I had lunch with a friend yesterday and we were talking about Bitcoin and he was asking me all the usual questions one that asked if one stays come across someone who knows a thing or two about it and during the process. I realized he's got to be not the only one especially it's in the news now and I'm sure a lot of people asking questions and probably getting a lot of complicated answers. So I called my buddy Ivan. Brightly. It was one of the smartest guys I know in the space and said let's do an episode called Bitcoin for dummies, you know not calling anyone a dummy just more like let's simplify sure we made.
Talk about complicated Concepts, but let's simplify it down and really answer the questions. The average person would have if they're trying to learn it and try to figure out what to do about it. So, I hope we can push that and I hope you enjoy it.
So I would this is the cushion. It's kind of like asking the internet. What is it Bitcoin? What is it?
It's such a tough question. You can't hold it. You can't see it. You can't taste it every single time that I see it in the mainstream media. They have to put up the logo with the orange coin. It's the toughest thing to describe. It's a new way to account for distributed work. And that's a tough thing to describe that the average person.
Yeah. What is distributed work?
Sure when I first heard of Bitcoin, you know, I think everybody starts.
Soft as a skeptic unless you come in as a fringe anarchists or somebody who is utterly technology adopter and even then it's tough. Most people just skeptical of the idea that you could just invent money. And the first time I heard about it the idea that you'd have one computer and be able to do some work and then talk to another computer which verified that work that somehow value be created out of that. It was not obvious to me at all and I was probably a skeptic like everybody else and I dismissed it for at least a couple of years and probably only cost me a billion dollars or so, so no big deal.
It's a common story actually. Yeah, it really is.
So the short answer is that Bitcoin is a mechanism for how to establish a shared truth a database if you will where the ability to go ahead and interact with it is permission list. There's nobody who is a gatekeeper who says that somebody can join the Bitcoin Network and it's somebody has to leave the Bitcoin Network that they're not acceptable. Basically everybody ends up being the same on the Bitcoin Network and the question is, can you
Do the work necessary to join the short answer is that you have these functions called miners. It's a bad name for it. But you know people love analogy. They want to be able to go ahead and take a template for something that they know and understand the idea of digging something out of the ground and finding something it made sense to certain people. And so that was sort of the introduction of how you would create Bitcoins or you would introduce them into the system. But in reality a minor doesn't mind at all they basically take something almost like a lottery ticket.
And they create enough mapped transactions to be able to go ahead and guess a lottery as quickly as possible. And once they find the solution to this Lottery, they then broadcast it to the rest of the network and very simply, you know, say for example, if I'm a miner and you're running a note and you're verifying things come on, then you'll verify and you'll check and say hey look is this a valid solution to this Lottery and if it is great, we all agreed a new block has been formed. I'll attach a set of transactions that have been queued up for people who are sending funds to each other.
And then we go ahead and append that piece of data this new block of transactions. People are sending Bitcoins to each other as well as a so-called block reward to the database. So you get this append only database. It just keeps on getting bigger and bigger and bigger and you're going to be the person who checks that you run a no just the same as me and you verify this block and so does the rest of the world every single computer attached to the Bitcoin Network verifies the block that I've just created and only one of two things happens, either it's valid and
Is an intrinsic block reward that pays me is invited to do the work that I did or if I'm a cheat if I somehow don't construct a proper block then I get rejected and I've now spent the TriCity equipment costs to get nothing in return. So I'm highly incentivized and tell the truth that do the right thing and create a valid block.
So now at this still sounds pretty complicated and techie sure, you know, so I was thinking what's in it for someone who's actually trying to figure out what's Bitcoin. You know, I once heard what
Explanation where basically think of an accounting Ledger everyone knows what accounting Ledger is. We just keep track of things a bank keeps an accounting Ledger of what you put in versus what you pull out and we all trust the bank. Well, you know, they can go deep into that. But let's assume we all trust the bank. This is the first time in the history of human race where you can do this accounting Ledger and everyone's got a copy that's updated for everyone and you don't need the middleman because we are ourselves the checkers and the
Group checks itself as a sound accurate.
It has a very elegant way to go ahead and sum up exactly what I said, so it sounds very accurate.
So why do it why have this
you know, I think for me I think the idea that a neutral platform that something almost akin to the internet could be built and that that would allow for Innovation to occur that really maybe no one could figure out at the time of when the internet was created what it could be really used for.
And I think a Bitcoin is the same type of thing where it's this neutral platform. It does really only one thing it basically creates this unit of account that you can use to go ahead and store wealth or spend money. Basically a shared truth database. And from there. We see what happens. That's the best part about this. We don't really know what the end of the story is going to be. Like, we don't know what you know, and it World filled with you know, Bitcoin adoption. It will be like, but we knew that's platform. That is it's difficult to stop.
Well, why is it
Money, you know because for most people Bitcoin is that money so let's separate money like US dollars from Bitcoin. Why is it worth money? Why is it go up and down all you know what you see in the news? Why is someone willing to give up US dollars for Bitcoin? Why should they
it's a great question. It's a great question. And I think that especially as an American Americans don't question money because we've been blessed with having several hundred years of of a stable currency that has never Rebooted.
