Welcome to Duality Check, the podcast where two brothers embark on a thrilling journey
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I'm Drew. And I'm Dean. And this is episode 14. Man, 14. Yeah. Getting closer to two decades.
Today we have an episode about Bitcoin. Yeah, I'm going to shake it up a little bit. We've
been doing a lot of. Chris Bledsoe and secret history of the world. A lot of like esotericism.
Yeah, which is good. We love that stuff. And yeah, let's get. Lighten it up a bit maybe.
Maybe. I mean. Maybe not. I don't know how. How long the topic is. We'll go into a different
type of deep. Yeah, so we're going to be talking about Bitcoin today, which is the world's first.
digital crypto currency and It's freaking amazing and I've been Bitcoin head for quite a while
Yeah, you first introduced it to me When did it first pop off? 2009 I first heard about
it probably around 2011 ish man just nine imagine Just getting out of high school imagine investing
in that Not knowing. Oh, I know, dude. Yeah. So we'll get into all that. Before we get into
Bitcoin though, there was an interesting article I saw this week from George Howard of the Cosmic
Tusk. Please share. Yeah, so it turns out that the New York Times has published a story about
the Younger Dryas Comet Impact. Paywall. It's Paywall, but on the Cosmic Tusk website, he
actually posts the full article, which I don't know if he... Supposed to. It's supposed to,
but it's here. Did you download it while you could? I do, yeah, I have a copy of it. It's
not crazy long, but it's long enough that I don't want it to be the whole first chunk of
the show. But in general, it's, to George. Does it got a synopsis or like a? No.
Yeah, so George Howard says, as a science news reader my entire life, this is an extraordinary
article in many ways. First, it mentions the tusk. Second, it is well written and reflects
an effort and skill in keeping with the subject matter. Third, the most important event in
earth and human history has now been well addressed in the New York Times. So this is. Yeah, and
he's got a couple quotes here from the article. William Topping, an archeologist, was studying
a site in Michigan's Upper Peninsula where ancient North Americans quarried the raw materials
to make their stone tools when he encountered a puzzle in the late 1990s. Anthropological
geological evidence indicated that the layer of soil containing the ancient artifacts dated
to around 12,900 years ago, just before the start of the Younger Dryas. But radiocarbon
dating, suggest that it was only 2,900 years old. Topping sent an email about this problem
to Richard Firestone, an expert on radioactive isotopes, who was then working at Lawrence
Berkeley National Laboratory. Firestone, who told me that he always had an interest in side
projects, agreed to help. So that's interesting. So the soil dated to... 12,900 years ago that
it was buried in. Yeah. But the radio carbon dating was only 2900. No, the soil was dated
to 12,900 years ago. That's what I'm saying. Yeah, the soil containing the artifacts was
dated to 12,900. But the radio carbon dating suggests that the layer was only 2900. So when
they meaning that there was some sort of radioactive event that threw off the radiocarbon dating.
Yeah. And there would be some react or radioactivity with So I'll leave a long a link to this it's
on cosmic tusk comm which is the website of George Howard who's like He's not one of the
scientists. He's more of like their communicator for the young rejoice for the comet research
group and his website cosmic tusk has a bunch of Articles and stuff all about it. But anyway
Check it out definitely So yeah, big
Man just looking at your notes. I know I tried to come prepared. I just wanted to make sure
No, I'm gonna try and keep it understandable keep it But I think it's really important that
people have more of a surface level more than a surface level Understanding understanding
of it. I know I need more than a surface low. Yeah, I know Really little about the inner
workings of it. So yeah, so Fascinating to learn consider this your primer as to what is Bitcoin
and why all the hype other than just the fact that price go up It's a lot more than that.
Or that's decentralized. Yeah, like people may have associated some buzzwords, but they don't
necessarily understand why that's the case or know for themselves that it is the case. Sure.
So it's important to understand the technology and why it's such a big deal. And they are
going to hope to achieve that for us today. But as an introduction,
I wrote this little intro, Bitcoin is the first peer-to-peer decentralized borderless apolitical
mathematically secure hard digital currency. There's a lot of qualifiers. And I say it's
peer-to-peer because you can send it directly from one person to another. There's no bank
in the middle. There's no trusted third party who is transacting your... who has their hands
on the money and is to be trusted with it while the process is happening. Like if you pay anyone.
At least it doesn't have to be, right? Cause there still are like apps and this and that
are designed to do that for you. There are ways to get rid of Bitcoin security, which we'll
go into. Like I got a whole security section outlined. Okay. But by default, like with a
standard Bitcoin wallet, if you send Bitcoin to someone, it just... It's a direct send essentially,
it's a little more complicated than that but it's decentralized because What runs the system
is a piece of software that runs on computers all over the world. There's no server So there's
no one physical place Right if you've dealt on the internet before you may or if you're
a little bit tech savvy you probably have understanding that like most of our internet is is set up
as like a client server model. So you type in the name of a website, even ours, dwalitycheck.net.
And what is happening when you enter that is that your computer is finding a server out
there on the internet and asking that server for information. And so the server is the thing
that controls it. It stores it, right? Yeah, and a lot of computer and internet technologies
are server-based. Which is fine in certain circumstances, but you don't want that with money. You don't
want that with a currency, because then that server is something you have to trust. Right.
And uh... Unless it's your server. Well, yeah, but no one else will trust it then. Yeah, exactly.
Ha ha. It's borderless, because again, it runs everywhere. As long as you have an internet
connection, a cell phone with internet connection, a fricking $20 used android phone with an internet
connection, you can use bitcoin. Which is pretty amazing. So yeah, it truly is, can be used
all over the world for the most part. It's apolitical because no government in the world has control
over it or can shut it down. They can do their best to ban it in their country, but they can
do nothing to shut down Bitcoin itself. The only way Bitcoin can be shut down is if the
entire internet and all computers go away and never come back. Right. Could you limit people's
access to, I guess not, really. Yeah, think of it like this. Back in the day when people
used to download free movies and music and stuff, the OG one was like Napster. And Napster was
a server-based model. So there was a central node that was passing the details around. And
so the government just has to find that and shut that down. Whereas now they have to find
every single computer, which is basically just shutting down everything.
What all the downloaders and pirators switch to after things like navister is to torrenting
and torrenting is a decentralized Technology, which is why it's still around to this day
Yeah, and it can't be shut down without shutting down the entire internet torrenting is basically
like taking little pieces of the whole project right so it's a protocol it's a protocol like
it's a It's a set of rules that each computer agrees to abide by and they hop on the network
and follow that protocol. So you'd search for a file and it puts out a blast to the network
asking who has pieces of it. And then it gets little pieces from anyone. And then any one
computer can go down and it won't affect the network. Right. But there's no central server
that those files rest on. There's no thing that you can turn off that will turn off torrenting.
It exists as long as the internet does. There's no address associated to it that the government
can come and seize or shut down. Got it. It's mathematically secure because it's... It was
designed by cryptographers and cryptography is used to construct the technology in a way
that is mathematically un impervious. It's impervious to the certain types of people trying to crack
it or whatever. Right. Like you as an individual can be insecure with your usage of it and someone
could take advantage of that. But no one can hack the network. No one can crack Bitcoin
and break it down through. Any sort of cyber attacks. And that's like the transfer of the
coins, the individual coins themselves, right? Like the... Yeah, or the blockchain that stores
all the information. Yeah. Okay. It's hard money because there's only ever going to be 21 million
bitcoins. It's... What do you mean by hard money? Hard money, so in like economics, they have
labels like hard money and easy money. A hard money is a money that has a limited quantity
and a limited ability to create more. So it's not like our US dollar. So like gold is like
the classic hard money because it's very limited. It's the most rare resource inside the earth's
crust. Right. And. You can't just replicate it. Yeah. It gets harder and harder and harder
to mine deeper and deeper and deeper. get more gold. And the value is based off weight, not
just the physical. Because with gold, you can stretch it, right? You can get everything in
gold and make it look gold, like make this big object look gold. But the value is in the weight
of it. How much of, you know, like that's why it's sold by the ounce or whatever. But yeah,
it's so it's considered hard money because of what's called like a stock to flow ratio. So
the stock is how much gold exists on the planet. OK, that would be the stocks. I've heard it's
like an Olympic-sized swimming pool is basically as much gold as we've mined. Doesn't seem like
a lot, but it is a lot. That is a lot, yeah. But it doesn't seem like a lot. It doesn't
seem like a lot. It is pretty rare, yeah. It is a lot, yeah. To see a Olympic sized swimming
pool full of gold. But if you compare that amount of gold that has ever been produced to the
amount that gets produced every year, it's a tiny percentage of the amount of gold that
can be produced every year. Right, so we have. And so it's got a high stock and a low flow.
So that stock to flow ratio is really good, which makes it in the category of a hard money.
Got you. That means the value is pretty steady. Right. Whereas US dollars, they are her. The
stock is in the trillions and getting crazier every year. And the flow is whatever the government
wants it to be. Whatever they decide. They open the floodgate, they turn the valve and open
it up. So there's no guarantee that money will maintain its value. In fact, it won't. You
would be foolish to think it would. Yeah. We'll get into more about how. Yeah. But it is foolish.
On October 31, 2008, someone went by the name of Satoshi Nakamoto, which is a pseudonym.
We don't know. Still nobody knows who that is? No. He published a technical white paper entitled
Bitcoin a peer-to-peer electronic cash system to an online cryptography mailing list so Did
you ever used to like be involved in any mailing lists back in the name? No, it's basically
like a bunch of nerds could set up where like they all copy each other on their emails And
they just have conversations across email Yeah, so there's this famous, now famous cryptography
mailing list and that's where the Bitcoin white paper first appeared. Okay. Um, and so Satoshi
as a cryptographer nerd, um, this was the abstract from the paper. A purely peer-to-peer version
of electronic cash would allow online payments to be sent directly from one party to another
without going through a financial institution. Digital signatures provide part of the solution,
but the main benefits are lost if a trusted third party is still required to prevent double
spending. We propose a solution to the double spending problem using a peer-to-peer network.
into an ongoing chain of hash-based proof-of-work network, forming a record that cannot be changed
without undoing the proof-of-work. The longest chain not only serves as proof of the sequence
of events witnessed, but proves that it came from the largest pool of CPU power. As long
as the majority of CPU power is controlled by nodes that are not cooperating to attack the
network, they'll generate the longest chain and outpace the attackers. The network itself
requires minimal structure. Messages are broadcast on best effort basis and nodes can leave and
rejoin the network at will, accepting the longest proof of work chain as proof of what happened
while they were gone. So is that mining? Yeah, that's mining. Is that kind of outlining mining?
