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So how is the balance of an address calculated?

Addresses have no balance. They are only used to verify signing authority. This is because there is no such thing as a ``sending address'' in a bitcoin transaction.

Currently most leaf nodes require only one signature, and have one address associated to them. More exotic leaf nodes may require more than one signature, or use signatures without associated addresses. Such exotic transactions are possible, do happen in the network, and as infrastructure matures they will become more common.

If you have coins, i.e. spending authority for some leaves in the network, you have no reason to believe that the addresses associated to those leaves' parents (if any such addresses exist) has anything to do with the sender. Nor may you assume that this address can be (or ever could be) safely spent to.

Andrew Poelstra 2014-06-05