Who determines bitcoin’s worth?

00:02 Who determines Bitcoin’s worth? Turns
00:05 out you do, just like everything else in
00:07 the entire world. This is a concept
00:09 people have hard a hard time with
00:11 because most people have never thought
00:12 and just don’t understand how markets
00:15 work. A market is anything where people
00:17 buy and sell anything. The grocery
00:20 store, insurance, uh a used car lot, all
00:24 of those are markets. Anything where
00:26 anything is bought and sold is a market.
00:29 And on markets, the value and worth and
00:34 price of anything is reflected by supply
00:37 and demand. In the case of Bitcoin, the
00:40 uh total supply is limited to 21
00:43 million. Uh so there’s no new supply,
00:46 you know, beyond 21 million. It’s a set
00:48 supply which means uh the price is
00:50 determined by the buyers and sellers of
00:52 who wants Bitcoin right now as compared
00:54 to who wants to sell Bitcoin right now
00:57 to buy a car or improve their lifestyle
00:60 in some way or go on a nice vacation or
01:02 whatever it is they might be spending
01:03 their Bitcoin on. So, uh for a lot of
01:07 people markets once they understand how
01:08 markets are work, it’s sort of scary for
01:11 them because they’re like, “But wait,
01:13 that means I thought a dozen eggs was
01:15 worth $4. I thought it was worth $4.
01:18 It’s like, no. The the fact that you go
01:21 to Kroger or Costco or whatever and it
01:24 says a dozen eggs is worth is $4, that
01:27 does not mean they’re worth $4. That
01:29 does not mean someone gave them that
01:32 value. Someone stuck the price on it
01:35 with their little little, you know,
01:36 price stamper machines, whatever. They
01:38 stamped that price because in their best
01:41 estimation that was the clearing price
01:44 where supply and demand balanced. If
01:48 there was suddenly a massive shortage of
01:50 eggs, uh they would raise the prices and
01:53 they would raise the prices because the
01:54 eggs would be flying off the shelves as
01:57 everyone realized that eggs were in
01:58 short uh supply and they couldn’t get uh
02:02 additional eggs to restock the shelves.
02:04 So the price would rise $5, $6, $7, $8
02:09 for a dozen eggs. But that is not
02:11 because there’s they’re inherently worth
02:13 that. That is because people want them
02:16 and they’re in short supply. And so the
02:18 price rises and the price rises because
02:20 the people who are selling them
02:21 understand that the price that they’re
02:24 sticking on it is a function of supply
02:26 and demand. Now with liquid markets,
02:29 liquid meaning they’re in in a constant
02:31 state of flux like the stock market and
02:35 you know stocks and bonds and
02:37 commodities like gold, silver, rice,
02:39 beans, wheat,
02:42 old, bitcoin. With those sort of
02:45 markets, nobody’s even assigning a
02:47 price. Uh the price is entirely
02:50 dependent on supply and demand. So
02:52 nobody’s even trying to use a little
02:54 sticker machine to, you know, stick a
02:56 price on it because the price is in
02:58 constant flux. Now behind the scenes,
03:01 that’s true for everything, including
03:03 eggs. If you go to an, you know, egg
03:06 futures and wheat futures and comm, you
03:08 know, soybean futures, those prices are
03:11 constantly changing. There’s not a set
03:13 price. Now, the grocery store does not
03:15 want they don’t want to have little TV
03:18 screens with the price of eggs popping
03:20 up and down every couple seconds. And
03:22 so, they just pick a price near the
03:24 midpoint and slap it on there and just
03:26 leave it for a few hours or a few days
03:28 or a few weeks. Uh, that’s sort of close
03:30 enough. Now, sometimes you get
03:32 shortages. Sometimes you go to the
03:33 grocery store and they don’t have what
03:34 you want.
03:35 And that means the they chose a price
03:39 that was a little too low and people
03:41 bought more than the supply. Sometimes
03:43 you go to the grocery store and the
03:45 stuff on it is expired. It’s because
03:47 they chose a price that was a little too
03:50 high. It was just high enough that not
03:53 quite all of it got bought in time
03:55 before it expired. So, they’re guessing.
03:57 The the grocery store is guessing. But
03:59 what give gives Bitcoin its worth? Who
04:01 determines the price? Who determines the
04:03 value? It’s all based on supply and
04:05 demand. Now, you may be thinking, “But
04:07 wait, if everybody stopped valuing
04:10 Bitcoin, the price would drop
04:12 precipitously.” That is true for
04:14 literally 100% of things on the earth.
