Hey folks!

Welcome to week 3 of Finshots Cracks Crypto.

If you’ve been following along, we’ve already cracked open the basics of Bitcoin and blockchain in week 1. Then in week 2, we took a ride through the history of money and how Bitcoin could be the next big chapter.

So now, you’re probably asking, “Alright, but why should I care? Why does crypto or Bitcoin matter anyway?”

Fair question. Let’s talk about it.

Imagine a young chap living in a remote Indian village. Let’s call him Gopal. His family earns a living by rearing cattle and selling milk. But banking? That’s a luxury. The nearest bank is miles away, and even if Gopal gets there, there’s another hurdle. He needs to prove his identity and comply with KYC (Know Your Customer) norms to open an account. Think about it. If someone in his village is a daily wage labourer who doesn’t have a fixed address or proper documents to prove where he lives, how would he even go about making something like AADHAAR card?

Sure, he could get an Introducer — someone who vouches for him. But that’s another layer of red tape. He’d first need to find an Introducer, go through the entire process, get their AADHAAR card and then finally open a bank account.

Phew! That’s a lot of steps just to access something as basic as banking. And if he doesn't go through those steps? Tough luck. No account. No access to basic financial services.

But what if he didn’t need a bank at all? What if there was a system where no documents, no middlemen and no bureaucracy stood in his way?

Enter Bitcoin. Or, for that matter, any cryptocurrency network. They could actually solve the problem we just talked about and, in some cases, might even replace banks entirely. How’s that, you ask?

Well, if you’ve followed our previous stories in the series, you know that the crypto network runs on blockchain technology which is decentralised. There’s no single entity or person controlling it and no intermediary.

So all Gopal needs is just an internet connection, and he’s good to go.

And hey, over 55% of Indians and 60% of the world have internet access today. With that connection, anyone can simply download an app to set up a crypto wallet and they have their own bank. The app will create a public address (like a bank account number), and boom. They can send and receive cryptocurrencies or funds without any bank or payment companies ever getting involved.

And unlike traditional money transfers, which can come with hefty fees thanks to multiple parties or banks taking their cut, crypto fees work differently. They depend on how busy the network is. More traffic means higher fees, and paying more gets your transaction processed faster. But here’s something interesting. Whether you send ₹10 or ₹10,000, the fee remains the same. This is different from the banking we see today, where banks keep a flat percentage of the transaction amount as fees, making big transfers more expensive.

At this point, you might stop us and say, “Wait a minute. I just opened a Bitcoin wallet, and the website asked me for all my KYC documents. So what’s this that you’ve been going on and on about?”

Well, here’s the thing. There are actually two types of crypto wallets. First, there’s custodial wallets. These are the ones you use when you store or buy crypto through a centralised exchange. Think of them like a gatekeeper or custodian for your crypto. The platform holds your crypto for you, and because they’re in charge of your assets, they need to verify your identity through KYC checks. After all, these entities are answerable to their customers and the government if anything goes wrong.

But the true power of crypto ownership comes with a non-custodial wallet. And that’s the kind that we’re talking about. These are free apps you can download or hardware devices that give you full control. No KYC, no ID proof, nothing. You simply download the app or buy the device, set up your wallet and take full control. Sure, you’ll need to put money into that wallet, and since banks don’t support direct crypto transactions, most people first buy stablecoins like USDT (we’ll tell you more about this in the upcoming editions) using bank money, then use that to buy Bitcoin or other cryptocurrencies. It’s a quick two-step process to move from traditional money to the crypto world. But once that’s done, you’re free to send, receive and store your crypto without any middlemen.

That means you literally become your own bank. And that, folks, is how financial inclusion could really take off with Bitcoin and other cryptocurrencies in the future. Gopal sure would be happy. Not all in his village may opt for cryptocurrency but they’ll at least have the option to trade with any person, at any corner of the world which they were earlier deprived of!

Sounds like financial inclusion on steroids, right? 

But Bitcoin doesn’t stop there.

It could help solve some of the deeper economic problems we face beyond just financial inclusion.

Because it sort of mimics the ideas behind Austrian economics. If that sounds new, Austrian economics is a school of thought that economist Carl Menger kicked off in the 19th century. It argued that everything in the economy follows a cause and effect relationship and that you can’t apply a rigid, one size fits all theory to explain economic behaviour.

Take the labour theory of value, for instance. It was popular a couple of centuries ago and claimed that the value of a good or service depended solely on the labour put into it. So if it took 10 hours to make a clay pot and 10 hours to mine a nugget of gold, both should technically be priced the same.

If you laughed at that thought, that’s what Austrian economists did too. They said, “Hey, the value of a good or service doesn’t just come from labour. It can depend on circumstances and people’s preferences.” For instance, diamonds are usually far more expensive than water, not just because they’re harder to produce but also because they’re scarce. But think diamonds vs. water when you’re stranded in a desert for a day without water. Would you rather have a diamond or a glass of water? Water wins hands down, no?