We've never had a coup or some kind of a government overthrow which has caused the existing dollars to go ahead and be worthless all of a sudden and new dollars issued. And so because of that I think that you know Americans are quite complacent when it comes to questioning. Well, what is money the answer is always been it's just dollars and dollars are relatively stable, you know, approximately 2% inflation per year inflation happens, but at the same time, it doesn't feel like something that's a problem, you know even over the course of a decade, but
Declan comes on the scene. And in order to go ahead and answer. Well, why would anybody care about Bitcoin? Why are we going to be value this why would you take your dollars go ahead and buy, you know something you can't see such as Bitcoins the short answer is that we have basically created this idea money money is not something that we see in the animal kingdom. It's not something that existed, you know in the early versions of barter people just simply sold shoes for butter because that's what they had and what they needed and eventually along the way
money came along is this meme this idea that well, you know, let's come up with an intermediary that we both value with that Bitcoin is very much of a mean just like everything else Bitcoin is really only worth what somebody else, you know values it at and the first time you heard about Bitcoin, maybe let's say was you know worth ten cents or something like that or a dollar back in 2000, maybe 11 or something like that, you know at the time you can easily dismiss it because well, there are very few other people who would actually pay that dollar for a Bitcoin the price was low.
The number of people using it was very low and now all the sudden today with the price, you know coming close to $20,000 as we speak. It's harder to go ahead and say that the market is wrong that the value of Bitcoin is just the inaccurate that it's gonna go to zero. It's been 11 years now, so it's really hard to go ahead and make the argument that big one is valueless. So the short answer is it's a me. It's the thing where two people look at it and one person might say that it's worthless. Another person says will pay a price for it. There's something there.
middle between
those two
Some mean being almost an idea except there is something tangible here because a website is tangible. If a website is tangible if you listen to podcast on a phone that's tangible. There is that tangibility of Bitcoin because it does exist on the network and you can't kill it because everyone's got a copy of it on the computer whoever's running a note anywhere in the world. You can be in Botswana in the middle of nowhere. You have the full copy of every transaction that's ever been done, correct
for sure. It's absolutely correct. And you know what that idea that you can't
Kill it I think is what cements it for a lot of people. I remember running into people in let's say 2015, which was the year after Bitcoin had sort of exploded and price and Mal Cox was this Japanese institution that in 2013 served of 90% of the coin liquidity where most of the kind of traded a large number of Bitcoins are stored on Val Cox and the company basically imploded admitted. They didn't hold all of the balances that they said they were supposed to the CEO is
Arrested the institution would shut down and it's still going through bankruptcy proceedings this year but was interesting. Is it running through some people on the street some friends of mine. I remember one of them from my traditional Financial background. He asked me what I was doing. I said, well, I'm working a Bitcoin full time. He said no really I thought that thing was dead. Did they arrest the CEO? So we'll know it's just one company. It hasn't heard pick one at all. And for him, that was the Catalyst moment where he said if that's not going to kill it. Nothing will amen. I bought some Bitcoin.
He's done pretty well since then. What was that 2015
and the price of Bitcoin back then was what
probably in the range of about 300 dollars. Give or take
a few pots a hundred for 3,000 and you have a hundred now that's you know, a hundred times twenty thousand. Yeah, that's not bad.
It's a very good sum of money in a very short period of
time. That's the very interesting thing. I found from some very smart people saying like look for investing in Bitcoin because let's let mean it's literally you're not buying it to spend it unless you're in Venezuela or some places like that if you
Talk about that later is the fact that there's no asset out there that has an aspect of that level of returns. So if you're doing investing is worthwhile to take a certain percentage of your portfolio and you can select look. This is by Lottery money portfolio and put it into something like this, which is the reasoning I've seen some people do it. Now. How did you get into this? There's a 2015 know you were in an earlier.
I was in a little bit earlier than that from an interest and point. I think that it started off.
in the late 90s, I was a big fan of pretty nerdy project something called seti at home said he being the search for extraterrestrial intelligence and Berkeley in the late 1990s came up with I think it was about the third platform to come up with a distributed compute idea such as that, you would take all the people who have computers that have idle time and you basically have millions of people across the world, even the 90s who had computers and for the most part they were either on being used or they were turned off not being
So they were just sitting idly and doing nothing with this processors Berkeley came up with the idea that they will take all of these radio signals that nobody has the money to go pay for some super computer to Crunch and look for patterns. How about we just go ahead and distribute the pieces of work out the people to go work on their own. They put together the project they distributed they were hoping fifty or a hundred thousand people get involved their computers. I think that in the course of a year, they had millions of people who signed up and decided that they were going to go ahead and invest
Vest you know, whatever the cost would be. Let's call it an extra couple dollars a month for bringing their computers that they would decide to invest that in a chance at being one of the people who found let's say, you know ET.
Yeah, so it's like, you know, so you were a nerd right? I mean that's a said this is a rather nerdy thing again. I see they have it all love. I mean, look, I'm in Silicon Valley Kingdom of the Nerds and I'm one of
them absolutely a hundred
percent. Okay, so you were a nerd you got into nerdy stuff and how did that lead you to
bitcoin fast forward 10 years.
And like everybody else I ended up having a job and spending a lot of time working there. I work for a currency trading firm. No less retail currency trading firm and my background was economics at least as far as College goes and so is actually set up to not like Bitcoin right away, the traditional background and u.s. Driven economics really doesn't lend anybody to question. What is money? It doesn't lend to many questions toward. Is there anything wrong with our current systems of having targets of my tire inflation every year?