Yeah, which I'll go into here. So I'm just laying some background info here. So that's essentially
like the high level synopsis of what it is, which there's a lot of jargon in there. So
we'll have to break down a lot of that. Yeah, I was gonna say, I understood it as being mining,
but I didn't necessarily. So he's talking about like the, when you're engaged in the act of
mining, the largest CPU forms the longest chain and. The attackers is basically, what is the
attackers reference? I'll get to that. OK. Yeah. Then here's just an interesting tidbit. This
is the first ever block of Bitcoin that was mined by Satoshi Nakamoto. So this was the
very first creation of Bitcoin. It was January 3, 2009.
And this is the original block of data, which I'll share a photo for you guys. But he, to
prove that he mined it that day, he includes this message from the Times. January, 2009,
chancellor on brink of second bailout for banks. Oh, wow. Which is, that's so sick. Yeah. Uh,
If you see here, this is the times from June 3rd. Chancellor on the brink of second bailout
for banks. Yep. That's a collector's item for Bitcoin nerds now. Oh, I bet. Your birthday's
coming up. I'm just kidding. I'm not kidding. I would love that. It's probably ridiculous.
It's probably like a whole Bitcoin to buy that right now. You could probably buy a print.
I'll take a print. All right. Alright, so before we go into all the technical details of exactly
how Bitcoin works, I wanna set the table by talking about why Bitcoin. Okay. So in the
history of money, gold has typically won out as the best, strongest form of money. And it's
got a lot of pros and a lot of cons, right? But lots of things have been used as money
across time. Back in the day, it used to be cattle and salt. Some places used seashells.
There is a particular island that uses these massive stones that no one can move. They just
sit there, and they sign over the rights to a portion of it to people. And that's their
money, which is actually really similar to Bitcoin in concept. Because, yeah, it's like an immovable
like. that nobody can take full ownership of, right? Because the whole community witnesses
when someone transfers to someone else. And that's similar to how Bitcoin operates, is
you're essentially allowing the entire network to witness that you're saying you're sending
Bitcoin from one person to another. But seashells, people have used sticks, people have used,
there's so many things like, have been used as money over time. But gold emerged and became
wildly popular. And eventually, people caught on that places that use gold would have much
more successful economies than places that didn't. And so more and more. I wonder if it's just
because they could place higher value on it or something? Or what's? Or they add enough
to be able to assign it a higher value, or what? No. So there's a lot of reasons. So here are
the pros for gold. It's really difficult to get a hold of, OK? Which is important for money,
because if anyone can just go grab more of it out of nature, then that will destroy the value
of your money, right? True. Like if our money was pieces of office paper that had a little
tiny black pen circle on the top left, and that's all it was, why would you go out and work to
get those when you could just go buy a bunch of office paper and draw a bunch of circles
and make your own money? Right? True, true, yeah. So, and then the effect of that is as
you spend that into the economy, it would cause prices to rise. Right. as the money became
less valuable. Delutes the value, inflates the prices. Right. So the fact that it's rare is
very important, but the fact that it's really difficult to mine is also important. Yeah,
you can't just have it easy like any person with a laptop in this case. Because as more
and more of the world started using gold as money, the value will go up because the supply
can't grow at the same pace. Right. And so that would incentivize people to go mine gold, but
mining gold has never, like historically, gone any higher than like three or 4% of the supply
in a year. Except for I think one or two years ever. Where we had a boom or something. Like
a technology comes along with a new mining technique or something. Dynamite. But even still, like
it has gone, it goes right back down. Like. It's pretty consistent, 2% to 3%.
I wonder if there's an estimated, I guess, if there's ever been an estimation of how much
gold might be in the earth. I guess there's no way to know, really. There are estimates,
but they're just estimates. Yeah, there's no really. Once you find a little mine that's
never been touched. The real thing, like, if we were still using gold to this day, The real
thing that would be dangerous now that we're entering this like space age and private space
companies is like someone going and finding some asteroid rich in gold and bringing it
back and hyper inflating the currency because of it, you know? Yeah, but we're not really
on a gold standard anymore. No, kind of, but not really. Gold is got that high stock to
flow ratio like I talked about earlier, but it's a really stable element. That's one of
the reasons why it's such a good currency is because unlike other metals that you could
use Gold doesn't corrode. It doesn't break down. It's really stable. It's very resistant to
like chemical activity It's easily divisible it's a soft and malleable but still holds its
shape kind of metal like it's not that hard to work So you can break it down into uniform
units and coins and you can divide those. And so it's relatively easy to work with, um, in
that regard. And from a political side and economic side, gold is great because when we were on
a gold standard, when gold was money. In order for governments to do really expensive projects
that they couldn't afford They'd have to get it from people They would have to tax people
because they couldn't just create more money The only way for them to get more money was
to take it from the people Yeah Is that really a pro though? It is a pro because it keeps
government power in check Yeah Because you can only tax people so much before they stop taking
it. Right. I guess that's implying that the tax is fully compliant and people are willing
to tax based on the value that you're going to give them off the project. We're a lot more
docile these days, but like. Yeah. The American Revolution was over such a small tax rate compared
to what we pay today. Like, like people don't stand for taxes going crazy. Yeah. Get out
of my head. Get out of my face. You can only raise taxes so much before people just stop.
Anyway, I wish I was the same right now. There are some downsides to gold in comparison with
things like Bitcoin, which is that verifying gold can be different, difficult. to like a
layman. Fool's gold. I mean, it's relatively easy to take it to someone to have it verified
that it's real. From an expert, yeah. For you as an individual, it's very hard to know like.
Yeah, if you don't know anything about gold. Someone hands you a thing that looks like gold.
How do you know that it's not gold coated? I mean, that's why people used to like buy coins
and stuff to like, that was kind of like a poor man's test. Right, right, right. Yeah, that's
true. But it could be difficult to verify and so there could be some scam. minting can be
tampered with and this is actually goes back in history to like the Roman Empire and multiple
governments have done this throughout the years where they'll essentially clip or shave little
bits and pieces off the coins so as people pay their taxes right to the crown though they'll
shave off little bits of every single So they're gold coin that comes in and then put them,
spend them back into the economy. And then they take all those shavings and make more gold
coins. And that was their way of sort of inflating the currency. Yeah. Lining their own pockets,
right? Yeah, lining their own pockets. It's inflation. It's the same idea. It's just not,
it's yeah. But that's actually where the ridges on coins came from. So you can be able to tell
somebody shaved it. Mm-hmm. Interesting. It's so interesting all these things that are like
left over from a time when like thing like because we're talking about ridges on quarters and
dimes and all these other like coins now like It doesn't have a use. Yeah, there's no use
in but they're still left over from that time when Those things were happening, which just
interesting. It just feels a little more official a little more Yeah, it feels like it's went
through a more of a rigorous Uh, governments, yeah, have, I just talked about that. It became
so valuable that silver and copper were used for smaller transactions. Because of the value
being so great. Right. And that was actually one of the downsides of gold is that because
of how limited it was and because of everyone using it, it got so valuable that you had to
use something different for smaller transactions. Sounds like Bitcoin and Dogecoin. Right. And
so using a gold with silver and copper was a thing for a while. But there's problems with
that because silver and gold don't. Silver is a lot easier to mine than gold. It's got a
higher flow rate. And so the exchange rate between silver and gold would always fluctuate. Yeah.
They're not exact. So you can't just peg them to each other. So something you might have
just bought for gold and silver. And then not too long after, you just lost money based on
how varying it was. Right, you need to buy some stuff so you convert your gold to silver, but
then it just happened to be at a time where someone had a big- Hit a jackpot. Hit a jackpot
of silver and dumped it on the market and now your value goes down. Yeah, you just lost a
bunch of money. The other con for gold is that it is what led us to this paper money system.
And it did so because of the history of gold warehousing. So one of the problems with gold
is that it was susceptible to be stolen, right? So if you were going on a big travel and you
need to bring your money with you. Yeah, let's say you're trying to set on the west. There's
a lot of risk involved in that, right? And so what you would do is you would warehouse your
gold with someone who could keep it safe for you and they would give you a paper receipt
for the amount of gold in their vault that they are protecting for you. And then you would
go wherever you need to go and that little piece of paper is a lot lighter, a lot more safe
to travel with. Yeah. But then the problem is, well, then people started trading those receipts.
And that was essentially the beginning of paper money. Were those greenbacks or were those
before greenbacks? This is just straight up gold receipts, right? Yeah, this is just gold
receipts. This is like 1600s, maybe. 1500s. Greenbacks is like maybe a long time ago. Yeah.
And for modern use, the con for gold, and the reason why we should not go back to gold as
money now is that, well, at least it couldn't serve the full role that we would need it to
is because you can't use it over the internet. Can't sell gold, send gold across your internet
connection or across your Wi-Fi. You can send a receipt. Right, but now you're introducing
a trusted third party. So the problem with, anyway. Gold essentially led to banking out
of warehousing. Warehousing became, warehousing gold for people and keeping it secure and making
deliveries for people became a profitable business. And when you run it for long enough and you
realize you have a certain amount of gold in there, but only ever a certain amount of people
are ever coming to get it at a given time, then you realize, You can start loaning out paper
receipts to people based on the gold you have in your vault that isn't actually yours. And
it's not being moved. Like, you know, you know that this amount of gold is always here, so
you have a pretty good, pretty good chance of being able to do that, loaning these receipts,
where you're making money off of the, you're right, you're making money off of the service.
Right, you would charge interest, yeah. So yeah, that's interesting. So gold leads to paper,
and I only have a couple pros for paper, which is that it's light and less bulky than gold,
and you can pay your taxes. That's all I could come up with. But there's a lot of cons, which
is that banks and governments can create it out of thin air. Well, you forgot one thing
on pro, that it keeps your immune system high. Right.
Yeah, so on the con side banks and governments can create it out of thin air for cheap and
they do all the time that's monetary policy Yeah, and that's what the Federal Reserve does
they try and regulate our economy to control the inflation rate and target a optimized 3%
of inflation year by year which is essentially just economic speak for we print money and
we give it to people and it makes you guys poorer. Yep. We make more money, you make less. Yeah.
So it can be used to steal the value from citizens for large projects rather than taxation. So
that's what's so sneaky about paper money. It's worse, really. Is that the tool of inflation
is used. So in the book I was just reading about Bitcoin, the Bitcoin standard, which I highly
recommend and I'll link to. They were talking about the difference, one of the main differences
between, I think it was World War I, yeah, was that it was the first war where most of the
world governments were on paper money. And because of that, they were able to use inflation. As
an attack method. Right, because what happens when you go into a war time is that your government
needs funds to keep that war going. And so there were typically taxes would start going up.
