Can I hold Bitcoin in my hand? Can I touch it or feel it? No, and that’s a good thing! Here’s why

Can I hold Bitcoin in my hand? Can I touch it or feel it? No, you can't. And that's actually a good thing. Now, if you could hold it or touch it or feel it, it would be much easier to explain Bitcoin to people, to show it to them, and to give them something tangible that they could understand Bitcoin. But it would also mean it doesn't work in a digital economy. You see, the problem that Bitcoin solves is the problem of trust. If trust was not a problem, if humans were perfect, if humans were angels, trust would not be a problem. And if trust was not a problem, money could be something you could hold in your hand and then you could transact with something uh electronically that represented that thing you could hold in your hand. In fact, that was the idea behind the gold standard. The idea behind the gold standard was gold is scarce. Gold is the scarcest thing in the world other than Bitcoin. Bitcoin is now more scarce than gold. But if you compare every single thing on the uh the elemental table looking for something that serves as money, what you want is something that is the hardest to make more of or get more of as compared to what there already exists. So it's called stock toflow. The flow is how much uh how much how hard it is to get the new amount of the something. Um the stock is how much there is and the flow is how much there is of the new stuff. So gold, when you look at the stock flow uh ratio of gold, there's about 2% more gold dug out of the ground every year. So that is a harder ratio uh to get more gold of than any other thing. For example, it's about 16 times easier to dig gold out or sorry, silver out of the ground than it is to dig gold out of the ground. So we didn't end up with the gold standard of the past by accident. We ended up with it because of the things that you can hold and touch and feel in your hand, gold is the most scarce. The problem with gold was that it because it was something you could hold in your hand and touch and feel. That also meant it had to be somewhere in the physical world. And that place that it was in the physical world was not something that could work in a digital economy because it was physical in nature. You could not send it across a telegraph wire. Uh even back in the early days of undersea cables, you could not send Bitcoin uh through an undersea cable across a telegraph wire. Uh you can't send bitcoin, you know, you can't send gold over the internet. So anything that you can touch or feel or hold in your hand results in the need to store that thing somewhere and then use money that represents that thing. The problem is that introduces trust in the system. And the trust is whoever holds the gold will make more things that are represented uh representative of the gold than there actually exists gold. Now 100% of the time throughout human history that you have had a scarce asset and then that that scarce asset was represented uh by something else. Ultimately humans decided to cheat the system. So every time you have something scarce like gold, you stick it in a vault and then you issue issue paper receipts called paper money that represent the gold. Eventually whoever introduces those paper receipts decides that not everybody's going to come and get the gold all at the same time and therefore we are just going to issue way more paper receipts than we have gold. That is the case with everything that is physical in nature if you try to use it as money. Uh in fact the reason the gold standard worked at all in the early days is because the internet did not exist prior to the invention of the telegraph. You you could actually transact with gold in the real world. It didn't really work for small transactions which is why people use silver but wherever you were transacting prior to the invention of the telegraph in the mid 1800s. If you were transacting, you were transacting in the physical world because there was no way to transact or exchange information or knowledge electronically because that had not been invented yet. And so you could transact with gold. Now it still had the problem of nobody wanted wanted to lug around a huge amount of gold. So they made paper receipts that represented the gold and then the people who made the paper receipts made too many of them as compared to how much gold there actually was. So it would result in bank runs on the bank vault and all sorts of problems. That is an unsolvable problem. The problem of trust in a mon monetary system with things that are tangible that you can hold and touch and feel. Uh that problem of trust is unsolvable in an uh in a modern monetary system which is why bitcoin was invented. The entire benefit of bitcoin is that there is not something you can hold and touch and feel in your hand unless you could obviously get something like bit key which is just a key. That's why it's called bit key. It is a key to your Bitcoin. That is something you can touch and feel and hold in your hand, but you're holding a key to the Bitcoin. You're not actually holding the Bitcoin itself because Bitcoin is digital. It is electronic. Um there there's not something you could hold in your hand other than something like a key to it. Uh but again that means you can transmit value anywhere in the world at any time with no barriers and no reliance on trust of anyone else which you can't do with anything that you can feel or touch or hold in your hand. So uh the downside of course is that it's a lot harder to explain to people what Bitcoin is if there's not something you can feel and touch and hold in your hand. The upside is that's what makes it work as money in a digital economy. So, uh, Bitcoin is the scarcest thing in the world. The stock toflow ratio of Bitcoin is better than gold. It is the only thing in the universe that has a a better stock toflow ratio, meaning it's more scarce uh than gold because gold is 2% more per year. Bitcoin is a finite cap supply of 21 million. Uh, so Bitcoin is more scarce than gold. It is harder to get a unit of Bitcoin than it is a unit of gold because gold again there's 2% more of it every year and there is not 2% more Bitcoin every year. It's got a fixed supply. Uh so Bitcoin solves the problem of the constant inflation of gold at 2% a year and it solves the problem that you have to have something you can touch and feel and hold in your hand which means it does not work in a modern economy which means you have to trust that thing to be somewhere. If you have something you're trying to use as money, it has to be somewhere and you have to trust someone to secure it or hold it on your on your behalf and that is broken down every time gold tried to be used as money because the people who held the gold and uh held the gold had to be trusted and they were never trustworthy. Nobody holding a bunch of gold who then issues receipts for fractional parts of that gold has ever ultimately been able to be trusted because eventually someone will always say, "Hey, we really only have 10 tons of gold in the in the bank vaults." But who's going to notice if we issue 10 tons of gold receipts plus $1? Nobody's going to notice. And so they do. And there's no way to audit that. Uh you can go try to count the gold, but you know, there's no way to know. Is it really gold or is it tungsten that's spray painted yellow? Um or is it, you know, gold on the outside and tungsten on the inside? Like there's just no way to know. So, you can't touch or feel uh or hold Bitcoin in your hand. That is what makes it work as money. That is why you can use it in a digital economy without having to trust anyone because you can hold the keys yourself. Uh, Bitcoin does not have the divisibility problems of gold where it's impossible to make small transactions with gold and it does not have the portability problems of gold where it's hard to move large amounts of gold because it's heavy uh around and it doesn't have the security problems of gold where somebody can physically take it from you uh just by literally physically taking it from you. Bitcoin does not have that problem. It's electronic. You can you can hold Bitcoin, you know, I'll do a video about how you can even hold Bitcoin in your head if you want to do that and how that works. Uh but anyway, so uh you can't hold it in your hand, you can't touch it, you can't feel it. And that is what makes it work as money. It's the first time we've had a digital scarce asset that was uh could be used as money and was invented to be used as money that did not have all of the problems of anything that you can touch and hold and feel. And the only downside is it's a lot harder to explain something to someone that they can't hold and touch and feel in their hand.