Topic: BTC Wallets: How to keep them clean? (Read 244 times)

very interesting post

Try to stop thinking about addresses and think about UTXOs instead. It makes absolutely no difference if you have 100 UTXOs on one address, or the same 100 UTXOs spread over 100 addresses. All else being equal, then the fees to spend these UTXOs will be identical.

Every transaction you create will use up one or more UTXOs as inputs to cover the value of the coins you want to spend, and the fee you need to pay for the transaction. Your transaction will create a minimum of one output UTXO to whichever address you want to send coins to. If there are any coins leftover between the sum of your input(s) and the sum of your output(s) and fees, then they will be returned to you in an additional output UTXO in what is known as "change".

This depends on the UTXOs.

Let's say you have a single UTXO containing 1 BTC. You send 0.5 BTC to someone else, then the remaining 0.5 BTC will be returned to you in a single UTXO.
Let's say you have 10 UTXOs, all containing 0.1 BTC. You send 0.5 BTC to someone else, by using up 5 of the UTXOs. Your remaining 0.5 BTC will not have moved, and will still be made up of 5 UTXOs of 0.1 BTC each.
Let's say you have 10 UTXOs, all containing 0.1 BTC. You send 0.5 BTC to someone else, but this time you use up all 10 of your UTXOs. The 0.5 BTC extra will be returned to you as a single change UTXO of 0.5 BTC.
Let's say you have 10 UTXOs, all containing 0.1 BTC. You send 0.5 BTC to someone else, but this time you use up 8 of your UTXOs. The 0.3 BTC extra will be returned to you as a single change UTXO of 0.3 BTC, and you will still have 2 more UTXOs of 0.1 BTC each which have not moved.

There are endless possibilities here. You can choose to spend the minimum required to cover your transaction, or include extra UTXOs to "consolidate" them in to a single change UTXO to save on fees further down the line.

---

Here is a good page regarding outputs which I suggest you have a read of: https://learnmeabitcoin.com/beginners/outputs. That entire site has a lot of good beginner-friendly guides.

After consolidating, when you got to 1 BTC "in one piece", each new transaction will send some money .. somewhere and the change that comes to you will return to your wallet indeed, but usually at a new address.
This means that the remaining money is still all in one piece, hence the next transaction(s) will not get more expensive.

So your transactions would be:

1. Consolidating:

address 01 |
address 02 |
.............. | --> address 31
.............. |
.............. |
address 30 |

2. Then your 10 spending txs:

address 31 --> | recipient whatever
`````````````| address 32

address 32 --> | recipient whatever
`````````````| address 33

...
...

address 40 --> | recipient whatever
`````````````| address 41

And you'll end up with money only at your address 41.

As you can see, all the transactions will have only one input, hence the fee won't be unnecessarily big.
Also, as optimization, when you know that you have to pay to more recipients, you can also do pay-to-many transactions like

your address X --> | recipient 1
```````````````` | recipient 2
```````````````` | ...
```````````````` | ...
```````````````` | recipient 10
```````````````` | your address Y

since it's cheaper than 10 1 in, 2 out transactions.


I will add that the (change) addresses I painted in gray you don't have to provide, the wallet should handle that by itself.

You have to consolidate your inputs regularly when the network isn't congested and transactions fees are low.

If the amount you want to send is smaller than the input, your wallet will create a new output to send the difference back to your wallet.
In your case, there will be always a single UTXO in your wallet. So, you don't have to worry about consolidation unless you receive other transactions.

If you want to lower your fees, you should try to receive bigger amounts less often, instead of small amounts more often. For example, if you're buying coins on exchange every month, don't withdraw them immediately, let them sit for some time and withdraw every other month or once in 3 months. Of course it will come with increased risk of storing coins on exchange. So, you can also monitor the mempool and make withdrawals when fees are low and then consolidate your coins for the future, which will come with a reduced privacy downside, because your coins will be linked together.

I advise all beginners to purchase a Ledget or Trezor hardware wallet. I'm already used to the nano x leder.
Next, explore the electrum wallet
https://electrum.org/#home
You can connect your hardware wallet to it and use the electrum interface.
It is very convenient to view all UTXOs there and choose the optimal commissions.

Paper Wallets? You meant to say Hardware wallets, I guess? Paper Wallets seem to be pretty bad for security, because I have to expose my Key every time via Keyboard.

Use micro-wallets like Faucetpay for small transactions, and consolidate to your digital wallets like Blockchain.com or Exodus. Send your savings to Cold storage on Paper Wallets.

This sounds pretty good! I'm just not sure if it really helps after all: Lets say I have 100 Addresses with 0.001btc and consolidate all in one Address to 1 BTC. Will my fees not rise after some transactions, because i create new UTXOs every time? Am I thinking about this wrong?

I mean: I have 1btc on my Address A.
Now i spend 0.5btc in 10 Txs to other Addresses.

Will my Address A not be full of 10 smaller UTXOs after multiple spendings thus creating the same problem I had before?
Or is my 1btc now just 1 UTXO with 0.5BTC left?

Sorry for asking so much stuff, I just want to get it right. I really love this project and want to understand every single bit of it, so I can teach my Shitcoin friends
Maybe I should read more about the UTXO Scheme, I guess I still don't understand it quite enough.



Thanks! I'll check it out. I already guessed my questions aren't a "first" in this forum. You guys discuss BTC on a daily basis for 12 years 
PS.: I run a node, I can verify the mempool without a third Party  (just kidding, thanks for explaining anyways)

Have you tried to check the sticky thread here in this section?
Check this https://bitcointalksearch.org/topic/general-bitcoin-wallets-which-what-why-1631151


Almost all questions you have already been answered above the only thing that I want to add is that always monitor the Mempool stats from here https://mempool.space/
And wait for a day or time that the network is not congested like today the low priority is 7sat/byte and high priority is 21sat/byte the fee is low so you can get less fee when you make a transaction today(You can get lesser transaction fee in the future if you merge your all UTXO today).

It may be better for privacy - people won't know how much BTC you own and where you got them from - but it won't help much with the fees.
The wallet will pick one or more inputs to aggregate the amount it needs to spend, whether those inputs are on one address or more.
And of course, the more the inputs, the bigger the fee.

What you have to do would be:
1. Try to not send many small transaction to your address/addresses. If they are bigger - at a comparable size with what you usually spend - you're pretty much OK.
2. Consolidate your inputs when the fees are small. You'll find tutorials, details and people will tell when the time's right in this thread: https://bitcointalksearch.org/topic/aug-2022-mempool-empty-use-this-opportunity-to-consolidate-your-small-inputs-2848987
3. It worth knowing that the fees are lower for SegWit addresses, but you may already use those.

Hey guys & girls,

I guess this is my first Post ever? Yay! Anyways...

Is there any Topic related to best practices for using Wallets and Addresses? The first few years I just send everything to one Address (I'm a former ETH Pleb), but after moving these Coins I saw that my Tx Fee was higher than usual because I had to "stack my UTXOs" together, if I understood correctly. Nowadays I send my BTC usually to a new address all the time. So just 1 Tx per Address. Is this better in any way?

I thought by doing so, I can at least pay low fees per vByte when I want to spend less BTC than I have on 1 Address. Only if I want to spend more than I have on any of my Addresses than I would need to Stack Addresses together and pay higher fees in return. Am I getting it right? Could I improve my 120% fail proof "System"? I guess it can't go Tits up? 

I hope I don't get blamed for not using the search function. I should have properly just used the search function.