What is an exchange address in Bitcoin?

Know what is and the purpose of a direction of change, an address that plays a fundamental role in allowing us to receive the remaining set of cryptocurrencies from our transactions in order to be able to use them in the future.

CWhen we make a transaction in Bitcoin a user and then we review it we can notice that two receiving addresses appear, this is due to the address de change, also known as return address. Esta es una normal address, without anything special, but it is created by the wallet that sends the cryptocurrencies automatically at the time of making a transaction to send the coins left over from the transaction so they can be spent on future transactions. That is, the currencies that we have left after making a payment.

Generally when we make a payment in cryptocurrencies, this is usually less than the amount we actually have in the wallet. But at the time of doing the operation, all the bitcoins that are available in the shipping address must be spent. So, Bitcoin or wallet customers create a new address known as the exchange address to return the difference or the remaining funds to our wallet.

How does the direction of change in Bitcoin work?

We can illustrate this process with a very simple example to understand it more clearly. If we go to a store and buy a product of € 79 euros, we pay the cashier with a € 100 euro ticket, he will give us a change of € 21 euros. Which is the difference between the value of the product and the ticket with which we pay.

Now with the money fiat, the cashier of the store will deliver the change with the authorized denomination banknotes that the central banks have created. In our example, the change would most likely be made up of two € 10 bills and a € 1 bill. Together they add up to a € 21 difference in purchase. In Bitcoin and cryptocurrencies, unlike fiat money, you have the authority to generate a change with an arbitrary denomination. In other words, the change can be generated with a denomination of € 21 directly.

So, illustrating another example, but now with a transaction with bitcoins, it would look like this:

If we make a payment for the value of 0,00473224 BTC (transaction value) and we have in our wallet a total of 0,00571224 BTC (total entries), our wallet would carry out two simultaneous operations. One with an amount of 0,00473224 BTC  minus the mining fee that will be sent to the recipient that we indicate. The other operation will have a value of 0,00020796 BTC and it will be done at one of our addresses.

In other words, this second operation will direct a transaction to our exchange address. This process is carried out with the aim of avoiding double spending, since the 0,00571224 BTC that were in the shipping address were spent in full. Remaining our change of 0,00020796 BTC at another address, of which our wallet has the private keys to use them later.

Evolution of the directions of change

Previously, when making a transaction, users had to manually enter the exchange address in which they would receive the difference of the operation. A process that was quite risky, since if for some cause or error, the address of change was not set, the remaining funds went to the mineros, since any amount that is not assigned is the miner's fee.

Subsequently the wallets began to create new addresses for each transaction automatically. As we have already explained, the addresses are generated thanks to a set of public keys y private, And these had to be kept in a backup if you did not want to lose the cryptocurrencies to a problem with the wallet. Doing this for each transaction became so cumbersome that very few people had updated backups.

Everything was simplified thanks to the development of Wallets deterministic (HD). With this, the entire process is carried out automatically every time a transaction is made, and without the need for backup copies or any extra action by the user. So you don't have to worry about entering addresses manually to receive your returns or make new backups.

Why not receive the "change" to the same address?

Simple. For protecting the Privacy user. From the original Bitcoin client, its creator Satoshi Nakamoto, programmed it so that every time a transaction is made, the difference would be sent to a change address other than the shipping address. And it did not recommend reusing addresses for privacy measures.

In this sense, the Bitcoin addresses indicate that they should be seen as simple payment identifiers, where we receive an amount, use it once and it is over. Bitcoin is the most transparent payment system that existsTherefore, adopting measures that protect our privacy is our responsibility.