But if you couldn't keep people paying the taxes and you kept raising them too high, the people
would revolt. They'd stop paying. It would be a pain and you would not be able to keep funding
your war. But with paper money, you can raise the taxes as much as you need to. If you need
more and you don't want to raise the taxes anymore because you know people aren't going to take
it, you can just printing it and pay your troops with that. Yeah, putting that in. And eventually,
once that paper money goes and circulates into the economy, causes the price hikes. And so
any time a government wants to fund something that it typically couldn't afford, it can just
print money. And now it's so down to a science that that's just how the economy works. That's
how governments work. We're also numb to it now. All the governments of the world use paper
money and continue to inflate it in order to fund the projects that they want. Your taxes
barely go to funding anything that the government does. Most of it's funded by debt and by inflation.
Debt is inflation in our... money system. The other problem with paper money is it requires
a central trusted authority, right? So there's only one group that is involved with making
it. When you in the modern world, when we're transacting digitally online with paper or
with quote-unquote paper money with dollars right through credit cards and paypal and things
like that and all that yeah there's always some institution that is the one that's securing
your transaction and collecting fees on that transaction and because some people are going
to try and defraud the system and double spend money they It raises the rates and the fees
that they have to charge. And it essentially sets a minimum price of what the companies
will allow you to essentially sell. So the reason I say that is because for a long time, computer
nerds have had the idea that the future of the internet is micropayments. Where instead of
right now, we have this advertising model where you are the product and all of your data and
your habits is collected and that is used to fund these websites who provide you stuff for
free. But what the nerds have been trying to realize is a internet where everything is done
through micro payments. And so instead of instead of your data being the source of value for
the company, you're actually paying little quantities of money. Fractions of a penny per minute you
watch or whatever as a way to avoid Monitors as a way to avoid advertising as a monitor
Or at the end of your time on a website You just have like a little thing that pops up
and says this is how much you owe right? Well, it's like an automatic Yeah, like the division
is that it just deducts as you watch right, right? Which obviously would have its pros
and cons, and maybe some people would prefer to be part of a free advertising-based model,
but at least the two could compete. Yeah, absolutely. But with our current paperbacked system, the
cost of transacting online is too risky, and so micropayments aren't feasible. for it to
happen that often, right? Well, because you'd be paying more in processing fees than you
are in the micro payment itself. So the infrastructure of it is not set up in such a way that would
make it feasible, really? Right, right. Yeah.
And yeah, there's other downsides with constant inflation. One of the big problems with constant
inflation, which comes with paper money, is that it disincentivizes people from saving
money. Yeah. You actually wanna just spend it because you know you're gonna, that money's
gonna be worth less. It's the smart, quote unquote, smart thing to do. Like if you make a bunch
of money, or you're hard working average earner. You're trying to save for retirement if you
take your earnings and you just put them in a account or you put them in your mattress
or in your safe at home like Over time that money like by the time you retire 20 30 years
later that money is gonna be worth half of what it was when you earned it and so just Saving
money isn't doesn't make a lot of sense And so what it incentivizes you to do is to spend
your money or to invest it, right? Or to invest it and quote-unquote investing. This is why
the average person is encouraged into like 401ks and All these mutual funds and all these financial
tools where they're not financial experts the reason they get into them in the first place
is because they need a way to hedge against the inherent inflation in the system. Yeah,
looking back in the day. 40 years in the future for, you know, especially, you know, you're
in a job where you see yourself for a long time and you're looking down and you're looking
into the future and you're trying to think, how am I going to hedge against all of this
inflation? It's the safest for somebody who doesn't have the time to spend. Right. And
average people don't have the time to spend on like. being a whiz in financial markets,
right? And so you end up hiring a company or a brokerage that manages your money. And now
you just got more trusted parties that are handling everyone's cash and you get all the Wall Street
shenanigans that happen. So, it also, constant inflation artificially reduces interest rates,
which is like the price of money in the future. And so that essentially is another factor incentivizing
spending, even for the business-minded. Right, because the interest rates go down and you're
like, oh my god, I can afford all these things. I'm not going to have to... Right. So the yearly
payments on the money is going to be lower. I can take a big loan and fund this project.
Because you can afford to pay it month-on-month. Right. I can afford it at this interest rate.
And so people make economic decisions that they wouldn't otherwise. Yeah.
Make sense. And yeah, the speculation, it encourages all these derivative markets, all these people
trying to ride money up and down, and all these crazy schemes, and currency trading. And
it funds warfare. Let's just say it, whatever conflicts are going on around the world, there's
a good chance they're funded by that country's inflation. Yeah, and it's no coincidence. Or
foreign aid from the US, which is also funded by inflation. Yeah, it's no coincidence that
inflation hits pretty hard around the times that wars start happening, popping up around
the globe where the US leads it, because we're the leaders of the NATO and all this. Right.
And so fundamentally, the entire world is on a paper money system, and paper money is just
broken. From the perspective of the average person who just wants to get ahead in life
and live a peaceful life Yeah, it is fundamentally not in your favor to have a paper money system
the paper money system Only benefits the politically connected the bankers the politicians The people
who are able to get the fresh money loans to have the leverage on it all right Yeah, I mean
it's outlived its usefulness for the average person And so, yeah. And that way, it leads
us into a new era. We need a solution. And that's where Bitcoin comes in. I think that was a
perfect way to introduce it. I think we're up on a break here. A little bit past our normal
break time. We'll dive into what we got coming up for Bitcoin. We got a lot. We're going to
explain some of the technicalities of how it works. I'm going to start with Bitcoin's pros
and cons first, but then we'll start going into how it actually works. Dogecoin. Yeah, Dogecoin
is going to be like a 35-minute segment. See you on that bit.
And we're back.
Welcome back to Duality Check. Song's called Sunshine, and we're gonna talk about the sunshine
of monetary schemes. A little bit of reach, but I like that. So let's go over Bitcoin,
because we ended on the pros and cons of paper. Right, so... The pro, a bunch of the pros of
Bitcoin, A, it's decentralized, so there's no one person in control. It's global, which we
talked about before. It's trustless. And what does that mean? It means, it doesn't mean that
everyone in Bitcoin is untrustworthy, what it means is that you don't need trust. Everything
is mathematically and cryptographically verifiable and therefore, based on mathematics, you don't
need to trust anyone. You can 100% be assured based on the laws of mathematics that whatever
you just sent will get to where it needs to go. It's very internet friendly. Easy to use.
Yeah. It does enable microtransactions. Right. Yeah, so this, so like we were talking about
earlier, like the geeks and the nerds on the internet trying to find the infrastructure
to allow for microtransaction. Would this allow for that? It would, yeah, because. But you
would still need the companies websites to allow it still, right? Which we're seeing more and
more of. Yeah, like websites would have to build themselves around that idea. There's still
a couple components in the internet that we need to figure out, like web 3.0 stuff that's
coming down the pike. But eventually the internet itself will be decentralized and all of your
web browsing will be decentralized. And you'll have control of your data and you won't be
some...
I would love that. Yeah. You won't be a cattle in someone else's data farm. Yeah. It cannot
be inflated. Caveat, it is currently, there are new coins being created every 10 minutes
right now. But it is set up in such a way that by around 2140 or something like that. All
the bitcoins that will ever exist will have been mined into creation And from that point
no more Bitcoin will ever come into existence So there's a there's a end date schedule or
whatever right so they know and that's why but And I know we're gonna get into it more but
like as far as the money, how do they? How do they limit the mining? Yeah, yeah, we'll get
we're almost there. Okay. Uh, cryptographically secure. So there's a problem. Bitcoin's not
the first thing that's tried to be money on the internet. There's been other attempts by
other cryptographers and programmers to create like digital cash and some have been more successful
than others, but the fundamental problem that they face is a double spending problem. How
do you prevent someone from spending money somewhere? And then before that transaction has concluded,
spending that same money somewhere else. So you're talking about like, you put like $20
into an E wallet, quote unquote. you know, not Bitcoin, but you put in like $20 into an e-wallet
and then you spend $10 on a service. And then before you can spend, before that transaction
is complete, you spend that same $10 on another transaction that they both go through. Is that
the idea? Right. Or only one goes through, but either way, whichever one goes through, like
it could be that, yeah, it's a way that you can possibly scam people. It's a, It's a common
flaw in attempts at digital currency, and it's one of the hardest problems that we've faced.
And we're gonna go into that in some more detail as well. Okay. It's borderless. So you can
actually keep Bitcoin in your brain. You can create what's called a brain wallet, and you
can... Travel the world with this bitcoin stored in your head and when you need it you can access
it. Sounds insane but I like it. I mean there's been times in the past where people are leaving
war zones or whatever and they're trying to bring whatever they can with them and if you're
entering or crossing through a country that isn't necessarily friendly to you people can
have their livelihoods and wealth stripped from them. And so this is a safe way to travel and
not have your money at risk and you can take all your money anywhere with you. There's no
banks. You are your own bank. It is a really good hedge against inflation. So if you remember
back to our economics episode and our earlier talk today about inflation. Inflation is the
act of diluting the money supply, printing more money, right? And so if you have a thing that
is cryptographically secure and will only ever have a certain amount versus something like
the dollar, which will continue to inflate every year, and you need to park your money somewhere,
are you gonna park it in the thing that's constantly losing its value? Or are you? where you're
going to take the option to park it something that's only going to gain in value in the long
run. So it's a really good hedge against inflation. And you can make a lot of money for now. And
the reason I say for now is because ideally, let's say there's a potential future where
Bitcoin is the money of the world. Right. And once it has already achieved that status and
it's stable at that status, at that point, just owning Bitcoin isn't a way to make money anymore.
Right. Necessarily, other than through the deflation, natural deflation that happens. So paper monies
are inflationary, hard monies are deflationary, gold and Bitcoin. Deflationary means just having
the money does actually... get a little bit more valuable over time. The more you can hold
onto, right? It would actually be a viable strategy. To save. And just save. And because you're
not an expert in investing, don't invest, just save your money. And you know that when you
retire, it'll be worth more. Right. Just based on the fact that you saved that amount, and
that amount did not circulate during that time. Right? Right. Well. the population grows, the
economy grows, there's more people, more products, all chasing the same amount of limited money,
and therefore the value has to rise as the economy develops and as time goes on, if you're in
a deflationary money.
Got it. Cons for Bitcoin at the moment is it's low adoption. Right. And you get people. Yeah,
there's not a lot of people who actually use it as money right now because its main value
is as a hedge against inflation. And so people mainly use it as an investment. Shading and
stuff, yeah. But there are places that take Bitcoin as payment. Yeah, you bought a laptop
using Bitcoin, right? Or did you convert it and then? No, I actually bought it with Bitcoin.
