In this article
- TL;DR
- Where is my bitcoin before I send it?
- What happens when I press send?
- How does the network know I am allowed to spend it?
- Who checks that the transaction is legitimate?
- What actually changes on the blockchain?
- Where does the 0.05 BTC go afterwards?
- So what is my wallet balance?
- If you are in Switzerland
- Reader takeaway
- Sources
Nothing moves when you send bitcoin. A lock changes hands.
I work in the crypto self-custody space, and the question I hear most often is the one a reader posted on r/Bitcoin this week after several nights of research: she knew the words, wallets, keys, miners, nodes, blockchain, and still could not see how they connect. She had 0.1 BTC, wanted to send 0.05 BTC, and listed six questions. The best reply, from u/SimpleHeadcount, began with advice I now give everyone: stop picturing coins moving around. I take her six questions in her order and carry her example through each one.
TL;DR
Your wallet holds keys, not coins. The coins are entries on a shared ledger, each entry locked to one key. Sending means your wallet writes a message that unlocks one entry and creates new ones, signs the message with your key, and hands it to the network. Every node checks the signature and that the entry is still unspent. A miner puts the message in a block. The old entry is now spent and two new entries exist, one locked to her key and one locked to a fresh key of yours. No coin travelled anywhere. A lock changed.
Where is my bitcoin before I send it?
On the ledger, in every copy of it. The ledger is the blockchain, and more than 26,000 computers around the world that accept connections, called nodes, each keep a full copy, plus an unknown number behind home routers that Bitnodes cannot count (Bitnodes, September 2026). Your 0.1 BTC is one line in that ledger. The line says two things: an amount, and a lock. The lock is derived from your public key. Only the matching private key can open it.
That line has a name in Bitcoin: an unspent transaction output, or UTXO. Every bitcoin that exists sits in one of these. Your wallet does not contain the line. It contains the private key, and it scans the ledger for every line its keys can open, then adds them up. That sum is your balance. As u/chainglance_cm put it in the thread, the balance is your app adding up the chunks it can see are yours.
This is why "your bitcoin is not in your wallet" is true and still confusing. The phone app is a keyring plus a calculator. Delete the app and the lines stay on the ledger. Restore the keys from your 12 or 24 words on another phone and the same balance appears, because the ledger never changed. The wallet recovery guide walks through that restore.
One more thing about the line. Its amount is fixed. A 0.1 BTC entry is like a single banknote worth 0.1. You cannot tear a corner off to pay 0.05. You spend the whole note and get change.
What happens when I press send?
Your wallet writes a short message. In plain words it says: unlock the 0.1 BTC entry, create a 0.05 BTC entry locked to her key, create a 0.0499 BTC entry locked to a new key of yours, and leave the 0.0001 BTC difference as a fee. That message is the transaction. It has one input, the entry being spent, and two outputs, the new entries being created. If you want to see the raw fields, learnmeabitcoin has a transaction walkthrough with real examples.
Then your wallet signs the message with your private key. The signature is a piece of maths that proves the message was approved by whoever holds the key behind the lock, without revealing the key. The private key never leaves your device. On a hardware wallet such as the Zurich-made BitBox02 it never leaves the secure chip; the phone or laptop only sees the signed message.
Then your wallet hands the signed message to a handful of nodes it is connected to. Each of those checks it and passes it to its own peers. Within a few seconds every node on the network has seen it. At this point the transaction is unconfirmed: known everywhere, written into the ledger nowhere.
The change output is the part that surprises people. Your wallet created a new address from your seed and sent 0.0499 BTC to it. In a block explorer that address looks like a stranger. It is yours, and your wallet will count it in your balance a moment later. Wallets do this so that no address is used twice, which keeps your history harder to trace. The privacy chapter covers why that matters.
How does the network know I am allowed to spend it?
Only the signature.
The reader's follow-up question in the thread was sharper than the original: what makes an entry belong to me in the first place, and how does the network know her address is connected to her private key? The answer is that nobody knows and nobody checks in advance. There is no registry of who owns which address. An address is a fingerprint of a public key. A public key is derived from a private key. Your wallet generated the key, and that was the whole act of ownership. As u/Hissykittykat wrote, the only thing that makes it yours is that only you know it.
When she gives you an address, you lock the 0.05 BTC entry to that fingerprint. The network accepts the lock without asking whose it is. When she later wants to spend the entry, her wallet signs with her private key, and every node checks: does this signature match the public key whose fingerprint is on the lock? Yes, so the spend is valid. If she gave you a typo that happened to be a valid address nobody holds the key for, the coins are locked forever. Bitcoin addresses carry a checksum, so your wallet rejects a typo before sending. A real address that belongs to the wrong person passes that check.
The thread also asked whether a company with enough computers could guess a key. A private key is a 256-bit number. There are about 1.16 times 10 to the power of 77 of them. No hardware, present or planned, can try enough of them to find one that holds coins. You lose coins in duller ways: you type the seed phrase into a website, or a backup photo sits in a cloud album. The self-custody guide closes those doors.
