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