Well, technically what I did was I bought Amazon gift cards with Bitcoin and I used those gift
cards to buy the laptop. You were able to buy Amazon gift cards, right? Was that some kind
of third party company that did that? Yeah, there was a company. I don't think they're
around anymore. There was a company that took advantage of Amazon's Amazon has this thing
where it hires people across the world in lower income countries and stuff to do work for them.
And they'll pay them in Amazon credit. But a lot of those people who receive those Amazon
credit, they can't use it for everything or even at all, depending on where they live.
And so they go and sell their Amazon gift cards. Gift cards, yeah. Or whatever they're paid
in on the market. for whatever, as much money as they can get. And so there was a company
that would allow you to essentially buy gift cards and buy Amazon credit with Bitcoin, because
those people could use Bitcoin where they couldn't use the Amazon credit. And I remember you were
saying, I remember now that you were saying that like, you could kind of like set your
price. Like you could kind of like choose how much Bitcoin you're willing to give for. Right,
so you can like, essentially like, You fill up a shopping cart on Amazon, and then you
post it on this website. And then one of those, and you set how much of a discount you want,
and then essentially one of those employees who needs Bitcoin will go through and pick
which thing to buy for someone, giving them the Amazon, using their Amazon credit to buy
that for you, and then receiving the Bitcoin in return. Gotta love the internet. Dude, yeah.
One of the problems or the downsides in Bitcoin at the moment is the type of government regulations
that are around it depending on what country you're in. For instance, in the US, the law
that the IRS has, the ruling that the IRS has said for Bitcoin is that it's essentially gets
taxed at capital gains. Oh, for any profit gained from it? They basically classified it as a
commodity. So you, anytime you convert bitcoins to dollars, any profit you made off of that,
you're supposed to pay capital gains on that.
But that's not a problem if your strategy is to hold for the long term Yeah We have you
need that money you're gonna end up paying capital gains. Yeah one of the problems that Bitcoin
has had in the past, but it's mostly solved now has been like confirmation times As far
as transactions go? Yeah, which is a little too early to explain how that works but essentially
new blocks get created every 10 minutes and You need a certain number of blocks after you
need to be included in a block And then you need a certain number of blocks in order to
for it to be considered Absolutely final and secure depending on the size of your purchase
So like if you wanted to buy something really big like a house the person receiving would
want to wait a lot of blocks. And if you're buying something small like a cup of coffee,
it could be inconvenient for the coffee shop to wait 10 minutes to know if your payment
went through. I see. But there are solutions to that already. Anyway, so let's talk about
it. How does Bitcoin actually work? Yeah. So.
The main problem that Bitcoin solves is something called the Byzantine generals problem. And
this has been a problem going back in history. And Bitcoin is the first thing in history that
has solved that problem. And so I actually have a video queued up here that we can watch about
the Byzantine generals problem. So here we go. Let's do it.
I'm going to explain it by using an ancient problem that Bitcoin claims to have solved.
It's called the Byzantine General's Problem. And until now, it's been unsolvable. The problem
goes like this. How do you make absolutely sure that multiple entities which are separated
by distance are in absolute full agreement before an action is taken? In other words, How can
individual parties find a way to guarantee full consensus? Here's the example. Imagine that
you are a general in the Byzantine army and you're planning to attack an enemy city. You
have the city surrounded by several battalions, each of them camped several miles from the
other, and each of them led by another general. A coordinated attack on the city from all sides
at the same time will be but an uncoordinated attack will likely end in defeat. You have
decided to attack at dawn, but you have no walkie talkies or cell phones, and signals from flags,
torches or smoke could be seen by the enemy. How do you make sure with absolute certainty
that all of the other generals reach consensus and all attack together at dawn? You could
send messengers on horseback, but what if one of them is captured or killed before delivering
the message? You would need to have a reply from each of your generals confirming that
they have received your message, which means that they would have to send messengers to
you on horseback, but what if they are captured or killed? What if a messenger is captured
by the enemy, and an imposter messenger with a fake reply is sent back to you? And how do
the other generals know that the messages that they received from you are genuine and haven't
been intercepted and altered by the enemy? Worse yet, what if some of the other generals are
traitors and they send messages back to you confirming that they will attack at dawn when
their true intention is to retreat? How can you ever be absolutely certain? that all of
your battalions will reach consensus and attack simultaneously. Like I said, this problem has
remained unsolved for thousands of years, and at its core, it's all about individual parties
being able to trust each other directly, no strings attached. Bitcoin claims to have conquered
this problem. Now imagine that the battalions are actually computers on a network, and that
the generals are copies of a computer program running a ledger. A ledger that, via some very
complex math, records transactions and events in the exact order that they happened. The
key here is that all of these ledgers are exactly the same for everyone. As soon as a change
is made on one copy of a ledger, if it is proven to be true by the math, all other copies of
the ledger are updated to match. What we have here is a distributed ledger that is also always
in consensus. This is one of the first things to understand about Bitcoin. It is the first
full consensus distributed ledger mankind has ever seen. This network can be expanded across
the entire planet. It means that individual parties on opposite sides of the world can
come to consensus on an event without requiring any third party as an intermediary for trust.
Whether it's an order from a general to his troops, or an order from you for a pizza, a
distributed ledger confirms, via math, whether an event is true and records it permanently.
Bitcoin The first full consensus distributed ledger is a trust machine.
Yeah. Pretty good. That's an interesting, yeah, that concept of the generals problem, right?
So. Let's explain how Bitcoin works. Let's walk through what actually happens in a transaction.
Yeah, please. So I'm going to, you're going to buy me a coffee, and I'm going to pay you
back with a Bitcoin. OK. Do I buy it with Bitcoin? Doesn't matter. No, it doesn't. The example
is just me paying you. And you're getting a whole Bitcoin for coffee. So you better be
happy. Woo, baby. But this is in a future where one Bitcoin is one Bitcoin? Yeah, yeah, yeah.
Sure. I'm not making $70,000 off a cup of coffee. So you give me the coffee and you give me your
Bitcoin address, okay? So you'll have what's called a wallet on your phone or on your whatever.
You'll have an address. You give that to me. I take that and I input it into my wallet to
start a new transaction. I say, I wanna send one Bitcoin to Drew's address. And then I sign
that with my digital signature. And then I broadcast it to the Bitcoin network. So that's the first
thing that happens. So once it goes to the Bitcoin network, it starts propagating around whichever,
the Bitcoin network is run by people called miners, and we'll explain that concept here.
But essentially, some of the miners are gonna hear that transaction and they're gonna rebroadcast
it across the network in a peer to peer style until it's like transmitted through the network.
This is all happening silently. Like there's no like, yeah, this doesn't, our involvement
is basically done as soon as I send that transaction, except you may want to watch the network and
see when that transaction has gone through, been processed or in Bitcoin we say confirmed.
Yeah. Okay. So, excuse me. So I send. The transaction is now sitting in what's called the mempool,
which is the memory pool of all the floating unconfirmed transactions. Going on at one time,
at any given time, right? And then what will happen is that the miners are trying to create
what are called blocks. And so Bitcoin is just a ledger. A ledger is just like a list of transactions
that have happened. This address sent this address this many coins. This address sent that address
this many coins. It's just a list of transactions. From address to address. For a specific amount
of Bitcoin. Right. And so all these floating unconfirmed transactions get scooped up by
a miner and assembled into a block. Okay. And then what happens is the miner starts hashing
that block. Okay, so let's talk about what hashing is. Please. So hashing hash is a mathematical
operation that allows you with like a particular mathematical operation to put as much data
into it as you want. And it will spit out a random assignment of like letters and numbers
to attribute to what just happened. It essentially like obfuscates the data, right? So the hashing
algorithm that Bitcoin uses is called SHA-256. It's used all over the internet and in your
web browsing, your email, it's all over. Anyway, SHA-256 outputs 256 ones and zeros. So I can
put in a book, I could have a shop 256 equation process, a novel, or a podcast, or a video,
or a Bitcoin transaction, or a block, it doesn't matter what it is you put in, you put in a
sequence as long as you want of ones and zeros. And that's shop 256 algorithm will chop it
up and turn it into a random assortment of 256 ones and zeros. OK. So 256 is the number of
zeros and ones it's going to change it into, basically. Right. So you give it a thing. You
give it some kind of data, and it's going to change it into this. OK. Right. And what's
special about hashing is that you whatever you want in and get out a hash but what you cannot
do is take the hash and reverse the math to turn it back into what it originally was. So
it's a one-way conversion. Okay and so it's also computationally expensive if you have
to do a lot of these hashes. And so what essentially Bitcoin is doing, what these miners are doing
is they're taking that assembled block, they're feeding it into the SHA-256 algorithm. And
then- Just using their CPU. Which is gonna spit out a number. Well, there's requirements for
what types of blocks or what output of the SHA-256 is acceptable. It's called the difficulty setting
in Bitcoin. And so what they do is they set it so that, yeah, I want you to output 256
digits, but I need the first 18 digits to all be zero. And if the first 18, 15, or what did
I say? You said 18. The first 18 digits aren't zero, then the rest of the network will not
recognize that as a valid block. And so you have to keep running the shock to be the CPUs
because it's constantly trying to run right to match. What is the requirement? Yeah. So
inside that block, there's a thing in there called a nonce, which is just a number that
you put in to add randomness to it. So that's the randomness generator. Right. So what you're
doing is like you start your nonce at zero, you hash it. You see if you get 18 zeros, you
didn't. You change that number, you hash it. You didn't get 18 zeros, you change that number,
you hash it. So who sets the requirement for the 18 zeros then? The network does. And the
network is the combination of all of the different miners or what? So back when Bitcoin was new,
they could keep the difficulty of the hashing relatively low because there wasn't as many,
the network wasn't as big, there wasn't as many people mining. Right. Right? So now, so the
problem then became making sure that the miners weren't the problem or weren't becoming the
problem. So you had to add a level of security to maintain the miners. Right, so essentially
what's happening is there's miners all over the world who are constantly trying to mine
the next Bitcoin and mining the next Bitcoin means... successfully hashing the next block
into the correct difficulty. Gotcha. So everyone's computers all over the world are chugging away
on these hashing algorithms, hoping to come up with the one that has the proper difficulty
setting. As soon as they do, they broadcast that block to the rest of the network. And
that's a Bitcoin. No, well, that's a block on the blockchain. So what is a... As a reward
for finding the block, one of the things they put in that block before they start hashing
it is a Bitcoin reward to themselves. Gotcha. So they get a percentage of a Bitcoin for the
reward. Right, so when Bitcoin started, the block reward was 50 Bitcoins. God damn. Yeah.
