00:04 My goal today is to explain Bitcoin in a
00:07 more clear, straightforward, and easy to
00:10 understand way than it has ever been
00:13 explained before. Hopefully, you can
00:15 forward this presentation to people you
00:17 know who need to understand Bitcoin for
00:19 the very first time. All right. Why do
00:22 we use money at all? We use money
00:24 because it makes it easier to trade with
00:26 each other. It is hard to trade eggs for
00:29 a cow. It is hard to trade a cow for a
00:31 house. It is hard to trade a house for
00:34 eggs. But we can use money to sit in the
00:36 middle. It makes it easier to trade with
00:39 each other. But money is also a system.
00:43 The US dollar is money. But it is also a
00:46 system we call a monetary system. And
00:50 that system is composed of banks, a
00:53 central bank we call the Federal
00:54 Reserve, the government, and of course
00:57 taxes. And a money system, which we call
00:60 a monetary system, has to do two very
01:03 important things. It has to keep track
01:05 of who has what money and the total
01:09 amount of money that is in that system.
01:13 Think of a money system as a
01:15 spreadsheet. And we’re going to look at
01:17 the US dollar money system. All right.
01:21 So, this is the world’s simplest
01:23 spreadsheet. And this is all most people
01:26 think about when they think about money,
01:28 which is how much money do I have? But
01:31 there’s another number that is just as
01:33 important as how much money you have.
01:35 And it’s this number, which is how many
01:38 dollars are there in the system. Because
01:40 your purchasing power on any given day
01:44 is your money divided by how many
01:47 dollars there are in the system. For
01:50 example, if you have $100 and there are
01:52 $1,000 in the system, you can buy 10% of
01:56 all of the things that dollars could buy
01:58 at that time in that system. But if
02:00 somebody increases it to $2,000, your
02:03 purchasing power drops from 10% to 5%.
02:07 There is a direct correlation between
02:10 the amount of dollars in the system and
02:12 the amount of stuff you can buy in that
02:14 system. And those prices are a
02:16 correlation. You can add extra money to
02:19 the system going from a,000 to $10,000,
02:23 but the price of everything just goes
02:25 up. It doesn’t make more stuff in the
02:28 system. If it helps, think about all the
02:31 stuff and all the money on an island.
02:33 You can add more money to that system,
02:36 but it’s not going to make more stuff.
02:37 It just makes the stuff go up in price.
02:41 So, how many dollars are there in the US
02:44 dollar system? There are $22 trillion
02:49 of US dollars in the system. So $100,
02:52 for example, could buy you a 1 g set of
02:56 gold earrings. So has the US dollar
02:58 system always had $22 trillion? And has
03:02 a $100 always bought you that much? The
03:05 answer is no. Shockingly, if you go back
03:08 to the 1960s,
03:10 we had only $286 billion in the system.
03:14 And the US has printed out of thin air
03:17 about 7% more dollars every single year
03:21 on average. Which means 286 billion has
03:25 increased by a factor of 75x
03:29 to the present, resulting in the 22
03:31 trillion we have today. So back in the
03:34 1960s, you could buy 88 gram of gold for
03:39 the same $100. that buys you one gram of
03:43 gold earrings today. So when that number
03:46 goes up, when the number of dollars in
03:49 the system goes up, the purchasing power
03:52 of those dollars in the system goes
03:54 down, which is why you see prices
03:57 rising. For example, the price of a Big
03:59 Mac is up by a factor of 12 since 1968.
04:04 The price of the same Campbell soup is
04:07 up by a factor of 10 since 1968. And in
04:11 general, all the things we need and all
04:13 the things we own cost about 10 times as
04:16 much as they did back in 1960.
