Bitcoin Wallets: How Do They Function? Here Are 5 Effective Features For Indian Users

Present-day wallets are far more elaborate than Satoshi Nakamoto’s first wallet, so it’s only common that many of us want to understand how they function and how they can be used effectively.

Many Indians believe that Bitcoin’s significant pricing is unsuitable in the domestic context since the majority of us do not hold such significant funds as savings

Source : Getty

By Roshan Aslam

When Satoshi Nakamoto, the mysterious founder of Bitcoin, sent Hal Finney 10 Bitcoins as an experimental measure - it began a chain reaction. At the time, Satoshi himself had little idea of the revolution he had begun, as the significance of this new-age technology would remake the global financial understanding or how we perceived it.

As the first-ever cryptocurrency, Bitcoin ushered in the age of NFTs and the unbelievable development of blockchain technology. A decade later, Bitcoin has reached its all-time high of $73,780.07 and is considered the driver of the global crypto domain. The Bitcoin ecosystem is dependent on blockchain, which enables digital wallets with a username and a public key where Bitcoins are stored. It's similar to how conventional trading in equities occurs, however, it often comes with added security features that enhance the functionality of the Bitcoin wallets. Present-day wallets are far more elaborate than Satoshi’s first wallet, so it’s only common that many of us want to understand how they function and how they can be used effectively.

How Do Bitcoin Wallets Function?

While popular understanding states that Bitcoins are held inside wallets, the technological understanding trumps it. Bitcoins are originally stored inside its blockchain network, however, wallets store the cryptographic keys (public and private) that communicate with the network. Private keys provide complete access to accounts to their owners, including transactions.

On the other hand, public keys are a shareable edition of a user’s blockchain address, similar to a user’s Bank A/C no or UPI IDs, that are used to receive transactions. During a transaction, Bitcoin uses the Unspent Transaction Output (UTXO) model, which comes under the jurisdiction of the blockchain protocols. It’s similar to how we give a 100 rupee note to a vendor when we buy something, and receive the change in smaller denominations from the vendor.

5 Effective Uses For India

Many Indians believe that Bitcoin’s significant pricing is unsuitable in the domestic context since the majority of us do not hold such significant funds as savings. However, similar to smaller denominations of established currencies, like Paise to Rupee, Bitcoins also come with Satoshis - the atomic units equivalent to paisas in the Bitcoin ecosystem. A single Bitcoin is equal to 100 million satoshis, which offers a sustainable and accessible investment practice in the Indian context. Here are 5 effective uses tailored to the needs of Indian users.

Prompt And Safe Transactions

As mentioned before, Bitcoins are stored on the blockchain network, which is why it does not need to use the conventional banking system. It can be used to transfer money rapidly with heightened security anywhere in India, as well as in the world. The speed of this transaction trumps that of a conventional banking system, which often needs some time to complete sizable transactions done through NEFT or RTGS methods. Bitcoin wallets enable Indian users to use this feature in a highly secure way.

Potential Investment Opportunity

Common belief suggests that Bitcoin’s biggest downside is its volatile nature. While that is true to some extent, Bitcoin’s price has skyrocketed in the long term since its launch and for long-term investors, they can be useful investment avenues for capital appreciation. While Indians are known widely for their cautious approach towards investment, our preference towards long-term investment avenues aligns perfectly with Bitcoins. The wallets empower Indians with potential investment opportunities in Bitcoins that can yet become multibagger once again.

Remittances

Indians are considered some of the brightest and most hardworking individuals in the world. Thousands of Indians work overseas and sending money back home is often an expensive undertaking for them for significant fees associated with the transfers. Bitcoin wallets enable these Indian citizens with an alternative way to send money back home, with a considerably cheaper solution for completing remittance payments.

Hedging Inflation 

Many Bitcoin users believe that it can be used to hedge against inflation since its supply is confined, added to the halving events. Indian users can park their capital at the Bitcoin wallets which can be ideal solutions to holding valuation that can be less vulnerable against depreciation.

Diversification

BTC allows users to diversify their investment portfolio by offering a new avenue. Wallets can enable Indian users to diversify their strategy, however, considerations are recommended before entering this new asset class.

(The author is the Co-Founder & CEO of GoSats)

Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd. Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.