Broadcasting a PSBT

Prior to broadcasting a PSBT bitcoin core shows three transactions -

• Transaction to the change address

• Transaction to your desired address

• Fee transaction

After seeing these three values, I had to review some of the core concepts about a bitcoin transaction to myself namely, what a change address is and what happens when you send a transaction that doesn’t drain your entire input.

Inputs and Outputs: Bitcoin transactions are made up of inputs and outputs. When you receive Bitcoin, it comes in as an input, and when you send it, it goes out as an output.

1. Entire Input Spending: Unlike a traditional bank transaction where you can specify the exact amount to send, in Bitcoin, the entire input amount must be used. If the amount you want to send is less than your total input, the difference is sent back to you.

2. Change Address for the Difference: This 'change' is sent back to a new address in your wallet, known as a 'change address'. It's similar to buying an item for $5 and paying with a $10 bill; the $5 you get back is like the Bitcoin sent to your change address.

3. Privacy and Security: Using a new change address for each transaction helps maintain privacy and security. It makes it more difficult for someone to track your transactions and balances because your funds are not all tied to a single address.

4. Wallet Management: Modern Bitcoin wallets handle this process automatically. They create new change addresses as needed and manage them along with your main addresses.

Additionally, you can confirm that the public address is controlled by the public key by running the command ‘listaddressgroupings` in bitcoin core it should be empty because the change address will be a brand new address. Once your transaction has been confirmed on the network you should see the adjusted value on the newly created public address.

Ascend to the most sophisticated form of financial sovereignty.

Why overcomplicate your setup and use third party wallet software when bitcoin-qt is powerful enough for watch only addresses and pbst (partially signed bitcoin transactions).

See the linked post or download this pdf for a walkthrough on how it is done.

Important notes not outlined in the post above:

1. If you don’t see your balances/transactions. You may have to rescan the blockchain to pick up previous UTXOs and balances to do this run the command “rescanblockchain”. In the bitcoin client after navigating to Window > Console. ex: rescanblockchain 501727.