I think that the internet is going to be one of the major forces for reducing the role of government the one thing that's missing but there will soon be developed is a reliable ecash a method whereby on the internet you can transfer funds from A to B without a knowing b or B knowing a what is a Bitcoin what is bitcoin what backs a Bitcoin you put some of your money real money online and it turns into Bitcoin I don't even know why we call them coins except that they call it coins in the name I think Bitcoin has turned into a massive multiplayer online game where speculators are trying to out speculate each other is it a a means of exchange or an asset class I see you taking my real dollars and then you give me virtual money in return Thanksgiving dinner my grandmother asked me what the heck is this Bitcoin stuff anyway right and I said do you remember when Visa cards first came out you were used to paying with cash or with a check and then a Visa came out it was this weird payment system that you didn't understand and she said yeah I remember that I said well Bitcoin is just the next evolution of another payment system [Music] Bitcoin by now you've probably heard of it the wild fluctuations in its price has gained the attention of the mainstream Financial media but Bitcoin is much more than just your average investment beneath all the hype in hysteria lies what could be the most important technology of our lifetimes so what exactly is it to fully appreciate the characteristics that make Bitcoin a potentially world-changing technology we first need to understand what money is currency started developing uh six to nine thousand years ago some sort of medium of exchange and people used something of value societies around the world though started to select gold and silver as their primary currency about three thousand years ago and then about 680 BC they became money when they were minted into coins of equal weights governments started creating representative currencies where you deposit your gold and silver or they have gold and silver in the treasury and they come out with notes that are basically a claim check on the gold so they're supposed to be as good as gold because you can always convert them into gold throughout history precious metals were chosen as money not through government decree but because of their unique features gold is rare easily recognizable portable durable and divisible Above All Because gold is difficult to find and labor-intensive to mine refine and mint it has always been perceived as a store of value at brettonwood New Hampshire delegates from 44 Allied and Associate countries arrived for the opening of the United Nations monetary and financial conference in modern history as World War II is coming to an end in 1944 the Allied Nations met at the small town of Bretton Woods New Hampshire here they drafted a new Financial system which would stabilize the world's Financial system once the war ended with the United States poised to enter a golden age of prosperity the U. S dollar was chosen to be the world's Reserve currency the Bretton Wood system was created after the second world war at the Bretton Woods conference in New Hampshire and rather than using gold as a means of exchange between countries as was the case under the old gold standard the dollar was going to be used and the dollar was chosen because back then it was as good as gold under this new system the countries of the world would tie their currencies at a fixed rate to the U. S dollar and because most of the world's gold was held in U.
S vaults the U. S dollar would be backed by gold at a fixed price of 35 dollars per ounce it's created a system where the currencies of the world were effectively backed by gold through the US dollar I have directed secretary Conley to suspend temporarily the convertibility of the dollar into gold or other Reserve assets the Bretton Woods system lasted for about 25 years but in August of 1971 president Richard Nixon called for an emergency press conference where he announced foreign countries would no longer be able to convert their U. S dollar Holdings into gold this surprise move would come to be known as the Nixon shock with this one announcement President Nixon effectively created our current monetary system a system where no currency is backed by gold or anything of value this is what is known as a fiat currency fiat currency is currency that's backed by nothing except government promises the word Fiat is a Latin word and it basically means currency that's circulating by force if people have confidence in that currency and if there's enough government force that will enable the currency to circulate for a period of time until people lose confidence in the currency money is a medium of exchange and the way it has evolved is that it's always something of intrinsic value until the Modern Age when the politicians say well we don't need anything of intrinsic value anymore all we need is political decree we can say this is money this piece of paper is money now money has a new characteristic but Underneath It All there's the same concept in place that nobody ever seems to challenge and that is that governments have a right to declare something of of no value to be money and you must accept it that's really the problem and it's still the problem today without anything tangible backing the currencies we use today governments around the world have been able to issue unlimited amounts of new currency without restraint and with the Advent of the digital age currencies around the world are now digits in a global banking database so what is bitcoin well simply put it's a digital currency much like the electronic currency we use today but it's also the payment Network which facilitates the transfer of this new digital currency from one person to another bitcoin's a new Internet Protocol that enables the transmission of value over a Communications Channel you can think of it like being able to send a gold coin as easily as you send an email you can send any amount of money to anyone in the world anytime can't be seized can't be confiscated can't be frozen very useful technology so Bitcoin is a digital currency and it is a payment system so it's a payment system in the same way that bank networks are or PayPal those are those are all payment systems but it's also a currency so PayPal and Banks use the dollar as their currency the Bitcoin payment system uses Bitcoins as its currency so they both have the same name what is your opinion of disruptive digital currencies such as Bitcoin if you're looking for the idea that that a currency doesn't really have to be something physical it could be something that's virtual that's the system we already have you know and if you want