What Is Bitcoin and Why Is It Important?

all right all right all right bang bang what's going on everyone uh we're gonna wait a couple minutes as people start to trickle in today we're gonna be talking about bitcoin what is it how does it work why is it important and how does it fit into the global macro economy before we get started please smash the like button subscribe to the channel and if you like all of this content you can go to pompletter.com i've left the url in the chat i write a daily email where you can get that every single morning in your inbox so smash the like button subscribe to the channel let's get into it uh first let's start with what is bitcoin simply i'm gonna explain all this in a very generalized manner think of this as kind of bitcoin 101 and it will kind of graduate to higher levels of understanding and what i'm going to try to do here is use very plain english and very concise explanation so what is bitcoin bitcoin is digital money and in order to understand bitcoin we first have to start with what is money and money has two properties it is a store of value and it is a medium of exchange and if you go all the way back to ancient roman times every single money has served as a store value and a medium of exchange now ultimately the things that have served as money have evolved throughout the years so we had everything from uh precious metals to seashells to paper claims on commodities all kinds of different things but at the end of the day money is a belief system right especially in a fiat world if you think of the us dollar it is simply the belief between two people that that thing that is being transacted that dollar that is being exchanged for a good or service has value if the two parties do not believe that it has value then it is not money because it cannot be used if both parties believe then it is money so that is what money ultimately is money is a belief system and what we've seen is it serves as a store value and a medium of exchange and so bitcoin is merely digital money if you think back uh before the internet there was all sorts of analog businesses when the internet came along we simply took the idea of those analog businesses and we put it on the internet we made some changes we improved things we made some tweaks but what we did was we took business that existed in the analog world and we put it on the internet we digitized the business what bitcoin is is bitcoin is taking the idea or concept of money and it is just digitizing or putting it into the digital world now we've made a lot of improvements we've made a lot of tweaks to um kind of existing money to bitcoin but that's ultimately what we're talking about it is simply digital money and so how does bitcoin work bitcoin works off of the same exact concept that monopoly works on so what i'd like to talk about is bitcoin uses a transparent public ledger and those are big fancy words that people use to try to sound smart but what exactly is a transparent public ledger it's simply if you were playing monopoly and you have four people sitting down in front of the board game everybody sets up the board you take the money and you put it out in front of you on the table and then there's a bank and that bank is a collection of all of the money that's not in an individual's um you know in front of them on the board and the reason why there's only four people who are playing monopoly but you don't have a banker is because there's full transparency in the game so if i roll the dice and i pass go i reach in the bank and i take 200 everyone at the table can see that i took the 200 and i put it in my bank if all of a sudden i buy a property or somebody buys one of my properties the exchange of funds at the game is all done publicly and transparently for everyone to see because it's public and transparent during the game of monopoly there's no need for a third party or some sort of authoritative figure right when you're kids you don't need your parents to sit over you and say okay johnny give the 200 it's just known that the four players that table can can understand because of the public transparent system now in the legacy fiat system right in the legacy finance system almost every single transaction that occurs whether it is with money or other financial assets there is a centralized third party all that means is if i want to do a transaction with you i take the asset that i have and i go to give it to you but i can't give it directly to you i have to give it to somebody else who gives it to you they process the transaction and so ultimately what you and i are doing when we enter into a transaction or an agreement is we are trusting that that centralized third party is going to do what we want them to do but in some cases they don't do what we want them to do they may go rogue they could steal they could do something that they claim that we don't fit their profile so they don't want to process the transaction all kinds of different things but one of the points of failure in the legacy system is that we have to trust this third party this centralized system bitcoin one of the improvements it made was the public transparent ledger and that public transparent ledger meant that nobody had to trust a centralized third party i now can transact directly with you across the bitcoin network and no one or nothing can stop us from transacting it is a fully decentralized system decentralized just means nobody's in control so a lot of people when they hear that the bitcoin system is decentralized and no one's in control the first question is well how does that work so essentially what is going on is bitcoin was launched on january 3rd 2009 and when it was launched every single transaction that has ever happened is on a public ledger if you go back to the monopoly game it would be like every time there was money trading hands either from the bank to a player or from player to player there was one of the players sitting there and they wrote down the transaction so johnny gave sarah 200 and they wrote it down on a piece of paper on the next line sarah gave anthony a hundred dollars right and every single transaction just got written down but after 10 minutes of playing we said wait a second rip off that piece of paper from the the notebook and put it to the side that would then start us writing down the transactions for the second 10 minutes of the game and if every 10 minutes we ripped off the piece of paper and simply stacked it on the last piece of paper at the end of the game we would have an entire pile of paper where we could go back and we could look at every single transaction that happened in the monopoly game and we could even go to the exact time so if we said hey between 7 10 p.m and 7 20 p.m i think i gave you uh 300 we could go back in the transactions and we could find 710 to 720 and we could find that exact transaction written down that's what the bitcoin blockchain does and that's a very over generalized uh example but ultimately what the bitcoin blockchain does is every single transaction that happens in about a 10-minute block gets written down digitally and then it gets blocked together so there's a block right or a group of these transactions and it's kind of tied up in a 10-minute block and then that block is tied to or connected to the last 10 minute block so the bitcoin block chain is simply a chain of blocks that hold transactions in them and each block contains about 10 minutes worth of transactions and they're all just chained together so the 10 minutes that's occurring right now when it's over we will take all the transactions that happen in that 10 minute period and we're going to chain it to the last 10 minutes and you can go all the way back to january 3rd 2009 and you can see every single transaction that's occurred so part of the beauty of this system is not only that nobody owns it nobody controls it but also that anyone in the world can go and see every single transaction right again it's a fully public transparent system and so this entire idea of bitcoin is built on something uh that'll that people refer to as trustless and what that means is you don't have to trust the system you don't have to trust a centralized third party you actually don't even need to trust the person that you're transacting with everything that you need to do you can verify right there you can go and find the truth and what i mean by that is when i send a wire at a bank i'm trusting that the bank's not going to take my money that the bank is actually going to give it to the right person and that the bank or the recipient's bank is going to accept the money so i'm trusting multiple parties in that transaction here i don't have to trust anybody to send it i don't have to trust anybody's bank to receive it and i can actually go verify that the money was sent right the bitcoin was sent and i can verify who received it how much and i can even see what they do with it and so when you kind of go through this system it is a public transparent system that is not owned by anybody it's fully decentralized and so a lot of people will say okay well how is that run how does the transactions get processed if you're processing transactions you need some sort of computing power to do that you're right it's in the bitcoin system there's something called bitcoin mining and you can think of the miners all they are doing is they are processing transactions right they are there to run the bitcoin software in a very generalized manner and what i mean by that is they essentially have specialized computers that are very high computing power and they run the bitcoin software and they process transactions and they're financially incentivized to do this how are they financially incentivized well there's only 21 million bitcoin so there's an artificial supply there will never be more than 21 million bitcoin and in the beginning starting in 2009 every 10 minutes 50 bitcoin were released