But Bitcoin wasn't worth anything back then. Sure, sure, sure. But I'm just thinking. Every
10 minutes, there was another 50 Bitcoins that came into existence. Right, right, right. What
does it add? And that's what we looked at earlier. That's this thing. So every 10 minutes is one
Bitcoin? Or is one block? So it's one block. How many Bitcoin are being created? So, before
I get to that. The other thing about the hashing of the blocks is that... the difficulty gets
retargeted every two weeks in the software code, okay? But is it the same difficulty across
the board for everybody? So they can add, yes, it's always the same difficulty. The network
agrees that the difficulty needs to go up or down and every two weeks it adjusts up or down.
I see. And the reason it adjusts up or down is to target, it essentially, it will rate,
let's say, someone gets lucky and hashes just happens to hash a block two minutes after the
last block was created. If that only happens once, we don't need a difficulty change. But
if the Bitcoin network keeps growing and more and more and more people are mining, then statistically
that will drive the amount of time it takes for someone to solve a block. It'll drive it
down. And so in order to put the block time back at 10 minutes, the network will up the
difficulty. They'll require more zeros in that hash output. I see. Is it always like a zero
for the difficulty? It's always zeros. Yeah, so. I was gonna say, couldn't you add more
difficulty by requiring, I need a one at seven, and I need a zero at eight. Maybe one day,
yeah, maybe one day. I was gonna say, because eventually, but that gives me hope that there
is an infinite amount of security to this. Yeah. Or at least as far as the mining goes. You
could make the difficulty so hard that we may never reach the point. I mean, sure, there
is a projected date of 2142 or whatever the date was that you projected earlier, right?
But that gives me a lot of hope that they could elongate this even longer. And as long as people
are using it, obviously, once we get to the point where people are using it regularly for
our normal, you know, day to day stuff. It'll need to get to the point where there's enough
of it. But unless there's smaller coins like the Doge or the Ethereum's or the these other
coins. So right now there is about.
Six.
million terror hashes per second. And a tera is like a terabyte. That is a lot of hashes
happening every single second. And that's people trying to crack the code of it. There are so
many computers across the world hashing Bitcoin right now. Let's talk about the CPU and how
much taxing that is on a computer system. It's super taxing. So when Bitcoin first started,
the difficulty setting people with just like a laptop could run the Bitcoin software and
use their CPU to hash. Yeah. Okay. Then as Bitcoin started to grow and more and more miners, they
started increasing the difficulty. Eventually the difficulty in the total hash rate of the
network became such that you need, like just using a GPU or a CPU wasn't good enough. And
so people started, stacking a bunch of GPUs into a computer and making the GPUs do the
hashing because GPUs are really good at parallel processing. And so, then Bitcoin moved to the
GPUs and now all of a sudden, that's why GPUs became really hard to buy for a while because
when crypto value goes up, people start buying a bunch of GPUs to start mining with. Just
as a side note, I want to, and I know I've got a buddy who may or may not be listening to
this podcast, but we used to work in a college town and the property we worked at provided
free power. Oh, so there was probably people in there running Bitcoin mining. So we had
an apartment we had to inspect. It was just a standard inspection. It happens like. you
know, twice a year or whatever. This person had been living there for four years because
they're a senior in college now. And we walked in and he wasn't home, but we walked into their
room, their entire closet. Walk-in closet was filled with computers and it wasn't just computers
like it wasn't like a Standard like you would look at what I'm like open motherboards with
easy breathing room Literally their door they replaced their door with box fans. Yeah blowing
air out. It looks like a drug Go we had a operation. We had we had to move the fans to be able to
go in there and there was Just stacks of CPUs and GPUs running. Yeah They were all connected
to like a central hub. That was a smart kid. Because the thing is, if you have an arrangement
where you can get free power, the main cost to a miner, you might think it's the hardware
because it gets expensive, but no. The main cost is the power. Because when enough people
start mining, it drives that cost down to, anyway. And there was more than just him, but he was
the biggest. He had his entire closet filled with it. That was the biggest I've ever seen.
Places with cheap power are usually the places that are big in mining. Yeah. You'll get giant
warehouses set up near hydroelectric dams and stuff. There's some areas. Where it's cheap
as hell. I think China outlawed mining there, but at some point, they had all these hydroelectric
dams for expansions that they had planned. Oh my gosh. But. that the expansions didn't go
through, like the cities that people never moved into. And they got these hydroelectric dams
that are supplying power to no one. And so you get these companies that will move out there
because the power is so cheap just to do mining.
That's crazy. You know, just as a side note, it's crazy that China did all this infrastructure
for all these cities that nobody moved into. That's crazy. Yeah. That's crazy. There's ghost
cities in China because they built all this infrastructure thinking that people were gonna
move into these hubs and then they just never did. Crazy. I mean, there's ghost cities here,
but for different reasons. Yeah, no. But there, they like, they like. It's like an old gold
mining town that went dry or something. Right, but like, this is like a, like a, like, you're
thinking about like, feudal China and how they like. Or a place where like a factory closed
down. Right, right. Like, Detroit's becoming a feudal city, you know, or a ghost city in
a sense. But anyway, but yeah, like China like fully set it up to be like, they wanted people
to move in. Like, they fully set it up. expecting that people would influx into the city, trying
to stimulate some kind of economic growth or whatever. It's not a natural economic way for
a city to develop. That's not how cities come to be in history. Anyway, yeah. Sorry, I said
no. Yeah, no worries. So yeah, tons of hashing. So yeah, CPUs were used and then GPUs. And
then someone developed what's called an ASIC, which is an application specific integrated
circuit. So it's a particular piece of integrated circuitry that is purpose built for SHA-256
hashing. There's no other circuitry in there. for any other purpose. Its entire design is
for shaw hashing. So you don't need to buy a specific Jeep or any kind of The problem with
GPUs is they're massively parallelizable. Parallelizable, but they are. Say that 10 times fast. Yeah,
right. But they have so many functions. And so there's a bunch of your potential processing
power that gets left at the table. Right. because it's not meant for that. Your max is probably
40% of the GPU's power because it's meant to do other things. Right. And so there came a
point where ASICs got popular, and it's never gone back since. So now, even if you have 10
of the best graphics cards, you're not going to compete like Bitcoin mining. Gotcha. So
there's specific mining rigs. Right. And so what people end up doing, because they still
want to mine with all these graphics cards they got, is they'll mine one of these other cryptocurrencies
that are not Bitcoin and that have a low enough hash rate that their graphic card can produce
a bunch of it. I assume. Yeah. So they're still making some money, but they're not doing it
at the rate that they might have been with Bitcoin. Right. So at least the value.
is crazy. How a block is created is by hashing. Okay. And the reason it's called a block chain
is because the nature of the block is that so you see how like having a competition for whoever
proves that they use CPU power in order to generate a block. that can be verified by everyone mathematically
that block is valid, because all you have to do is look at the number of zeros on the hash.
Right. And then essentially what you do is inside that block, you don't just have your block,
you like your Bitcoin reward as a miner, all the transactions you included, but you also
include the other, the previous block. its hash as part of this block. To prove that you were
in a line. That's how these blocks chain together, hence the term blockchain. Okay. And so...
As each block gets added to the chain, your transaction for that coffee that we did will
end up further and further back. Which means if you wanted to go and get your money back,
or I wanted to go and get my Bitcoin back that I sent you, I would have to... have more processing
power than the entire Bitcoin network and recreate the last three or four blocks faster than Bitcoin,
the entire network could keep creating blocks. And so the only thing Bitcoin is actually susceptible
to as a security risk is what's called a 51% attack. And that's basically where, just by
context, that's basically where like, there's enough people to attack it in a sense. So essentially
what that means is if you have enough processing power that represents 51% of the processing
power of the entire Bitcoin network, then you will process more blocks than anyone else because
you have more processing power than anyone else. And if you have more processing power than
anyone else, you can send. money to someone, buy something expensive, and then rewrite the
blocks and make a longer chain because the way Bitcoin works is whichever chain is the longest,
the network always agrees to always use the longest chain. So if you spend a bunch of money,
go buy a Ferrari and then you go back with all your processing power and mine so many blocks
that it outpaces the rest of the network, the rest of the network will see your longer chain
and switch to it. And now all of a sudden you got a Ferrari without money spent. Whoa. But
you would have to know because it's too secure. It's too much processing power. The the idea
of having enough processing power to have a 51 percent of attack is just unfeasible with
the size of Bitcoin. You got to be talking about like multiple countries worth of like. everybody
doing the exact same kind of like thing, right? Focusing all of their processing power. You
would need more ASICs than are producible in a year. Right. Like the entire world would
know based on ASIC supply shortage that someone's trying to make a move. Right. Like it's just
not feasible to have a 51 percent attack. To have 51 percent of the ASICs, you'd have to
have. the ability to produce more ASICs than anyone else, which, you know, like it's just
not feasible. It was just a red flag, and then everybody would know that something's up, and
then the purchase itself would have to be- And then the price for those would go up. Right,
and also the purchase itself of whatever you're trying to manipulate would have to be so worth
it. If you're just going for a Ferrari, like, whoa. Right. Come on, what are we doing here?
Well, because the other problem is, Obviously, you spent enough money on the ASICs. You don't
need to worry about it. Exactly. You spent so much money on these ASICs that you could be
making a fortune just in block rewards. So why would you, like, by doing a 51% attack, you
would have attacked the very network that you just invested so much in, that you're getting
so much out of. Right, right, right. Yeah, it doesn't make sense. Yeah. Which is that is
why bitcoin is secure and you'll hear people complain about how much energy bitcoin uses
But it is the very fact that it uses that much energy is what keeps it secure And in the long
run if bitcoin is the money for the world the amount of value that it's protecting for the
amount of Energy it's investing is actually like it's a good ratio. Well, and plus eventually
we'll get to a point where it won't need to be investing that much energy into it as much,
right? Right. It'll get to a point where it plateaus. It'll always go up. The energy use?
