My best shot at explaining Bitcoin

00:02 Hey everyone, here is my best shot of 00:04 explaining Bitcoin in one take on my 00:06 back patio. So, what is Bitcoin? Bitcoin 00:09 is a new form of digital money. And the 00:12 reason humans need money is because 00:14 barter is difficult. It's difficult to 00:16 barter things like cows and eggs and 00:19 whatever else, a pair of shoes. And so, 00:21 humans invented money. Money is a 00:23 technology and it's the technology that 00:26 we use to interact and medium of 00:28 exchange, unit of account and store of 00:30 value because it's hard to use other 00:32 things for that. So over human history, 00:34 humans have used uh sea shells, glass 00:36 beads and ultimately newer technologies 00:39 always replace the older technologies. 00:41 So for example, glass beads replaced sea 00:43 shells ultimately gold, precious metals 00:46 replaced glass beads and we are in the 00:48 early stages of bitcoin replacing gold 00:51 as the uh store of value ultimately 00:54 medium of exchange and uh long-term also 00:57 unit of account. So in order for 00:59 something to be a money the number one 01:00 value or the number one characteristic 01:02 that matters is it needs to be scarce. 01:05 uh anything that is not scarce is hard 01:07 to use as money because it's there's a 01:09 lot of it and so it the ability to find 01:12 new amounts of whatever it is undermine 01:14 its value. So the the most valuable 01:17 money is the scarcest money. For about 01:19 5,000 years, gold has been the scarcest. 01:22 Meaning the ab the difficulty of finding 01:24 new gold as compared to how much gold 01:27 already exists in the world has been the 01:29 hardest for gold. And it's called stock 01:31 to flow. Stock is how much already 01:33 exists above ground already mined 01:35 already in existence and the flow is how 01:38 much new of that there is. So for 01:40 example uh for gold about every um every 01:44 year about 1.5% to 2% new gold is dug 01:48 out of the ground every year about one 01:50 1.5 to 2%. That means about every 50 01:53 years the total number of gold that is 01:56 available to use in for anything is 01:58 about 2x it's about doubles about every 02:00 50 years. So right now the stock to flow 02:03 meaning the scarcity of bitcoin and gold 02:04 is about even at uh April of this year 02:07 coming up in about 40 days 40 about 40 02:10 days the stock toflow of bitcoin will 02:13 drop in half in something called the 02:14 having which in bitcoin happens every 02:16 four years the amount of new bitcoin 02:18 issued to the miners who secure and 02:20 audit the bitcoin network drops in half 02:23 about every four years. Uh, gold never 02:25 does that. Obviously, if the price of 02:26 gold goes up, people mine more gold. So, 02:28 the stock to flow for gold stays in the 02:31 ballpark of 1.5 to 2% more gold a year, 02:34 which tends again over the course of 50 02:36 years means there's literally twice as 02:38 much gold. And obviously, that long-term 02:41 means that uh the price of gold 02:43 appreciates less because the price uh 02:45 the amount of gold doubles every 50 02:47 years. In the case of Bitcoin, the vast 02:50 majority of all the Bitcoin that will 02:51 ever exist in the world already exists. 02:53 And the amount of new Bitcoin is about 02:55 to drop from about 1.5% per year to 75% 02:59 for per year. And then four years after 03:01 that, it will drop to half that. Four 03:03 years after that, it will drop to half 03:04 that. So effectively, there's very 03:06 little bitcoin left to enter 03:08 circulation, which means most of the 03:09 monetary system of the world will be 03:11 built on the Bitcoin we already have in 03:13 existence. So that'll happen around 03:15 April 19th. that that having has and 03:17 historically that's resulted in a huge 03:19 price rise for Bitcoin because the same 03:21 amount of demand is now chasing uh half 03:24 as much Bitcoin and obviously that 03:26 results in the price having to reflect 03:28 that. Um so anyway, so what makes a good 