to everybody who was running the software so that 50 bitcoin that was released in the first 10 minutes went to everybody who was running the software now not every single person got 50 bitcoin but it was split up among everyone running the software and so the next 20 minutes or the next 10 minute block so it's kind of 10 to 20 minutes now everyone running the software got access to 50 bitcoin right and it got split among everyone running it and so that has continued since 2009 all the way up until today but the one thing that happened in the bitcoin system was that it was programmatically designed for that 50 bitcoin per 10 minutes that's called the bitcoin reward that 50 bitcoin per 10 minutes gets cut in half every four years so it started out at 50 bitcoin every 10 minutes for four years 50 bitcoin was distributed to everyone who was running the network after four years it got cut to 25 bitcoin then for four years in a row 25 bitcoin was given to every single miner for four years that happened and then it got cut to 12 and a half and so every 10 minutes for another four years 12 and a half in may of 2020 it just got cut from 12 and a half to 6.25 million or 6.25 bitcoin and so that 6.25 bitcoin is distributed to miners every 10 minutes that is their financial incentive to run the bitcoin software and process the transactions the beauty is that you can actually find truth one of two ways you can either rely on a centralized third party they're in charge they're the authority they have all the power and they tell all of the participants in a market what is true and what is not if the bank says that you did something then you did it if the bank says you didn't do it then you didn't do it you have no way to tell the bank anything right if all of a sudden the bank uh you went to the atm tomorrow and the bank said nope you don't have five thousand dollars in your account now you only have a thousand how would you prove that you had five thousand dollars right it's a centralized party they have control that's where the risk is so one way to get to quote unquote truth is to have a central party tell people what the truth is the other way to find truth is to have consensus among 51 or more of a very decentralized distributed network and that's what the bitcoin system does the bitcoin system has millions of nodes all around the world completely geographically distributed and they all work together to find the truth right to process the transactions and determine truth and so that is the beauty of the bitcoin system is that it is fully decentralized fully distributed and it doesn't rely on any centralized third party so why is this system important today we have two financial systems we have the legacy finance system that relies on a fiat currency the us dollar as the core unit of account and that core unit of account has a monetary policy that is inflationary in nature meaning that they constantly produce more of it and it devalues over time since the early 1900s the u.s dollar has lost 95 plus percent of its purchasing power right so what one dollar could buy a hundred years ago is much much more than what one dollar could buy today so you need many more dollars to buy the same amount of goods or services that you needed 100 years ago that's because it's inflationary in nature bitcoin is a 180 degree opposite so the second financial system or the alternative financial system or what people call the bitcoin system or the digital finance system is all based on a deflationary asset and all again big fancy finance word all that means is there's a capped amount there's only 21 million bitcoin about 18.4 million bitcoin have already been put into circulation through that bitcoin reward that we talked about that mechanism and so there's still about just about two and a half million bitcoin that are going to be distributed over the coming years and decades and so in a deflationary system what that means is that the asset the core unit of account a bitcoin or um a fraction of a bitcoin will continue to increase in value rather than decrease because supply and demand economics tell us if you have a fixed supply of an asset and demand increases then the only thing that can happen is you could either try to produce more of the asset or the price has to go up because bitcoin can't be recreated no one's producing more bitcoin that means that the price continues to rise bitcoin has grown in us dollar terms at a compound annual growth rate of over 30 percent for many many years now and so the deflationary nature or structure and design of bitcoin is 180 degrees difference it's the complete opposite of the inflationary fiat system that we all have had grown up using now bitcoin because it's still um injecting new supply right there's still a daily incoming supply there's 900 bitcoin per day that are put into circulation that are new to the system there's only 21 million total but the circulating supply gains 900 a day right now that means it is a disinflationary system or a disinflationary monetary supply all of that means again big fancy words in plain english that means that you've got a certain amount of bitcoin that's created every day before may of 2020 that was 1800 bitcoin it got cut in half now it's 900 in four years it'll get cut in half again and it'll go from 900 to 450. so dis means it's going down inflationary means you're adding some to the circulating supply so it's a disinflationary monetary supply schedule that is built in a deflationary monetary structure or design and so bitcoin being a deflationary structure and complete opposite of the fiat system provides an alternative historically every single money in the world every single money was a fiat currency which meant that if you go back to money right in the legacy sense of it we've used commodities for money for a long time so take gold for example gold was used on coins and bars of gold to buy goods and services for trade for barter all of those things it's very hard to carry around it's heavy it's very hard to divide it it's not very divisible right in terms of you got to shave it off and things like that and so what we ultimately came up with was we said gold is really really secure right we know where the gold is because i can hold the gold in my hand it's heavy it's hard to produce all these things but it's hard to actually use for transactions so we created paper claims on the gold those were in the dollar system dollars those dollars were merely you could go exchange a dollar to get gold back right they were interchangeable you just had a paper claim to the gold and the gold sat in a vault somewhere so it was much easier to use the dollars to transact then actually use the gold but 1971 we decided in a temporary measure at the time to break from the gold standard to say you no longer can take your dollars and turn them in for gold the dollars are not backed by anything and so this was the rise of the fiat currency experiment fiat simply just means it's not backed by a a commodity it's just a piece of paper and so in the current system today what we have is we have a money system that is determined by in the united states the federal reserve and other countries the central banks and that money is a belief system we all believe it has value right i use dollars everyone here probably uses dollars as well and that money has become the global reserve currency it's backed by the strongest military in the world it's backed by the greatest economy in the world in terms of the united states and you know post-industrial revolution all these things so that is what has given it value is the belief that it has value but as we have seen in many many other countries around the world if it gets devalued too quickly because you can produce more of it if a country loses discipline that currency can be uh the faith in that currency or the belief in that currency can be lost by the citizens so if you look in places like lebanon right now in venezuela zimbabwe other countries in history what you find is that the currency gets devalued so quickly that all of a sudden people say wait a second i'm actually losing money because i need way more of this currency to buy the same goods and services that i needed yesterday so obviously the currency is worth less money and therefore i need to get out of it and so ultimately the the belief system breaks down and people flee a currency and they go into other assets whether that's gold another fiat currency whatever it is the beauty of the design of bitcoin is that it is not inflationary you cannot produce more and therefore rather than it lose value over time like a fiat currency it actually gains value in time as long as demand continues to increase and so again for over a decade demand has not only continued to increase it's continued to increase at a very very fast pace and so for the first time in history what we have is we have two financial systems we've got the legacy finance system that uses the dollar as the base unit of account that's an inflationary currency we also have an alternative financial system that has a digital decentralized currency as its core unit of account which is bitcoin and it is deflationary in nature meaning that it's not going to have more made of it now many of you are saying wait a minute there's only 21 million bitcoin how could everyone in the world only use 21 million bitcoin well bitcoin is highly divisible right so you can divide it up you can actually go and buy just a couple of uh pennies worth of bitcoin right you don't have to buy a full bitcoin which today is uh about eleven thousand dollars you can go buy ten dollars of a bitcoin you could buy fifty dollars a hundred dollars five hundred 500 of a bitcoin right you don't have to only have a full bitcoin you can get a fraction of one and the way that those are talked about or measured is in something called a satoshi now satoshi is there's 100 million satoshi's per