Casually Explained: Bitcoin

this video is sponsored by incognate now as someone who doesn't get very emotionally attached to a financial investment shout outs to my future children I think the best way to introduce Bitcoin is with a quote from sunz zo's famous blog post The Art of War where he said I fear not the man who's read a thousand crypto white papers I fear the man who's read one crypto white paper a thousand times because if you go on crypto Twitter God forbid there's no more common way to dismiss Bitcoin Skeptics than simply saying do the work so

a few years ago that led me to set aside a day to really dive into and study the Bitcoin white paper one morning I sat down had way too much coffee which for me is one opened the PDF and started reading after just 5 minutes I sat back and thought wow cuz there wasn't any more pages not knocking the content but if anyone tells you they did the work just know what they meant was they read a pamphlet in brief the reason the Bitcoin network was Innovative was because in 2008 Anonymous chess Grandmaster Satoshi Nakamoto

proposed a solution to a problem that have been plaguing digital currencies for decades which is if I want to buy two large pizzas from Papa John's but I have no cash to do it how do I send the money digitally without a financial institution having to verify the transaction Between Us 2 years later this transaction was successfully performed although at today's bitcoin price those two pizzas cost about $615 million about the same as the entirety of Papa John's Market Cap at the time while at first glance it seems like a fairly practical problem to solve

it doesn't really explain why the price has gone up over 500 million per while I didn't have any Bitcoin maximalists say that Bitcoin has gone up so much because one day it'll become the new Global Reserve currency replacing all Fiat on Earth and be worth tens of millions of coin but then there's a whole other group of Bitcoin Skeptics that say it's a scam and all going to zero first of all it's not possible for Bitcoin to go to zero because a guy on Reddit said he'd buy all 21 million for 1 cent each there's

also no way it can go to tens of millions of coin because that would put its evaluation at about $400 trillion this doesn't make any sense because the Bitcoin network doesn't even sell AI graphics cards now that we know the proper price of Bitcoin is somewhere between 1 cent and $10 million how do we know which direction it's going to go if you look at what the experts say legendary investor Charlie Munger called Bitcoin rat poison which is clearly bearish but if you take Michael sailor chairman of the Bitcoin options trading vehicle micro strategy he'll

tell you Bitcoin is a swarm of cyber Hornets serving the goddess of wisdom feeding on the fire of Truth exponentially growing ever Smart hard faster and stronger behind a wall of encrypted energy which I think is bullish but I might have to ask my Shaman I would also like to add that I didn't edit anything here this is literally his Twitter profile the problem I found is that if you ask anyone who's into crypto why Bitcoin has value the most common response is it's digital gold the obvious followup is why does gold have value which

then usually devolves into because it's scarce and because people have valued it since the dawn of humanity and while that's a great explanation for only fans this is the economic equivalent of saying it's a good store of value because it is on the other side people from traditional Finance often make the argument that a digital asset isn't real so you can create an infinite amount of them and therefore they have no value this isn't a very good argument because if digital assets have no value how can the founders of nearly every crypto project rug pull

the whole thing to buy Yachts now while you shouldn't evaluate the effectiveness of a Technology based on the character of people who believe in it I certainly do anyway and Bitcoin in particular has a strong bias towards anti-government sentiment and libertarian ISM if you're not sure what that means imagine if the government were to say because you didn't pay your fair share 150 people died today from an underfunded government program this kind of thing would really rattle a Libertarian because they know that their taxes would have helped the government to get at least a dozen

more even looking at the types of people within traditional Finance versus crypto while there are some who really get it you get the feeling that most of the people in decentralized finance aren't familiar with how the existing Financial system currently Works causing them to often reinvest the wheel and run into the same mistakes that have already happened before take Sam bankman freed in the collapse of FTX everyone in crypto was like I mean there was no oversight or transparency everyone knew it was possible they're just making everything up we we just didn't think they' do

that and that made traditional Finance say what but but what they were doing was illegal did didn't you learn anything from 2008 and unfortunately not because they were 12 for this reason a big threat to the crypto industry has been regulation because there isn't any you can go on binance buy 75 times lever Dogecoin Futures without a single confirmation window and in 25 seconds you'll either make three times your money or lose everything which let's be honest is pretty awesome well this has begun changing a lot in the last few years after so many people

were losing all their money repeatedly there is a lot of environmental criticism brought towards crypto because the process of mining new Bitcoin is extremely energy intensive as the process is done by brute forcing math problems with a huge amount of compute Bitcoin mining was actually banned in China because the government decided the amount of energy being expended to solve arbitrary math problems was excessively wasteful and it would be much more productive to use those children for something else generally speaking the single biggest concern of most people is bitcoin's price because even though it doesn't produce