03:30 money? Well, whether it's seashells, 03:32 glass beads, gold or bitcoin, you want 03:35 something that is easy to use and hard 03:37 to make more of. So over time some some 03:40 things like seashells became extinct in 03:43 the use for money. They became obsolete 03:45 because they were hard to use as money 03:47 and ultimately they found too many ways 03:49 to find new sea shells. So they were not 03:51 scarce and hard to use. Gold ultimately 03:54 was hard to use because it's not very 03:56 easy to divide it. It's hard to move in 03:58 large, you know, large amounts, etc. So 04:00 gold was hard to use, but it was hard to 04:03 get to make more of or to get more of. 04:06 So it sort of solved half of the 04:08 monetary equation. It was hard to use, 04:10 but hard to make more of. And so it was 04:12 good enough when no other technology 04:14 existed. Right now, most of the world 04:16 runs on fiat currency. Fiat means made 04:18 up. It means uh by fiat, by dictate. It 04:21 means the government just says it's 04:22 money because it is. They print pictures 04:24 of dead presidents on paper and they 04:26 hand them to you and they say this is 04:28 money. This is what this is what you 04:30 have. You know, this is this is money. 04:32 Um so fiat currencies are easy to use 04:35 because they're it's easy to carry paper 04:36 around or to transact electronically 04:38 online. So fiat currencies are easy to 04:41 use, but they're also very easy to make 04:43 more of. So the total amount of new 04:45 dollars in circulation is constantly 04:47 going up because the Federal Reserve in 04:49 every country in the world is constantly 04:51 printing more money. And they always 04:52 claim there's some new emergency, and of 04:54 course there never is, but they're 04:55 constantly printing more money. So fiat 04:58 currencies are easy to use, but easy to 04:59 make more of. So they failed the test 05:01 the opposite way of gold. So, Bitcoin is 05:04 the first currency that is both easy to 05:06 use and easy to make more of. So, in my 05:09 case, I use the Coinbase debit card, 05:11 which I use, it is accepted anywhere in 05:14 the world that Visa is accepted, and it 05:16 is linked to my Bitcoin. So, every time 05:18 I use an ATM or I pay for something or I 05:20 activate it on my Apple Watch for 05:22 contactless payments at to pay for gas 05:24 at a, you know, at a gas gas station, it 05:27 immediately uh deducts however much 05:30 Bitcoin is the current exchange rate 05:32 with fiat currencies. Uh the current 05:34 exchange rate, whatever that is, however 05:35 much gas I bought, it deducts that much 05:37 Bitcoin on the back end. But Visa and 05:39 Coinbase take care of that for me. for 05:41 me and as long as you're using like a 05:43 coinbased debit card, it is very easy to 05:45 use Bitcoin to transact. I can also si 05:48 send any amount of Bitcoin anywhere in 05:50 the world in a few seconds um for you 05:53 know very low fees on the Bitcoin 05:54 network. Uh which is very hard to do 05:56 right now on a Saturday. I can't send 05:58 money if I want to send money right now 06:00 across the the planet. I can't because 06:02 the banks are closed. They will not 06:04 allow me to wire money until Monday and 06:06 even then the other person doesn't get 06:08 it till Tuesday or Wednesday. And 06:09 usually wire transfers get rejected the 06:11 first time for some reason. You got to 06:13 try them again. Something's not right, 06:15 whatever. It's just a royal pain to look 06:17 to move significant amounts of money 06:18 around. Um, so anyway, Bitcoin solves 06:21 that. So, Bitcoin is the first money 06:22 that humans have ever invented or 06:24 discovered that is both easy to use and 06:26 hard to make more of because in the case 06:28 of Bitcoin, uh, the Bitcoin network only 06:31 produces a a new amount of Bitcoin and 06:34 that new amount of Bitcoin drops every 06:36 four years. So, Bitcoin is the most 06:39 amazing technology. The the cryptography 06:42 behind it, the uh computer network that 06:44 