Understanding Change Addresses in Bitcoin: How Bitcoin Core Treats Them
When it comes to transactions on the Bitcoin network, two types of addresses play a crucial role: change addresses and payment addresses. Both are used to receive coins or other assets from vendors or miners. However, there’s an important distinction between these two types of addresses that may seem counterintuitive at first.
Change of Addresses
Change addresses, also known as « change » addresses or « recipient » addresses, are created for receiving Bitcoin coins or other assets from another user. They are not used to send coins to others but rather to receive them. Change addresses have a specific structure, typically in the format of bc1... followed by a unique code (also known as a « sequence number ») and then the recipient’s public address.
Change addresses are treated differently by Bitcoin Core compared to payment addresses. When you create or send change addresses using the command line tool bitcoin-cli, the changes are not automatically deleted once the transaction is complete. Instead, they remain on the blockchain until the funds are fully unlocked.
Payment Addresses
Payment addresses, on the other hand, are used for sending coins to others and have a different structure: bc1... followed by the recipient’s public address. Payment addresses can be created using various methods, including the command line tool or through the Bitcoin Core interface.
When you create payment addresses in Bitcoin Core, the changes are automatically deleted once the transaction is complete. This means that if you delete all your change addresses, none of your funds will remain on the blockchain. This is because each change address corresponds to a specific recipient and has its own unique sequence number, making it difficult for anyone to reuse or access the same funds.
Key Takeaways
To sum it up:
- Change addresses are used for receiving coins from others but are not automatically deleted after the transaction is complete.
- Payment addresses can be created in Bitcoin Core with their own set of rules (including automatic deletion of change addresses) and have a specific structure.
- If you want to remove all your change addresses, you cannot simply delete them. Instead, you need to manually reset or re-deploy them.
This may seem like a significant difference, but it’s essential to understand the underlying mechanics of Bitcoin transactions and address management in order to maintain control over your assets and avoid any potential issues on the network.