[2:08] Well thanks everybody! I’m really honored to be here. It’s my first time back in Kalispell in five years. That’s me [2:26] right about the time that my dad was talking about. Well actually well before the [Lisa] Valentino days, that was a computer that dad brought home when I was about my kids' age - four or five years old. The rest is history, right? And some of you who know me may be wondering what happened with the wheelchair. Part of the reason I haven’t been back in five years - it was a long medical ordeal that is a story for another talk. But the good news is: I’m well and okay. I was paralyzed from a medical condition that was part of cancer. So I’m in a wheelchair now, but here I am. It’s all good.
[3:12] So yeah! And I’ve been enthusiastic about computers all the way. And let’s talk a little bit about Bitcoin. So Bitcoin got started in 2009. And I got interested in about 2012, so it’s been now thirteen years going on that Bitcoin’s been around. I’ve been really interested and increasingly involved in the last nine years or so. In 2014 I helped co-found a Bitcoin exchange called Bisq that helps individuals trade Bitcoin for currencies like the Dollar and the Euro in a decentralized way, a peer-to-peer way, just you and me working together over the Internet, nobody in-between us. But that’s also a story for another day!
Let’s just talk about Bitcoin. So just a show of hands: how many are familiar just beyond the word Bitcoin in some way before this talk? I imagine yeah most hands go up. Just keep your hands up. How many have done a bit more research than that, would say you know a little something? And how many would say you’ve had experience with it? Let’s say you’ve owned it, you’ve transacted with it? Yeah just a handful of hands, so I think this will be the right talk for everybody here. Because in this talk we’re gonna talk about what it is, why it matters, where it is today, where it’s going, how to get it, how to use it, how to learn more. And that’s plenty for a twenty or thirty minute talk. So we won’t talk about how Bitcoin works, technical details, all that stuff. We won’t talk about other cryptocurrencies or blockchain technology. The most important thing to understand in this space is Bitcoin. And that really takes some work! It takes doing some homework. So I hope I can give you a jumpstart for those who are just new to it.
So these slides are online and you’ll see there are a whole bunch of them. We’ll see what we get through here in just fifteen minutes or so. But you can refer to this afterward and I’ll have the link up at the end of the talk again.
[5:19] So what is Bitcoin? Okay, however many times you’ve seen this picture on CNBC, that is not a Bitcoin! It is not a physical thing. [5:30] As the white-paper that introduced Bitcoin back in 2008 said, it’s a peer-to-peer, electronic cash system, right? So what does that mean? It means going from a world where we’re transacting physical cash and moving in a different direction than what we do today digitally - which is interacting and transacting through third-party intermediaries - to a world where it’s just you and me. Whether we’re right here next to each other or across the world. Directly, peer-to-peer, without anybody in between. That’s a radical change and a big leap in what’s possible. So you hear lots of things that might sound like buzzwords. You hear people talk about, Bitcoin is a peer-to-peer network, a value transfer protocol, a digital asset, a distributed ledger, it’s open source software that’s borderless and permission-less and decentralized and unstoppable.
Yeah! Okay, well, what does all that mean? It’s a technology for money that’s better. Bitcoin is better money. That’s the point of this talk. That’s what I hope you take away and get interested in finding out more about. So let’s talk about why it’s better. To talk about why it’s better we have to actually ask, What is money in the first place? How do we know it’s better before we know what it is? We all have a clear sense of it, but it’s pretty tricky once you get into it. [7:00] To talk about money we have to talk about value. People do work that creates value for other people. We create products and services that other people want, and they want those products and services more than they want the money in their pocket. So they’re happy to trade that money with us, which we value more than the work that we did! Right? And we value that money, because while our work may be great - maybe we make a sandwich or we make a table or a chair or we provide some kind of great service - that can only do that. But the money that we get in exchange for that can buy and we can trade for anything that we need now or in the future.
