00:02 We’ve never been able to solve this
00:03 problem until the invention of Bitcoin
00:05 in 2009. And the inventor of Bitcoin,
00:08 who’s a person, we don’t know who they
00:10 are. They went by the name Satoshi
00:11 Nakamoto, but we don’t know who that is.
00:13 Nobody’s It’s the greatest mystery of
00:15 the internet, is nobody knows who
00:16 invented Bitcoin. Uh, but it doesn’t
00:18 matter because they published it for the
00:20 world, gifted it to the world, and
00:22 disappeared. And so the the code nobody
00:25 needs to know who they are because the
00:26 code is open source which means anyone
00:28 can read it anyone can use it and and
00:30 once and there’s a big group of
00:32 developers that maintain Bitcoin now but
00:34 uh so he that person has not been
00:35 involved for many years now okay so
00:37 Bitcoin was invented by somebody who
00:39 understand understood everything I’m
00:41 explaining and wanted to fix it once and
00:42 for all so what did they do okay so what
00:45 is Bitcoin exactly I’m going to try to
00:46 explain what is Bitcoin exactly okay so
00:49 Bitcoin is a money system that runs on
00:52 software ware. So, we are in the
00:54 internet age. Basically, everything runs
00:55 on software now, including stuff you
00:57 didn’t even think runs on software.
00:59 Every car in that parking lot runs on
01:01 software nowadays, right? Software isn’t
01:02 everything. And the Bitcoin software
01:05 works like a spreadsheet just like we
01:07 were looking at like a, you know, the US
01:08 dollar spreadsheet. So, that spreadsheet
01:10 runs on computers and it keeps track of
01:13 how much Bitcoin I own, how much Bitcoin
01:15 you own, and very importantly, it limits
01:18 the total amount of Bitcoin in the
01:20 system to 21 million. There is a hard
01:22 cap. It is the only money that’s ever
01:24 existed in the world where we know in
01:26 advance how much of it there will ever
01:28 be. So this is how the Bitcoin system
01:30 works. And then that spreadsheet which
01:33 manages who owns what and enforces the
01:37 the limit that is what the Bitcoin
01:38 software does. It basically says who
01:40 owns what and does the total amount
01:44 owned exceed 21 million. Okay. So rule
01:46 number one, who owns what? So uh Bitcoin
01:48 is protected by encryption keys. I’m not
01:50 going to explain this other than to say
01:52 if all the computers in the world right
01:54 now tried to crack a single Bitcoin key
01:57 to to lock unlock someone’s Bitcoin, it
01:59 would take a billion trillion billion
02:01 trillion years of all the computers in
02:03 the world all working simultaneously to
02:06 crack one key. And at the end of a
02:08 billion trillion billion trillion years,
02:10 they would have one key of one Bitcoin
02:12 owner and then they have to start all
02:14 over to get the second one. So,
02:15 Bitcoin’s not crackable. I mean, it’s
02:18 the most amazing system ever built. Um,
02:20 now that doesn’t mean your account can’t
02:22 get hacked at some institution, but
02:23 that’s not Bitcoin being hacked. That’s
02:25 like you lost your password or you
02:26 goofed something. But the Bitcoin actual
02:28 protocol is effectively unhackable. All
02:30 right. So, the Bitcoin software runs on
02:33 computers. Those computers connect to
02:35 each other and then they share who owns
02:38 what and they replicate that across the
02:40 world until there are more than 100,000
02:44 computers that have the exact same
02:46 record of exactly who owns what
02:48 everywhere in the world. And it within a
02:50 second or two of anytime someone uses
02:52 Bitcoin, it replicates so that all of
02:54 more than 100,000 computers that run
02:56 Bitcoin uh have the same record of who
02:59 owns what. In my case, you any anyone
03:01 can buy a little $500 computer and they
03:03 can run the software and it will check
03:05 and it’ll check who owns what and it’ll
03:07 connect and all that. Um, it’s really
03:09 cool. So, um, all right. So, if I have
03:11 the the the key, that private key, I can
03:14 send Bitcoin to people and the fact that
03:17 I made that change is immediately
03:18 replicated to all 100,000 additional
03:21 computers. And that is how that works.
03:23 Okay. How does it enforce the 21 million
03:25 limit? Well, I I’ll cite a few sources
03:27 first. This is the Wall Street Journal.