And so that when something new crops up that challenges all of those basic ideas that the government creates money and that, you know, a stable money would small inflation is what we're looking for and at money supply is to contract increase to go ahead and create those conditions that was strike one for not being interested in Bitcoin right away. And the other one was working for currency firm trading firm, which made all of its money on for currency Pairs. And so the idea that you would end up at, you know, JPY Canadian dollars euros and US Dollars whatnot.
Maybe Swiss Francs JPY being Japanese Yen and the idea that you would create this new currency, which will be smaller than whatever was used in Romania at the time or what not and that this would be something that would either be necessary or helpful to the world was ludicrous to me. And so I ignored Bitcoin for I think I probably heard about in 2011 when it wasn't until sometime in 2012 when I started to dabble in it that by 2013 was when I finally had the hooks kind of set into me. I think I mind all of
One Bitcoin in 2011 it pride. I think it would ever be looking back at it. I think I said wow. This probably cost me around 20 or 30 dollars to mind. What is something that's worth about $10. So good job. So you know it she
kept that Bitcoin that's 20 $30 for
$20,000 for sure over a long period of time. It's obviously, you know, come back. Yeah, it was one of those things where you know, I thought about it just tried it out just to see how it would work the idea of using a my relatively powerful video card to go.
Didn't do the work necessary to earn one Bitcoin and I put it on the Shelf. I hadn't even thought about it for months afterwards 2013 rolls around and I'd left my job after 10 years and I was looking for something else to do and Bitcoin kept on coming back up and sort of, you know into the things I was looking at reading and eventually I started attending some of the really epic Bitcoin meetups in York City some of which are still going on today and they had something called.
Toshi Square where in Union Square Park in New York City once a week I think was Mondays at 5 p.m. There would be several dozen of us that would meet up and trade Bitcoin for cash and really just get a chance to meet other people in the community since it was pretty small and we did it in Union Square Park. The idea was that you wanted to meet someplace where it was relatively safe because if we kept on doing this in a regular enough basis eventually somebody become aware that hey a bunch.
People who show up with cash and Bitcoin on them are going to meet at a certain time and a certain place. Its we become a Target or something like that for some criminal until we met where we knew there was a ton of police around so we didn't have to worry about that and at that same place. I've met a few people who eventually ended up being co-founders in a business about a year later in 2014 called solid ex-partners and solid X was purely designed to be a Bitcoin company that offered the ability to invest in Bitcoin.
If you were a hedge fund or high net worth individual without having to worry about custody figuring out Keys figuring out the legal requirements for how you would potentially invest and worrying about counterparty risk all the rest of that. So we put together something called the derivative called a swap which was made popular, obviously the financial crisis, but in our case it was a total return swap. The idea was supposed to be that you put in $1 worth of you know purchase into the swamp. We would go ahead and buy 1 dollar with the Bitcoin and at the end of the expiration date we would return
The price performance for that underlying asset it was a fun idea. We raise money. We did all the things that a start-up does. It was also very early and in 2014 and in 2015, the price of Bitcoin went dramatically down from approximately thousand dollars the beginning of 2014 down to a low of something like a hundred and seventy-five dollars in 2015. I believe we made the argument eternally that well, you know hedge funds are going to want to be able to go short this thing, too.
They didn't they probably had no way to go ahead and value Bitcoin the time.
Yeah, that was, you know, just given relative history that was early on in Bitcoin and it was still in finance circles. It was just basically laughed at correct. You guys were really it's a classic thing, you know, but you were buying at the time for yourself. I'm assuming
I did I put basically almost all of the cash that I had, you know available in 2013-2014. I bought as much as I could I think
Dumped a fair bit of stocks in my regular account to go by the coin. So, you know II got about as best as I could at the time and I'd seen it I'd actually, you know made money and lost money in 2013. The price went up I didn't get in as early as a lot of other people but the price has gone up I think about a hundred X from the start to the end of the year a hundred X being you
put $1 in in the beginning of year by the end of the year goes hundred X you have $100. That's correct. So you put $1,000 to begin the year at the end of the year you over there, huh?
$3,000. That's a nice return. That's
right. If you timed it. Well,
if your time I bought yeah, that's easy to say in hindsight.
If you bought it ten dollars in January and you saw that $1,200 price premium, you know in December then great good for
you. Well one of the keys I think I've noticed I mean we've known this is something that Bitcoin is in like a buying cash, you know, it's not even like buying a stock stock Stone roller coaster up and down daily over time and people have been in Bitcoin. Let's say five years or more. They're so used to these.
Don't even care. They know long-term. It's gone from like fractions of a penny to not $20,000 and it's most likely from what you and I have discussed from seeing all the institutional money coming in all the big hedge funds saying like they want to own a piece of it. It's going to go up a lot. Now one of the things that people forget is why why you know, it's like because there is a limited supply of this and you want to talk a little bit about that because that's a very important part of this that unlike the US dollar you can't
Continue printing this thing.
