Topic: I noticed a bitcoin transaction involving one Address. Why was it done? (Read 185 times)

Looks like they consolidated various inputs into one larger output. Perhaps they did it during a low fee period.


Most people don't have a reason to do this. Your wallet will automatically draw from these inputs when it needs to so going out of your way to do it is normally not required or cost effective.

If you really want to do it right click on the address in question on the addresses tab and choose spend from. Then click on max on the send tab to spend the entire amount i.e. all unspent outputs sent to that address.

A good analogy I like to use to explain this is to think of each individual output as an actual, physical coin.

Let's say I send you 0.001 BTC. Think of that like a large coin from your local currency, maybe a quarter if you live in the US. You receive another 0.001 BTC from someone else. You now have two quarters. Now you receive 0.0005 BTC - a dime. Now another few transactions - a nickel, a cent, another quarter, and so on. You keep all these coins in the same place - your wallet.

After a while, you are holding 20, 50, 100 individual coins. Your wallet is bulky and cumbersome to use. Paying for things is a nightmare - you have to stand at the checkout for ages, counting out individual coins. If you want to send money to someone through the mail, then you end up paying loads in postage because your letter is heavy and weighed down by the 100 coins you have stuffed in to the envelope. However, you can swap all these coins for a single $20 bill. Your wallet is now light and easy to use again. You can pay for things quickly. You can send a $20 bill through the mail cheaply.

A transaction like this is the equivalent of swapping a bunch of heavy, unwieldy physical coins for a single $20 bill. As has been explained by the posters above me, because you have to pay a fee for each input in to a transaction, turning all your small inputs (individual coins) in to one large input (a $20 bill) will save you time and money further down the line.

---

For future reference, blurring out an address like this does very little to anonymize a transaction. Simply knowing the inputs and output makes it trivial to find the transaction in question.

Just a guess: 5000 satoshi fee

I made a topic for this 2 years ago: Fees are low^*, use this opportunity to Consolidate your small inputs!
^* Currently fees are high, so it's not the right moment to do this.

Maybe the coins came from several transactions and the owner of the address just wanted to regroup it so it'd be cheaper/faster to spend at once when needed.

A transaction involving numerous inputs would require more data.

Bitcoin does not work on an account basis.
If you receive X transactions to the same address, you have X UTXO's.

So, when you then want to spend all of your funds, you will have X inputs (not just one).

Since the recipient is the same, it can be assumed that he is simply consolidating his inputs.
This means he is converting X UTXO's into 1 UTXO. If he then wants to send his coins when fess are higher, he will have to pay a lower fee since the size of the transaction is smaller with only 1 UTXO instead of X.
This transaction probably has a low fee and its intended to be able to spend the coins later when the fee is higher without needing to pay an insanely high fee.

You rather want to consolidate a lot of UTXO's into one with a low fee (e.g. 1 sat/B), then pay a higher fee when necessary to transact than to not consolidate and pay a higher fee with 10+ inputs.

Can members help me explain what is going on here?
I came across certain transaction that has all inputs going into one output all involving one (The blurred address is the same throughout). Obviously this looks intentional and so there must have been a reason.



What is the essence of such a transaction?
If it's of importance, how can it be done on a normal wallet like electrum?