04:20 Everything’s rising. Now, you may be
04:22 wondering, but hasn’t this number also
04:25 gone up, too? Hasn’t the amount of
04:26 dollars that are earned gone up? And the
04:30 answer is yes, but only about half as
04:33 much as the prices have risen for
04:35 everything people need to buy. A typical
04:38 hour of work buys you about half as many
04:40 Big Macs and about half as much Campbell
04:42 Soup and about half as much of anything
04:45 as the same hour of work bought you in
04:48 1975.
04:50 What is going on here? If this seems
04:52 crazy, it is. Who manages this system
04:57 anyway?
04:58 The answer is each bank in the system
05:01 keeps track of who owns what money.
05:03 There is a central bank that makes sure
05:06 two people don’t own the same money. And
05:09 the question is how are the dollars in
05:11 the system determined? For the US dollar
05:14 system, there is a central bank called
05:16 the Federal Reserve with a chairman
05:18 called Jerome Powell. And when they want
05:21 to increase the dollars in the system,
05:23 they meet and they effectively
05:25 doubleclick that number and they make
05:27 the number go up. They have a bunch of
05:30 fancy words that mean they’re going to
05:32 print money out of thin air. But all of
05:35 these fancy words mean at the end of the
05:37 day, the total dollars in the system go
05:39 up, your purchasing power goes down. And
05:42 all of that is basically one big
05:44 spreadsheet that they’re changing the
05:46 numbers on. technically called the
05:48 database, but it’s a big spreadsheet
05:49 running on big computers. That is why
05:51 the number of dollars in the system is
05:54 on a tear. The dollar system runs on
05:58 politics and the politicians that run
06:00 that system are supposed to limit their
06:03 spending and they never do because the
06:06 politicians have a bunch of reasons
06:09 which are really excuses why they want
06:11 more free money to spend and the central
06:14 banks are always happy to oblige. And
06:17 again, as that number of dollars goes
06:19 up, your purchasing power goes down. In
06:22 the last 90 years, the purchasing power
06:24 of the US dollar is down by 95%.
06:28 95% just in the last 90 years. So, what
06:32 about gold? What if politicians couldn’t
06:35 print the money out of thin air because
06:37 we tied the number of dollars in the
06:39 system to gold? Well, we tried that.
06:42 Paper money used to represent gold. And
06:45 if you zoomed in on a piece of paper
06:47 dollar, you could actually see that on
06:50 there it said, “This certifies that
06:51 there have been deposited in the
06:53 treasury $10 in gold coin payable to the
06:56 bearer on demand.”
06:59 What could go wrong? Every time the gold
07:02 standard has ever been tried, the
07:03 government prints too much money and
07:06 breaks the promise. In 1971, the US
07:08 government broke that promise and they
07:10 actually changed the words on the dollar
07:12 to say Federal Reserve note. They
07:15 deleted all the words about how it was
07:17 redeemable in gold. What about other
07:20 governments? Are other governments
07:22 better at managing a money system than
07:25 the US government? Well, sadly, every
07:28 country prints money and most are much
07:31 worse than the US dollar. Whereas the US
07:33 dollar has lost 25% of its value or more
07:37 just in the last 10 years, other
07:39 currencies are down much more. For
07:42 example, the Venezuelan Bolivar is down
07:44 an additional 99.9%
07:47 on top of how much the US dollar is
07:49 down. The Argentinian peso, the Turkish
07:53 lera down 92 and 98%
07:56 in addition to how much the US dollar is
07:58 down. And even major currencies like the
08:01 British pound, the Indian rupee, the
08:02 Canadian dollar, and the euro are down
08:05 an additional 20 to 25% on top of the
08:09 25% of value that the US dollar has
08:12 lost. So you might be thinking, are
08:14 there any other options to this
08:16 insanity? And I’m thankful to say yes.
08:19 Now there is. Bitcoin is a better system
08:22 that results in better money. First of
08:25 all, what exactly is Bitcoin? Bitcoin is
08:29 a money system. We call the monetary
08:31 system that runs on software. And
08:33 Bitcoin is software that works like a
08:36 spreadsheet.