bitcoin right so if you think about 100 million or satoshi's per one bitcoin and then there's 21 million bitcoin now what you will hear people talk about is 10 000 satoshi's right that is a equivalent to pennies in the fiat system so you've got bitcoin that's a full bitcoin and then you've got uh satoshi's that are fractional shares or fractional percentages of a full bitcoin and so now all of a sudden you have a system that looks very similar to the fiat system right you can use a hundred dollar bill or you can use a 20 bill or you can use a one dollar bill or you can use pennies dimes nickels quarters etcetera so same thing here is you can have a full bitcoin right again is equal to about 11 000 u.s dollars or you could have a very small percent you could have four or five satoshis you could have ten thousand satoshis you could have a hundred thousand satoshis a million satoshis right there's a hundred million satoshis per bitcoin so why is this important historically if you did not believe that a fiat currency was going to serve you best doesn't mean it has to fail but just you didn't feel like that served you best you had no other option other than to go to gold which again is not a great way to transact as a medium of exchange or you had to go to another fiat currency so if you didn't want fiat currency there was no way to kind of opt out of this legacy uh finance system now with bitcoin there's a way to actually opt out of the system and so what millions of people have chosen to do is take some percent of their net worth doesn't mean that it's a lot could be only one percent could be 50 right anywhere in there they've chosen to take some percent of their net worth and opt out of the legacy finance system and buy bitcoin and use that as their new core unit of account so in their head they don't price things in dollars they will actually price them in bitcoin so for example if i want to buy let's say a new phone i could say okay that is 1200 u.s dollars polina's back there says hello to everybody hi guys so that is 1200 us dollars if to buy a computer but if i want to pay for it in bitcoin i could think to myself and say wait a second that is 10 million satoshi's right or 15 million satoshi's and therefore that's how i'm gonna pay the denominator or what the the asset is denominated in ends up being bitcoin rather than dollars and so ultimately this is a a separation of a legacy system and an alternative system one has the dollar and other fiat currencies as their core unit of account the other the digital decentralized system has bitcoin as the core unit of account and so when you look at what's happening in the world we continue to see governments devalue their currencies and they do that through quantitative easing so if you look at kind of the macro environment what occurs at the macro environment is uh the exact same thing all across the world a government creates money at their central bank they then when there is a market downturn or there's some kind of issue in the economy they sit there and they say well we couldn't let the free market determine what happens here but actually if we step in if we start to intervene and maybe we just give ourselves a little jolt we could print a little money we could drop interest rates or we could kind of manipulate the economy we can get high again and so it's very similar to the econ the economy is very similar to a drug addict if you're a crack addict there was a point where you were sober you'd never tried crack before you try for the first time and you get high you like it you want to get high again so you take more crack you get high a second time you like it again every time that you take crack you've got to take more and more to get the same high right it becomes less effective as a drugs it take more and more and ultimately if you take too much you literally overdose and you die well economies are no different there was a time period where there was no monetary stimulus there's no quantitative easing there was no intervention by the government but as we started to intervene and print money and inject this quantitative easing and monetary stimulus we became addicted to that stimulus it was like an adrenaline uh punch right like oh man every time we do that everything goes up and everyone would say wait a second if asset prices are going up the economy is great let's do that again and so the two last examples in 2008 we saw this asset prices sold off in the summer of 2008 the government stepped in they printed hundreds of billions of dollars and when they printed hundreds of billions of dollars what happened was all of the asset prices stopped falling from the liquidity crisis and they all recovered and then rallied so something like gold for example dropped 30 over the summer of 2008 and then the government started to print money and then gold went up more than 200 percent and hit an all-time high of 1900 in 2011. well they in this most recent uh economic recession have used the same playbook there was a global pandemic there was a healthcare crisis or a virus that led to government saying we are going to shut down local state and federal economies right our national economies and that slows the velocity of money so investors then enter into this liquidity crisis they want dollars but they have assets so they need to sell the assets so they can get dollars and they look around their portfolio and say what has a liquid market what can i sell and they start selling assets and there's so many people selling that the prices are dropping and the dollar is strengthening right if you think about every single price you think of so gold stocks bitcoin whatever there are two numbers that determine that price it think take bitcoin one btc over how many dollars right same thing with stocks how much one share over how what is the us dollar price what is the ratio or the the exchange of price there i'm willing to buy or sell one share of apple at x price of dollars so when all of the asset prices sell off what actually happens is the dollar is strengthening and asset prices are dropping it takes less dollars to buy the same good or service right because the dollar is stronger so i need less dollars to buy the same good or service well the government in 2009 and then again uh in the last couple of months says wait a second we can stop this all we need to do to stop asset prices from dropping and to stabilize markets and have them go back to recover is let's just flood the market with money right so they go and they create uh in the most recent uh situation they've created trillions of dollars of monetary stimulus and quantitative easing and they start giving it into the market and injecting it into the economy they do that through loans they do that through stimulus checks they do that through unemployment checks they do that through all sorts of bailouts like there's a multitude of ways and very exotic ways that they get this money into the economy when they do that what happened was asset prices stopped going down equities had gone down 30 percent gold had gone down 12 to 15 percent bitcoin had gone down 50 right um treasury everything had sold off when they flooded the market with dollars all of a sudden all the asset prices rised and so take stocks for example those have rallied off the bottom of the march uh price bottom 50 plus percent well why in a economic recession where many of those companies have lost 50 60 70 80 90 of their revenue have they uh absolutely exploded in value go back to their priced in dollars it's not that the stock is getting more valuable it's that the dollar is weakening so it's now gonna take because the dollar is worth less you need more dollars to buy the same asset so go to to a traditional stock let's say a stock was a hundred dollars before the pandemic started well when everything started to sell off the stock now you only needed 50 to buy the same stock right so i needed less dollars to buy that same one share of a company so 50 to buy the same share that i needed i used to need 100 by the same share now once they flooded the market and there's dollars everywhere now i don't need fifty dollars i don't need a hundred dollars i need a hundred and fifty dollars to buy that same stock it's because the dollar is getting worth less and less they're devaluing the currency now why is that important and this is kind of the the big issue with fiat currencies and inflationary type systems is that there is a very big difference in how inflation impacts the top fifty percent of a population and the bottom fifty percent of a population so when we print money and cause inflation the argument is if you know that your currency is going to be worth less a year two three four five years from now it's gonna lose value over time you're going to be incentivized not to hold on to that uh money and you're gonna be financially incentivized to go spend it or go buy assets so you're going to increase the velocity of money right how fast do you turn the money over well if i know it's losing value i don't want to hold it so let me either go give it to somebody for a good or service or let me give it to somebody so that i can get an ass and an exchange right and then you keep money moving around in the system that's the argument for an inflationary system well the problem is that system is built on 50 percent of americans not understanding how money works 50 of americans don't understand what i just said they don't realize that their dollars are going to be worth less next year and the year after in the year after the year after so what they do is they hold the dollars right the bottom 50 of the u.s population holds their dollars they live paycheck to paycheck and they just simply save in cash everything that they have is in cash 50 i think it's 45 percent of americans do not own a stock so they own no stocks no investment assets almost 50 percent of americans couldn't come up with 400 for