Quote from: DannyHamilton on December 18, 2019, 03:44:21 PM

Quote from: gentleman2019 on December 18, 2019, 08:46:01 AM

Thanks, its still a bit technical for me

Lets say I want to send 0.05 BTC from my Coinbase wallet to my friend who has a Bitpay wallet. Will this show up on the blockchain as one transaction with one input (my public address) and one output (friend's public address)?

The following analogy is not perfect, but it will get you started down a path of understanding. There are a few more details to understand beyond the scope of the analogy, so don't get too caught up in the specifics...

Think of your bitcoin wallet as an actual physical wallet. When someone pays you, think of that as them handing you a physical bill that you put into your physical wallet.

So, Alice pays you a $5 bill. Then, Bob pays you a $10 bill. Then Carl pays you a $5 bill.

All together, you've received a total of $20, but what do you actually now have in your wallet? Do you have a single $20 bill? Or do you have a single $10 bill and two $5 bills?

Now, lets say you want to pay David $14? You have to pull out two separate bills (the $10 and a $5). That's two inputs into your transaction to David, however, David gives you $1 back for your wallet.

The way Bitcoin works is similar to this (except the recipient doesn't send the change back, instead the sender creates the change when they create the transaction).

Every time you receive a payment (regardless of whether it is to the same address or a different address) the transaction paying you creates a new separate output that represents that payment.
Then when you want to make a payment, you need to choose from all the previous outputs that you received. You need to choose enough of these separate outputs so that the sum of their value is at least the amount that you are trying to pay. Each output that you choose gets listed as an input in the transaction that you are creating. Then if the sum of all those inputs happens to be more than the amount you are trying to send, the transaction needs to create two new outputs, one for the value of the payment that you are sending, and another for the extra so that it can be added back to your wallet.

Note that it is possible to create a single transaction that pays multiple people. So, if I want to pay Alice 0.1 BTC, and I want to pay Bob 0.2 BTC, and I want to pay Carl 0.3 BTC, and I have two outputs in my wallet each worth 0.5BTC, then I can create and send a transaction that has two inputs each valued at 0.5 BTC (for a total input value of 1 BTC), and has FOUR outputs (one for each person I'm paying plus an additional output worth 0.4 BTC back into my own wallet).

I cant merit as I'm too new I think, but just wanted to say thanks for the excellent explanation.