So money is half of every transaction on the planet. You could say it’s literally the most important thing in the world. [7:47] And it meets certain needs that we have. Universal human needs around managing value. So it provides us a way to record who created all that value. What value did I create? What value did you create? Money is a kind of distributed ledger - even without Bitcoin - of who did what over time. It’s a mechanism to preserve that value that we earn. The fruits of our labor over time. Hopefully what I earn today for my massage that I give or the sandwich that I make will buy the equivalent of that or better in the future. Right? Preserving value. Storing value.
It’s how we move value through space. Again if you’re right here next to me or if you’re across the world, we need money to move value to friends and family, to send it to myself in my other bank account, whatever it is. And of course, money is the medium that we exchange through. So if I want to use that money that I earned to buy something else - a nice four-wheeler for my kid who’s now addicted to them - I need money to do that, right?
[8:54] So we’ve had all kinds of money through the ages: cowrie shells and cattle, salt, beads, great big rocks buried in the bottom of the ocean, gold, fiat money. Right? The currencies that we know today, the currencies that are just paper backed by things like full faith and credit of your government. No longer backed by gold, right? And I assert here that the money that we have today is broken.
[9:26] So money in the modern age - you know, we’re not using beads anymore - has been gold and fiat. Gold not so much anymore. It’s not money, per se. But in the modern age, if we rewind back to the 1800’s let’s say, gold and fiat currencies have been what we’ve used.
[9:44] So let’s look at these two things: How effective is gold at holding value? Well it’s really good across time! Thousands of years long history, it’s extremely hard to create. You can create more, but it’s predictable how hard it is and how much will be created every year and that creates predictable scarcity that leads it to attain its purchasing power over time. So gold has been fantastic as a resource for us over the centuries, over the millennia. However, it is terrible across space! It’s big and heavy, it’s hard to divide and verify, if you try to transact at a cash register. It’s expensive to store and move, and it’s absolutely impossible to send electronically. It’s impossible to send across the world without a ship or a plane. You can’t do it digitally.
How about fiat at holding value? Well it’s terrible across time. It’s got just a fifty to a hundred year history. It happens to be this week is the anniversary of the so-called Nixon shock in 1971, when Nixon took us, finally, completely off the gold standard by closing the gold window and telling the rest of the world all that gold you gave us for safekeeping in World War II - we’re just gonna keep it. Right? At that moment we were on the fiat standard. There was no link, no tether left to gold, and we’ve been doing that now for exactly fifty years, and if you rewind to the dawn of the Fed, the Federal Reserve system has about a hundred years, a little over a hundred years.
So we’ve got a hundred year experiment in fiat currency, and what we now know is it is very easy to create to the tune of trillions of dollars just in the last blink of an eye. And it definitely loses its purchasing power over time, dramatically. But it is really good at moving across space - it’s the best thing we’ve ever had. We can do digitally, it’s small and lightweight in the form of bills, paper currency, and when it’s in digital form as bank money it can zip around pretty fast depending on what you’re doing. Trying to do it internationally is usually slower and costs a bunch of money. And in all cases when you’re moving across space, certainly digitally - not physical cash - but digitally, it’s restrictive. You have to sign up, you have to give lots of information, you have to have permission. So it’s bad across time, pretty good across space.
As you can see both have strengths and weaknesses, but both have suffered mightily from centralized control. So lots of bad stuff happens when you centralize control over money. And I’m gonna move very quickly through these slides because they’ve got a lot of territory to cover and we just have about five minutes left.
[12:20] But one of the things that happened back in 1933, maybe some people know or remember - well nobody remembers it probably - but Executive Order 6102 was Roosevelt just summarily confiscating all the gold that all the people owned in the country, just with the sign of a pen. So gold, even though we can own it and put it under our mattresses or bury it under our floorboards, is subject to central control. We proved it, it happened, it can happen again. It took us fifty years to undo that.
[12:51] This is the history of the Dollar’s purchasing power since the Fed was established in 1913. It’s reduced in purchasing power by 94%. A dollar today would’ve been worth $26 of purchasing power in 1913. $26 of today’s dollars is what a dollar would’ve bought in 1913. A 94% reduction of purchasing power and going. So gold and fiat are broken in these ways.
