7 Minutes!
Bitcoin Explained STOP!
Forget about confusing words like Bitcoin, blockchain, BLA BLA and others…
Let’s first look at the super simplified history of “money”
Long ago… there was no money.
I might exchange my milk for your cheese But what if I have 1 big cow and I want just
your 3 chicken eggs?
I would not give you my whole cow…
I might give you 3 seashells to represent that I got 3 eggs from you every day.
And after I gave you 1,000 sea shells, you could exchange them for my whole cow.
Do the sea shells have value?
YES.
Because 2 or more people have ACCEPTED and AGREED that they have value, and they CAN
BE TRANSFERRED to other people.
And when more and more people accept and agree to use these sea shells, the more valuable
they will become.
One problem… there’s an UNLIMITED SUPPLY of seashells and you could easily CHEAT by
getting more sea shells at the beach.
For the sea shells to have good value, there needs to be a LIMITED SUPPLY for us to use
them as money.
So we stopped using sea shells and started using rare metals like GOLD and silver…
Gold has value because it has a limited supply and some people say that all the gold stored
in the world can fit into one big swimming pool
Gold also has value because it is accepted and agreed by many people to be valuable.
A Common Belief is that “Gold has high value because it conducts electricity and is used
for making products like phones” That’s part of the reason, but gold was
valuable long before electricity, computers, and phones
Silver and oil have much more uses than gold… so why is 1 ounce of silver or oil valued
less than 1 ounce of gold?
One of the main reasons is that gold supply is more limited than oil and silver
So after using gold and silver as money…
Kingdoms and empires used gold and silver COINS with images of the king or emperor (but
still, the value came from the gold/silver, not the government)
In the past, the US dollar represented an amount of gold that you could withdraw from
a bank…
While the British Pound represented 1 pound of silver in England
The Value of money STILL came from gold and silver, and not from the government “commanding”
people to use government money Even TODAY, you can see some governments stocking
up on more gold to guarantee the value of their money
Despite this, the value of government money keeps going down… as can be seen by prices
going up every year.
Why?
For leaders to stay in power, a government must give MORE AND MORE FREE STUFF to its
citizens or its military… or else they will lose their position in an election, revolution
or coup d’etat How does the government pay for these INCREASING
promises of free stuff?
One is through taxes, but this is NEVER enough The government also borrows money…
But taxes are NOT enough to pay for these borrowings and interest
So the government just prints more money for the same amount of gold in the central bank’s
vault In some cases, the government might not even
keep any gold at all… in which case the money might simply represent all the products
in that country When more money is printed for the same amount
of products, what happens?
Look at this Apple whose value is $1 When more money is printed, the same apple
becomes $2 instead of $1.
Same as saying the value of money goes DOWN So the solution would be for us to just keep
gold, right?
Well…
Maybe yes and maybe no, depending on who you ask.
Gold is not completely limited… there’s more gold found every day in unpredictable
amounts.
Gold is very difficult to transfer from person to person, or from country to country.
Not good for the digital world of today Although gold certificates can be transferred
online, the certificates still have to represent real physical gold in a vault in some country
A government can get gold from all the vaults located on its land and replace it with paper
currency… even if the gold owner does not agree; just like the American government did
in 1933 A Possible solution might be Bitcoin!
Bitcoin is a WORLDWIDE digital money which is NOT controlled or centralized by any government,
bank, location, or corporation It has a strict limited supply as there will
only ever be 21 million Bitcoins forever and ever.
It can easily be transferred digitally around the world with reasonable speed
It is unstoppable by governments, banks, or corporations even if the internet is cut off.
Reminder: Governments can control banks & corporations using laws
Instead of transfer using banks, it’s done using a “blockchain” which is NOT centralized
Blockchain is technical to explain, so let’s just imagine it’s millions of independent
citizens and their computers around the world working together and policing each other to
honestly record transactions between you and me.
These citizens also earn Bitcoin by providing this service
Bitcoin is NOT a physical coin.
It is digital like email, which you cannot touch and hold
It can be divided, subdivided, transferred, bought, or sold in decimals
Finally, do you want to learn more about Bitcoin in a non-technical way?
Download my FREE cheat-sheet at MBAbullCoin.com Remember to Like and Share this video
What do you think?
Is Bitcoin good or bad?
Let me know in the comments below!