an emergency payment which means that these people are living paycheck to paycheck in all cash no investment assets but if i save a hundred dollars in the bank today and that hundred dollars could go back and buy one share of let's just use apple stock for as an example even though it's obviously more than a hundred dollars if i save a hundred dollars in my bank today and it could buy me one apple share but i wait till next year or the year after the year after and i've left it in cash the whole time now i'm gonna need much more than a hundred dollars to buy that same apple share simply because my dollars are worth less the purchasing power has been eroded away and so what ultimately happens is the bottom fifty percent of americans they constantly have this feeling like i can't get ahead i'm always falling behind i just can't get ahead but it's because they haven't been educated on how money in the economy works so they simply just hold cash and when they hold cash and there's high levels of inflation they're the ones who get hurt the most because if all of your wealth is just sitting in cash it's losing purchasing power right the second way that the bottom fifty percent of americans get hurt through inflation is the fact that most people in the service industry in the hospitality industry right hourly workers whatever they do not have something called an inflation-adjusted wage contract all that means is that if you get paid ten dollars an hour to this year and you get paid ten dollars an hour next year and the year after the year after you think i'm getting paid ten dollars now i'm getting paid the same amount of money but in terms of your purchasing power you're actually getting paid less every single year right rich people they don't get paid the same amount every year their salary goes up it's an inflation adjustment it goes up two to three percent every single year to mitigate the impact of inflation so it makes sure that they are at least going to get paid the same in purchasing power um every single year if not more the bottom fifty percent they get crushed by this they do not get the protection and so what ends up happening is they make less and less money over time even though it looks like they're still making that ten dollars an hour so the bottom fifty percent get absolutely destroyed by inflation the poor get poorer why are rich people okay with this well because this is how rich people get rich right the inflationary nature of the economy makes rich get richer and poor get poor what happens to the rich people the rich people know how money works they understand if i hold cash that cash is going to be less uh worth less over time so i am financially incentivized to spend it on goods and services or i should take the money and i should go buy investment assets so what do rich people do they don't have a lot of cash they go and they buy stocks they buy commodities they buy art they buy homes they buy bitcoin they buy all kinds of assets and they know that over a very long period of time because the dollar is getting devalued it will take more dollars to buy the same asset right if you bought a house in 1980 and you held it to today it is very likely that that house is worth more money than it was in 1980 but is that because the house became better or is that because the dollar devalued and maybe it was a 50 000 house in 1980 but now it's a 200 000 house in 2020 and it's just the fact that you the dollar got devalued and so you need to buy uh you need more dollars to buy that same house well rich people know the game so they don't hold cash and they get investment assets right they get into assets that continue to go up so they continue to get richer as inflation happens while poor people get crushed and they end up getting poorer over time now when we print lots of money normally that leads to higher levels of inflation so if we just print the traditional amount or the historic kind of average of money there's about one and a half to two percent inflation every year there's a two percent inflation target right well when we start to print trillions and trillions of dollars one of the fears that people have is that we will not only see two percent inflation we'll see something more than two percent right and if we see more than two percent in the official inflation numbers that means that the poor are getting punished even more and the rich are getting richer and richer so look what's happened over the last couple of months the billionaires in the united states have made collectively almost half a trillion dollars over the last couple of months how could that be when 50 plus million americans have lost their jobs and there's a global pandemic and tens of millions of small businesses in america are gonna get shut down and we're in a recession yet the rich people made half a trillion dollars it's because majority of their net worth is in assets not in cash and those assets have continued to increase in price because the dollar is being devalued by all the money we're printing so it's not that the rich people did anything necessarily different they simply are they understand the game they know the rules of money they understand how to build wealth and they have positioned themselves to get wealthy over a long period of time rather than hold cash and see their wealth constantly eroded away by inflation so that's how the traditional macro economy works right that's how inflation works now what does this have to do with bitcoin why is this important bitcoin protects people's wealth and what i mean by that is if bitcoin is the core unit of account there is no inflation right there is no ability for somebody to go create tons more of bitcoin and erode away the value of bitcoin right there's no printing press when it comes to bitcoin so rather than be financially incentivized to get out of the currency and to have to go buy investment assets you now can go from having to be an investor to simply being a saver so in the legacy finance system investors win and savers lose right that's very important in the dollar based system investors win and savers lose in the bitcoin or the alternative financial system that this digital decentralized system savers win because they're saving in an asset that is deflationary it's artificial right the same thing like in the u.s dollar system where buying land they're not making more land so you can buy land and the dollar will devalue and your land will become more valuable as more people want land the same thing here they're not making more bitcoin there's 21 million of them that will ever be available and the way that people value bitcoin is in terms of u.s dollars so when you hold bitcoin as part of a portfolio what happens is the dollar will continue to devalue over time and as more people want bitcoin the value goes up its compounded annual growth rates over 30 over the last uh almost 10 years or so and so ultimately what ends up happening is you have these two financial systems you've got a legacy fiat system and you've got a digital uh decentralized financial system dollar is the core unit of account in one side bitcoin is the core unit account in the other side the way that i have personally thought about this is i believe that there is a 50 50 chance of both of these systems being the winning system in the future right so i personally again this is not financial advice there is a lot of risk you should go do your research but because i have a 50 50 believe in either system being the winner i have chosen to split my net worth put 50 in the fiat system and 50 in the digital decentralized system there's a lot of people who say ah i don't think there's a 50 50 chance i think that there's a 99 chance that the fiat dollar system is going to continue to serve as the global reserve currency and the legacy finance system will prevail but there's a one percent chance it's a non-zero percent chance that this bitcoin decentralized digital system could maybe win it's very small probability but it's possible one percent my my comment to those people is your portfolio again not financial advice but your portfolio should mimic what you believe so if you think it's 99 fiat one percent bitcoin system well then you should go 99 the fiat system one percent the bitcoin system if you think it's 90 10 then go 90 10 if you think it's 50 50 go 50 50. like that is what people are are understanding and that is what they're getting educated on is there's now two financial systems with two different structures two different designs one punishes savers and rewards investors the rich get richer and the poor get poor the other is a much more equitable system where everyone who has the currency simply needs to save and it will continue to increase in value because supply and demand economics if you want to understand bitcoin you have to understand regular economics 101 supply and demand which is you have a fixed supply asset 21 million bitcoin if demand continues to increase as it has for the last 11 years if demand continues to increase the u.s dollar value the price will continue to increase over time that's how supply and demand works so that is what bitcoin is that's how it works that's why it's important and that's how it fits in or compares to the macro economy i'm going to start taking questions here in a second a couple of housekeeping things one please smash the like button so way more people on youtube can see this also make sure that you're subscribed to the channel so you can see when i go live and post other videos and then i'm putting in the chat right now i write a daily letter to over 50 000 investors every single morning go to pompletter.com again pompletter.com pomp letter.com and you can subscribe there and get the letter i write about business technology finance bitcoin all kinds of different things all right let's start with questions i'm going to do the absolute best i can there are there's over 2 000 people