7 Minutes! Bitcoin Explained
STOP! Forget about confusing words like Bitcoin,
blockchain, BLA BLA and others… Let’s first look at the super simplified
history of “money” Long ago… there was no money. I might exchange my milk for your cheese
But what if I have 1 big cow and I want just your 3 chicken eggs? I would not give you my whole cow… I might give you 3 seashells to represent
that I got 3 eggs from you every day.
And after I gave you 1,000 sea shells, you
could exchange them for my whole cow. Do the sea shells have value? YES. Because 2 or more people have ACCEPTED and
AGREED that they have value, and they CAN BE TRANSFERRED to other people. And when more and more people accept and agree
to use these sea shells, the more valuable they will become.
One problem… there’s an UNLIMITED SUPPLY
of seashells and you could easily CHEAT by getting more sea shells at the beach. For the sea shells to have good value, there
needs to be a LIMITED SUPPLY for us to use them as money. So we stopped using sea shells and started
using rare metals like GOLD and silver… Gold has value because it has a limited supply
and some people say that all the gold stored in the world can fit into one big swimming
pool Gold also has value because it is accepted
and agreed by many people to be valuable. A Common Belief is that “Gold has high value
because it conducts electricity and is used for making products like phones”
That’s part of the reason, but gold was valuable long before electricity, computers,
and phones Silver and oil have much more uses than gold…
so why is 1 ounce of silver or oil valued less than 1 ounce of gold? One of the main reasons is that gold supply
is more limited than oil and silver So after using gold and silver as money… Kingdoms and empires used gold and silver
COINS with images of the king or emperor (but still, the value came from the gold/silver,
not the government) In the past, the US dollar represented an
amount of gold that you could withdraw from a bank… While the British Pound represented 1 pound
of silver in England The Value of money STILL came from gold and
silver, and not from the government “commanding” people to use government money
Even TODAY, you can see some governments stocking up on more gold to guarantee the value of
their money Despite this, the value of government money
keeps going down… as can be seen by prices going up every year.
Why? For leaders to stay in power, a government
must give MORE AND MORE FREE STUFF to its citizens or its military… or else they will
lose their position in an election, revolution or coup d’etat
How does the government pay for these INCREASING promises of free stuff? One is through taxes, but this is NEVER enough
The government also borrows money… But taxes are NOT enough to pay for these
borrowings and interest So the government just prints more money for
the same amount of gold in the central bank’s vault
In some cases, the government might not even keep any gold at all… in which case the
money might simply represent all the products in that country
When more money is printed for the same amount of products, what happens? Look at this Apple whose value is $1
When more money is printed, the same apple becomes $2 instead of $1. Same as saying the value of money goes DOWN
So the solution would be for us to just keep gold, right? Well… Maybe yes and maybe no, depending on who you
ask.
Gold is not completely limited… there’s
more gold found every day in unpredictable amounts. Gold is very difficult to transfer from person
to person, or from country to country. Not good for the digital world of today
Although gold certificates can be transferred online, the certificates still have to represent
real physical gold in a vault in some country A government can get gold from all the vaults
located on its land and replace it with paper currency… even if the gold owner does not
agree; just like the American government did in 1933
A Possible solution might be Bitcoin! Bitcoin is a WORLDWIDE digital money which
is NOT controlled or centralized by any government, bank, location, or corporation
It has a strict limited supply as there will only ever be 21 million Bitcoins forever and
ever.
It can easily be transferred digitally around
the world with reasonable speed It is unstoppable by governments, banks, or
corporations even if the internet is cut off. Reminder: Governments can control banks & corporations
using laws Instead of transfer using banks, it’s done
using a “blockchain” which is NOT centralized Blockchain is technical to explain, so let’s
just imagine it’s millions of independent citizens and their computers around the world
working together and policing each other to honestly record transactions between you and
me. These citizens also earn Bitcoin by providing
this service Bitcoin is NOT a physical coin. It is digital like email, which you cannot
touch and hold It can be divided, subdivided, transferred,
bought, or sold in decimals Finally, do you want to learn more about Bitcoin
in a non-technical way? Download my FREE cheat-sheet at MBAbullCoin.com
Remember to Like and Share this video What do you think? Is Bitcoin good or bad? Let me know in the comments below!