That's correct. That's probably the simplest way to describe the coin to the average person is that it's digital scarcity. It's the very first invention of digital scarcity and it actually is the most scarce thing on the planet. What's interesting about other Commodities like gold or oil is that there is a cost to get them out of the ground. But there is it in tremendous amount of these resources, you know, distribute across the planet and if you get a gold even outside of the solar system or asteroids or
Not in order to find gold you dig in the ground because it's going to cost and if the price of gold goes up, let's say doubles. There are certain Minds that would be unprofitable that all of a sudden become probably start finding more gold. If the price of gold goes down all of a sudden you become unprofitable and certain Minds you just turn them off. So this sort of natural Supply increase that happens when prices rise and this applies sort of introduction decrease happens as well in Bitcoin. It doesn't happen as the price of Bitcoin goes up and as
More miners more people put more equipment onto the network in order to go ahead and solve the problems necessary to create the next blocks the difficulty of solving those problems continually adjust adjust on a two-week basis. And so as a result if you have a hundred machines that are mining Bitcoin today and say for example, you know, the price of Bitcoin goes up assuming everything else goes stays equal and let's say that you have a lot of other competitors. We're bringing you another Network. You're going to need to increase the
That equipment just to keep plates and be able to mind. Is he a lot of Bitcoin so you don't get this reflexive Supply increase every time the price goes up. It is incredibly hard to find today in the sense that you need to have specialized equipment and you need to have a lot of it in order to go ahead and generate a significant return.
So the cost of mine additional Bitcoins goes up. It's not unlike the US dollar there is no
cost. Correct. For
example to create more you just print more now everyone loved one of the things is actually there's a finite cap on this as well.
Like there is no finite cap on like you said on gold you can always find more and they're already exploring mining asteroids that they can't say. They will be only x amount of gold ever available here. It's by the function of the way. It was designed is what 21 million Bitcoins, correct?
Correct? And it'll take us a hundred and forty years from inception to the last new Bitcoin introduced into the network with a hundred forty years for that to happen.
So there's currently how many that have been mined with about 18 million. Okay, so it's
Moses is getting harder and harder for everyone after this and the cost is going more and more and here's an interesting thing as well. So if you go to classic supply and demand, you know, like if a lot of people want something even fix apply they're going to outbid each other like an auction in eBay auction for example, and so people think okay. So the 18 million of these things but actually yes and no right because good chunk of this and you would know what percentage is actually held by people who don't sell it. What percentage is that?
That's a good question. I think that we could look at the statistics, but it's probably something let's say on the order of half that do not regularly move over the course of months or years. And in fact on top of that some of the early Bitcoins because of the fact that initially Bitcoin was worth almost nothing and in fact in the very beginning of the first day there was no market for it. So it's essentially worth zero and the cost of mine it was negligible. So also a reason to Value any higher than that, so people lost them people would mind.
Bitcoin just because they thought it was an interesting experiment they'd mind thousand Bitcoins on a regular computer sometime back in 2009 and then they forget about it. They'd erase the hard drive. They throw it away or they would you know, somehow just not keep their keys in a private and somebody else would just go ahead and take them so probably something like around 25% of all the Bitcoins will ever exist something in the range of about three or four million Bitcoins will never be able to be spent most likely either due to
Known losses or to the fact they just haven't moved since 2009 2010 when they were mined in the first place.
Yeah, so given that if you just some rough rough math is something like 7 million that are available because it buncher just held and so all of a sudden have more money more interest that's coming in. The price has to go up just like an auction and it's interesting. I was trying to explain to someone yesterday very wonderful gentleman that I become friends with we meet for lunch once a week and have this great conversation.
It's about buying Bitcoin and I was like, look, here's the thing. You can't go to like Schwab or whatever Merit or at least currently and by you could go to a I think the PayPal and buy it, but he said they're pretty expensive. Isn't it? Something like closer thousand thousand twenty thousand a Bitcoin. I said, well, yes, but it's kind of like like a dollar you can divide that into a hundred pennies with a Bitcoin you can divide it to 8 decimal places. So you don't have to say you don't have to buy a whole
all Bitcoin you can buy fractions of a fraction of a fraction of a Bitcoin and as it goes up in value their fraction goes up and equal value and the next thing was trying to explain to them how to buy Bitcoin and look we've come a long way from your days when you were buying because you have to be kind of you had to be a techie basically to figure it out and do it holding keys and all these things that I think we don't need to get into that discussion because it gets pretty complicated but these days you can literally go to
It wasn't as exchanges right and by their like you would like you to send money to your bank account and you buy a Bitcoin through there and you can hold it through there. The only caveat being do not lose your password and account be very very careful because unlike an FDIC insurance and a bank. If someone logs into your bank account of moves the money, you can get it back there. Once it's gone and Bitcoin it's gone. It's just going to someone's address and they can do with it. Whatever they wish. There's no recourse anything you would
Amend on what is the easiest way for someone to start? Let's say if they're interested in buying it and look we're not recommending you buy it or not. This is all about education, you know, obviously you and I both own it and we're Believers in it for various reasons. So what would you recommend the simplest ways for people to actually go ahead and let's say if someone's got $1,000 I say, okay. I'm going to buy a thousand dollars, you know walk in the store. Give me $1,000 worth of bitcoin. How would you recommend they do it?
Sure, and you know this as you can imagine is not investing advice, but I do often tell people who are interested in Bitcoin to go ahead and take a de minimis amount take the amount of money that they would be comfortable spending in a weekend in Vegas or even just simply a bar tab for one night at the bar take that and buy the coin and you can choose any number of ways to get invested. The US exchanges are all pretty equally I would say reliable for the average retail investor square has
made it incredibly easy to go ahead and purchase Bitcoin and don't read the white paper. Don't worry
about
don't don't don't go down big rabbit holes that kind of stuff just take a small amount of money where if you lost it, you wouldn't even think twice about it other than you know, you'd be sad for a minute and then just go buy some and once you do that, if you have that investment, you will follow it up with a curiosity that you wouldn't have. Otherwise then you'll get a chance to go.