anything in the literal sense from the time you could easily publicly buy it as a Speculator it is one of the best performing assets of all time critics will argue that saying Bitcoin is the best performing asset of all time is like saying a winning $2 Powerball ticket is the best performing asset of all time but if you bought a winning lottery ticket you would gladly look that person dead in the eye and say correct there are two popular theories of pricing Bitcoin that are thrown around enough to be worth considering the first common theory

is it'll take at least half the market cap from gold because they serve similar monetary purposes which would put them both at around an $8.4 trillion market cap at today's prices or 420k a coin this makes a lot of sense because the biggest Bitcoin bull I personally know is the 76-year-old guy who owns the penthouse in my apartment complex who may or may not be the baron from Dune he owns a commercial weed farm and while weed stocks aren't doing so well the man needs a new backsplash for his kitchen the second common price theory

is the use of a stock to flow model created by Twitter user Plan B and while I'm absolutely strawmanning this a stock to flow model is like saying if you have 100 food and 100 hungry people what happens to price when you have 50 food and 100 hungry people the pattern then checks out in real life down to 10 food so logically you can just keep extrapolating predict if you have one crom 100 hungry people how much higher would the price be for half a crumb instead using this model it currently predicts the price of

Bitcoin in 2030 will be $4 million a coin which is so far beyond even the AI chip theory that the only explanation is that Kathy Wood is about to bless us with a new saga of her shown and manga what's interesting at this point is that with the creation of Bitcoin ETFs regulatory oversight emerging but giving the green light and so much money from traditional Finance pouring into the crypto ecosystem purists look at their ascending token portfolio with Glee as it seems like it's blue skies ahead for prices to climb even further but some people

have started to point out that as time has marched on every day their favorite crypto assets trade more and more in lock step with traditional Financial assets and ownership has become more and more concentrated on centralized exchanges and mainstream Financial products even 5 years ago the whole Space was about disrupting traditional Finance but now it's about cheering on any product that lets you get exposure to the network without being part of it in the hope it drives the price higher just like an Oppenheimer it's caused some some people to dim the lights Adorn their Trilby

and recite with scorn he who fights with monsters should be careful lest he thereby become a monster causing everyone else to say bro I just want to be able to afford a house one day can you please chill the out in my view so far despite a lot of people telling me they've done the work much like the Bitcoin blockchain I'm still looking for proof and personally I haven't been able to find anyone who I think really has a convincing argument for the future of the technology or the price and it's pretty much hopes dreams

and specul all around that is except for one person a Bitcoin talk for a member from 2013 named gamec who during a huge selloff titled the thread I am hodling where he went on to say I typed a d that title twice because I knew it was wrong the first time still wrong whatever girlfriend's out at a lesbian bar BTC crashing why am I holding I'll tell you why it's because I'm a bad Trader and I know I'm a bad Trader and you Traders you good Traders can spot the highs and the lows pit pat

Wing Wong Wang just like that and make a Millo bucks sure no problem bro I should have sold moments before every sell and bought moments before every buy but you know what not everybody's as cool as you the people in between hold you only sell on a bare Market if you're a good day trader or an illusion noob in your Zero Sum games such as this Traders could only take your money if you sell so so I've had some whiskey actually on the bottle it's spelled whiskey he then passed out not realizing the profundity of

his own words because everyone had recognized the hodler in themselves too to me gamec is a man who finally cracked the code on not just Bitcoin but life in general you can't make a bad decision if you never decide you can't have a regret of things could never be different and of course what I've now adopted as my Golden Rule your girlfriend can't leave you for another man if she's cheating on you with a woman now unlike your girlfriend leaving you one thing you can't solve by just saying no is data Brokers getting their hands

on your information who then turn around and sell that data to whoever wants to buy it potentially getting it into the hands of robocallers scammers or God forbid the government this is because you're giving them permission to nearly all the time whenever you sign up for things online but if the inner libertarian in you is getting flustered already the good news is you can use today's sponsor Smith and Wesson just kidding you can use today's sponsor in cogni to contact these data Brokers for you and just say no this is because these data Brokers actually

have to remove your information if you ask them to it's just ridiculously tedious to contact all of them and go through the process incog automates this for you in the most seamless way possible because all you have to do is sign up and immediately it does the work it's so simple that once you sign up you think okay so what do I do now but you forgot the whole point is finding the data you use to sign up since the last time I talked about incog 6 months ago it's done an additional 12 hours of

work and completed a couple dozen more requests if you like to give incog a try you can use the code casually at the link below to get 60% off an annual plan [Music]