[13:32] Let’s talk about why Bitcoin’s better. It’s perfectly scarce. This is an absolute revolution. This is a scientific discovery in the field of computing. There’s a supply cap on Bitcoin: there can only ever be twenty-one million. We’ve got about nineteen in circulation right now. And that fact makes inflation impossible beyond that limit. So it makes it perfectly predictable how many there will ever be, and it’s a miracle that we got that. That is a genuine breakthrough that no one ever thought could happen. We’ve invented digital scarcity. We’ve actually invented ultimate scarcity. You could say, Bitcoin is the most scarce thing in the Universe except time. So that ensures preservation of value to a much greater degree than any money we’ve ever seen, and that supply of twenty-one million is issued fairly over time, over many decades actually.
[14:26] Here you see - it’s a little bit of an eye chart here - but at the top of that circle you see Bitcoin’s supply at twenty-one million. It’s approaching that supply of twenty-one million over time, and the year there is about 2141 that we get to about 99.9%. We gotta figure out how do you distribute a new money, and Bitcoin does that really well. So it’s secure by design. It’s relatively private - much more private, if you know what you’re doing, than the monies that we know today. It’s possible to have fast and cheap transactions. There are lots of options. You get to choose - you a sliding scale of security, privacy, speed, and cost. And it’s fair and open to all. It’s global. It’s wide open. You don’t have to ask permission to use this network, and that’s not so important for us here in the States and in Europe. It’s very important for the developing world. It’s very important for people that are in authoritarian regimes who are trying to escape oppression, trying to escape hyperinflation. Talk to somebody in Lebanon right now about their world and how they use Bitcoin.
It’s verifiable and auditable. You can continuously audit the entire supply of Bitcoin on a little tiny machine that you spend $50 on. Try doing that with the Dollar system. Try auditing the Fed - it doesn’t work, right? You can know for certain the Bitcoin that you have is not counterfeit. It’s highly divisible. You can cut a dollar up into a hundred cents, you can cut a Bitcoin up into a hundred-million sats. So if you’re looking at the price of Bitcoin you see $45,000 per Bitcoin, divide $45,000 by a hundred-million - you can buy a fraction of a Bitcoin. No problem. It’s more than enough for 8 Billion people.
It’s programmable and extensible so you can build layers on top of Bitcoin which we’re doing right now. It will feel just like the layers we’ve built on top of the core of the Internet. So where the Internet is the Internet of data and communication, Bitcoin is the Internet of value and money. It’s resistant to censorship and confiscation. Nobody can stop Bitcoin. Governments can try to ban it - some do it with more or less success - but the only thing they do is ban their people from it. Nobody can stop Bitcoin after twelve years. That’s a pretty big feat.
It’s pro-freedom and pro-privacy. Physical cash is excellent for privacy. It’s really a marvel that we still have it. And it is on the way out, and central bank versions of cryptocurrencies are on their way. China is really leading the way there with a lot of innovation and everybody else is trying to catch up. It is about total control. Their words: total financial surveillance. So Bitcoin really provides us hope here, and it’s got a damn good shot of doing it.
So Bitcoin’s pretty effective at holding value both over space and time. And where it is today and where it’s going - a little preview: it’s twelve years old, it’s been highly reliable, essentially 100% uptime. The network has never really gone down in that whole time, and it is today by a large measure the most powerful secure and valuable computing network on the planet. It needs to be to secure it.
[17:58] And adoption numbers are really interesting. 135 million users of Bitcoin - people who have touched Bitcoin in some way globally. That’s about 2% of the world’s population. That’s about where the Internet was in 1997. Think about yourself using the Internet and people that you knew using the Internet in 1997. Think about how far we’ve come in just 20 years or so. Now extrapolate that on top of Bitcoin - get ready to blow your mind with where we’re headed! So we’re on track to a billion users by 2025 - this is the fastest growing technology, fastest adapted technology, in human history.