it to be uh I want a way to make payments um electronically that's you know credit cards I mean so exactly what it is that this thing is supposed to be doing that we don't already mostly do Bitcoin is different from other Fiat currencies uh in a couple ways but not the way people think so most people think it's different because it is a digital currency but Fiat currencies are also digital right so the dollar is a digital currency the euro is a digital currency they're all just ones and zeros in the banks of the world so it's not that Bitcoin is digital that makes it unique it's Unique in that it cannot be created out of thin air so dollars Euros Yen these can all be created out of thin air by people who have permission to do so which is generally a central bank Bitcoin has no ability to create it out of thin air so it is a scarce digital asset unlike the banking system we currently use where bureaucrats meet behind closed doors and determine and regulate the supply of new currency mathematics and cryptography are used to regulate the creation of new Bitcoins the Bitcoin network is decentralized meaning that instead of transactions and account balances being stored on a central computer or database bitcoin's Ledger of accounts more commonly known as the blockchain is distributed across tens of thousands of computers around the world there's something called Napster we all remember Napster we could download music and movies from Napster but after a while it got so big and popular the government came in shut it down because of copyright infringements no more Napster right so then somebody created something called the bit torrent Network what's this this is a a software people run on their computers that allows people to file share so if you run the software you can go to things like Pirate Bay or views or BT junkie and you can download any music or any movies you want and they can't stop it because it's not a centralized location well Bitcoin is the currency that runs on the bit torrent Network why was gold and silver considered money for the last 4 000 years is because it took work and effort to make that nice beautiful coin they had to dig it out of the ground and refine it and the crucibles and the furnaces and stamp it into a nice beautiful coin and that took work so you didn't have to trust anybody that they were going to work for you the work was already done well Bitcoin proof of work is the same thing right you have to Hash away and solve all these math problems you have to have the chips and the electricity and yada yada yada to create a Bitcoin a good cost today about 800 to make a Bitcoin I believe that Bitcoin has multiple levels of intrinsic value uh the properties like being unconfiscatable properties like this censorship resistant value transfer that no one can stop you from sending more importantly what gives an intrinsic value is the productive capacity and the brain power of some of the brightest developers in the world that have chosen to work on this open source protocol and this productive capacity of some of the brightest Minds that are building it is what truly gives it value all Bitcoin transactions are cryptographically verified by thousands of computers on the Bitcoin Network these very powerful computers known as miners expend a massive amount of energy and processing power to verify the Integrity of each and every transaction so the miners basically validate transactions all these transactions are flying around and um they have not yet been formally vetted by the network if the miner believes the transactions are valid it will put them in the block and the block then becomes part of the blockchain and over time that becomes the record of Truth and so that what that means is that if you receive Bitcoin and a few blocks happen after you receive it no one can ever take that money away from you because the blocks have been stuck into the blockchain they can't be reversed and you know that the money is is truly yours the decentralized nature of the Bitcoin Network eliminates a single point of failure and makes it impossible to be hacked or to be shut down Bitcoin transactions are transmitted peer-to-peer without the need for a third party meaning that the user is in complete control of their money it's impossible to be shut down that's the beautiful thing about it is that there is no place there is no Bitcoin place you can't shoot Bitcoins it has no center of gravity it has no headquarters you can't shut it down the only way you could is to shut off the internet your average person has absolutely no idea how their email works but it works and that's all that really matters and Bitcoin is very similar to that but as far as what I would do to tell people or describe to people uh who don't know about Bitcoin what it is I would say it's a form of money that you can just use on your phone or your computer in today's digital age where everyone's on the internet that is much faster to send than most of the banks and it has for at least since its Inception in 2009 risen in value for new users the inner workings of Bitcoin can be quite complex and daunting but what's important is how this revolutionary technology changes how money is transferred globally now every single payment that you make to another person goes through an intermediary uh either PayPal or bank or Visa or Mastercard and more importantly the governmental jurisdiction decides if you're allowed to make that payment that payment could be stopped halfway through and then you have to try and get your money back with Bitcoin no one can stop it the moment you decide to send another person digital value you can just send it and there is nobody in your way there is no one that has to give you permission to pay another person money and all they need is an internet connection this has the potential to displace the need for banks as a trust institution if you and I exchange currency or you know have Commerce using Bitcoin and it goes on The Ledger on the blockchain we don't need a bank to confirm that that is a valid transaction one of the differences between Bitcoin and the banking system is the it doesn't require a third party to perform when you make a deposit into a checking account or a savings account you are actually loaning the bank your currency they now have title to it and they have a liability on their books to pay you back one day but they get to do anything they want with it and you have this intermediary this third party counterparty that has to perform for you to be able to get your currency back cryptocurrencies invert the power structure it isn't a few people at the top controlling a whole bunch of the of people at the bottom the power goes to the individual in the same way that the internet