Amber asks, "Could you explain Bitcoin to my mum?
I ask because I want this video to exist for my mum… and everyone like her, who wants
to understand the basics." All right. Whether it is your mum, dad, grandpa, kid,
nephew, niece, or even your grandchild, and you need to explain Bitcoin or any cryptocurrency
to somebody who is not technical… Let's see if I can do a good job of this. What is Bitcoin and what are cryptocurrencies? Bitcoin and cryptocurrencies are a form of money
invented recently and introduced on the internet. This is a form of money that
only exists in a digital form. It can be sent and received just like an email. The advantage of that is, in many countries, people have
very limited access to traditional financial institutions. But even in developed countries, traditional
financial instruments like credit cards, checks, and paper money are not
suitable for our digital lifestyle. It's actually very difficult to use financial
systems that were designed in the 1950s, like credit cards, online to do e-commerce. A lot of people suffer from identity theft,
chargebacks, stolen credit cards, and overcharging from vendors once
they've given [credit card information].
All of these are problems and bureaucratic
issues with traditional financial payments. One of the advantages of having a new digital
currency that lives on the internet… and operates entirely in digital form, is that it is
much more suited to our modern digital lifestyle. Making payments online [with bitcoin] is a lot safer,
it's faster, and in many cases it is cheaper. When you make a payment with a credit card,
you may not see the level of fees that is being charged. That gets charged to the merchant, not you. But inevitably, because of market economics,
someone is going to pay for that fee. The merchants are going to pass that on to
you in the form of higher prices. Another advantage of using this new digital
form of money, is that you can save more… because the fees are lower for you and the merchant. It's more secure. There's less opportunity for
chargebacks and fraud. You risk your identity less. All of these things reduce the cost
of engaging in commerce online. Your first experience with these digital currencies
is not going to be as simple as you imagine.
Remember back in the days, when you tried
to do some online shopping for the first time? Or maybe the first time you tried to connect
to the internet and send an email? Perhaps you struggled with modems, setting
up a connection with an ISP, a clunky desktop, trying to install a Windows machine or a browser
that was confusing and weird. Gradually, over time, a lot of these
rough edges were smoothed out. Nowadays, you can buy a device that is
very easy to interact with, such as a tablet. It already comes pre-installed with
everything you need to use the internet. You can easily connect to a WiFi hotspot. You don't need to sign up for
an account with almost anyone. Sending emails and doing online shopping is easy. Well, digital currencies are still in the early stages. As a result, the software is pretty clunky,
the services are in their very first iteration, and the companies haven't yet
developed easy ways to use them.
Maybe digital currencies like bitcoin and other
cryptocurrencies are not quite right for you yet. But in places where people are desperate for financial
services, where they have access to nothing… other than cash, and they're surrounded by
corrupt governments, officials, cops, and banks… The effort to learn and use
this technology is well worth it. It can be a really meaningful change
in their life circumstances. For most Westerners, this is still more of a curiosity.
It's more of an interesting technology [than a currency]. If you're a geek or fascinated by new technology,
maybe you will put in the effort to learn about it.
In any case, it might be interesting to
experience one of these transactions. But don't let this early stage technology fool you. Just because it is clunky now
doesn't mean it will be clunky forever. The fundamental principles and structure of these
new digital currencies, the open world they create, where money can be transmitted
and commerce engaged in, where people can hold on to their assets securely
anywhere in the world and transact with anyone else nearly instantaneously, securely, with very low fees…
That is really going to change the world. You can either jump on that bandwagon now, go through
some of the early pain of trying out a new technology, or just be aware that this thing is
happening and wait a few years. Eventually, it is going to be easy to use for everyone. Then we'll have to try and explain to our children
and descendants what the hell we were thinking with these plastic cards, this linseed and
cotton money that was covered in germs. They will not understand what we're talking about..