Well, the hash rate will likely always go up. Because if it ever stops. and our efficiencies
and our ability to design chips keeps going but our hashing doesn't keep going with it,
then eventually we could be susceptible to a 51% attack. Right, yeah, I guess that makes
sense. Plus, miners want those sweet bitcoins and so they want to try and get as much of
a chunk as they can and so they keep investing in more and more and more and more hardware
to get a higher percentage of the blockchain mining pool. I guess eventually we just have
to hope that that... that Bitcoin leads to a world where energy, it leads to the investing
in a world where energy is not a problem anymore. Yeah, so if you're concerned about a waste
of energy, there's another side to the argument, which is that Bitcoin can actually be a reason
to create more and more energy that the world needs, because you can... One of the main problems
with energy creation is as distribution and storage, right? Like if you're a power plant,
distributing it across lines is wasteful. So you need your power plant to be like somewhat
in relatively in the area, or else you're gonna lose a ton of energy by sending it off somewhere
far. And what you're producing isn't necessarily always needed by the... population and depending
on the technology over producing, that energy still has to go somewhere. And so it's a real
tricky business managing cycling up and down a power generation facility. All right. And
that's true. So like a hydroelectric dam will have like multiple generators they can turn
on. And you'll see if you drive near one. Sometimes they have all the spillways open, and sometimes
not. Most of the time, yeah, not. And that depends on what level of energy usage is needed at
that moment. So you're basically saying that when the energy usage is high, we'll basically
just open all the floodgates for all of these different. you know, facilities and when it's
low, they can keep their production up and still make money by selling that energy to miners.
Right, because the energy is being, you know, can be used and can be generated. It's more
of like the usage is not matching what the capabilities are. And because Bitcoin, mining's main cost
is energy, they're sensitive to the energy price. So like, during peak hours when the energy
is needed most and the price goes up, they wouldn't necessarily be as interested in buying that.
But then down on the down hours where they would normally start winding down their thing, they
can keep it running and buy cheaper energy. Which also, yeah, it's more cost efficient
because winding down costs money. Right. Just winding it down. Well, and it also can be dangerous
because it takes time, depending on the production technology, to wind it back up. Right. The
wear and tear on the equipment is higher because just like when you're like the idea of like
starting your car or like idling your car. Like if you're running on a freeway at a constant.
velocity, it's easier on your engine than going up and down and fast and slow and starting
and stopping and turning in city traffic, right? Same idea. Same idea. So Bitcoin can help equalize
those spikes and valleys of energy production by buying the energy when it's cheap and no
one's using it to allow them to not have to spin it down constantly. Right. So avoiding
wear and tear. helping energy companies get the extra funding they need. So that we can
get more safety involved in all these things. And we can have more money going into producing
more ability to provide more power. The infrastructure will grow, right? People are worried about
all these wildfires and stuff going on. It's a lot of times it's because of that. Like,
you get a lot of these, like, oversaturated lines and they're near power. Like, they just
don't have the infrastructure to, like, cost. or the money to be able to pay these people
to go clear these lines. Like these people charge a lot of money to go up, fly helicopters to
chop down trees near power lines. Like that's an expensive business, you know? Yeah, so yeah,
it makes sense. Essentially, once that miner mines that blocks and that block and post it
to the blockchain, you on your wallet, you could receive that. You would see the transaction.
Your wallet will pop up. You'd receive payment. It has one confirmation. And then when a new
block is added to it, it's two confirmations. And when a new block is added, it's three confirmations.
So the higher your confirmation count, the more secure, the more mathematically secure you
are that transaction can never be reversed. And so if you're selling a coffee, just the
fact that it posts is probably enough. But if you're selling a Ferrari or a house or a corporation,
you're going to want to wait a bunch of. Confirmation 20 30 40 50 depending on the size, right? Okay,
that makes sense. Yeah so that's the basics of how it works and We're over again. So Let's
in fact, we're almost at the next one. We'll probably just take a I mean We'll probably
just take this break and we'll finish it out after this. Yeah. Yeah a couple breaks in this
one make Bitcoin a little more clear to you than it has been in the past? Yeah, I mean,
I remember you explaining a lot of this to me. It went out when a lot of this was first starting.
But yeah, it's definitely more clear because I'm older. I understand things a little bit
better. Right, right. I was pretty young when you first started explaining this to me. I
was like, yeah, that's sick. I remember. You know what's crazy, while the music's playing
is, you used to pay me in Bitcoin. I did. And I lost that first wallet that you ever gave
me. Yeah. That first wallet that I created when you started buying, like, paying me. Yeah.
Like, oh my god. I've done that to a number of my friends. I'll, like, go out to lunch,
and they'll buy my food, and I'll pay them back with Bitcoin, off of the pay them cookie. And
you know how you have to have the recovery path, like the recovery phrase? I had a notebook
that I kept with me, kept with me, religiously and then I moved three times within like two
years and lost it and I lost it And that phrase is gone and I can't recover that wallet anymore
unfortunately. All right. Well, we'll talk about security here coming up Yeah, I'll see you
in a bit
you
Yeah. Ahhhhhhhhhh kshhhhhh ahhhh yeah.
We actually made that song for a commercial for Reason. Okay, that makes sense. Yeah. That
was a whole project with our whole studio group. John was then oh was that for the for this
thing for the propeller head Yeah for the propeller head balance the balance that we're using currently
well actually no This was for a different one of their project products We did one for that
and that was like your first one you did with them, right? Right, right balance this one
was like a sound pack and we use that sound pack to produce that song. Okay It's called
soul school
Pretty dope. Coco, co? Anyway, yeah, we're talking about Bitcoin. We are back to Bitcoin. So we
kind of left off on the security of it all. Yeah, we had just kind of walked through the
essentials of how it works. What I did leave out is how the signatures work. Yes, I was
going to ask you about that. The wallets and the signatures and stuff like that. So you've
probably heard that Bitcoin isn't exactly anonymous, but it's pseudonymous. So what that means is
all your transactions that happen, they don't have your name attached. Instead what they
have is wallet address attached. A pseudonym for what you want to be represented, like the
representative of you basically. Yeah, and so the way that works is through a special form
of encryption called private key, public key pair encryption. I don't know the official
name, but it's essentially two numbers. that are related through a super complicated mathematical
formula in such a way that you can use one number to generate the other, but you can't use the
other one to generate the first number. So it's one way again. Again, one way. So you create
your backend key that you know. Right. So you'll have a private key and a public key. Yeah,
so the front end is not something that can be reversed to know your private key. Right. So
the public key is your Bitcoin wallet address. OK. The private key is the thing that only
you know that you use to sign transactions that prove that it came from your wallet. And what's
so clever about the math? of this private public key encryption is that people who want to be
sure that signature came from you, they can use your public key and do math on it to verify
that this particular thing was indeed signed by the private key associated with that public
key. Even though they don't see it. Even though they still can't know what the private key
is. So it's cool math in that, yeah, you can keep that secret of the private key while still
the public key is useful. Right, and that goes back to what you were saying about being able
to have all of your Bitcoin in your head. You can have your whole wallet stored in your head.
As long as you memorize your private key, you have all of the, you have access to all of
your money, your Bitcoin. And so there's essentially a specific process that can be done to generate
like a series of words that represents that can be reverse engineered to recover your keys.
And so you could actually even create a wallet that has never touched the Internet, just using
the math like you can have it spit out those 12 words. And you can use those, keep it in
your head, take that public key, put some Bitcoin in it, and then never even have an internet
connected wallet. As long as you know the 12 words, you can use that as your public key?
As your private key, right. What about your address though? Because you need to give that
to people to pay you. The address is the public key, right. So you would take that, but...
Instead of memorizing the crazy long private key, you memorize the 12 words. For the private
key and that gives you access to it. So you can, as long as you've had internet connection
at one point to enable, to enable the You don't even need to have had it. How would you have
given your public key to people? Uh, well, I mean, you could text it to someone. Like, let's
say you have regular phone. Let's say you have regular phone service, but no internet. OK,
OK. You can still create private public key pair with a 12-word backup and text that public
key to someone. But still, you need some sort of connection, right? Right. It's ideal to
have internet. Yeah, obviously. But so basically, so let's just say like, let's just say in modern
times, right? If you were in a war-torn country and you had access to internet your entire
life, but all of a sudden, your life is- things have turned upside down and you remember, as
long as you remember your private key- And you want to leave the country, right? As long as
you have memorized the 12 world, 12 word private key that, gains you access, you could leave
the country with nothing physically. You can take all your life savings, pop it into Bitcoin,
memorize that 12-word key, and then go wherever you need to go as a refugee to get your life
out of danger. And then whenever you get where you're going to end up at, like you get established
again, you get your internet connection, you can recover the wallet with those 12 words
and have access to your coins. Right. Another popular way is to create a paper wallet, which
is essentially just taking those 12 words, printing them on a piece of paper, keeping them in a
safe. Which I should have done, but I didn't have a safe at the time. Yeah. I don't think
I had a full coin or anything, but I still had a decent amount. Yeah. Did you tell that on
the air? I think that was between. Oh, did I? I don't know. I think I told it on the air.
We should talk about that though, because, so that's a thing that happens in mid coin. The
thing is because, if you lose that private key, and you lose those 12 words, you will never
be able to access those coins. And that's a security feature, it's that way on purpose
so that no one can steal from you. but it also means that you are responsible for the security
of your own wallet. Let's talk about security because you want, the private key is essentially
the keys to your bank account. Imagine right now you got a bunch of money set up in a savings
account. You wouldn't go to work and leave your savings account password. on a post-it note
where everyone walking by can see it. And so in the same way, you want to keep your private
key as secret and safe as possible. Somewhere where you can always recover it. Right. Yeah,
basically what had happened, if I didn't tell it on there already, is Gene had sent me, when
a lot of this had first started, I was investing small amounts because I was, you know. You
know, I just didn't want to put too much money. I was putting like $10 here and there. I think
I had gotten up to $100 at one point of my own money into it. And Dean was also, anytime he
was paying. Oh, that's probably worth a lot. I know, no, I know, I know. But Dean, I don't
think it was fully out 200 because I was also paying you with it as well. We were basically,
any transaction between me and you at that time, we were just using Bitcoin. And so I was paying
you in Bitcoin, you were paying me in Bitcoin. And at some point, I had moved like three different
times within like a year or two. And I written down my 12 word. you know, recovery. And I
had access to my wallet the entire time, but there's always a point where it requires your
12 word key to recover it when you're like switching to a new phone and you re-download the app
or whatever it might be. And I lost the notebook that I had kept. I kept all my stuff in it,
man. And I kept all my, and it was always close to me. But I had also gotten a new car. So
there was a lot of transferring of things going on in my life. And I just lost the notebook
that had my 12-word key in it. And I probably did have, I don't know if I had, I don't think
I had a full coin. But I probably had maybe half a coin. It's actually estimated that some
5% or 10% of Bitcoin is just lost. Is just lost. And that's actually part of the features of
Bitcoin as well, because that guarantees that over time, not only will the money not inflate,
but it will actually reduce. Reduce late, yeah. Yeah. And so, yeah, remember we were talking
about the block rewards that started with 50? And it's set so every 210,000 blocks created,
the block reward cuts in half. So the first having,
written down somewhere. Went from 50 to 25? Like what the dates were, yeah. But the first
halving went down to 25, then to 12 and 1 1.5 in 2016. I think the first halving was in 2012.