Read the white paper white paper is brilliant. It is I think nine pages long one page is just footnotes. So it's really just eight pages and it is not you do not need to be a math expert to read it. Most of it is an incredibly concise clear English that it's understandable by anybody. I think that of all the things that I maybe respect to tells you for the most it was his ability to communicate a very complex idea in such a limited number of words in such simple Pros. It's amazing, but by
Bitcoin first and then read the white paper because otherwise you'll be motivated to do it in terms of places. You know, I think that the typical exchanges coinbase Gemini Square are all excellent places now PayPal
these are u.s. Want something more regulated. You can move money from your bank account to there and buy it and sell them with money back to your bank account.
Sure. And if you're somebody who is technically interested in figuring out a little bit more about how Bitcoin Works once you have some that you purchased on one of these platforms.
Preferably you want to go ahead and purchase on a platform that allows for withdrawals. If you're interested in figuring out the technology about how it works one like coinbase versus this time PayPal doesn't allow for withdrawals. They will but they don't today. It's a pure investment platform for PayPal and then from there, you know, you can we draw a very small amount you can withdraw a $10 $100, you know worth of bitcoin and put it on a computer. You don't have to worry about securing it super. Well, it's just like a $10 bill sitting in your wallet. You're not going to worry about
It too much, but you can get a chance to do your first transaction. You can use a number of tools. You can run a full Bitcoin note. If you wanted to you could go ahead and buy a cheap Hardware wallet to play around with there's a lot of ways to go ahead and get involved and not have to worry that that you need to be super super secure on your first transaction. If it ends up being something that's more of a significant investment actually would impact your life. If you lost it then I think you should put in the same amount of effort into securing it as appropriate. But initially you have a very small amount of money on it. You can create it.
Like your physical wallet you don't worry about it too
much. You know one thing I really like about Bitcoin itself the philosophy of it. It's a very utilitarian egalitarian philosophy and any came out of what was the the market crash of 2008, right?
It was it was
yeah, and that was like it was almost like and here's the interesting thing. No one knows who Satoshi Nakamoto is the guy who wrote that white paper who actually started Bitcoin, which is there's a certain Beauty to it. It's like the Elegance of the internet, you know, you can be
For all we know was a dog sitting on a laptop came up with this, right so you don't you don't know but the code is there so the code is auditable and so many smart people all across the world have audited try to hack it whatever and it survived. So it's something special and no one knows who started no one's taking the credit for it and it was released almost as a pissed-off citizen saying like look at Wall Street firms. What they did was they basically robbed us and the government bailed them out and robbed us worse and people should have gone to jail.
Let's create something outside of the system that gets valuable that no one can control and Rob from you the way they did. That's the way I look at it and there's a beauty in that and as the internet is distributed. This is just distributed money. Some people call this the future of money and its really start to become that way because Bitcoin led to what people call, you know, cryptocurrencies and now nation states are looking at having their own cryptocurrencies, including the US and I think China is going to be the first one because unfortunately, it also allows them greater control.
Roll over their people because now you can literally track every transaction done is because it's all done electronically and there's a level of Trail when there's no cash but in the other end in places like Venezuela and dictatorships, it's literally freedom because people mined Bitcoins and use that to bypass these plummeting local currencies that have been floated away and they can actually survive so it's become this thing that's out there and no one can stop it. And for some reason it started getting value because more people
Wanted it and it's become this thing but people calling it. Basically what's the best analogy is digital gold and now people start to say if you own gold, you should own some Bitcoin. You can't taste it. As you said you can't smell it. You can't hear it. You can't touch it. You can't dig it out of the ground. But yet you can log into an Internet site or have like a hard drive that you know has something on it and here's something I find really really interesting as far as what this allows someone to do when Jews were escaping Nazi Germany, you know in the 40s the ones who were getting out
You know, there's a stories of like they would sell everything they had at a significant discount and get diamonds and so them into their coats and that's how they escaped with some money out of there today. You can literally memorize because Bitcoin doesn't sit in your computer. All you have is your address that says this has so much Bitcoin in it. You can memorize that and you are write it down on a sheet of paper and carry that with you. You're not swallowing your tongue. Whatever like are in your pocket and walk out and land until
Back to analog in a computer and have access to it. It gives you control of your own personal Assets in a way. No government currently so far can take away from you. Is that all correct? Anything you want to add to that?
All of that is absolutely part of the Bitcoin lower part of you know, what makes it important. We should come back to Satoshi just to talk about that a little bit but let's let's put that aside for the moment. I think that that's an excellent point getting toward the question about will what is bitcoin really for and
For us who live in modern Western countries with solid monetary policies. It's really not for us. We get to benefit in investing in it. We get to go ahead and use it as a new technical platform. But in reality, it's not as if we live under governments and monetary authorities who are running full-blown kleptocracy these where the currencies are eroding by a thousand percent every month. We don't have as much need for it. At least not today underneath Current financial.
Missions as safe. For example many who might just as you mentioned, you know, Venezuela, for example, Venezuela people. Look toward anything else other than Bolivars, they would love to have dollars if they could but because that's pretty much not available to them or at least in limited very restricted Supply will take anything else people will do things such as just buying up canned soup canned goods last for three four five years and the price of bit of canned goods is pretty much going to be about the same over the course of years. And so that's a better story value.
