Topic: What does "transactions -> use change address" do? (Read 621 times)

It shouldn't change. The current system is perfect we just need more intelligent policy for small input so users aren't technically forced to abandon currency.. Better distribution of the blockchain too using compression and torrents or something distributed with compression. LZMA2 solid compression or go hardcore with a PAQ algorithm.

BTW a better way to explain it is a payer address is a single input. All change addresses and destination address are outputs that don't get blockchain verification without a certain amount of satoshi to bytes.

Yes the thing about bitcoin is that inputs have to be signed individually even if they are all from the same address. This may change in the future if they manage to introduce shnorr signatures.

I believe he is talking about the situation where after sending 4 transactions, you get:

ChangeAddressA = 0.0001 btc
ChangeAddressB = 0.0002 btc
ChangeAddressC = 0.00015 btc
ChangeAddressD = 0.0003 btc

You have no other unspent outputs in your wallet... and you go to send out all your balance... ie. 0.00075 btc... but your wallet now has to use 4 inputs to do this, which jacks the transaction size up to 600 bytes... and suddenly you need to pay 132,000 sat fee, instead of 45,000 sat fee.

To the OP, at the end of the day... it makes no difference in terms of fees or transaction size, whether you use change addresses or not. If you don't use change addresses... instead of the situation outlined above, you'd just have four inputs in one address like so:

Address1 = 0.0001 btc
Address1 = 0.0002 btc
Address1 = 0.00015 btc
Address1 = 0.0003 btc

So you would still incur the penalty of having to use 4 inputs (and associated higher fees)...

Hopefully, if you have a "smart" wallet it will use the least number of unspent outputs to make up the amount you want to send... rather than just starting at the beginning of the list of unspent transactions and adding inputs until it reaches the required amount.

One trick that can be used to minimise the amount of "change dust" that you generate would be to do batch transactions using Electrum's "Pay to Many" feature...

There is no additional overhead. When you got to spend your bitcoin the inputs to the transaction still have to be signed regardless of which address they were originally made out to.

no I'm talking about the cost overhead in the form of fees when you try to combine change balances for inputs. I'm actually interested in what you guys suggest people do with change seeing as you don't see this as a conflict.. wallets don't efficiently use them..

I can't think of any conflicts. You will lose privacy if you combine multiple change outputs into a single transaction though. Is that what you are referring to?

what conflict are you talking about?

What that page doesn't tell is how there is a conflict with change and network fees.. First think new users are going to do is try and combine change with other change for other transactions..

OP please read about change on the bitcoin wiki:

https://en.bitcoin.it/Change

Put simply transactions often have change that has to be sent back to your wallet. For privacy purposes it is better to use separate change addresses. You should leave this option checked. If you leave it unchecked change will be sent back to the address where the input coins came from.

If that is unchecked, what does that option do?