44'/0'/0'/1/0 points to the first change address of the first account. Because both chains come from the same seed phrase, restoring the seed brings back the change too. The Bitcoin Wiki notes that very old wallets without a seed stored change keys only in the wallet file, which made regular backups important. A related question about receive addresses is covered in why your bitcoin address keeps changing.

How does a change address affect privacy?

Anyone can see a transaction's outputs, and analysts try to guess which one is change. The Bitcoin Wiki lists common clues:

• An output sent to a reused address is likely the payment, since wallets make new change addresses.
• Round amounts, like 0.1 BTC, are usually payments, leaving the odd amount as change.
• An output with a different address type from the inputs is likely the payment.
• If one output could have been paid with fewer inputs, the larger output is likely the payment.

Once change is identified, an observer can follow your remaining coins. Wallets try to blur these clues. Bitcoin Core 24.0, released in 2022, began randomizing change amounts so the change is sometimes larger than the payment. It also added a way to spend selected coins in full with no change at all. Spending a whole coin, such as when sweeping funds to cold storage, avoids a change output entirely.