And then it went down to 6.25 back in 2020. And it's actually next month is the next halving.
Oh, really? Next month, it cuts from 6.25 down to 3.5.
One, two, five, or whatever. So it's really interesting if you compare the halving events
to the price, because it usually spikes around halving events. Interesting. And this is an
interesting time to be talking about Bitcoin, because it's in the news right now for it breaking
its all time record recently. It is booming. And I don't really condone the tulip mania
investment approach in Bitcoin, but if that's what you like to do, then that's what you like
to do. You're risking your own funds by day trading Bitcoin. For me, Bitcoin specifically,
there's other coins to day trade. No, I mean, day trading in general is its own like, Yeah,
yeah. you know, thinking you can like come up with ways to like be more clever than the market.
Like most people who attempt that, it doesn't work out for them. But anyway, for me, the
strategy is just, you look at the fundamentals of Bitcoin, which is that it will be a deflationary
money. or only ever be 21 million, and more and more will get lost over time. It is the
most secure money that's ever existed. And essentially there's nothing to stop it from taking over.
Yeah. And eventually once you know the central banks of the world have printed their monies
into oblivion people are going to take refuge in things like Bitcoin and one day I truly
believe Bitcoin will be the currency that the world uses you know barring a blackout a solar
flare that blacks us all out right and At that point, there's more issues. I think that's
a really hopeful thing. I think it's a really powerful thing because if Bitcoin is the world's
money, that means governments no longer have the ability to tax you directly. They can no
longer seize your assets or your bank accounts. They can't inflate the currency to fund their
wars. Yeah. So imagine a time where you can actually decide you don't want to pay taxes
and all your money is in, you know. Mm-hmm. You know if there's something going on where
you don't agree with you work and get paid in Bitcoin and buy everything in Bitcoin The government
has no ability to get in between that transaction and forcefully tax money from you They have
to convince you to pay taxes It's be willingness to like which is how it used to be they used
to have to convince you to pay the taxes All right, and they used to have like people that
they would like make deals with who would like be their tax collectors. They were the lobbyists
of the time, right? No, not like the lobbyists. Like there would be people who are like influential
in wherever area or like big. Well, lobbyists are people who try and convince politicians
to do things. I'm saying of the time. I'm saying the lobbyists of the time to convince the population
that taxes are a good idea because this is our goal. Maybe propagandists? I don't know, I
guess maybe lobbyists is the easiest to understand. But anyone who had a sort of business where
like people's money had to flow through the governments would try to make deals with that
person to collect taxes on their behalf. And right, but they still have to do convincing.
Right, but they could never really tax everyone, whatever the tax rate was. It was actually
not that hard to avoid paying taxes. But now, yeah, if you work a normal job and you get
a normal W-2 paycheck, your taxes come out of your check before you even get your money.
And so essentially, your employer is the tax collector for the government. Yep. Unless you
can break out of that, build your own business, and you know. But if you start getting paid
in Bitcoin... the things start becoming different. I mean, your employer still could send some
Bitcoin to the government and some to you. But if you set up your own income stream, no one
can take that from you. Well, if it becomes a point where things are happening and Bitcoin
is becoming a major transactionary thing, setting up your own business and receiving all your
funds at Bitcoin, yeah, the government has to convince you. at that point to start paying
taxes because there's no obligation at that point. Other than the fact that your name is
in all capitals and you sign this contract. So for me, putting money in Bitcoin is it's
about hedging for the future against the dollar. It's also about every dollar that gets put
into Bitcoin is one less like blood soaked US
funding the deaths around the world, you know? Like, you know, US dollars are blood money.
Bitcoin isn't. Yeah, I mean.
That's a whole other can of worms to open. Yeah. But yeah. That's my radical libertarian coming
out. That's a, it's definitely, it's becoming more obvious for people, but it's definitely
still something that people have to come to terms with. Like people don't really understand
that. People don't see that as being a reality of where their money, what the money, the US
dollar is doing in the world. Yeah. Right. So let's talk about security. And if you are interested
in getting into Bitcoin, what are your different options as far as securing it? So there's two
main different types of wallets. There's one wallet that is called a custodial wallet. And
there's one that's like a private wallet. I will highly recommend everyone to always use
a private wallet. One that where you. personally have and control the keys to your Bitcoin.
If you don't have the keys, you don't have the cheese. I think it's just like a thing going
around. Long time ago, it was just cheesy, but whatever. Literally. So, if you don't control
the keys, then the Bitcoin isn't actually yours. So what a lot of people do when they wanna
buy Bitcoin is they'll set up an account on like a crypto exchange or like, And sort of
exchange cash app or Venmo is probably doing I think that no, they are they're Venmo's doing
it I haven't seen that. Mm-hmm. I'll check but Whatever method you used to buy Bitcoin Let's
say it's a let's say it's on some online exchange where you can like trade different cryptos
and whatnot When most of those exchanges are custodial wallets, which means that the keys,
the private keys are actually held by the exchange and not by you. And essentially that is no
different than having a conventional bank account where the bank could seize your funds, where
if the bank goes broke or the bank can loan out your money to other people, you have to
trust them. and trust that they're responsible with your money, which is not really much better
than the dollar situation. Same thing. So if you're gonna have a exchange account, that's
fine, do that, but once you buy Bitcoin, move it to a private wallet where you control your
own keys. Yeah. Don't leave your money on an exchange. Some of the biggest heartbreaks that
have happened in Bitcoin are from people. just buying and selling and buying and buying and
buying and leaving all their money on an online exchange and then the online exchange doing
something like skeezy and going out of business, going broke or stealing money or closing down,
there's all sorts of, there's multiple times this stuff has happened. The first famous one
was the MTGox collapse back in like 2011, I think it was. It's just a bunch of people had
their money on exchange and they went bankrupt. They went bankrupt and people didn't get their
money back. So, yeah, if it's on an exchange where you do not have the keys or if it's in
the cash app or in Venmo, it's not your Bitcoin yet. Yeah. Until you move it to a private wallet
is technically you don't control it. So you have to understand that. So if you are going
to have a wallet, there's a certain amount of responsibility you're assuming for protecting
your own Bitcoin. You have to have backups. So I run a wallet that can run on multiple
platforms, so I always have it on multiple of my devices in case one of them crashes. And
then I've got my 12 word passphrase backed up in multiple places as well. So almost nothing
could. make me lose full access to my Bitcoin. Right. And then if you want to be even more
secure, there's things called hardware wallets, where they're essentially little like USB devices
that they keep your crypto safe. But everything has its upsides and downsides. Its upside is
that it's a physical thing that you can control. You can throw it in. You're safe. The downside
is if it burns, if you lose it, you lose your Bitcoin unless you, I think those ones can
also have pass phrases that, yeah. Backed up on some kind of online server. Yeah. Or online
something. I've never had enough to feel like I justified that, but. And then the brain wallets
and offline paper wallets that we talked about before, which is essentially those pass phrases.
Yeah. Yeah. But yeah, if you want to buy some Bitcoin, it is as easy as just using the cash
app, going to there, buying some, and then transfer it to your wallet. And that's an exchange app,
right? So you're holding it all in exchange. Yeah, they're going to charge you a fee, essentially,
to purchase Bitcoin on your behalf. Yeah. And yeah. I think you get lower fees. when you
use online exchanges, I think that's the benefit of them is like you can trade quickly trade
between assets and lower fees. So even now, I would expect to have higher fees. But for
me, it's all about the long run a little bit of fee upfront isn't a big deal to me. When
and the convenience of it too is like you can have like for cash apps specifically is you
can have direct deposit. So like Say you get paid every other week, you can have Cash App,
buy this set amount of Bitcoin every two weeks based on your paycheck. And you can have that
recurring so that you can just always have that. Obviously, you'd want to transfer that out
to a private wallet at some point, especially once you get up to higher amounts. But yeah,
it can do that for you on a regular basis so that you're not having to. constantly go in
there and like do like trading and all that stuff but For the long haul that makes sense.
Yeah A lot of people do speculation and day trading with Bitcoin. I mean, it's pretty it's
continuing to mature The big thing recently is there's ETFs, which is essentially like
these big Conventional financial investment institutions are starting to get into Bitcoin
and offer it as assets and standard portfolios. And so a lot of new money is pumping into Bitcoin
from that at the moment. And that's part of what justifies the price going so crazy right
now. Okay. That makes sense. Some really big players have made some really big Bitcoin purchases
recently. As on behalf of people who are putting in like 401ks and stuff like that. Like their
ETFs are starting to... Yeah. Interesting. That does make sense as far as like this big boom
that we're seeing right now. Yeah. Another interesting thing, like it is maturing to the point like
even... I don't know if you heard this story when it came out, but El Salvador actually
accepts Bitcoin as legal tender in their country. You can pay your taxes in Bitcoin in El Salvador.
It's the first country to use Bitcoin as legal tender. They're actually getting a bunch of
flak from the IMF about it. The IMF is refusing to give them loans because they're using Bitcoin
as legal tender. It's the future, man. It's the future. The people want it. I think it's
just the governments are going to resist as long as they can. Especially, man, one of the
big differences it can make in people's lives is if you live in one of these countries where
the currency is hyperinflating. Yeah. Where you're spending a million dollars of your currency
to buy milk. Like, I'm hedging against dollars, but like, if you were living back in, you know,
Venezuela during the hyperinflation, like, bro, like, put some, you put your money in Bitcoin,
like, you're doing okay. But. Yeah, like there's some countries where you're literally spending
$100,000 of your currency to buy like milk or water or whatever. Right. The other big use
is remittances. So a lot of people will move to a country for a better opportunity and work
hard and earn a bunch of money and then send it back to their home country, to their family.
But depending on how poor or third world that country you come from is, it can be really,
really expensive and slow to send money across the world. And so Bitcoin is a solution for
that as well. Yeah. Especially like El Salvador, right? Like you have people move out of El
Salvador and make a bunch of money and send you Bitcoin that could earn you $100,000 or
whatever. And you can now pay your taxes in your home, pay for your house or whatever it
might be if it's an accepted currency. That's huge. Bitcoin has real value in the world and
it actually is changing people's lives. Yeah. So. regardless of whether you think it's just
a hype thing that a bunch of tech nerds are into and speculating on. At the core. For the
last 15 years. At the core of the technology, it's about freedom, it's about having control
of your own money, it's about not being able to censor someone from being able to interact
economically from the world. Yeah. It actually has huge advantages and upsides, and it would
be a smart thing. This is not investment advice, but I think, let's just say I buy Bitcoin every
paycheck, always, regardless of the price. Now, I didn't used to, and I'm kicking myself for
it. And if your answer to that is, but what if it crushes? Look at Bitcoin's history, look
at the fundamentals, understand the technology, read about it, and learn that Bitcoin can't
really ever crash down to zero because it has too much value in it and it actually provides
a valuable service around the world at the moment. Unless some other big moves are being played
by governments around the world. But well, there's governments around the world that are trying
to come up with their own quote unquote cryptocurrency, but that is BS. It's not real. I mean, they
can really create what they call what they call a cryptocurrency, but it would not be a real
cryptocurrency. It won't be a secure won't be a digital, secure peer to peer trustless inflationless
cryptocurrency. If they create a currency, a digital currency, it's so they can have extra
control over you and so that they can preserve their ability to inflate it, which is to steal
your value every time they do that. So, Bitcoin is a way for you to get out of that. And they'll
have the limitless possibility to inflate it at that point. Once everything's gone away
from paper and there's no more paper money anymore, they'll have the ability to just up and down.
