Ever wonder why spending $20 in Bitcoin or Litecoin can consume a whole $73 digital bill?
Think of your BTC or LTC like digital dollar bills, except each bill can be worth any amount.
You might have one "bill" worth $73 in your wallet. If you want to spend $20, you do not tear off part of the bill. Instead, the whole $73 bill gets used.
In this example, the transaction creates two new bills:
- $20 goes to the person you paid
- $52.90 comes back to you as change
- The remaining $0.10 becomes the transaction fee.
So your wallet is not really tracking one running balance like a "bank account". It is tracking a collection of unspent digital bills.
In Bitcoin and Litecoin, these are called UTXOs. When you spend, some bills are consumed, new ones are created for the recipient and your change, and the small difference becomes the fee.
So for crypto like Bitcoin
$BTC, Litecoin
$LTC, and Dogecoin
$DOGE, your wallet tracks many unspent digital bills.
And for chains like Ethereum
$ETH or Solana
$SOL, your address or "account" behaves more like a running balance that gets debited and credited.