Change address

Bitcoin doesn’t store any account or balance information. The number that represents how many Bitcoins you have is simply all the inputs to that address after you take away all the outputs. This is what is meant by UTXO (Unspent Transaction Output). For numerous reasons, like security and ease of programmability, Bitcoin can only send inputs from the wallet when you make a payment. Say you pay someone .05 BTC. It is likely that more will be sent, and the additional will be refunded as change to the change address. We do this all the time with cash. If you pay for something that cost $1 with a $20 note, you think nothing of a cashier taking that $20 and giving you $19 back as a $10, $5, $1, $1, $1, $1. This isn’t too different from UTXO. Instead of fixed denominations like 5, 10, 20 and 50, you have fixed denomination inputs. You give the recipient enough inputs to cover the transaction, and whatever is left over is sent to a linked change address. Not all cryptocurrencies do this. Ethereum and all ERC20 tokens have account and state information.