04:17 If people stopped valuing insurance, the
04:20 price would go to zero. If people
04:21 stopped eating eggs, the price would go
04:23 to zero. If people stopped driving cars,
04:26 the price would go to zero. The price of
04:29 everything would go to zero if people
04:32 stopped valuing it. So, you might be
04:34 thinking, okay, but what keeps people
04:36 from stopping to value Bitcoin? Why
04:39 don’t what’s going to keep everyone from
04:41 waking up tomorrow and deciding
04:43 Bitcoin’s not valuable? They don’t want
04:44 it anymore. And the answer for that is
04:47 people need money because barter where
04:51 you like trade eggs for a pair of shoes
04:53 and things like that. Barter is
04:55 incredibly inefficient and impossible to
04:58 be workable in a modern economy where
05:01 there is so many goods and services you
05:03 could possibly want. It’s impossible in
05:05 a modern economy for you to show up at a
05:07 restaurant and talk to the owner and
05:09 say, “Hey, what thing of value could I
05:12 do today to earn a meal?” Well, the very
05:16 first person who shows up might be able
05:17 to like mow the lawn, do the weed eating
05:19 and, you know, uh, edging, but what
05:22 about the very second person that shows
05:24 up? Like within two or three or four
05:26 people, the restaurant’s going to run
05:28 out of random stuff that random people
05:30 can do, which means you need a way of
05:33 storing your time and energy, which is
05:35 what money does. Money stores your time
05:37 and energy so you can use it later. If
05:40 everybody wanted your skill set all the
05:43 time, you could actually live life
05:45 without money. You could show up to a
05:47 restaurant, do seven minutes of work,
05:48 eat lunch. You could show up to buy a
05:50 car, do two weeks of work, buy the car,
05:53 or, you know, whatever a year of work,
05:54 however long it works. But you would not
05:57 need to store up. I guess in the case of
05:59 a car, you would because you can’t buy
06:01 like a little piece of the car with each
06:03 hour of work. So even there, you’ve got
06:06 to do enough work to accumulate enough
06:08 money to buy bigger purchases. So money
06:11 is what stores your time and energy.
06:13 You’ve probably never thought about it
06:14 that way, but that’s actually what’s
06:16 happening. What’s actually happening
06:18 behind the scenes is that money is
06:21 storing your time and energy so that you
06:24 can use it later to go buy a car or eat
06:27 at a restaurant or buy insurance or buy
06:29 a dozen eggs. So because humans need
06:32 money, Bitcoin is valuable because
06:34 Bitcoin is a better money than any other
06:36 money that exists. Gold, for example,
06:39 does not work well as money because it’s
06:41 not divisible. It’s not portable in
06:43 large amounts. It’s too hard to verify
06:46 that it actually is gold and it’s not
06:48 just like tungsten with gold, you know,
06:51 gold wrapped around it. It’s just
06:53 there’s no good way to use precious
06:55 metals in a modern economy to buy stuff.
06:57 it’s too hard to tell what they are, you
06:59 know, if it’s legit, all that sort of
07:01 stuff. And so, most people use the US
07:04 dollar because it’s easier to divide
07:06 into 100 pennies and it’s verifiable and
07:09 stuff like that generally because, you
07:11 know, it’s hard to it’s hard to uh
07:13 counterfeit it. But the problem with the
07:14 US dollar is the government, the central
07:16 bank, the Federal Reserve we call it in
07:18 the United States, the central bank
07:20 never stops printing more of them, which
07:22 means they’re cheating you constantly.
07:25 your time and energy is being stored up
07:27 by hard work. And then they print money
07:29 out of thin air that didn’t cost them
07:31 anything. And so they’re constantly
07:33 devaluing your hard work. You try to
07:35 save up a year of of your hard
07:38 hardearned time and energy. And in that
07:41 same amount of time, they print 3% 4% 7%
07:44 on average is about 7% more US dollars
07:47 per year. They print on average 7% out
07:50 of thin air every year. So no matter how
07:53 hard you try to save up your time and
07:55 energy in US dollars, the government is
07:59 debasing, meaning taking away, meaning
08:02 diluting your time and energy by 7%
08:05 every year. And that shows up in
08:07 inflation. It also shows up in the price
08:10 uh the fact that you don’t get price
08:11 decreases on most of the things you buy,
08:13 which you normally would. Humans get
08:15 better at making stuff. So normally
08:16 stuff should be getting cheaper. Eggs
08:18 should be getting cheaper every year.
08:20 Meat should be getting cheaper.
08:21 Insurance should be getting cheaper.
