Why Bitcoin transactions work like cash, not like bank transfers
"I sent 0.5 BTC but my wallet shows a different balance than expected. Where did the rest go?"
This happens because Bitcoin doesn't work like a bank account with a running balance. Instead, it uses UTXOs — Unspent Transaction Outputs — which work more like physical cash or coins in your pocket.
You have a balance: $1,000
You spend $300
New balance: $700
The bank just updates a number in a database.
You have coins: 0.6 + 0.3 + 0.1 BTC
You spend 0.5 BTC
Use the 0.6 coin, get 0.1 back as change
You're spending actual "coins" and receiving change.
Imagine you have three notes in your wallet: a £20, a £10, and a £5. Your total is £35.
You want to buy something for £12. You can't just "send £12" — you have to hand over actual notes. You give the £20 note, and the shopkeeper gives you £8 back as change.
Now your wallet has: £10 + £5 + £8 = £23. The original £20 note is gone forever — it's been "spent". The £8 is a brand new note (a new UTXO).
Click on UTXOs to select them for spending:
When you spend multiple UTXOs in one transaction, you're revealing they belong to the same person. This is called common input ownership heuristic — blockchain analysts use it to cluster addresses.
Transaction fees are based on data size, not value. A transaction spending 10 small UTXOs costs more in fees than one spending a single large UTXO (more inputs = more data).
When fees are low, it's smart to consolidate many small UTXOs into fewer larger ones. Send a transaction to yourself that combines multiple inputs into one output.
Every Bitcoin node maintains a database of all unspent outputs — the "UTXO set". Currently it's about 5-7 GB. When you spend a UTXO, it's removed from this set. When you create new outputs, they're added.