Ideas like these also shaped Austrian economics’ views on money. Like how money should emerge naturally, not be controlled by governments. That’s where Bitcoin fits in.

On the contrary, traditional money today isn’t backed by anything tangible, like gold. It’s just backed by the government. This means that governments can keep printing more money whenever they need it.

Take the US, for instance (because well, the dollar is the reserve currency today). For years, the US has been tweaking and increasing its debt ceilings, or the limit on how much it can borrow. But when debt increases just like that or money is printed without any real limits (out of thin air), money’s supply just keeps growing.

And you know what happens next – inflation! More money chasing the same goods means prices rise. That’s why ₹100 or $100 today won’t buy what it did a decade ago. And that’s why, year after year, you and I keep seeing prices shooting up, and they rarely go back down. Here's proof:

Bitcoin flips this script.

It was designed to avoid losing value the way regular money can. To put things in perspective, governments control money, so they can print more of it, which reduces its worth. But Bitcoin isn’t controlled and it has a fixed supply. Only 21 million will ever exist. And because of this, as more people want Bitcoin but the supply stays limited, its value tends to rise. This built-in scarcity without any authoritative say helps Bitcoin resist inflation, unlike traditional currencies that lose value due to central bank policies or excessive money printing.

Now this is just the economic aspect of it. But think of what bitcoin can do to solve problems beyond money itself.

It could democratise the way we vote. Yup!

Right now, voting means using an electronic voting machine (EVM) or if you’re in the US, you can also choose a paper ballot. But this process is slow, super costly and labour-intensive. After elections, EVMs need to be secured and votes painstakingly counted under strict supervision. That’s a massive effort, especially in a country as big as India.

But imagine if votes were recorded on a blockchain. Just like Bitcoin runs on a public ledger, electoral authorities could develop private blockchains for voting. Once set up, it could work like an app on your phone or any internet connected device. You verify your identity using a government-issued ID (just as your voter ID), cast your vote and that’s it. Once you’re done, no one else can vote on your behalf. Every validating computer (or node) can then count votes in real time, and once verified, votes can’t be changed or tampered with.

This shrinks elections from days to minutes. It’s fair, transparent and eliminates the need for polling booths and recurring election costs. The best part? No political party can cry foul about rigged elections because votes on a blockchain are unalterable. Models like this have already been tested in the US, where votes were cast in minutes, and the results were certified in 20 minutes!

And this exact feature of Bitcoin can empower entire communities too.

Take rural areas struggling with water access to clean water. Instead of waiting on a municipal body to handle supply and maintenance, blockchain-based systems could track and manage water supply directly. So every time someone logs a request, whether it’s for access to water or fixing a leak, it gets recorded on a shared network. And instead of a central authority setting prices and distribution rules, the community decides these through pre-set agreements on the blockchain. Those who maintain the system don’t work for free. They earn digital tokens as rewards. This keeps things running smoothly and even creates local jobs.

And this isn’t just a theory. A similar model was successfully tested in India, providing clean water to 45,000 people. The blockchain-based system encouraged community participation and even created 440 informal jobs, with 30% of them going to women.

Cryptocurrencies could also end corruption in public schemes. Right now, money meant for things like infrastructure projects or relief for the poor often gets siphoned off by bureaucrats before it ever reaches those who need it. But with a public blockchain, this could change. Funds could move directly to beneficiaries, wiping out the layers of intermediaries who might take a cut.

And what about AI? As machines take over more tasks, they’ll need ways to pay for services, whether it’s cloud computing or data. Crypto enables instant, direct transactions between AI agents (software that act independently, making decisions and completing tasks). Think self-driving cars paying for their own charging or AI assistants buying upgrades all with their own cryptos. Wild, right?

So yeah, all Bitcoin gave us was decentralisation or a system where community agreements and network rules are set in stone and can’t be broken. And with that, the possibilities are endless, many of which we probably haven’t even imagined yet.

And while these were just a handful of applications beyond economics and money, Bitcoin has a whole universe of possibilities. It’s code, it’s not dictated by anyone and it treats everyone equally. It creates win-win opportunities where none existed before.

And that’s exactly why it’s worth paying attention to.

On that note, we’ll wrap up this edition.

And if it feels like we’ve been singing Bitcoin’s praises, don’t get us wrong. We’re not here to pick sides. In fact, in the coming weeks, we’ll flip the coin. We'll tell you why Bitcoin might not be the silver bullet all the time that it’s made out to be.

We’ve got some big questions to tackle too...

Why does Bitcoin get all the attention while blockchain and other cryptos take a backseat?

What about its massive energy consumption… is it really the environmental villain people claim it to be?

And how cryptos are already shaking up industries you interact with everyday often without you even noticing. 

We hope you stay with us until then too.

For now...

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