When you deposit your bitcoins to the physical Ballet wallet by scanning it’s top QR code, where do the bitcoins actually go? How is it exactly stored on the physical, non-electronic, Ballet wallet? Is it even on the physical wallet?

These are questions that a newcomer in the space would ask, but it’s completely normal to have these questions. Considering that bitcoin is still an esoteric technology to conceive and understand, it’s imperative that we continue to educate the newcomers on how it all works.

In short, essentially you aren’t technically sending bitcoins, you are changing the locking scripts of the unspent transaction outputs (aka UTXOs) that you own. UTXOs, in short, refers to transaction outputs that can be used as an input in a new transaction.

At the moment, whatever UTXOs that are “in your wallet” are locked by your private keys. Your private keys have the ability to unlock your UTXOs only. When you transfer ownership of the UTXOs, you essentially are using your private keys to unlock the current locking script on the UTXOs, and then assigning it a new locking script, which can only be unlocked by the recipient. And all this is recorded on the bitcoin ledger, or history of blocks. Anyone who runs a node, carries a live version of the bitcoin ledger.

So in a way, your private keys/public address aren’t holding bitcoins, the ledger is holding it. It’s your private keys that have access to the UTXOs pertaining to your public address.

 

Transactions assign bitcoins to a locking script. The locking script is what’s specified in the ScriptPubKey field. You can think of this as a lockbox where some money is deposited that only a particular key can open. The money inside, of course, can only be accessed by the owner who has the key.

The unlocking of the lockbox is done in the ScriptSig field; this proves ownership of the locked box, which authorizes spending of the funds. — Programming Bitcoin By Jimmy Song

Think of it as the bitcoin ledger, the full transaction history of blocks, holding the bitcoins and recording all of its movements and ownerships. Then think of your private key as being the only mechanism to control or change ownership of your bitcoins. So everything is essentially on the bitcoin ledger, carried on each individual running node, and there are tens of thousands of live running nodes supporting the decentralization of the network.

So a wallet holds the private keys and helps to create transactions. When you “send” a transaction, you essentially are sending a signal to dozens of bitcoin nodes to receive, verify, update ownership, and propagate transactions on your behalf.

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About us

Ballet is a U.S. company that provides simple and secure cryptocurrency storage solutions for the global mainstream market. Ballet is the team behind the world’s first multi-currency, non-electronic, physical crypto wallet. The company was founded in 2019 by Bobby Lee and an international team of cryptocurrency industry veterans. Ballet is headquartered in Las Vegas, Nevada in the United States, and has an office in Shanghai, China.

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