Who checks that the transaction is legitimate?
Every node, on its own, before it tells anyone else.
When a node receives your signed message it runs the same checks as every other node: the signature opens the lock on the input, nobody has spent that input already, the outputs add up to no more than the input, and the message is well formed. A transaction that fails any check is dropped and never forwarded. One that passes is forwarded and held in the node's waiting room, the mempool.
Miners are nodes with expensive extra hardware. They take transactions from the mempool, run the same checks again, and bundle them into a candidate block. Then they race to find a number that makes the block's hash fall below a target, which is the proof of work. Every 10 minutes on average one of them wins and broadcasts the block. Every node then checks every transaction in the block, and the proof of work, before adding the block to its own copy of the ledger. A miner who includes an invalid transaction has wasted electricity on a block the network throws away.
Nobody in particular checks, so everybody does. There is no head office to ask. If you run a node, your own software performs those checks on your own hardware, and your wallet can ask it instead of a company's server. That is the only vote you get in the system, and it costs about CHF 300 in hardware once.
What actually changes on the blockchain?
Two small things.
Your 0.1 BTC entry is marked spent. It is not deleted; the history stays, but every node removes it from the set of entries that can still be spent. Then two new entries are added to that set: 0.05 BTC locked to her key, 0.0499 BTC locked to your new key. The 0.0001 BTC that is neither goes to the miner who found the block, as the fee. The fee buys space in the block, and the amount moved plays no part. The reader in the thread was surprised by that: a 100 BTC send and a 0.001 BTC send of the same size in bytes pay the same fee. When the network is busy the fee for a normal send is a few francs; when it is quiet it is well under CHF 1.
Confirmations are how many blocks have been built on top of the one holding your transaction. One confirmation means it is in the newest block. Each further block makes reversing it harder. Swiss exchanges and brokers credit a deposit after 2 to 6 confirmations, so 20 to 60 minutes. For a coffee, one confirmation or even zero is fine; for a car, wait for six.
Where does the 0.05 BTC go afterwards?
Nowhere. That is the answer that made it click for the reader, and u/SimpleHeadcount gave it first: the ledger updates the pointers.
Her wallet has been watching the ledger for entries locked to her keys. After the block, it finds one worth 0.05 BTC and shows her balance went up. Her phone received no file and no message; her wallet noticed a new line it can open. The same happens on your side with the 0.0499 BTC change entry, which is why your balance drops by 0.0501 BTC rather than 0.05.
Later, when she pays someone, her wallet will use that 0.05 BTC entry as an input to a new transaction, and the whole story repeats. Every bitcoin that exists is a chain of these hand-offs going back to the block in which a miner first created it. You can follow any of them yourself on a block explorer such as mempool.space. Paste a transaction ID and you see the inputs, the outputs, the fee, and how many confirmations it has.
So what is my wallet balance?
The sum of every ledger entry your keys can unlock. Neither your phone nor any company stores that number, and only a transaction you sign can change it.
The keys are the asset, so back up the 12 or 24 words on paper or steel and the phone becomes replaceable. There is no undo: a signed transaction that reached the network is done, and the checks that protect you from theft also rule out a refund, which is why I send a small test amount to any new address before the real one. And nobody can freeze the entries. A bank can block a transfer; a node cannot block a valid signature.
One warning the thread got right: the reader offered to take explanations by private message, and a commenter pointed out that private offers to help a beginner are how the theft starts. If you are learning, learn in public. Anyone who offers private help with your wallet wants your seed phrase. The scams chapter lists the patterns.
If you are in Switzerland
The mechanics are the same in every country. The on-ramp differs. When you buy from Relai, Pocket Bitcoin, or Swissquote, the company sends a transaction like the one above, with your address as the output. From that moment the entry is locked to your key and the broker is out of the picture, which is the point of buying to your own wallet rather than leaving coins on an exchange. The buying guide compares the options and the cold storage guide covers what to do once the coins arrive. If you want the keys on Swiss-made hardware, BitBox is built by Shift Crypto in Zurich and ships from Switzerland.
For tax, sending bitcoin between your own addresses is not a taxable event, and the change output is not income. What the Steuerverwaltung wants is the total you hold on 31 December at the ESTV year-end rate, which the Swiss tax guide explains.
Reader takeaway
- Bitcoin lives on the ledger as locked entries. Your wallet holds the keys and adds up the entries it can open.
- Sending means writing a message that spends one entry whole and creates new ones, then signing it.
- Ownership is the signature. There is no registry, and there is no need for one.
- Every node checks every transaction. Miners order them into blocks. Nobody is in charge.
- The old entry is marked spent, new entries appear, the fee goes to the miner.
- The coins go nowhere. A lock changes. Her wallet finds an entry it can open.
Not financial, legal, or tax advice. Amounts in the example are illustrative; the fee depends on network load on the day.
