Everything You Need To Know About Bitcoin

Here’s the problem: most people who know a lot about Bitcoin can only speak “tech”.

I was at a conference recently. I was the keynote speaker but had zero talk prepared (as usual). It was a crowdfunding conference so I “crowdsourced” my talk.

I asked the audience: I can talk about entrepreneurship or I can take fifteen minutes to explain Bitcoin without using any technical jargon. Clap for which one you want.

Almost 100% of the people wanted to learn about Bitcoin without the technical jargon.

People are hungry for this. They don’t want to hear about “crypto” or “blockchain”. They just want to know what all this Bitcoin stuff is about.

Back in 2013, I thought Bitcoin was a scam. I was wrong.

First, some credentials.

In early 2013 I had my doubts. I started reading everything I could. Then I got my hands dirty.

I’ve been a coder / programmer since 1985. I decided to code up a Bitcoin only store (maybe the first ever) and sell my book, “Choose Yourself” on it before it was released on Amazon.

It was very hard. I had to develop the store from scratch since there were no easy tools to help me. There still isn’t (hint: business opportunity).

Once I launched it, quite a few people bought my book. I sold a PDF of my book for 0.1 Bitcoin. Bitcoin was then $60 so I sold it for about $6 per PDF. Right now, it’s as if I sold each PDF for $1600. I sold many copies.

I went on CNBC when they heard I was doing this. The anchor asked me, “Did you just do this for publicity?

I said, “Well, I’m on national TV so I guess it worked.”

Another thing worth noting: Most of my customers came from one domain name (they had to submit their email addresses for me to process the sale): Amazon.com. Make of that what you will.

A few months ago I started writing about cryptocurrencies again. I saw so many people getting involved in scams, I wanted to help.

The other day I had an Uber driver who thanked me during the car ride for helping him “get it”.

And last night at a restaurant, the waiter at the end of the meal shook my hand and thanked me for helping him “finally” begin to understand what Bitcoin was about.

In order for crypto currencies to succeed, people need to understand at a basic level what they are. Nobody needs to learn complicated cryptography or blockchain.

Just understand why now. Why this is important for us a society.

TWO CRITICAL REASONS BITCOIN IS HISTORICALLY IMPORTANT AND HERE TO STAY

Just understand these two reasons. Then you will know the potential for Bitcoin. And you will be popular at cocktail parties.

A) THE HISTORY OF MONEY

Every new style of money solves the major problems of the last style of money.

1.. Barter

If I have a bag of rice and I need shoes, what if you make shoes but you only need 1/2 bag of rice. Do I get 1/2 a pair of shoes?

Barter has a lot of problems. In the above, coming up with the rice to shoes exchange rate is difficult.

Then coming up with 1000s of exchange rates just to go out and buy groceries is almost impossible.

PLUS, what if you have to move (your kingdom is attacked). How are you going to carry all that rice? All of those shoes?

Money has two purposes:

  • as a store of wealth / savings
  • to make transactions

There’s a third, which Ray Dalio, the head of the largest hedge fund in the world, Brigewater, told me the other day. But we’ll get to that later.

Barter is horrible as a store of wealth. And for transactions, best case it’s very difficult.

But problems lead to opportunities. Which leads to…

2. PRECIOUS METALS / COINS

Gold and silver are scarce. It’s hard to mine them.

But it’s hard to forge them because you can measure by weight.

So the scarcity combined with the lack of forgery makes them good choices for money. I can convert my rice into gold coins, you can convert your shoes into gold coins, and now we can trade and now we can buy whatever we want.

(Marcus Aurelius on a gold coin)

As a store of wealth, it’s not great but not horrible.

If my kingdom is attacked and I have to move, gold and silver are easily stored and carried as designed jewelry.

BUT, two problems.

One: what if you live in a country that doesn’t have any gold mines. Now you either have to trade for gold or start attacking countries: (this did not work out so well for the Aztecs).

Two: What if you wanted to buy a house right now: are you really going to bring a truck of gold bars to the closing? Or if you have to move to another country and you have a lifetime worth of savings: are you going to ship all of your gold bars to your new home?

People say that gold is “real” as opposed to (later) paper money and cryptocurrencies.

This is not really true. Gold is a rock. But it does have industrial uses (silver is better for this because of price but still…). Gold and silver are great electric conductors, can be used as SILVERware. Can be used as antibiotics (hence great for fillings on teeth).

So we can say that gold money is “backed” by something that has real use with value associated with it.

But we still have to solve the problems above.

3) PAPER MONEY BACKED BY GOLD AND…PAPER MONEY

Countries made paper money that was like a contract with the government that all of that money can be converted into gold.

This was great for transactions (easy to carry paper money).

This was great for store of wealth (put the money in a bank and you can go anywhere). The first banks for paper money backed by gold helped fund every war in Europe in the 1800s. Good job!

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