[18:36] People probably know this technology adoption curve. We’re somewhere approaching that chasm. We’re somewhere in the early adopters phase. 2% of global population. 5% of Internet-connected population are using Bitcoin and it’s rapidly growing.
[18:54] This is the technology adoption S-curve where you see different technologies over time and how rapidly they’ve gotten adopted. There on the far right side you see the Internet itself got very rapidly adopted from its inception. Well not pictured in that photo is Bitcoin, which is happening even more rapidly, and we’re right at the bottom of the S-curve still. It’s still early days.
[19:20] So who’s using it is a whole bunch of folks - I won’t list all of these things, but it’s mostly institutions, hedge funds. The great news is it’s individuals: the vast majority of Bitcoin is owned by people like you and me. This is the first time in human history that we’ve front-run the banks, that we’ve front-run the hedge funds. And there’s still time to keep doing that.
[19:40] This is a picture of what is now happening with companies and corporations and institutions - they are buying up Bitcoin en masse, which is also a great thing! They’re using it to replace treasuries, getting off fiat and getting onto Bitcoin because they assess it as a better store of value. So we’re $45,000 today, the price changes a lot. We could talk about volatility afterward maybe. About 19 million units in circulation. And all of those together - $45,000 times 19 million units - that’s about $800 Billion worth of value in Bitcoin today. And if you compare that to gold, the value of gold globally is about $10 Trillion. So we’re about 1/10th the way to gold. And if you look at Credit Suisse’s annual global wealth report, there’s about $300 Trillion worth of wealth in the world. So the question is: how much of that value will Bitcoin eat? As the best store of value, as the best form of money humanity has ever known? It’s probably gonna be more than $800 Billion.
So moving toward a Bitcoin standard. We’ve gone through gold, gold failed. We’ve gone through it - as great as it is - it failed us, right? We’re on fiat, we’re watching it fail now. We may be heading toward a new standard, a Bitcoin standard where Bitcoin serves as global base money. And that doesn’t mean that fiat monies go away but they probably peg to Bitcoin just like they used to be pegged to gold. And while I think that future is reasonably likely it’s probably years away. We’re still early.
So how to get it? Basically if you have a friend or family member, that’s the best way. Just buy a small amount from somebody you know just to get started. From there you want to work with a reputable Bitcoin-only exchange. That’s the sort of easiest way, the best set of trade-offs. I recommend River Financial and Swan Bitcoin. They’re both US operations and they do a really great job and they just focus on Bitcoin and great customer service. So you have an initial investment that you want to make? Great, but just start small! Start small and start learning and then you can re-up. I recommend to people just put a small amount in every month, a kind of set it and forget way and just start building it up.
So how to use it? Well right now the thing to do with Bitcoin is to buy it and hold it. That’s what virtually everybody is doing. Use it as savings, use it as a better savings technology than your 0% bank account. Use it as portfolio diversification, use it as an inflation hedge. Educate yourself in the meantime. It’s not a generalized medium of exchange yet. It doesn’t exhibit all of the characteristics of a money yet. So buy it, hold it, educate yourself in the meantime while it continues to grow.
It’s a journey. Those nine years that I’ve been involved have been nine years of nonstop learning. This is an extremely condensed version of nine years of learning that you’re watching right now. You’ve gotta do your own research, you have to do your own homework to get comfortable. And like I said, the best way to do that is to get a small amount and get experience. Read the Bitcoin Standard, which is a fantastic history of money and case for why we’re headed in this direction with Bitcoin. The Bullish Case for Bitcoin is a great article to get started with. And this URL here which again you can find in the slides afterward is just a wonderful resource full of really high quality stuff.
When you just start Googling for Bitcoin and cryptocurrencies and stuff it’s just a minefield, so you really want to go to a trusted entry-point like that. That’s me and my e-mail address. That’s the link to the slides. And I’m here for Q+A afterward. Thank you very much.