Crypto school: Help! My BTC is gone!

“I sent a small Bitcoin payment to {wherever} and now all my BTC is gone. Help me get it back!!”

Questions like that pop up on Reddit and Discord with an unwavering regularity. Self-custody user transfers a small part of his or her Bitcoin balance to another address and suddenly a much bigger amount disappears from their wallet. Quite understandably they panic, get a small heart attack, blame Ledger, or Trezor, or the Bitcoin protocol and rush to seek an explanation online.

Are the bitcoins gone?

Usually there is no foul play involved and the bitcoins are not lost. To understand what happened we have to look at how the Bitcoin wallet actually works:

• One wallet has a lot of wallet addresses. These are like the slots or compartments in your purse.
• Each wallet address can hold multiple coins. They are like actual paper bills and coins in the compartments of your purse. These coins are also called “UTXO — Unspent Transaction Output” and each of them has a specific bitcoin value associated with it.
• All the coins together make up the balance of your wallet.

Now let’s say that you’ve got only one coin worth 0.1 BTC and you want to pay 0.01 BTC for an anonymous server hosting. You enter the payment address to your Ledger Live, fill in the details, sign and send. And suddenly your balance goes to 0 BTC. Zero. ZERO!!! That’s one heart-attack worthy moment, isn’t it? But don’t panic and take a deep breath, it’s not as bad as it looks.

Here is what happens: you can’t spend part of a UTXO coin, just like you can’t pay for a $1.50 can of soda with part of a $5 bill. No, you have to hand over the whole $5 bill (at which point you’ll have $0 left in hand) and then get back $3.50 change from the cashier.

And that’s exactly what happens when you pay the 0.01 BTC to the hosting company. Your wallet sends out your one of the existing 0.1 BTC coin and provides an address for the 0.09 BTC change (less the transaction fees). It may take 10 or more minutes for the change to appear back in your balance. Don’t panic, it will come.

As a side note — some wallets search only the confirmed transactions and can take longer to update and may show incorrect balance for a while. More advanced wallets look into both the confirmed and unconfirmed transactions and will show the “change in flight” immediately, perhaps with a little exclamation mark to emphasise that it’s an unconfirmed transaction. In those the total balance will usually be accurate.

Phew! Your coins are safe after all :)

What about other cryptos?

Several cryptocurrencies use the UTXO model or a similar system with multiple addresses per wallet. Some notable examples include: Bitcoin Cash (BCH), Litecoin (LTC), Dogecoin (DOGE), Monero (XMR), Cardano (ADA) and many others. These are just a few examples, and there are many other cryptocurrencies that use the UTXO model or similar systems with multiple addresses per wallet.

On the other hand Ethereum (ETH) and many Ethereum-based cryptocurrencies use a different model called the “account-based” model, which does not use individual coins or multiple addresses per wallet. In the account-based model, each wallet has a single address, and the balance increases or decreases with transactions. There is no concept of individual coins or change addresses.

Some Ethereum-based cryptocurrencies that use the account-based model include Ethereum Classic (ETC), Binance Coin (BNB) or USD Coin (USDC), among many others.

My change STILL didn’t come back!

Well, that’s odd. Here’s a couple of things to look at:

1. Examine the blockchain using the mempool.space service and check whether the transaction has already been confirmed. If not — wait. If your fee was set too low it may take a while. Or a long while.
2. If it was confirmed but still not showing try to restart your wallet software — Ledger Live, Trezor Suite, Electrum, Guarda, whichever you use. It may have disconnected from the blockchain and stopped getting the updates.
3. Double check and then triple check all the addresses and amounts in the transaction. Are they correct?
4. Was the transaction fee set too high? Once again check the Mempool website and check how much did you pay for the fee. It may have eaten a good chunk of your funds.

Still no luck? Well now it’s becoming scary! You may want to post the transaction ID to r/Bitcoin on Reddit and see if anyone can shed any light on what’s going on. However while doing that be very careful! You will inevitably get heaps of DMs (direct messages) from people offering help. Never ever reply to them. They will invariably try to scam you. There is no way to revert a Bitcoin transaction and the scammers will only make you spend more of your cash or crypto with them.

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