The alternative when you're losing basically 99% of your value in the course of a given year intern anything else and so because of that Bitcoin has gotten more attraction within Venezuela. It's also happens to be the Venezuela had at least originally relatively low electricity cost because of it being an oil producer. One of the subsidies that Venezuela does do for its citizens basically providing relatively low costs almost free electricity. And so you had a fair number of Venezuelan citizens who actually just bind to go ahead and make small.
Out of money and try to sell Bitcoin just peer-to-peer to other people within country in order to go ahead and pay for groceries and rent for sure. We've heard stories about that. And as you point out in situations where a country is about to be invaded and there's a Exodus of refugees. You can easily go from being a middle class potentially a business owner owning some property to being in a refugee camp without a penny to your name and Bitcoin could be a tremendous ability to go ahead.
And maintain some degree of wealth that can move with you in an emergency. Just like you say you can remember eyes something like 12 words. You could highlight 12 words in a book and carry that with you. There's a lot of ways you could go ahead and bring that wealth with you and be able to at least have something to go ahead and establish a life when you leave. Otherwise you end up being subject to possibly being in a camp with hundreds of thousands of other people who are all just hoping to get by for the next year.
Yeah. This is one thing that is nice important in the narrative.
Really is if you want to come that this is not social if it's the people's money. It does not belong to any government. You know, that's something very very special because normally governments print money and by the very fact of them printing money, they control the populace because they control the money who controls the money controls the people and this is the first one and it's not like look I'm not saying this is anti anything. We're both very American, but it is something special in the history of humankind that hasn't existed.
Before and it was on the fringes at first. It was just nerdy Silicon Valley Tech people overdoing it. Some of them will become I would say billionaire just because they've got some early now to to the point where like before covid you go to a Bitcoin meeting and it was all like Wall Street people because you know, they smell money but this mail money and how to make money off if they go there and now you have the head of JP Morgan black or I can all these other firms saying like, hey this might end up being a part of your portfolio. It's very interesting.
Seeing this Evolution but yet none of them can control it, you know like no one has a monopoly on how many like if you try to Corner the market on bitcoin you just going to raise the price so much. I will become kind of stupid in urine and you'll make the rest of us rich so you can't even do that. Right? I mean, I wish they'd try to Corner the market on if they would have to buy from us from a lot of money.
It really is one of the world's largest and most transparent markets, you know, it isn't largest in terms of pure liquidity not today, but
but it is it does have a large number of venues that offer liquidity and Transit ability to go ahead and buy and sell it and they are very transparent in their operations. Now, you know, they're not all equally trustworthy. But that's the best part about choices that you know, anyone in the anywhere in the world can pretty much interact with any exchange of their choosing
one thing I would caution anyone against as if you get into this don't start trading it. It's like trading stocks. You're going to lose your shirt if you're not want to Insider and
Trading is manipulated like anything, you know, if you got a something is open anywhere in the world. Everyone's trying to make a quick Buck. Guess what there's a lot of sharks there with these kind of things the best thing the people I know who made the real money in Bitcoin. They've all done one thing in common. They bought in the held that's it. It's like I tell people what do you do after you buy Bitcoin go to sleep for like five years wake up odds are either will be 0 all you're worth a lot of money. That's it.
Absolutely go find a hobby. I come on
seriously.
Something else which doesn't
involve staring at the price, which is easier said than done. You know, I don't think that I could say that I'm somebody who doesn't look on the price on a daily basis that said, you know, I think that it does the history of Bitcoin does create a lot of incentive to buy and hold. It doesn't mean that you have to go ahead and hold it forever without taking any kind of profits. If you're in them. There's nothing wrong with going ahead and picking some price targets that you would be comfortable selling either part or all of your Bitcoins fourth, that's fine.
Nobody should be beholden to a permanent strategy of holding something that they don't feel comfortable with but historically it is outperformed. Would anybody expects, you know people argued back in if you look at the forums and I certainly wasn't around trading at the time but backfield argued back and pick one first hit a dollar. I think it's in 2010 or maybe early 2011 and they said it was way overpriced back then you know, and so if Bitcoin feels expensive today, it's because it's always felt overpriced and expensive.
So that's interesting.
I remember yeah, it does. You know, it's like people ask me like is it too late? I'm like look, I mean it's too late if the thing is done and I are whatever like but it's out there. It's out the bag. All right, let's go back to the Satoshi Nakamoto because you feel that's really important. What would you like to say there?
I mean, I think that I don't have any particular insights into exactly who they are. But I do think that having the founder of Bitcoin be anonymous has been a great marketing tool for Bitcoin the Press
Loves to write stories about Bitcoin at least they did early on because the fact that it was such a soap opera type of drama you had this idea that was sprung out of the 2008 financial crisis that affected the world and then you have a Founder who probably rightfully so said that they didn't want to be may be targeted or they didn't want the attention or they just didn't steal that they wanted to be identified. And so they took some pretty careful steps to stay Anonymous during their early involvement.