03:29 The computer code behind Bitcoin imposes
03:31 a hard cap of 21 million bitcoins. That
03:33 is the headline on a major Wall Street
03:36 Journal article about Bitcoin is behind
03:38 Bitcoin’s rally is a simple fact
03:39 supplies are limited. This is straight
03:41 from the White House of the United
03:43 States of America that says this was the
03:46 creation of a strategic Bitcoin reserve
03:48 which was signed into law a few weeks
03:49 ago. And in the text of that strategic
03:52 Bitcoin reserve signed by the president
03:53 of the United States, released by the
03:55 White House, it says, “The Bitcoin pro
03:57 protocol permanently caps the total
03:59 supply of Bitcoin at 21 million coins
04:01 and has never been hacked.” So trust the
04:03 Wall Street Journal, trust the uh the
04:06 White House or go look at it yourself.
04:08 It’s like right there. The code’s like
04:09 right there. Any software developer can
04:11 look at it and see. Okay. So all the
04:13 bitcoins will that it will ever exist is
04:16 21 billion. The you can’t make more. And
04:18 the Bitcoin software is programmed to
04:21 disconnect anyone who tries to make more
04:22 than what 21 million. So if I went to my
04:25 little Bitcoin computer at my house,
04:26 which you don’t actually need one. I
04:28 just run one for fun, but there’s like
04:29 100 thousand of them, so it doesn’t
04:30 matter. You really need All you need is
04:32 one, but there’s like one Bitcoin
04:34 computer and basically
04:36 9999,999 backups. This is kind of the
04:38 way it works. But they’re all the same.
04:39 They all talk with each other. Um, if I
04:41 went in my little Bitcoin computer and
04:43 changed the code so that there would be
04:45 more than 21 million, all of the Bitcoin
04:47 computers I’m talking to would cut me
04:49 off. They would say, “These are the
04:51 rules. If you are trying to make more
04:53 than 21 million Bitcoin, you are not
04:55 allowed to be on the network.” It’s
04:56 similar to the internet. If you start
04:57 talking a language that’s not that’s
04:59 foreign to the the language of the
05:00 internet, you’re on an internet by
05:02 yourself. Like, nobody talks unless
05:04 you’re talking the protocol and the
05:06 language of the internet. Okay? So if I
05:07 change mine to 21 million within a
05:10 couple seconds I am living on an island
05:11 by myself. No one will talk to me. I
05:14 have my own version of Bitcoin where I
05:15 have more and nobody recognizes that as
05:18 legit. It’s I get cut off from the
05:20 network. Anybody?
05:23 Okay. So, so the value of Bitcoin is
05:25 going up as more people adopt it. And so
05:28 for the first time in history, you
05:30 actually have a choice in monetary
05:32 systems. a choice between using the US
05:34 dollar monetary system and which is
05:37 losing value or using the Bitcoin
05:40 monetary system which is gaining value.
05:42 And I’ll talk a little bit about why the
05:44 price goes up and down over time. In
05:46 fact, I’ll jump straight into that.
05:47 We’ll I’m going to speed do this and
05:48 we’ll do a Q&A. So, you may be
05:50 wondering, but wait, why is it volatile?
05:53 If this is a new monetary system, why
05:55 does it go up and down a lot? You
05:56 probably heard it goes up and down a lot
05:58 if it’s being adopted by more and more
05:60 people every day. Uh the answer to that
06:02 is let’s understand where that price
06:04 volatility comes from. We are super
06:06 early in the adoption of Bitcoin. Only
06:08 about 3% of the world uses Bitcoin. When
06:10 you’re that early in the adoption of
06:12 anything, it is volatile. It will go up
06:14 and down because it is small. It is
06:16 getting, you know, blown around by uh a
06:18 gazillion different things. It’s the
06:20 equivalent of online banking in 1996
06:22 when nobody was online banking. the
06:25 equivalent of social media in 2005 which
06:27 was Facebook was not even open to
06:30 regular users back in 2005 and the
06:32 internet in 1990 when probably none of
06:34 us were using the internet in 1990. That
06:36 is the stage of adoption Bitcoin is. So
06:38 it is early things that are early are
06:40 volatile. Okay. So we also live in a
06:43 volatile world. There’s lots of stuff
06:44 happening. Thank you. happening in our
06:46 volatile world and the prices of
06:49 everything including Bitcoin respond to
06:50 the headlines and the moods and the you
06:53 know supply and demand of everybody
06:55 that’s affected by anything. Um big
06:57 assets in the world respond less. So um
07:01 these are huge assets that represent the
07:05 wealth people own in the world. Money,
07:07 bonds, real estate, equities, gold, art,
07:10 cars, collectibles, gold. And the sort
07:13 thing is the US dollar is a huge market
07:14 in a huge worldwide uh thing. So it’s
07:17 like a huge ship. So the US dollar
07:19 actually goes up and down quite a bit.