It'll be all based on the market. and what they wanted to do at the time. Dude, people have
gotten rich off of just posting like a QR code of their Bitcoin address, like on YouTube videos
and a getting scene and a bunch of people just like tipping them. No way, do we need to do
that? And then the price going crazy. We should do that, bro. I did. We should do that. I will
be posting our wallet address. Hell yeah. If anyone wants to give us a little tip in Bitcoin,
we'll be happy to accept. That's a great idea.
As far as like other cryptocurrencies, I don't have a huge opinion on them, but I'll tell
you this, Bitcoin is the cryptocurrency. No other cryptocurrency has the hash rate that
Bitcoin has, which means they're not as secure as Bitcoin. Most of them are created so that
people can, they're like, most of the other ones are pump and dump schemes, which is what
people accuse Bitcoin of being. It's people trying to drive up the value of a token. And
then dump it. And then sell it off to buy Bitcoin. And that's people trying to make use of their
giant stacks of GPUs. I get it. But if you're not a highly active, highly educated day trader
who is keeping tabs on the minute all the time, then you're. putting yourself at risk in other
cryptocurrencies. So really do your research. Yeah, I mean, I've had buddies who are doing
the day trading, the day trading type style of cryptocurrencies for a while. And some made
a little bit of money, some lost a lot of money. Right. Yeah, it's definitely something to be
wary of. Yeah, and that's why I don't really advocate it. I'm not against it. I'm just not
going to advocate it. So if. I would I feel comfortable advocating is that everyone should
at least own some Bitcoin Understand how it works set up a wallet send someone some money
like get familiar with how it works because it's not as Scary and you think it is involved
and it's not as scary as you think it's actually pretty simple Once you get it all set up and
once you do it a few times you understand how I get scary in the sense of like Like you've
got to remember this thing and keep it like I've learned. I've learned and lost, but you
know, going forward, like it's not so scary. You just got to learn and live, you know, learn,
learn about it and, and get a group of your friends to all set up all it's together and,
you know, pay each other back and forth when you go out to lunch, you know, and, uh, just
get used to it being a thing and because one day this dollar printing craziness is going
to come crashing down. And the quicker and the more able you are to switch to something like
Bitcoin, the less of an impact that will have on your life. The more you'll be able to keep
moving on. And you won't be so devastated by it. Yeah. So got some a couple of interesting
little points. I did want to talk about Satoshi. I did some math. Oh, yeah. So the guy who invented
Bitcoin, the Satoshi Nakamoto, he, she, they, we don't know if it's a group of people. We
don't know what country. We don't know anything. All we know is that they were on the internet.
back in 2008 through about 2010 when they went dark. 2009 or 2010 when they went dark and
never anyone heard from them again. No more posts, no more nothing. But they were involved
in the development of Bitcoin for the first while and they mined the first number of blocks
and there's, it's not 100% but it's estimated based on like early mined blocks and Bitcoins
that were created early that have never moved. Yeah. There's like an estimate of how many
coins that Satoshi actually has. Yeah, I wonder how many. It's estimated at around a million.
Which. Just a million coins? A million coins. A million coins. Oh, God. A million coins out
of the 21 million that will ever exist. Holy. Yeah. So, at, I guess, yesterday's price now.
Yeah. 1.1 million coins would be $83 billion. Holy shit. Which would make him the 17th richest
person in the world according to Forbes.
Isn't that ridiculous? 17th? You're telling me 83 billion is not the first richest person?
No. I know. 17th richest person in the world. But if Bitcoin goes up to about $250,000,
he will be by far the richest person in the world. And this person seems like somebody
who to hold on to it. Yeah. And a private wallet somewhere safe and sound. Yeah. Also, Bitcoin
is the 13th largest currency in the world. Look at this. Holy shit. Bitcoin compared to the
largest fiat currencies in the world. They've got Chinese Yuan. The Yuan, and this is all
priced in Bitcoin, right? So the value of all Chinese Yuan is 611 million BTC. The US dollar's
behind that in 588 million BTC. Euro, Japanese yen, pound, pound. South Korea is won, Indian
rupee. Then number 10 is Brazil. Number 11 is Australia. Number 12 is Taiwan. Number 13 is
Bitcoin. Wow. And then Swiss franc. Yeah, Bitcoin is just above. Switzerland. Mexican peso. Those
are all below the Bitcoin. Every other country in the world is below Bitcoin. Holy. There
is more value in Bitcoin than most of the countries of the world. Tells you something. The market
cap for Bitcoin right now is at some like... Let me see.
The market cap for Bitcoin, that's the price. Oh, yeah. The price right now is 68,350. As
we speak. 354. March 14th. Yeah, and just yesterday it hit its new all-time high at 73,000.
There we go, market cap. $1.34 trillion of Bitcoin exists right now. Paywall. Yeah, right. And
it's down 7%. Yeah. So here's the thing. If Bitcoin really is the future of money, then
the price is going to absorb the market cap of all the other currencies over time. And
it will continue to absorb them. So it'll just be astronomical. Essentially, the market cap
of all worlds. currency is the ultimate market cap potential of Bitcoin. Obviously, I don't
think Bitcoin's gonna replace everything and definitely not in our lifetimes. I think over
time, I think- 100, 200 years. 100, 200 years, I think, I don't see any reason why anyone
would, I think 200 years from now, people will look back at this time period, this last 150,
200 years and be like, Those people were stupid. Ridiculous, yeah. Why would you take this fake
money from a government? It will be so passe. I mean, obviously, they won't be able to see.
They'll be able to say that in retrospect, not knowing that we didn't have internet. Right.
Just like we look back in the day, and we see things that people did back then as crazy.
Absolutely ridiculous, yeah. But. I think that will come to be a truth in the future because
it's not that hard to grasp the facts involved that if you print more money the value of money
goes down and the only people that benefits is whoever gets that new money. Everyone else
their prices goes up and then their resources get taken by the people who had the new money.
Something like Bitcoin is the solution to that. It's the solution to these rich people just
fleecing the world year by year. The other interesting statistic I heard is even at like the conservative
published inflation rates, it only takes 30 years for the value of a dollar to cut in half.
So if you work and say for 30 years and you keep it in a bank account, you will literally
lose half of your life's work to the government's inflation. So, let's stick it to the man. Let's
put more money into something that is freedom promoting. It's future proof. That's future
proof. Oh, here's another interesting tidbit. The first sale of Bitcoin ever for US dollars.
was back in October 12th of 2009. That's months after the initiat- That's what it was. 10 months
after. And that's this guy. He was the second guy who was involved in the programming after
Satoshi, this Marty Malmy. He sold 5,050 Bitcoin for five bucks. Oh my God. $5.02 in 2009. which
set the first price of Bitcoin at 0.00099
US dollars. Wow. So that's the first ever price of Bitcoin. How much did you sell? 5,000, 5,050?
5,050 Bitcoin. For $5.02. Yeah. So if you convert that. Wow. If you run the math to see what
has the percentage increase been, Bitcoin has gone up at its lifetime 7.3 billion percent.
And there's still crazy gains to be had. So please like buy some for security and hedging.
But like it doesn't have to be for making money. Like, you know. Yeah, just don't put more in
than you can afford to lose Put money aside in Bitcoin though Like if you're gonna be putting
money in stocks or just your savings if you're putting money in mutual funds because it's
safer It's more spread and diverse There's anything denominated and traded in dollars is subject
to fail when the currency ultimately collapses and so If you really want to diversify, diversify
into some Bitcoin, diversify into some gold. Yeah. Lesson learned. The first sale of an
object for Bitcoin, like a purchase, was pizza. So I bought two pizzas for 10,000 Bitcoin.
Oh, my gosh. Back in 2010. Wow. 10,000 bitcoins. So two pizzas, probably roughly $10 a piece,
$20 maybe. Yeah, so at today's current price. $20 worth of pizza, $10,000? At $69,000. Yeah.
Oh my god, if whoever Sold that pizza kept their Bitcoin. It would be worth. Yeah, I don't know
how I didn't just do that Yeah for two pizzas. That's a pizza place. That's no longer a pizza
place. I can tell you that Or their dominoes and they're charging people for shit pizza.
Yeah And they're making tons of money still. I got a couple interesting quotes from Satoshi,
because if you're interested in Satoshi, I'll link to this website. Is he ever writing or
something? No. Satoshi has gone silent. But there's a website called sato And it has preserved
all of his forum posts, and all of his emails, and all of his writings from back when he was
active. And you can read through. Satoshi talking about Bitcoin and actively working with other
people to develop it. It's super interesting I definitely want to read through that. Yeah,
I put a couple interesting quotes though This is from February 11th 2009 He says banks must
be trusted to hold our money and transferred electronically But they lend it out in waves
of credit bubbles with barely a fraction in reserve We have to trust them with our privacy
Trust them not to let identity thieves drain our accounts. Their massive overhead costs
make micro payments impossible.
He uh... November 13th there? Yeah, this is another one. Yeah, someone was asking him um...
or said you won't find a solution to political problems in cryptography. And Satoshi says
yes, but we can win a major battle in the arms race and gain new territory for freedom for
several years. Governments are good at cutting off the heads of essentially controlled networks
like Napster, but pure P2P networks like Nutella and Tor seem to be holding their own. And Tor's
still around to this day. So he's right about that. Pure P2P is the future. and hopefully
you will join that Bitcoin future too. It's a beautiful world. Hell yeah. All right, any
other questions or anything? Anything about it you want me to like cover a little more?
No, I think we did a great job. OK, well, anyone else have any questions, conversation points,
send us an email. Yep. Hosts at dualitycheck.net, or you can also message us on Facebook or Instagram.
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I hope you end up with some Bitcoin in your life soon. Definitely. Love y'all. Take care.
Thanks for watching!