And even after they left, of course my guess on who it is is that I don't know who it is. It's like yeah, I definitely have a name to put out there but my gut feel is that it's somebody who is not a coder by their trade. I don't think that they work for a tech startup or somebody who writes production code on a regular basis correct partially because they built it in such a monolithic tool to the Bitcoin product of when it was originally came out the wallet the node operations the mining everything was in
And simple executable and it was also in a block of code that jammed a lot of these pieces together. So it's very hard to go ahead and extract the rules that govern what makes a block valid versus. You know, how does your wallet work? And so if suppose you were a tech startup coder they would never have done this they would have built it more
modular. I think it is beautiful. It's very elegant, right? That's one of the reasons why the nerd you know, what US nerds or whatever have always been attracted to it. I had a friend of mine who tweeted I think
last week is something like a very smart friend told me to buy an 800. I wish I'd bought more. Oh, so that was that was me was talking about you know, that's that was when I first started talking about it because it was so interesting but I used to tell people and I still tell people this like take some money that you would like willingly set on fire for an experiment and just put it on there. You know, it's an experiment. Let's see what happens and this is one of those experiments like the internet they don't it's not going back. It's not like there is no the internet's going to be shut off the same thing with this is
Going back and this has resulted in all these other cryptocurrencies and I just like to say to anyone listen to this, you know, if you don't know much about it stay away from them, you know, like fundamentally, this is the granddaddy the gold of crypto. If you're going to get into it start with this little dress. You can wait if someone tweets about something don't ever listen to anyone social media about buying something new because they're selling you something, you know, there are no one's doing that, you know out of the goodness of their heart and they were a lot of scams on this ever done.
And 2017-2018 2016. Okay, so back to Bitcoin now, so you're someone's Mom. Let's say you have a mom. I'm sure you've had to explain it to her. Like all of us have had to explain to people in our Circle about it. So it's this thing. You can't taste you can't touch it start off as is unknown guy. Put it out there some people started building it using it started giving money for it went up and down and now it's 20 grand at the last month of 2020, which has been an interesting year for people.
What do you think? It will be in your guess? I mean, obviously this is not Financial advice. Where do you think it'll be say a year from now five years from now and why
you know it price predictions are always a natural part of questions people ask about what do you think about Bitcoin because yeah, there's only two reasons to get involved one is ideology that you filled it attracted toward the technology or toward the idea of giving more power back to people take it away from governments or for the vast majority of people they do it because
They think it's a good investment because they think that it will result in better performance than any other place they can put their money. So am I holding it because I think the price will down absolutely not and so where do I think it will end up? You know, look it's going to be volatile in the short term. It's very hard to predict what exactly happens over the course of a month or three months as you get farther out toward 12 months 24 months three or four years that type of thing it actually becomes I think more plausible to do some price predictions the analogy that you brought.
Before about you know, hey, look there's a very limited Supply. It is only 18 million Bitcoins that have been mined so far of those probably three or four million will be inaccessible. So that leaves you with let's say a total Supply there will ever exist something around 17 million. There are 47 million millionaires worldwide. Even if every millionaire in the planet wants to buy just one they can so the likelihood that this approach is prices much higher than today presuming that
that is continued adoption and that there's continued interested in investing Bitcoin seems very high. What are the Alternatives you could hold cash. We all know that cash is an option, but that's really only a good option during periods of incredible instability. So you have to want to have your investment or road every single year by inflation bonds are not going to deliver any type of price performance. It doesn't even keep up with inflation today. So your left back with equities and real estate and maybe a few other assets like gold and art I think it's
Become more and more part of somebody's portfolio on a regular basis. And I think the right number is a single-digit percentage of somebody's portfolio and Bitcoin everyone should pick the right numbers for themselves is completely appropriate. Do you put one percent of your net worth? Are you disposable, you know liquid assets into Bitcoin if you lose it all you'll be fine if you put to 3% or 5% because you're aggressive. That's also going to be a situation where you probably won't be set back if say for example, the price of Bitcoin dramatically goes down. I can say with pretty much already that it's
Not going to go to 0 but I can't say that's not going to get another pullback of 80% just like we've seen several times in the past
guy takes a strong stomach sometimes which is why does 5 go to sleep. This is not your livelihood depended on in your rent check dependent on money, but still dude you've danced around the question. What do you think will be worth? What do you think the price will be?
I think a year from now. I think it's probably worth north of $50,000 possibly way more than that. I think if you go out or let's
Four years from now. I think that the price, you know somewhere between a half million dollars a million dollars. It's probably not
unreasonable. Yeah, that's what a lot. I've heard a lot of people say and you know one thing I keep we got to keep in mind is a lot of people are saying it have other people are holding it so they have a incentive for it to go up but they're holding it while people are trying to buy and institutions to try to buy so they're actually partially response with the price going up. So we owe that to them and we look if someone came to me with and said like the
Here's a potential investment and the potential return that the smart money is saying is in a year 225 x and in five years like maybe 10 to 20 x that would be worthwhile and it's liquid and it probably won't go to 0 but it might you know that might be worth playing around with a couple of percentage of your portfolio. That's the way I would look at it. So what's something what are the things you wish you had known when you first started and what you've learned over your basically critical your career in Bitcoin that
I want to share with someone getting into it besides, you know, you wish you had bought more. All right, that's the lobby
all of it. Of course. I think we all we all wish that I think that many of us didn't realize how quickly things would go from being this nerd speculation thing to something which had a tremendous amount of value. And so for a lot of people they looked at and it said, yeah, I'm going to I'm going to start accumulating. I'm going to slowly by some and you know in the beginning when you have any asset that starts off it with a price of zero and then it goes, you know significantly up from there.