in here asking questions and in here so i'm going to do whatever i can to uh to get through this yes i went 40 minutes without a breath i actually have some wine here so if anyone's got a drink uh well cheers that's my first breath in 40 minutes all right uh how many bitcoin are lost forever so obviously because uh bitcoin works in a in a cryptographically secure way right so one of the things people need to understand about bitcoin is the fact that when you put money um us dollars into the bank the bank now owns uh your dollars right that's not your money anymore they give you an iou they say you know you put a hundred dollars and they say we owe you a hundred bucks but they take your dollars and they go and they lend them out and they can lend them out sometimes five six seven eight times and then they give you some interest in exchange for you depositing it there but that's not your dollars anymore with bitcoin one of the key uh benefits or value propositions is something called sovereignty again all sovereignty is a big fancy word it just means you're in charge you're in control so the whole idea with bitcoin is you can hold the password or the private key so in cryptography the way cryptography works in a very basic way is there's a public key and a private key you need both the public key and the private key to have control of the bitcoin right if somebody has your public key they can't do anything with your bitcoin if they get your private key similar to a password they now can control your bitcoin so in the bitcoin system you can control the private key which means you're in charge you're not reliant on a third party right you're not reliant on a centralized authority you simply are in control and you have sovereignty over your wealth right i haven't ever said this in public before but when we were in march and all of a sudden there started to be gyrations in the market and there started to be a lot of uncertainty in chaos i went to the bank and i took dollars out right not because i necessarily thought banks were going to be insolvent i think it was a bank crisis but the fact that i knew that i had counterparty risk with a bank a bank could all of a sudden say hey you can only take out x dollars out of the bank or you can't access your money today right or they could say oh you can only spend money at these locations or whatever it was but i wanted control i wanted sovereignty i wanted peace of mind so i went to the bank and i pulled money out of it and so i took control of that cash and i now had the sovereignty that's because in the legacy system you constantly are relying on somebody else to have custody of your money and control and process your transactions here in the bitcoin system you constantly have those private keys you're in control so if you lose the private keys right going back to this question if you lose the private keys that means that the bitcoin are lost no one can get to them and so the question is how many p how many bitcoin have been lost i think there's estimates of anywhere from a million bitcoin to potentially as high as 3 million nobody knows for sure but there are definitely bitcoin that are lost there's 18.4 million bitcoin that have been put into the circulating supply already there are not 18.4 million bitcoin in the hands of people people have definitely lost bitcoin you can read stories online of you know they lost 10 000 bitcoin or 50 000 bitcoin from early on or whatever so i think that's a key piece to pay attention to is there's 21 million bitcoin in the total supply but because some have been lost it's actually effectively much less than that so we'll see what that ends up being okay um what other questions what other questions how would bitcoin become the reserve currency all right so lots of people always ask me you've got these two systems how do they compete with each other my personal belief is that every currency in the world is going to be digitized over time and what i mean by that is uh there's going to be a digital dollar a digital euro a digital yen a digital one a digital um you know uh boliviar a digital lev all across the world every currency that is in the fiat system is going to be digitized all that means is they're going to take it and they're going to create a digital version of the exact same currency they have today they're not going to change the inflationary nature they're not going to change the monetary policy they're just going to change the technology if you go back you know 50 60 years we used to have all paper money there was no digi there was no kind of electronic or digital uh banking well now all there is so we changed the technology form factor and majority of the money like 92 93 is not physical money well now we're gonna go through another transition where everything is digital and really that just means it's on some sort of ledger whether that's public or private it's on a ledger and so in that situation you will have the fiat currencies digitized you will also get a ton of private currencies so you see facebook announced the libra currency this is a corporation creating a digital currency now they've chosen to back theirs by other fiat currencies jp morgan announced jpm coin which is another private currency that's backed by a fiat currency so you got fiat currencies digitized you've got private currencies and then what you're gonna have is you're going to have bitcoin and bitcoin is really the first attempt or or the first successful attempt in terms of market share and adoption to separate state and money it is saying nobody controls this system it is completely uncontrolled and decentralized and distributed and so once every currency is digital whether that's a fiat currency a corporate currency or a bitcoin the technology layer is the same there's no competition there everything's digital so what i believe is going to happen is there's going to be a competition at the monetary policy level and at the monetary policy level i laid out the difference between the private currencies and the fiat currencies which are inflationary in nature and the deflationary bitcoin so what i believe the reason why i believe there's a 50 50 chance is i actually have a very high degree of confidence compared to most people that the superior monetary policy is one that is programmatic transparent and deflationary now what do those three things mean big words right so programmatic simply means that satoshi nakamoto who's the creator of bitcoin it's a pseudonym wrote into code exactly what the monetary policy was published the code anyone can go read exactly what's going to happen remember in the fiat system people are still are still wondering what is the federal reserve going to do at the federal reserve meeting this week we don't know there's people speculating with billions of dollars in the markets on what the federal reserve's going to do we have no clue right but in the bitcoin world we can go look at the code and we know it's programmatic nobody can change it it's not up to somebody's opinion um or kind of human bias it is written in code and that code executes the code cannot be changed unless majority of people agree to change the code so programmatic the second thing is transparent we can see the code we can see every transaction and we can see every single bitcoin that's being created and put into the circulating supply so you have a programmatic transparent monetary uh uh a monetary uh system right we do not have that in the fiat world i know more about the bitcoins monetary um system then you know about the fiat system you don't know what the circulating supply of the us dollar is you don't know how many dollars were printed today you don't know what the next decision is going to be and you can't show me every transaction in history with bitcoin i know exactly how many bitcoin are in circulation i know exactly how many are in the total supply i know exactly how many are being uh created today and i can shoot every single transaction from january third 2009 to today but the beauty is you don't have to trust me i can prove to you i can show you on the blockchain or in the database exactly in the code base exactly what it is you can verify with your own eyes you don't have to trust anybody and so that is this why i believe bitcoin's going to be the superior monetary policy now how do we go from where we are today to actually get to bitcoin being the global reserve currency i believe it happens over a long period of time and it starts with people outside of the united states right people where the currency is failing so venezuela zimbabwe lebanon other places they begin to adopt bitcoin at the individual or the population level because it isn't controlled by anybody so if your government just blew up the currency through hyperinflation they can't come to you and say oh our bad we just gave you a bad currency but here's our new currency you don't trust them so you're going to opt for a thing that you know can't be manipulated you know exactly what it is you can verify it's programmatic and transparent now as that happens the at the government level bilateral trade today there's a ton of negotiations that constantly go on if there's two countries and let's say the united states isn't one of them so china and russia and they want to do a transaction those two countries try to figure out what currency are we going to settle the transaction should we use dollars should we use rubles should we use rmb what should we actually settle the transaction but every country knows the other countries are manipulating their currency the us is manipulating theirs they're printing trillions of dollars other governments are doing the same thing so if you don't want to have to uh trust another country and use their currency and they don't want to trust you and use your currency i believe that naturally you're gonna start people to see government saying in the next couple of years why