This blog article is about how to control which coins to spend in a bitcoin transaction using coin control features in some bitcoin wallets.
Bitcoin transactions are composed of inputs and outputs, where inputs are the coins that are spent and outputs are the coins that are received. Sometimes, a user may want to control which coins to spend in a transaction, for example, to optimize the transaction fee, enhance privacy, or consolidate UTXOs. This article will explain how to use coin control features in some bitcoin wallets to achieve this goal.
Table of Contents
What is Coin Control?
Coin control is a feature that allows users to select which coins (or UTXOs) to use as inputs in a bitcoin transaction. By default, most bitcoin wallets automatically choose the inputs based on certain criteria, such as the age, size, or confirmation status of the coins. However, some wallets allow users to manually override this selection and choose the inputs themselves.
Coin control can be useful for several reasons, such as:
- Fee optimization: By choosing smaller or older inputs, users can reduce the size or weight of the transaction and pay lower fees. Alternatively, by choosing larger or newer inputs, users can increase the priority of the transaction and pay higher fees for faster confirmation.
- Privacy enhancement: By choosing inputs that are not linked to each other or to previous transactions, users can avoid revealing their spending patterns or balances to third parties. For example, users can avoid spending change outputs from previous transactions or mixing inputs from different addresses or wallets.
- UTXO consolidation: By choosing multiple small inputs and sending them to a single output, users can reduce the number of UTXOs they own and simplify their future transactions. This can also save on fees in the long run and improve the efficiency of the network.
How to Use Coin Control?
To use coin control, users need a bitcoin wallet that supports this feature. Some examples of such wallets are:
- Bitcoin Core: The official bitcoin client has a coin control feature that can be enabled in the settings menu. Users can then access the coin control dialog from the send tab and select the inputs they want to use. The dialog also shows information such as the amount, address, label, confirmation status, and fee rate of each input.
- Electrum: The popular desktop wallet has a coin control feature that can be enabled in the preferences menu. Users can then access the coin selection dialog from the send tab and select the inputs they want to use. The dialog also shows information such as the amount, address, label, confirmation status, and fee rate of each input.
- Wasabi: The privacy-focused wallet has a coin control feature that is enabled by default. Users can access the coin list from the send tab and select the inputs they want to use. The list also shows information such as the amount, address, label, confirmation status, anonymity set, and fee rate of each input.
Frequently Asked Questions (FAQs)
Question: What are UTXOs?
Answer: UTXOs are unspent transaction outputs, which are the coins that can be spent in a bitcoin transaction. Each UTXO has an amount and an address associated with it.
Question: How are transaction fees calculated?
Answer: Transaction fees are calculated based on the size or weight of the transaction and the fee rate chosen by the user. The size or weight of the transaction depends on the number and type of inputs and outputs. The fee rate is expressed in satoshis per byte (s/B) or satoshis per virtual byte (s/vB) and reflects the demand and supply of block space.
Question: How can I find out which coins I own?
Answer: You can use a bitcoin wallet that supports coin control or a block explorer that allows you to search by address. You can also use a tool like Coin Selection Simulator (https://murch.one/wp-content/uploads/2016/11/coinselection.html) to visualize your UTXO set.
Summary
Coin control is a feature that allows users to control which coins to spend in a bitcoin transaction. It can be useful for fee optimization, privacy enhancement, or UTXO consolidation. To use coin control, users need a bitcoin wallet that supports this feature, such as Bitcoin Core, Electrum, or Wasabi.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Users should do their own research before using any bitcoin wallet or service.