It's a tremendous story because basically you get essentially infinite appreciation now that we're at a greater degree of maturity, although it's still very early in the cycle in my opinion. The price is not likely to go ahead and double in a day which absolutely happened at times and Bitcoins history. I would say that things are a little bit less volatile than it used to be, you know, and if you look at you know, the current price of let's call it $19,000 as of today. Could it go ahead and retrace to 15 or even twelve thousand dollars before it hits an all-time high it could
I'm not going to say that it can will it go to 0 I would actually go with I used to be able to tell people that they look it could go to zero. I actually no longer say that I will say firmly that it cannot go to 0 and the reason being is because there are too many people who have invested in the idea that Bitcoin is a distributed money that is available to people and even if there's a technical underpinning the coin to will rise out of the ashes it'll be likely that the property owners of the coin one will be assigned a value basically forged.
Will be signed the same values that they had for the original version of it and Life Will Go On It just like the internet as you mentioned. You can't cope with this back in the box. It doesn't go away just like the printing press before it the idea that you could freely easily share information with people and something that will never be put back into a box and the same thing once people have the idea that you could create a unit value and you could use that to transact without needing to have a government to go create a currency that's going to be impossible to put back in the box. So we can't go to zero in my opinion. I really don't think that's possible.
But it absolutely could go ahead go down a significant amount. I think typically the amount we've seen in pull back during any of these bear Market Cycles is around 80% If you know everything that we're looking at right now is accurate and we're in a bowl cycled and that's not likely to happen right now, but it certainly could happen in Bitcoins future
now that's great advice and then as far as selling it you gave me a piece of advice when we first originally met on how you sell cryptocurrencies something about every time it does this sell x amount you remember that?
Yes, and I cannot take credit for that. I ended up pulling it off of a forum called Bitcoin talk dot org, which originally was probably the only place that you can use to interact with anybody and talk about Bitcoin. Now, we have tremendous tools like Telegram and crypto Twitter and whatnot. But the the short answer is yes, every time that something doubles if you sell it at 10% although you will have less than if you just held it from the bottom all the way to the top and when you choose to sell it that's almost impossible.
So for many people to do they just don't get comfortable the idea that they invested $100 which ends up being potentially ninety percent of their net worth because it's worth millions one day that that's something they can perpetually sit on no matter how much they expect the price to rise. And so taking certain amount off underneath profitable conditions make people feel a little bit better than they're taking some action but still maintaining an asset which is expected to essentially appreciate for essentially forever.
So just to reiterate every time let's say you buy Bitcoin every time it doubles in price.
As you sell 10% so if it goes over $1 or $2, you sell 10% that goes from $2 to $4.
You'll sell 20 cents at that point. Yeah, or you actually probably what you could do is you could say you'd sell the original 10 cents off either way. You want to do it your selling a percentage of what you hold at any given time so you never sell fully out. You may attend it. You know, let's say ten iterations later you will have less than half of what you originally had but you'll be in the money and you won't mind at that
point. You have taken good amount of cash out the table. That's really good advice and
Encrypt over things can go pretty parabolic. It's actually one probably the best piece of investing advice and crypto. I came across so I give you full credit as far as people, you know, I just take it. So as far as more information all this you look you type in the word Bitcoin and Google and it'll be a zoo you type in the word Bitcoin and God don't do it in social media. It'll be a zoo where can people go and find just some good sensible information or if they are curious if they want to learn more that's not tacky.
Sure, one of the places that you could look would be Bitcoin dot-org. They actually do have an excellent FAQ
that's different than Bitcoin.com. Right?
It is different than Bitcoins are calm the queen.com happens to be owned by a gentleman who has thrown most of his weight at this time behind a Bitcoin for called Bitcoin cash.
Yeah, so I would say I don't go to become an account becareful. It's Bitcoin that org which is about Bitcoin Network. This is the internet. So I remember you got to be careful where you read information.
I think that a shout-out should go out to Andreas Antonopoulos who is an early. Yeah Bitcoin ER and really if you look at the amount of videos and recordings and written work that he's done. I don't know that you could find anybody who has done more from a communication standpoint for Bitcoin. And so you could almost just type in Andreas Antonopoulos into YouTube.
How do you spell it? Because I would have a hard time swallowing a
sure. I let's see if I can get it right Andreas is a ND Reas and Antonopoulos is
is a and Tion ochio UL U s-- I believe that's cause it doesn't Google
except you put his name Bitcoin. He's Argentinean
right Greek. I think originally actually and he definitely grew up in a country which had the financial monetary system imploding around him. So you may have a better background than many people to understand the value of Bitcoin.
Now your social media your in Twitter. What's your Twitter
handle? I my brightly on Twitter,
you're one of the people I actually follow on Twitter to just for saying
Stuff about Bitcoin another friend of ours. I will e Wu on Twitter is also really smart about it. So I hope this has been useful to people, you know, there's no way to actually explain Bitcoin itself the whole thing within a short conversation, but this is enough as a primer the hope this is helpful do your research and if you can this could actually be a part of your portfolio and cleared well for you guys, but the best thing is don't trade it if you buy it just go to sleep and if you want to take money off the table and Ivan gets full credit for this campaign, you know it.
Ten percent off and take their place at the table every time it doubles. It's a beautiful simple strategy to thank you so much for being here. This is absolute pleasure. And that's it.
Thank you so much for having me. Come on. It's been fantastic.
And that's another episode. I'm glad you're here. If you're enjoying this podcast, please review and rate it I'd love that and if you want to learn more just go to cures command.com.