flattens access to information and allowed anyone in the world with an internet connection to learn basically anything they wanted to know and to communicate with anyone else on Earth Bitcoin does that with money so now anyone on the planet no matter their age or the arbitrary geographic location in which they were born or the arbitrary rules of the people that govern over them that person can now engage economically with anyone else in the world directly that's profoundly powerful you do not need a bank account to interact with Bitcoin you do not need a bank account now to receive an honest payment from someone else in the world and know that the money is uh is legitimate and good and can't be rescinded so money now can't be censored any two people can send it between each other through Bitcoin cryptocurrency Bitcoin has once again defied naysayers by spiking above eighteen thousand dollars at one point today Bitcoin hits a new high we had this incredible run-up in the fall going into the holidays and then we've seen a pretty big pullback this is a 30 loss in the week and a 50 loss in the year past year have seen the price of Bitcoin rise and fall in dramatic fashion getting the attention of Wall Street and the investment community Bitcoin is now seen by the public as a speculative asset class that can be traded but the core fundamentals of this important technology cannot be overlooked foreign the use of Bitcoin is particularly vital in the developing world where billions of people are without basic banking services people who see the price all the time especially in advanced societies they focus more on the price and they think that Bitcoin is an investment solely and that it goes up and down like a stock based on news and expectations but the fact is probably there's more people in these kind of third economies they don't own a lot but they own it and they own it because they need it not because they expect to get rich or hope to get rich because they need to protect themselves against both destroyed Fiat currencies and against Capital controls so when people think of it as an investment they have to realize that the reason that Bitcoin is so exciting is because it's a future money for the world not because it's something that can become a great investment it just so happens to be that both can be accomplished at the same time one of the great powers of whether it's Bitcoin or any other cryptocurrencies if we can figure out how to scale the technology we can solve a lot of problems in the financial system we can transact with each other globally at very low cost and very efficiently and there's tremendous Market power in that has nothing to do with anyone in the financial system people want to be able to communicate and transact with each other simply and quickly and the hunger to do that is enormous today Bitcoin is seen as a financial asset but as the technology develops the blockchain that powers Bitcoin may be used to verify transactions other than the transfer of money each Bitcoin is divisible into a hundred millionth of a Bitcoin called a Satoshi these tiny fractions of a Bitcoin can be programmed to represent assets other than money in this way the Bitcoin blockchain can be used to verify transactions of all kinds of items without the need for a central Authority the Bitcoin blockchain is a tremendous technological innovation that enables uh distributed consensus people are able to come to agreement on what the state of this Ledger should be and what it is and that enables people to have trust without trusting any other party or person or institution so anywhere we need to have trust where we need to be able to verify what is the true and correct state of something that has an application to be put on the Bitcoin blockchain for 6 000 years I've recorded history we've always had this problem when we want to engage in consensual exchange that is if we're strangers can I trust you and what's happening with Bitcoin and the blockchain the technology that powers Bitcoin is is now possible for us to have trustworthy exchange without those third parties the trust is built in through the cryptography that's guarantees the exchange of value well that means that there's this technology that is it is as disruptive as the internet was the publishing but this is disruptive to these hundred different institutions that that really are the the glue that pull Society together you know everything from is mundane is notary publics to the land idling to coining money to voting all kinds of these things are going to be recreated in the blockchain in a way that we will finally be able to fully trust but what that means is what we've seen technology do to lots of private Industries is now going to start doing the government function the thing for me is understanding the implications of what this is you can take a hundred million bits of a Bitcoin each bit is called a Satoshi right and you can program that to be anything of value it can represent titles to automobiles or real estate or diamonds or gold or votes and elections anything of value can now be digitized and tokenized put up on the blockchain and transacted can be sent across the internet without having to go through a trusted third party I think the blockchain and Bitcoin is going to change the world I think it's going to change everything in terms of protecting people's identities allowing people to own property Bitcoins for the two billion people that don't have bank accounts the five billion people that can't prove they exist they don't have title to real estate and stuff that's what Bitcoin is going to change the most for those people is because you know they're going to jump from the third world to the first world it's really going to revolutionize Latin America Africa southeast Asia where people can finally now own real estate we can have a transparent election that can't be hacked imagine that's going to change the world in and of itself tempers are beginning to flare these people have already been in queue for more than three hours now carrying currency notes the government's suddenly backed on Tuesday night because anyone can start using Bitcoin by simply installing an app on their phone Bitcoin can be used by the developing world to protect their wealth from unstable currencies and government control we're seeing it behave as a crisis currency in Venezuela in Nigeria in Zimbabwe when these countries can't get a grasp on their own monetary policy people flood to bitcoin the fate of the unbanked and underbanked population no longer lies in the hands of corrupt governments centrally planned economies and central banks it really there's a new Option a plan B personally I live in the United States and a lot of people in the U.
