Ranging from a bit distant, the cash are transferred to the Bitcoin Addresses, that are actually hashes of public keys. They are often spent utilizing their respective personal keys (which is used to generate the general public key and the general public key hash) which is saved within the Pockets.
Your stability is the sum of unspent transaction outputs (UTXOs) in your Addresses. You may test them manually: within the Bitcoin Core consumer go to Assist > Debug > Console, to test Addresses kind listaccounts, to test UTXOs kind listunspent or listaddressgroupings.
If you need to ship cash to an Deal with your Bitcoin software program goes trough all of your unspent transaction outputs and tries to seek out the most effective mixture to fill that quantity (together with transaction price) utilizing as few as potential. Within the easiest case one UTXO has sufficient coin so solely that will probably be used, in different instances extra will probably be mixed.
That is the “in” a part of the transaction.
After this the Bitcoin software program will add the “out” half the place the vacation spot Deal with (or Addresses) you provided will probably be current with the quantity(s). As a UTXO can solely be used up as soon as, all of it should be transferred. From the remaining the transaction price will probably be paid and the remaining is the change, that will probably be despatched again to a newly generated Deal with of yours (and it will enhance the “fragmentation” of your Pockets). The change seems as effectively within the “out” half (so it can enhance the scale of the transaction and subsequently the price), whereas the transaction price will probably be left within the transaction with no output.
After this the Bitcoin software program will calculate the transaction price required based mostly on the setting you utilize (price quantity/byte), replace the suitable quantities (transaciton price and change) and the transaction is able to be despatched.