In real life, people have found it useful to have different boxes, buckets, envelopes, jars, to put in and store different money. We can assume that the money we invent will have to be flexible enough for that as well. People that use our money will have different use cases and sources for money. Not only between themselves, but also within each person.

You have money to spend and money to save. Money that comes from your main job and money that comes from gifts, or a side hustle. Money that you put away for a special holiday, and money that’s just a rainy day fund.

There’s a way to design our wallet system so all those use cases are possible, without the hassle of having to create individual wallets with individual keys that we need to be individually protected. We can subdivide our wallet into those jars or boxes.

Let’s think of our wallet as a bank. When you open up a bank account you sign a lots of papers. That signature and documents are nothing else but the keys you’re identifying with at the bank. Your identity. Once you’re a client, you can have several accounts under the same identity. With our Monero wallets, we can do the same, we can generate almost endless accounts with the same pair of keys. It’s like opening lots of safety deposit boxes that open with a single key.

This example is important, because just like accounts or safety boxes in a bank, money can only be in one account at a time. If you deposit $100 into one account, it won’t show up if you look into another account. Every account will have different coins into them, therefore every account will have its own sum of all those coins, its own balance.

In practice, it’s like having multiple wallets inside a wallet. Amounts don’t get mixed up, and users playing our money game can have an account for savings, another for regular spending, another for all incoming donations, etc. It makes it all very tidy.

But what happens if we want to have the convenience of giving others multiple different addresses, but we also want the convenience of all those funds ending up in the same account? That we can achieve with subaddresses.

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