Any transaction in the Bitcoin network consists of inputs and outputs. An output determines which address the funds are sent to and in what amount. In essence, it is a record like "such-and-such an amount of bitcoins is assigned to such-and-such a recipient," which the network records in the blockchain after the transaction is confirmed.
A transaction can contain several outputs at once. This makes it possible with a single transfer to send funds to different addresses, as well as to return the remainder (change) to oneself. The point is that inputs are spent in full: if the input amount is larger than needed, a separate output sends the difference back to the sender, while another output usually forms the fee for miners.
Key features of an output
- it contains the amount and a spending condition tied to the recipient's address;
- it becomes an unspent output (UTXO) until it is used as an input in a new transaction;
- a single transaction can have several outputs — for different recipients and for change.
Understanding the mechanics of outputs helps to grasp how the UTXO model is structured and why a wallet's balance is essentially the sum of all unspent outputs assigned to your addresses.
