Ethereum: Why does Bitcoin use separate change addresses?

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:

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:

BENEFITS OF SEPARATED CHANGE ADDRESSS

The introduction of separate change addresses has numerous benefits, including:

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.

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