08:38 And that spreadsheet manages my Bitcoin.
08:40 It manages your Bitcoin. And most
08:43 importantly, it makes sure that the
08:45 total amount of Bitcoin in the system
08:47 does not exceed 21 million. That Bitcoin
08:51 software runs on computers. Those
08:53 computers connect to each other and make
08:56 exact copies of who owns how much
08:59 Bitcoin until there are more than
09:01 100,000 Bitcoin computers worldwide, all
09:05 with the same numbers. Those are called
09:07 Bitcoin nodes. And the Bitcoin software
09:10 has hard-coded rules about who owns what
09:13 and the enforcement of that 21 million
09:16 Bitcoin limit. First, who owns what. If
09:20 I have the private key of a Bitcoin,
09:23 it’s protected at a security level
09:26 unheard of in the rest of the world. It
09:28 would take more than a billion trillion
09:30 years to crack one Bitcoin private key.
09:33 And if you have a Bitcoin private key,
09:35 or if that key is managed by you by
09:37 Coinbase or Binance or someone else,
09:40 then you can send or spend your Bitcoin
09:42 in the real world. And those numbers of
09:45 who owns what are replicated across
09:48 every computer in the Bitcoin system.
09:51 And every one of those computers is
09:52 making sure that there will never be
09:54 more than 21 million. This is a direct
09:57 quote out of the Wall Street Journal.
09:58 The computer code behind Bitcoin is
09:60 hardcoded with a hard cap of 21 million
10:02 coins. And straight from the White House
10:04 of the United States when they
10:06 established a strategic Bitcoin reserve,
10:08 the protocol limits the total supply to
10:10 21 million coins. So 21 million is all
10:13 there is. There will never be more
10:16 Bitcoin. And the Bitcoin software that
10:19 runs on Bitcoin nodes is hardcoded to
10:22 disconnect anyone who tries. So if you
10:25 change the software to be more than 21
10:27 million, you are rejected from the
10:30 network and kicked off. Bitcoin is
10:32 ultimately your money divided by 21
10:35 million and no one can change that.
10:37 Which is why Bitcoin is going up in
10:39 value over time. The US dollar is your
10:42 money divided by infinity because they
10:44 will never stop printing dollars, which
10:47 is why the dollar is perpetually down.
10:50 And now you have the ability to make
10:52 that choice. The first question people
10:54 have when they make that choice is
10:56 often, okay, it’s better money, it’s a
10:58 better system, but what about
11:01 volatility? The dollar is more stable
11:04 but going down. Bitcoin is more volatile
11:07 but going up. Why is Bitcoin volatile?
11:10 Well, news flash, the world is volatile
11:14 and prices of everything in the world
11:16 respond to what the world is doing. And
11:19 we are still very early in the adoption
11:22 cycle of Bitcoin. Similar to the very
11:24 early days of social media, online
11:27 banking, and the internet. And when
11:29 you’re that early and Bitcoin represents
11:32 such a small percentage of the assets
11:34 that are owned, then Bitcoin is like a
11:37 small boat in a big ocean. It goes up
11:40 and down with the waves of every little
11:42 thing. As more people adopt Bitcoin,
11:45 Bitcoin gets bigger. And eventually, it
11:47 will be like a big ship on a big ocean
11:50 without the volatility. In the meantime,
11:53 the volatility is your friend and it’s
11:55 in your favor. Over time, it goes up.
11:58 And if you zoom out to even 3 years, on
12:01 a rolling three-year basis, any
12:03 three-year time period is almost 100%
12:05 up. It is a better money. It is a better
12:08 system. That is my best shot of
12:10 explaining Bitcoin in the simplest
12:12 possible terms. And we now have this
12:14 choice between the tale of two systems.
12:16 And I am so thankful for the
12:17 transformational effect that Bitcoin has
12:19 had in my life and everyone that chooses
12:22 the better system with better money.
12:25 Thank you all so much.