don't we just use bitcoin as a settlement currency we know that it's transparent programmatic and it's not being controlled by anybody or manipulated we can just use that system and then now all of a sudden we both agree that that's a better system than either of our currencies that are being manipulated so when you start to see bilateral trade being settled i think that's going to be a big moment now there have been very small examples of this in the past it was argentina did two separate bilateral trades uh with other countries they were very small like tens of thousands of dollars or hundreds of thousands of dollars so they weren't big but bitcoin was used to settle these transactions i think that that will become much more popular in the future the second piece of bitcoin's rise to global reserve currency and this is a very key piece is bitcoin is going to rise to a global reserve currency without ever firing a bullet now what do i mean by that every single currency that was the global reserve currency uh before it was unseated had the strongest military backing it at some point they devalued the currency enough where the economy was weakened a another country came in they had violent conflict they went to war the new country won the war they had the strong military they had the strong economy and they said we now are in charge and they put their currency as the as the global reserve currency so there's always been when a global reserve currency changes a transition there's always been violent conflict in the analog world the person who is superior in a military sense has always been the person with the best offense right and if you've got the best offense you're the most powerful military you get the global reserve currency but that's in an analog world in the digital world in cyber warfare the strongest person is actually the person with the best defense if i can keep everybody out i have the best defense i'm the strongest person right and so bitcoin all of the computing power that is pointed at bitcoin makes it the strongest computing network in the world it is the struct the bitcoin network is the strongest computing network in the world and therefore i believe that in the cyber world or in the digital world bitcoin has the strongest military right but they don't have any weapons they're not offensive it's all defensive because it's fully decentralized distributed and it's got the strongest computing power behind it and in that world what ultimately will happen is that i think bitcoin is going to rise to the global reserve currency and be the first one to get there with a all defense approach to strength and it will never fire a bomb a bullet or kill anybody the conflict is going to have bitcoin reigns supreme because it's got the best defense the strongest computing network it's fully decentralized you would have to have global cooperation from every country to shut bitcoin down you would have to have every single government get together and say together 186 countries we're going to shut it all down it's not going to happen and so that's where i believe over time bitcoin ends up being the global reserve currency now that doesn't mean that every other currency goes away right today there are tens of if not 100 plus currencies in the world and so it's not like because the dollar became the global reserve currency that all of a sudden all the other currencies went away there's plenty of countries that use a different currency it's just that the dollar is the global reserve and so just like we saw remember what i went back to when we saw the rise of the internet everyone said in the beginning i don't trust the internet i don't know who the person i'm transacting with is this is weird i'm not used to doing this uh how does this work but now those businesses that went from the analog world to the digital world they ended up becoming much bigger badder efficient faster profitable than they ever were in the analog world the internet made them better and that's ultimately what's happening with money is the digital world is making money better it's got a better monetary policy it is able to be transacted anywhere in the world and the defense behind it is better than any military in the world right there's no country that can hack the bitcoin network as far as we understand and so in that world i believe bitcoin will eventually rise to be the global reserve currency that may not happen for 50 or 100 years right most currencies actually have a pretty long run as a global reserve currency the dollar has been around for quite a while but it doesn't mean that it's going to happen tomorrow what i do know though is that every single currency that has failed in history has failed because the owner of the currency has devalued it right they've continued to produce or dilute that money and it's gotten less and less in value and then eventually fails that's what happens with fiat currencies every single fiat currency is being devalued the dollar has lost 95 plus percent of its purchasing power over the last 100 years so naturally at some point history would tell us that the dollar won't be the global reserve currency right i don't necessarily want that to happen right i live in the united states i grew up in a dollar-based system the dollar works for me i can go to the store and i can use dollars right this isn't a kind of uh statement as to um the dollar being bad as much as it is we just know if you study history technology and investing that the digital disruptor that is better and can get more distribution to a great a greater number of people on the internet usually beats the analog world version and i think that's what's going to happen with bitcoin so uh again i'll take a couple more questions before i forget uh make sure you smash the like button some more people on youtube will see this subscribe to the channel i'm putting pompletter.com in the chat go subscribe i sent a daily letter 50 000 people every single day and you can uh go there um okay somebody's asking about what's gonna happen to bitcoin moving forward so this is really important in june of 2019 i wrote a thing for pumpletter.com where i said i believe three things are going to happen in the future i believe that the central bank is going to bring interest rates down i didn't think necessarily they'd go to zero but i thought they're gonna have to drastically bring them down i think that they're going to have to print a lot of money because we're getting towards the end of a bull cycle and when that happens and the and you get the turnover of the economy and the stock market they're gonna say oh wait we're addicted to stimulus let's create a bunch of stimulus to get the economy going again so you get rates drop you're gonna get a bunch of printing of money and i said those two things are going to coincide around the same time as the third bitcoin having so that 1800 bitcoin per day that was getting created uh each day was going to drop to 900 that happened in may well fast forward to earlier this year and those three things happened within 60 days of each other we had two emergency interest rate cuts that cut all the way down to zero percent interest rates we got printing of trillions of dollars already about 2.4 trillion dollars many people think that we're gonna see another two to three trillion dollars in stimulus packages before we're out of this the fed's balance sheet could reach as high as 10 trillion dollars right so you get interest rates to zero you get trillions in quantitative easing and the bitcoin having happened in may in early may we went from 1800 to 900 bitcoin per day and what i wrote about in june 2019 is this is going to be rocket fuel for bitcoin rocket fuel was the terminology i used why because the macro environment is going to force people to look for inflation hedge assets when you cut rates and print money it leads to inflation and people are going to run out of the dollar and dollar based things and they're going to try to find inflation hedge assets so it's going to be bullish for real estate gold silver and bitcoin but bitcoin is the most volatile it's got the smallest market cap it's only 200 billion dollar asset and since it's so volatile that when all of the assets go up bitcoin will just go up more than the rest of them right kind of volatility goes up and down it's not good or bad volatility when it goes against you people don't like it because they lose money but when volatility works in your favor it's pointed in the right direction volatility is your friend because it means that you're getting return right you're going up in value so i said rates are gonna go down there's gonna be a bunch of printing of money and we're gonna get the bitcoin habit all three of those things happen but not only did they happen they happened at much much greater scale than i could have ever imagined we have interest rates at zero we've printed trillions of dollars the bitcoin having occurred look right now out of all of the asset classes crypto has outperformed every single asset class in this recession so stocks are basically flat year to date gold is up 20 25 bitcoin is up more than 50 percent bitcoin is up more than 50 in 2020 right so what ends up happening is exactly what i said as you get that violent move upwards in all asset classes because of the inflation remember the dollar is being devalued asset prices rise rich get richer poor get poorer bitcoins just going to go up more than the rest of them we've already seen that playing out i think over the next 18 months we're going to continue to see that and what ultimately happens go back to supply and demand the bitcoin having is a supply shock right 1800 bitcoin used to be available every day now there's only 900 that come online so that supply shock means if demand stayed constant if demand didn't change the price would naturally go up because there's less of this available on a net new basis but instead