Addresses, Balances, Transactions


  • Addresses are big random numbers, derived from a public key, that allow bitcoin to be transferred from one private key to another.

  • You can create an infinite number of addresses from any public key, and it’s considered best practice to create a new address every time someone sends you bitcoin.

Balances and UTXOs

  • Balances are the amount of bitcoin associated with a given private key.

  • Balances are calculated by summing up the amount of bitcoin associated with that key.

  • In this state the individual bitcoin amounts are called UTXOs, or Unspent Transaction Output.


  • A bitcoin transaction is how bitcoin ultimately is transferred from one address to another.

  • Transactions are broadcast to the entire bitcoin network of nodes.

  • Transactions are collected into blocks, which are then processed by miners.