08:23 Everything should be getting cheaper by
08:25 between 3% and 5% per year because we
08:28 keep getting better at doing stuff. But
08:30 the government stole that from you by
08:32 printing money out of thin air. You
08:33 don’t even know that everything ought to
08:35 be getting cheaper. Um, in addition to
08:37 that, they added the inflation on top of
08:40 that for an extra 3% 4% up to 9% per
08:44 year. So, not only is your stuff not
08:45 getting cheaper, it’s actually getting
08:47 more expensive, which is where that 7%
08:49 is disappearing. Typically, uh you’re
08:51 losing 3 or 4% of that because you’re
08:53 not getting the price decreases and then
08:55 you’re getting hit with a 3 or 4%
08:58 inflation, uh and often a lot higher
09:00 than that. So, uh humans need money.
09:03 They’re going to continue to use money.
09:05 Money is going to continue to out
09:07 compete less good money. And Bitcoin is
09:10 a better money. So the reason people are
09:12 not going to stop using Bitcoin is
09:14 because it forces them to use something
09:16 else. Gold is not good as money and the
09:20 US dollar is not good as money. So
09:22 there’s nothing that works as well at
09:25 storing your time and energy for the
09:27 long term as Bitcoin. Now because the
09:30 adoption of Bitcoin is so low worldwide,
09:33 only about 5% of the world owns any
09:35 Bitcoin. And most of that 5% it’s a very
09:38 small percentage of their net worth.
09:41 Someone like me, I’ve got 100% of my net
09:43 worth in Bitcoin, but that’s rare. In
09:46 the future, a much higher percentage of
09:48 the world will own Bitcoin, and a much
09:50 higher percent of their net worth of the
09:53 people that own Bitcoin will be in
09:55 Bitcoin. As a result, in the future, the
09:57 price will be much, much, much higher,
09:60 somewhere north of $1 million per
10:02 Bitcoin. And it will be that way because
10:05 Bitcoin is a better money because humans
10:07 need money. And because Bitcoin is
10:09 backed by math, it’s backed by cryp
10:11 cryptography. It’s backed by energy.
10:13 It’s backed by its anonymous creation.
10:15 It’s backed by open source software.
10:18 It’s backed by all of the things that
10:20 make a money good, that make a money
10:23 divisible, durable, portable, uh
10:25 verifiable, authenticatable,
10:28 recognizable. Uh, and most important,
10:31 the most important attribute of any
10:33 money is scarcity. There will only ever
10:35 be 21 million Bitcoin. There’s already
10:38 22 trillion US slloshing around. And
10:42 that number is unlimited. It just keeps
10:43 going up. You know, tomorrow it’ll be
10:45 higher than today. The next day it’ll be
10:47 higher than that. No matter how hard you
10:49 work, if you’re saving in US dollars,
10:53 they’re losing value. And as a result of
10:55 that, more and more people are figuring
10:57 out that Bitcoin works as better money
10:60 than the US dollar. And as those people
11:02 convert their US dollars to Bitcoin, the
11:05 price, even though it’ll be volatile in
11:07 the short term, it will go up in the
11:09 long term because it’s valuable. So what
11:11 gives Bitcoin worth? Demand. What gives
11:14 money demand? Barter sucks. And nobody
11:17 wants to barter for everything we need.
11:19 So we’re going to use money. and better
11:21 monies out compete uh lesser monies.
11:24 Bitcoin is the best money that humans
11:27 have ever discovered or invented. And as
11:29 a result, the price goes up as people
11:32 adopt it and realize it’s better money.
11:34 And it works just like anything else
11:35 with supply and demand where the price
11:38 is determined and you can just see it in
11:40 real time. Uh, if the grocery store
11:42 showed you the price of everything in
11:43 real time that was ch constantly
11:45 changing by the second, I think people
11:46 would have an easier time understanding
11:48 Bitcoin because they would understand
11:49 that all markets work that way. But a
11:51 lot of people are confused because they
11:53 think the prices they see are what the
11:55 thing is worth without realizing, no,
11:57 that’s just an arbitrary price the
11:59 grocery store chose based on their best
12:01 guess, supply and demand. So you
12:04 determine Bitcoin’s worth. 8 billion
12:06 people determined Bitcoin’s worth. And
12:08 the reason Bitcoin is not going anywhere
12:10 and will continue to keep going up in
12:12 the long term. It goes up and down down
12:15 on its way up. The reason that happens
12:17 is because people value money because
12:19 they need to store their time and their
12:21 energy. And Bitcoin is by far the best
12:23 way to do that. Have a great great day
12:25 everyone. Thanks.