Most transactions include two destination addresses. For UTXO-based assets, One address belongs to the recipient and the other one is a change address that belongs to your own account. This applies to UTXO-based crypto assets like Bitcoin, Litecoin, Dogecoin, and others. It does not apply to assets like Ethereum, XRP, etc.
How it works
When a transaction does not entirely consume the coins it is spending, the difference is known as change. The change is sent back to an automatically generated address called the change address.
You can compare UTXO-based crypto assets with cash. Imagine you buy a hotdog that hosts 5$ with a 10$ bill. In return, you will get a 5$ bill of change. This change belongs to you and it will come back to your wallet. In that comparison, your wallet with 5$ is a change address, still yours but a different bill. The same goes for BTC.
- John has 1 BTC and sends it to me. John has 0 BTC, and I now have 1 BTC.
- I then send 0.2 BTC to my friend Suzy
- 0.2 BTC goes to Suzy's account
- 0.8 BTC goes to my change address => my BTC account
- My total account reflects the remaining 0.8 BTC
- Ledger Live automatically generates a fresh change address for every new transaction that does not fully spend its inputs.
- Ledger Live automatically takes care of change, you do not have to track the coins on your change addresses.
- It is not possible to check which address is your change address in Ledger Live. You can check your Bitcoin change addresses using Electrum.
Always verify receiving addresses on your Ledger device and send a small amount first before sending larger amounts. Never assume that an address shown in the transaction details is yours!
Change addresses in Ledger Live
It is not only Bitcoin that uses the change addresses model in Ledger Live but other crypto-assets apply the same UXTO model too:
- All Bitcoin-similar crypto-assets
- Bitcoin Cash
- Bitcoin SV
- Other assets that use xpub (extended public key) and generate different receiving addresses