The evolution of bitcoin: why the separate change addresses were introduced
As the largest cryptocurrency in the world by market capitalization, Bitcoin has undergone significant changes over the years. One of the main innovations that has improved the user experience for sending and recipients of Bitcoin transactions is the implementation of separate change addresses.
For those who are not familiar with this concept, let’s dive into the details.
The traditional approach: a single address
When you create a wallet, it usually creates a bitcoin address. This single address is used to receive funds from other users. When sending Bitcoin, all its funds are sent to this single address and the change of the recipient (any remaining funds) are also sent to the same address.
However, this approach has some limitations:
- Safety risks : With only one address being used to receive funds, there is a higher risk of anyone breaking into your wallet or stealing your funds.
- Loss of control : As all transactions are linked to the initial shipping address, you have limited control over your own funds.
The solution: separate change addresses
To mitigate these risks and provide more flexibility, Bitcoin developers introduced separate change addresses (also known as “spending”) in 2016. These new addresses are used when sending funds, allowing recipients to receive their action without access to the main address of the sender.
When you send Bitcoin, your wallet creates a specific spending address that is not linked to your initial receipt address. The recipient can use this expense address to receive the corresponding change from the transaction.
How separate change addresses work
Here is an example of how it works:
- You have a bitcoin wallet with a primary receipt address (for example,
BC1 ...).
- When you send funds, your wallet creates a new spending address (for example,
BCs ...).
- The recipient uses the expense address
BCSto receive its part of the transaction.
- The sender’s balance remains unchanged; Only the recipient’s balance is updated.
BENEFITS OF SEPARATED CHANGE ADDRESSS
The introduction of separate change addresses has numerous benefits, including:
- Improved Security
: Separating funds from receiving and shipping transactions, you are less likely to find safety risks associated with single use addresses.
- Increased control : With a primary address to receive funds and a separate shipping address for shipping, you have more control over your own assets.
3.
In conclusion, the introduction of separated change addresses in Bitcoin revolutionized the way we interact with this cryptocurrency. By providing a safe and flexible mechanism for sending and receiving funds, these new addresses have become an essential part of the Bitcoin ecosystem.