Bitcoin Wallets — What they are and how to use them
Bitcoin is the first cryptocurrency to hit the market in a big way as well as the one that laid the foundation for others to follow. It is by far the most popular crypto coin to the extent that people often use the two terms, cryptocurrency and Bitcoin, interchangeably.
WHAT ARE CRYPTOCURRENCY WALLETS?
In this world, a wallet is the most essential accessory that everyone carries around with them. A Digital Wallet is a program that stores personal information about payments and passwords of websites. In Cryptocurrency, a wallet is used as a gateway to a blockchain network. These wallets don’t actually store cryptocurrencies, they actually only interact with a blockchain.
HOW CRYPTO WALLETS FUNCTION?
All the information one needs to use cryptocurrencies are generated by the Wallets. For example, M wants to build a new Bitcoin Wallet to receive a payment from Z. Using a Crypto Wallet Program would be the easiest way to do this. A new wallet would generate a set of keys; a public key and a private key. The program uses the public key to generate a Bitcoin address. M needs to give Z the Bitcoin address for Z to be able to transfer the Bitcoin from his wallet to M’s wallet.
Coins are only transferred from one address to another and they never actually leave the blockchain.
While it is safe for one to share their public key or address, one must never share or disclose their private key with others. One can use the private key to access ones funds and for signing new transactions. As long as one has their private key, they can use any device to access their wallet but if someone gets a hold of your private key, your funds can be stolen. The private key can also be used to recover the public key and addresses and it is a key element of a wallet.
SO WHAT MAKES BITCOIN SO POPULAR?
The biggest reason is perhaps the anonymity that it affords users. The other is low transaction fees as compared to trading in other currencies. Moreover, Bitcoins are relatively more stable trade as compared to other currencies, and transactions are faster because of the digital nature of trade. Finally, trading in Bitcoins is secure because of blockchain — the technology that underlies every transaction — and the chance of fraud is low.
Blockchain transactions are extremely difficult, if not impossible, to hack.
ARE BITCOINS LEGAL?
Well, the answer to that depends on where you are located and what local laws apply. That said, trading in cryptocurrencies such as Bitcoins is legal in most countries and you can buy just about anything in exchange for Bitcoins. In places where it is not accepted as legal tender, you can sign up to crypto exchanges, such as CoinDCX, and trade in Bitcoins, much the same way you would trade in stock.
As we said, you can do just about anything with Bitcoins subject to two conditions:
- That Bitcoins are accepted legal money in the state or country you reside
- The other party — for example, your retailer or real estate broker — is willing to accept payment in Bitcoins.
HOW TO USE BITCOINS?
Amazon, for instance, accepts gift vouchers that are purchased using Bitcoins while Expedia, one of the largest OTAs (Online Travel Agents), accepts Bitcoins as payment in exchange for bookings. You can also purchase coupons for mobile recharge, DTH, and a few other services using your Bitcoin wallet. <link to Blog 3>
In India, Bitcoin is not a legal tender. However, it opens a tremendous investment opportunity for everyone to invest in it and gain profits in the investments.
Once you have registered on a cryptocurrency exchange such as CoinDCX, you must complete your KYC and verification before you can begin trading or purchasing through your Bitcoin wallet. Trading involves purchasing Bitcoins with traditional currency such as Indian rupees and holding on to them in hope of selling them at a higher price on a later date. At CoinDCX, we facilitate a fiat transaction which means you can directly trade from your bank account. On exchanges that do not permit fiat transactions, you must purchase coins into your crypto wallet and deposit these coins as your initial investment.
You can operate your Bitcoin wallet from your mobile phone or any other device — or directly from the website of the exchange — by logging into your account. If your exchange allows fiat money transactions, your account on the exchange must be linked to your bank account for trading; or you can purchase Bitcoins in exchange for INR through your wallet.
Subsequent to the lifting on the ban on Indian banks collaborating and dealing with cryptocurrency exchanges, fiat transactions — that is trading cryptocurrency directly with INR — has become possible. The decision has also generated considerable interest among Indian investors to trade in cryptocurrencies.
If you would like to begin trading in Bitcoins or other cryptocurrencies, register with CoinDCX now. If you still have questions read our FAQ or simply drop us a line and we’ll get right back.
