If you've sent Bitcoins to someone you may have noticed that you sometimes seem to send a larger amount of Bitcoins than intended. Ever wonder why that happens? We'll explain. And don't worry, you're most likely not losing any money.
As with many things Bitcoin, it all starts with the blockchain. The blockchain is a giant public ledger that tracks all bitcoin transactions ever made. If you own any bitcoins, you (and the public) will be able to use the blockchain to find all of the transactions ever made to your address. These incoming transactions are referred to as “inputs.”
These inputs are essential for payments. Let's say you go into a restaurant that accepts bitcoin and order some food. When you go to pay, instead of handing over cash you'll provide references to your bitcoins (aka “outputs”).
This means you'll prove all of your transactions must add up to the number of bitcoins you need to make a purchase. This is referred to as an output and it consists of one or more previous inputs.
If you use an input, it will be considered spent, and that means you can't use it again. In fact, once you use your own input and it is confirmed as an output, it will become the seller's input. They can then use it themselves to buy something.
When it comes to using inputs, you're not allowed to use a part of an input. Let's say you want to send a user 2 bitcoins, but you only have an input that shows that you received 4 bitcoins. You can't simple send half an input, but instead must send the full input. That doesn't mean you have to pay the seller 4 bitcoins, however, just like paper money you'll receive “change” and will be refunded two bitcoins.
This is why extra coins are sometimes sent when you make a transaction. Any extra coins will be returned to your change address (which you can set up and configure inside your wallet), and everything will be noted in the public ledger.
Want to see how inputs and outputs work? If so, you can turn on “advanced” mode in the blockchain, and will then be able to track inputs and find out which inputs have and have not been spent.
The article was contributed to CoinTelegraph by Ofir Beigel from 99Bitcoins.
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