07:21 People just don’t notice it because
07:22 everything’s priced in US dollars. But
07:24 it’s not uncommon in the course of a
07:26 year for the US dollar to go up a few
07:27 percentage points up and down compared
07:29 to every all the other currencies in the
07:31 world. You just don’t notice because
07:32 your prices are in US dollars. Um so the
07:36 dollar is sinking but it’s sinking
07:37 slowly. Bitcoin is tiny. Bitcoin is 1.3%
07:40 of the world’s money. It is early. It is
07:43 small. And so Bitcoin is only 2% of
07:46 global assets. The short take is when
07:49 you hear Bitcoin, I want you to think of
07:52 this image. It is early. It is small.
07:55 Something early and small gets blown
07:57 around and it get every little wave
07:58 makes it go up and down. Um, one day
08:01 Bitcoin will look more like the US
08:03 dollar, a major major thing on the
08:06 surface of the water. It will get there,
08:09 but it’s just going to take time. And
08:11 until then, until then, Bitcoin will go
08:13 up and down with each wave. You know,
08:15 every time there’s some news article,
08:17 the price of Bitcoin goes up and down.
08:19 Eventually, it will be the most stable
08:21 thing in the world. Uh, between now and
08:23 then, there’s a huge economic upside to
08:25 owning Bitcoin. You can make a a major
08:28 Bitcoin has been the best performing
08:29 asset in the world for the last 10
08:31 years, and I think the same will be true
08:32 over the next 10 years. Um, so there’s a
08:34 huge amount of economic upside. At some
08:37 point in the future, the volatility will
08:38 be way lower, but so will the economic
08:41 upside. For example, nobody buys US
08:43 dollars and like, I’m waiting for them
08:44 to go up. It’s like, no, they don’t go
08:46 up. Like, because it’s money that
08:48 everybody uses. Now, Bitcoin will
08:49 eventually will always go up some
08:51 because you can’t make more of it, but
08:53 it’s not going to go up the the rate it
08:54 has in the past. at some point 10 or 20
08:56 years from now, but between now and 10
08:59 20 years from now, the vast majority of
09:01 global adoption will happen over the
09:02 next 10 to 20 years. So, um, so when in
09:06 doubt, zoom out. So, this is the price
09:08 on a daily basis. If you look at the
09:09 price of Bitcoin every single day from
09:11 the beginning of time, it goes up and
09:13 down. Now, it’s way higher here than it
09:15 is down there. It’s radically higher.
09:17 But if you zoom out, the average price
09:18 over the previous two years looks a lot
09:21 smoother. The average price over the
09:23 previous three years
09:25 is extremely smooth. So like almost no
09:29 other asset if you pull back and say I’m
09:30 willing to hold it for at least three
09:32 years do you get this nice beautiful
09:34 graph like this. Um and over four years
09:37 same thing. Um so um this is a quote
09:40 that I love. We tend to overestimate the
09:43 effects of technology in the short run
09:44 and underestimate the effects in the
09:46 long run. So in the short run every news
09:48 headline makes the price of everything
09:49 go up and down. In the long run the
09:51 impacts of technology are much bigger
09:53 than people anticipated. It just takes
09:55 some time and it’s like any investment,
09:57 you know, buy it and hold it. And if you
09:58 want to understand why it goes up and
10:00 down, this book explains why Bitcoin’s
10:02 price goes up and down better than
10:04 anything else I’ve ever read. Um, I’m
10:06 not going to explain all the nuances,
10:07 but it just explains how technology
10:09 adoption works and why prices go up and
10:11 down uh in the early days.
