wakoinc on Nostr: When you spend Bitcoin, you typically have a change output (UTXO). This is because ...

When you spend Bitcoin, you typically have a change output (UTXO). This is because your current UTXOs likely don’t have the exact amount you’re trying to pay.

When you try to spend BTC, you use one or more of your UTXOs and create a payment output and a change output for yourself (based on what you overpaid).

By consolidating UTXOs, you (kind of) turn change/coins into notes, meaning less future UTXO inputs and cheaper Bitcoin transactions (as you pay per data size, and more UTXO is more data).

Other reasons include privacy motives or managing KYC/Non-KYC linked coins. Or migrating to new address types like taproot.

UTXO being an unspent transaction output.