secures Bitcoin is the most advanced 06:46 computer network that humans have ever 06:48 invented. And uh it's just it's this 06:50 incredible technology that I've been 06:52 studying since 2017. So, about 7 years 06:55 now. I've been studying Bitcoin on and 06:57 off and uh really a lot on in the last 07:00 few years just because as Bitcoin has 07:02 has uh the adoption around the world has 07:04 really picked up. It's become more and 07:06 more clear that Bitcoin will be the 07:08 future monetary system of the world. And 07:10 as that has become more clear, obviously 07:12 my interest in studying Bitcoin has been 07:14 become higher and higher and higher. And 07:16 the price of Bitcoin over time has 07:18 become higher and higher and higher as 07:19 well. Um so I've accumulated, you know, 07:22 a lot of Bitcoin as a result of that 07:24 because I deeply believe in the 07:25 technology. So it represents the vast 07:26 vast vast majority of my liquid assets. 07:30 Um so a couple other things about 07:32 Bitcoin. Um you can transact anywhere in 07:34 the world. Typically you use a service 07:36 like Coinbase uh to transact Bitcoin. 07:39 And uh uh Coinbase handles the process 07:41 of sending the Bitcoin to whoever it is. 07:44 If you want to spend Bitcoin, uh 07:45 Coinbase also handles the process of 07:48 making it easy to do that with the 07:49 Coinbase debit card. And Coinbase also 07:52 makes it super easy to uh file taxes. So 07:55 taxes for Bitcoin work like any other 07:56 asset where if you sell it for more than 07:58 you bought it for, you have to pay taxes 08:00 on that gain, which is the difference 08:02 between the price you paid and the price 08:04 you sold it for. And so uh Coinbase 08:06 keeps track of all that for you and 08:08 makes it super easy uh super easy to 08:10 file taxes and all that sort of uh 08:12 thing. Um so anyway, Bitcoin's an 08:15 incredible technology. Um the having is 08:17 coming up in the middle of April and the 08:20 amount of new bitcoin will be uh will 08:21 drop in half that is issued to the 08:23 network and uh so that usually results 08:26 in a huge price rise. the historically 08:28 it's every four years for coincidence it 08:30 just happens to fall on the presidential 08:33 election years and so the last uh the 08:35 last havingss were in 2012 2016 2020 and 08:39 then it's this year is also a 08:40 presidential election year so the having 08:41 is coming up in uh in April of this year 08:44 which is 2024 uh historically that's 08:46 resulted in a huge up market following 08:49 the Bitcoin having um that has resulted 08:52 in sort of peak markets uh in 2017 the 08:55 year after 2016 in 2021 the year after 08:59 or I should say 2013 2017 and 2021 all 09:02 the years after the havingss and 09:04 everybody I know is predicting the same 09:05 thing is going to happen this time 09:07 because there's just you know bitcoin's 09:09 price is 100% a function of supply and 09:12 demand and so when you have the supply 09:14 of new bitcoin dropping in half 09:16 obviously the demand has to push the 09:18 price higher uh to reach equilibrium so 09:22 um to summarize money is a technology 09:24 the best money is easy to use and hard 09:26 to make more of. Every past technology 09:29 has been um has that has failed the test 09:32 of being both easy to use and hard to 09:35 make more of has eventually been 09:36 supplanted by another technology that is 09:39 either easier to use or harder to make 09:42 more of. Um in the case of you know 09:44 beads and you know glass beads and sea 09:46 shells and things like that a lot of it 09:48 was a function of just scarcity. 