of just having the supply shock we also had a demand shock because now they're printing so much money that people are saying wait a second i got to go get out of the dollars and go get into these inflation hedge assets so you get a supply shock you get a demand shock and what i think that serves is this rocket fuel that sends bitcoin's price exploding upwards it's up 50 so far this year it includes it's up 50 since january 1st that includes at one point it went down 50 so bitcoin has gone from earlier this year all the way down to about 3 800 and now is at 11 000 plus dollars absolute incredible upward volatility and it's because the macro environment is forcing investors to go into bitcoin this happened in 2008 2009 remember gold went down 30 in 2008 during the liquidity crisis they started printing lots of money everyone ran to gold when they ran to gold from 2009 to 2011 gold went up more than 200 percent and it ended up hitting an all-time high right now people are doing the same thing they're printing tons of money they're running to gold they're running to bitcoin right and when they do that you're seeing those assets rise but bitcoin is outperforming gold this year by 2x so gold's up 25 bitcoins up over 50 and so that's going to continue because bitcoin is a much more volatile asset just a smaller market cap of course it's more innovative disruptive new so it's going to continue to go up so i think that's what's going to happen i'm publicly on record again not financial advice there's risk do your research all the normal disclaimers right um i believe that bitcoin is gonna hit a hundred thousand dollars one hundred thousand dollars u.s by the end of december 2021. so basically we're looking at we're in july of 2020 right now by the end of december 2021 i believe bitcoin will hit a hundred thousand dollars people say that is absolutely ridiculous but what we see with bitcoin is bitcoin has these big boom and bust cycles and every time if you bought at the bottom of the last bus cycle and rode it through the boom and into the next bust that bus cycle was always higher than the previous low so it continues to establish higher lows and the reason why that's important is those boom and bust cycles are naturally how assets grow right and so bitcoin is likely to go from where it is today go all the way up to 100 plus thousand dollars by the end of next year and then it'll crash again but when it crashes it's not gonna come back to ten thousand dollars it may crash to thirty forty fifty thousand dollars right it'll kind of go through another multi-year barrel uh multi-year bear market and then it'll run again and it'll continue to gain more and more value if you believe that bitcoin is only a store value it's not a medium of exchange it's not money you can't use it to buy things whatever there's a lot of people who believe that and it's just a store of value right like gold today bitcoin's market cap is 200 billion gold is seven or eight trillion dollars so let's just use eight trillion dollars as the number if bitcoin reaches gold's market cap that means that bitcoin would 40 x to get to gold's market cap think about that for a second the analog store of value versus the digital store value if you think that bitcoin can hit the same store or the same market cap as gold that means that the bitcoin price would have to go up 40 x to get there right pretty crazy when you start thinking about it i personally believe that bitcoin is not just a store of value it's actually money and so when you think of bitcoin as money then you say what is the global monetary supply the global money supply is somewhere in the 70 to 90 trillion dollars depending on how you count so that means let's take 80 trillion as the easy number that means that bitcoin if it was to go from a 200 billion dollar asset and reach 80 trillion dollars which is the global money supply so kind of match the money supply there would be a 400 x increase in bitcoin's price again very very small chance that this happens but that's what the numbers would show you to go from a 200 billion dollar asset to an 80 billion or to an 80 trillion dollar asset right it's kind of showing you how small bitcoin is but i actually believe that not only is bitcoin money it is a market expanding type of money what do i mean by that when uber was a startup and they were pitching people they would say we are going to try to disrupt the taxi industry sounds pretty cool but when you look at the taxi industry it's really not that big and so if you simply just said okay uber's here and they're going to try to disrupt the taxi industry that means that uber can you know 20 to 30 x not a bad return but it's not insane type returns right it's not multi-billion dollar company type returns and so that would have been a fair assessment but what actually happened is uber ended up not only beating the taxi industry it ended up expanding into other areas and now it's a ride sharing company so it beat the taxis it beat the black cars it also beat car ownership there's many people who don't own a car because they use uber and so this market expanding technology means that it actually was bigger addressable market than people originally realized right airbnb is another example if you said hey airbnb is simply going to be a competitor to hotels you would look at the total addressable market of hotels but airbnb is different airbnb competes with all different types of logic you may actually say ah i don't even want a hotel in my own city i just want to rent an airbnb so that i can go have an event there and then come back to my house tonight and so it's a market expanding technology and so it's a much more it's much bigger adjustable market than just hotels bitcoin is the same thing in my opinion it is not just competing with gold or competing with the money supply it's actually got the possibility to be much bigger than that now how does that work murad mahav did came on on the podcast that i run uh and he gave a great um kind of breakdown of this and basically what murad said is go back to what the dollar incentivizes people to do get out of the dollar and get into store value assets so take your dollars and buy our real estate precious metals stocks etc well if all of a sudden the currency the global reserve currency ends up being able to uh be bitcoin to be and it's this deflationary system now you aren't financially incentivized to get out of the currency now you can just hold bitcoin and when you do that what you'll do is you actually steal market share back from those store value assets so you will steal market share back from art from real estate from precious metals from all these other assets you'll simply be a saver the fiat system rewards investors and punishes savers the bitcoin system rewards savers and in this system if it can grow and have global adoption become a global reserve currency now all of a sudden it will steal market share and so you're not talking about just getting to 80 trillion dollars the number that murad used was a 150 trillion dollar market cap right it would start pulling back all of uh the market cap from these other assets now i'm not smart enough to do the math on a 150 trillion so let's just simply use 160 because that's double 80 trillion in that case 400 x would be from 200 billion to 80 trillion well that means it's 80 800 x from 200 billion to uh a 160 trillion dollar market cap now i'm not claiming that it's going to go to 150 160 trillion dollars but that is the way to kind of look at the growth trajectory it's a 200 billion dollar asset it could grow to gold's market cap which would be 8 trillion it could grow the global money supply would be about 80 trillion or it could grow and actually be a market expanding technology and grow to 150 160 trillion so you would be looking at 40x 400x 800x again i don't know what's going to happen i believe that there is a 50 50 chance between the fiat system and this digital decentralized system i'm 32 years old i'm young i've got a very high risk tolerance i understand that i could lose the 50 that i put in the bitcoin system right so whatever you invest you can lose so you have to be careful you have to do your own research all of the normal disclaimers but i'm willing to take that risk because i believe 50 50. right you've got to figure out what do you believe 99 1 90 10 whatever it is that's what you got to do all right i'm going to answer two more questions and then i got uh things i need to go do i need to plug this in so that my computer doesn't die um uh let's see what other questions what other questions do you think that bitcoin will always lead the way in terms of value if there's a better technology such as litecoin okay so what about all the other cryptocurrencies is basically what this question's asking there's lots of people who uh who ask this question and what i always go to is two key things there's about 5 000 crypto assets right i use assets for a very specific work there's three types of crypto assets there's crypto currencies these are cryptographically secure digital assets that are trying to be money right so cryptocurrency there are utility tokens which basically are things that give you access to a network a product a service think of this this could be like um you know tokens at an arcade or or something like that um or there are kind of the security or investment assets right so this is like taking the equity of a company and digitizing it or tokenizing it so there's cryptocurrencies there's utility tokens and then there's kind of these tokenized securities there's actually a very small number of them that are trying to be currencies right of the 5 000 there might be 15 or less that are trying to be money and in there the market has determined this isn't my opinion the market has determined that bitcoin is far and away the winner right could that change sure anything's possible but going back to what is money