09:53 Obviously, 09:58 fiat currencies by their nature are way 10:01 easier to make more of. Uh, which is why 10:03 they're not scarce, which is why we have 10:04 inflation and why prices are continually 10:07 rising because the government never 10:08 stops printing more money. Um, so 10:10 anyway, so uh we are going through that 10:12 process right now. Uh the the entire 10:14 world is going through a process of 10:16 slowly switching from fiat currencies to 10:19 Bitcoin. That will be a multi-deade 10:21 process. We are very early in that 10:23 process and even very early in that 10:25 process, Bitcoin as the, you know, all 10:28 of the Bitcoin that's available is worth 10:30 more than $1 trillion right now. All of 10:32 the gold that is available in the world 10:34 is worth about $14 trillion. So the 10:37 amount the value of all the gold in the 10:39 world is still more than 10 times as 10:41 large as the value of all the bitcoin in 10:42 the world which that tells you we're 10:44 very early in that process because as 10:45 that process plays out uh typically 10:48 whatever is being replaced as currency 10:50 that value comes down over time and the 10:52 value of what is replacing it goes up 10:54 over time. So for example, when the 10:56 world moved from using sea shells as 10:58 money to using glass beads as money, 11:00 early in that process, you could buy a 11:02 huge number of glass beads for a small 11:04 number of sea shells because glass beads 11:06 had not been monetized yet. Late in that 11:08 process, the very last person holding a 11:10 ton of seashells had to transfer a ton 11:13 of sea shells in order to get a small 11:15 number of beads. So the same thing's 11:16 happening with Bitcoin right now where 11:18 right now you can still buy 11:20 comparatively a lot of Bitcoin for a 11:22 small amount of US dollars and as that 11:26 monetization takes place over time which 11:28 will be volatile. It'll be there will be 11:29 lots of ups and downs in that process 11:31 but eventually let's say when Bitcoin is 11:33 worth $1 million$1 million US per coin 11:37 you know that'll be you know whatever it 11:38 is 14 times as large as it is right now 11:41 uh something like that however many 11:43 multiples of it is right now. Um, 11:45 obviously you'll it will require a lot 11:47 more US dollars to buy a lot less 11:49 Bitcoin because a lot more of the world 11:52 will have switched to to Bitcoin as 11:53 compared to US dollars. So hopefully 11:55 I'll do some more of these v videos 11:57 about, you know, various things. But I'm 11:59 trying to get content out there because 12:01 I figure, you know, people I know and 12:03 love are on Facebook. And if I can help 12:06 them make that transition to Bitcoin 12:08 earlier in the process versus later in 12:10 the process, then everybody who makes 12:12 that uh that transition earlier versus 12:14 later with any money, whether it's 12:16 moving from glass, you know, from sea 12:17 shells to glass beads, glass beads to 12:19 silver, silver to gold, gold to, you 12:22 know, whatever. Um, anytime you're 12:23 moving in that process to something that 12:25 is ultimately more scarce and will 12:27 become more valuable over time, you end 12:29 up way better off than the people who 12:30 wait to make that transition to much 12:33 later in the process. And so my hope is 12:35 that, you know, the content I put out 12:36 about Bitcoin on Facebook helps people 12:38 make that switch uh earlier in the 12:40 process and therefore ends up 12:42 financially better off than the people 12:44 who end up uh making that transition 12:46 later in the process. Long term I think 12:48 the entire world will end up on a 12:50 Bitcoin standard that Bitcoin will be 12:52 the new monetary system of the world. It 12:53 will become the reserve currency for 12:55 corporate treasuries as in corporate you 12:58 know companies where they keep their 12:59 money. I think it'll ultimately end up 13:01 being um the preferred uh store of value 13:04 for central banks. But each of those 13:05 things takes a long time. Bitcoin's been 13:07 around for 15 years and it's just barely 13:10 barely barely on the front end of 13:11 getting past just consumers. Uh there's 13:14 only a handful of companies that are 13:15 keeping Bitcoin on their balance sheet 13:17 and uh zero central banks to my 13:19 knowledge that are keeping Bitcoin on 13:21 their balance sheet uh right now. Uh 13:23 Bitcoin has been adopted as legal tender 13:25 in El Salvador, but El Salvador is a 13:27 dollarized economy. So they do not 13:29 meaning they use the US dollar, meaning 13:30 they do not have a central bank that can 13:32 print fiat currencies and buy Bitcoin 13:34 with it. uh as soon as the very first 13:36 central bank that prints paper and buys 13:39 paper using meaning they print something 13:41 not scarce and buy something scarce with 13:43 it as in Bitcoin will be a sort of a 13:47 huge deal for the Bitcoin community and 13:49 as soon as more companies adopt Bitcoin 13:51 and and keep it on their um in their 13:54 treasury funds you know in their bank 13:55 accounts just like companies keep US 13:57 dollars right now that will be a huge 13:59 deal as well so there's a few companies 14:01 like Micro Strategy and Square/Block 14:04 and Coinbase and a few others that keep 14:06 Bitcoin on their corporate balance 14:08 sheets, but it's very very very few 14:09 companies right now. And as soon as that 14:11 happens, um you know that that adoption 14:14 curve of Bitcoin will radically 14:16 accelerate. So what does that mean? Um 14:18 it means if you have US dollars that can 14:20 be converted to Bitcoin, in my opinion, 14:22 now is a great time to convert them. And 14:24 in the long term, I think uh the world 14:26 will be on a Bitcoin standard. we will 14:28 not have recessions the same way we do 14:30 today because they're heavily recessions 14:32 are heavily caused by fiat money 14:34 printing and the Federal Reserve's 14:35 manipulation of the mon money supply um 14:38 which results in um the the boom bust 14:40 cycles those are not natural the boom 14:42 bust cycles are almost entirely in the 14:44 modern era caused by fiat money printing 14:46 by central banks and the manipulation of 14:48 interest rates which should be floating 14:50 based on supply and demand but are not 14:52 due to the man manipulation of central 14:53 banks so I think long term the world 14:56 ends up on a bitcoin standard we're way 14:58 better off uh in a million different 15:00 ways and uh the entire world will be a 15:02 lot better. So um anyway, hopefully 15:05 other jurisdictions in addition to El 15:06 Salvador will adopt Bitcoin as legal 15:08 tender. Uh Prosper on the island of 15:10 Rowaton in Honduras where I am uh 15:12 president reporting to the CEO. Um 15:15 Prosper, our jurisdiction was the first 15:17 jurisdiction in the entire world to 15:18 adopt Bitcoin as legal tender within our 15:20 jurisdiction, but also we do not have a 15:22 central bank uh like El Salvador does 15:24 not have a central bank. So you can use 15:26 Bitcoin within our jurisdiction. Uh you 15:28 can use just about anything for currency 15:29 within our jurisdiction and we were the 15:30 first jurisdiction in the world to adopt 15:32 Bitcoin as uh as legal tender. So uh 15:35 anyway, uh great time to adopt Bitcoin. 15:37 The price will be volatile as long as 15:38 you can stomach that volatility. Um my 15:41 my hope is that as many people get on 15:43 the front end of that transition to the 15:44 new monetary system uh as possible 15:46 because the earlier you are in that 15:48 adoption process um you know the more of 15:50 the new money you end up with and the 15:52 new money ends up being way more 15:53 valuable than the old money in the case 15:55 of for example the transition from glass 15:57 beads to gold. uh the people that that 15:59 changed out as much of their glass beads 16:01 for gold early in the process ended up 16:03 with way more gold than the people who 16:04 transferred their glass beads into gold 16:07 late in that process when it took a ton 16:09 of glass beads to buy a tiny amount of 16:11 gold. So, we're still very very very 16:13 early into this worldwide Bitcoin 16:14 adoption process. And hopefully this 16:16 video and the content I put on Facebook 16:18 is uh is helpful in that process. So, if 16:20 you got any questions uh post them here, 16:22 happy to help. Um otherwise, uh have a 16:25 wonderful Saturday. Thanks so