money is a belief system and when you have belief in a network and there's tens of millions of people who have all bought in money is a very viral product right we send it back and forth and people get locked into the network effects right so think of the dollar if you use the dollar you probably don't use another currency you just use the dollar you're locked into that system everything's priced in dollars everyone accepts dollars right you have dollars you're paid in dollars you get locked in the system in the bitcoin system there's tens of millions of people who've adopted it and they're getting locked into this system and so in order for something to um unseat bitcoin as the king in the cryptocurrency uh vertical you would need that belief to break down and for something else to capture the belief i personally do not believe that's gonna happen and it goes back to the same example like when venezuela's bolivia fails the government comes back and says oh sorry our bad we have this other currency now that you should try our second one nobody believes them i think that's what happened in a decentralized um digital currency bitcoin is the one attempt to separate state and money and to have a decentralized uh distributed um kind of system right or deflationary digital currency if it doesn't work nobody's gonna trust the next one right it's got too much market share it's got too much adoption at this point too many people would get hurt and those people happen to be the early adopters for this type of technology that if it actually didn't work the next one that came along everyone would be we saw that already it didn't work and so the only thing that you could do is you would have to wait for those people to literally die and then somebody could try it again but i don't think that anything if bitcoin doesn't work i don't think there will be a decentralized digital currency so it's basically bitcoin or nothing in the currency vertical now the other call it you know 4 900 plus currencies that are out there there's all kinds of debate what's valuable what's not valuable i'm not going to cover that stuff now but those aren't trying to be currencies and so it's really important to kind of break off in the crypto world what's trying to be a currency bitcoin's the winner uh the market's determined that and i don't think that's going to change anytime soon um okay uh usability of bitcoin so this is another thing that people always ask about which is um bitcoin is quote unquote slow right is something that's people will say if you look at the fiat system gold was the layer one right so we had gold and gold was hard to transact it wasn't divisible it's hard to move around it wasn't portable all that kind of stuff what we did was we took gold and we said we're gonna put it in a vault and then we're gonna create a paper claim on that gold a layer two so now you can just walk around with these pieces of paper and spend those and we know that it's backed by the gold that's sitting in the vault then we built on top of that electronic money on top of the paper money easier to transact and then we even built credit and other things on top so there's kind of multiple layers to the fiat or the dollar system started with gold and then went paper claims digital money and all the way up that's what's happening with bitcoin so gold was super secure super provable you could have sovereignty of it all of these things bitcoin is the exact same the transactions get processed batched together every 10 minutes like we talked a block chain a chain of blocks of transactions every 10 minutes so people will say oh it's slow but think of it as a spectrum between you can have speed or you can have security bitcoin just like gold in the dollar system has chosen for layer one to optimize for security it is much more important to be secure at layer one than it is to be fast and so by being secure what you're now seeing is we're already building layer two which is you might hear something called the lightning network or other things and so that layer two is similar to the paper claims on the gold it's a little bit easier to carry around and move it's a little bit cheaper it's a little bit faster it's a little bit more efficient that's exactly what layer two does layer two is built on top of layer one and it makes it more efficient to spend and use bitcoin there will be a layer three a layer four etc on top of it and so over time it will become much much easier to use it will become faster more efficient cheaper all of these things but going back money is the most important asset in the world right just like gold had to be the super secure sovereign asset at layer one the bitcoin network as is designed had to be the super secure sovereign asset at layer one in this new system and then you'll get the additional layers on top of it we're only 11 years into this right this is a multi-decade rise to become the next global reserve currency and so i think that's what people really have to understand here is this is not just about how fast is it today how shiny is something today how innovative and all that kind of stuff it's all about you have to be very methodical very safe very secure and very intentional about what you're building because today there's 200 billion dollars uh in value at stake if bitcoin was to be blown up right in terms of a self-inflicted wound there was a bug introduced in the code something like that there'd be 200 billion dollars of value that would uh dissipate or disappear and evaporate and so in that situation security safety methodical intentional work is the most important thing that's what bitcoin's doing i actually think it's doing exactly what it needs to do so uh all right i'm gonna take one more question before i do that go smash the like button so we get more people on youtube to watch this i'm trying to get a hundred 000 subscribers we're really close so make sure you're subscribed to the channel i'm gonna put pompletter.com again pompeompletter.com i just dropped the link in the chat go click on it sign up for the daily letter that i write to uh 50 000 investors every single day and um let's see all right i've seen somebody put in here a million times lengthening cycles yes so this last question i'm going to answer lengthening cycles basically is this idea that those boom and bust cycles i talked about they continued to get longer in timeline so in the beginning it might have been you know a six month boom cycle and a uh i don't know nine month bus cycle and then it would be a 12 month boom cycle then an 18-month bus cycle right and each time the boom and bus gets longer and longer what it really is doing is not only is it lengthening in time but it's also getting less volatile and the reason is because more and more people are adopting it so if you think back to um till ray which was a marijuana stock that got floated i think it was in canada and it exploded in fact i mean this thing went up like hundreds of percent everyone was freaking out the reason is because they took all of the stock for the company and they only floated a little bit i don't remember what it was one or two percent and there were so many people that wanted it but there was only one or two percent of the stock available and so because there was this frenzy in demand the price exploded but the company and the and the directors and employees held most of the stock back right so there wasn't that much float well in the early days of bitcoin the first 10 minutes there was only 50 bitcoin in circulating supply then after 20 minutes there was only 100 after 30 minutes there was only 150. so it was very slow in terms of putting it into circulating supply fast forward 11 years now there's 18.4 million bitcoin in circulating supply so there's been a dilution or more liquidity in the market right so that lowers the volatility because there's more liquidity there's also been uh in the beginning there's only a couple of people using bitcoin now there's tens of millions of people using bitcoin and on top of all of that you start to see that there is a very very high percentage of bitcoin that hasn't moved in long periods of time right what we call strong hands if you believe a deflationary asset is going to continue to get more valuable over time why would you spend it you're gonna get it and you're gonna hold it and when people hold it that ends up being a floor for the price so when you get these boom and bust cycles there's some percentage of bitcoin that don't move right call i don't know 50 of bitcoin haven't moved in like five years or some crazy number like that i don't remember the exact number in those situations you get a lengthening of the time you get less volatility and ultimately you get a continued increase in price right like i said 30 um compound annual growth rate so that's basically what happens with uh with this all right i've gone for more than an hour and 15 minutes i promised plane i was only gonna go for an hour so i'm in trouble now which means i'm gonna get the hell out of here uh go smash the like button please please please let's get more people watching this stuff more people need to be educated learn about bitcoin learn about the economy make sure you subscribe to the channel pompletter.com i just put it in the chat go subscribe and i will try to do these more often i appreciate all of you coming here to watch this and have a great night

Channel: Anthony Pompliano

Views: 237,782

Keywords:

Id: 7SIcS5hJHx0

Length: 77min 50sec (4670 seconds)

Published: Mon Jul 27 2020

Reddit Comments

[u/kyleleblanc]

I actually watched this last night and I'm not going to lie, it's incredible! Literally every single minute is filled with perfectly broken down and easily understandable knowledge. This is far and away the best thing I've watched in all of 2020 thus far. If you have not seen it, please do yourself a favor and watch this, I promise you'll very much enjoy it.