This has been a pretty magical week for the worlds first digitally native money. MassMutual purchased $100 million worth of Bitcoin as a reserve asset. Microstrategy popped off for another $650 million of Bitcoin using something called a “conventional bond sale.” Canada saw its’ first Ethereum ETF go live on their stock market. The price has held steady at around 18.5k, with a few late night forays into 17k and 19k. It is a great time to be a hodler.
I thought today would be a good time to talk about Bitcoin and the pesky “question” :
What is Bitcoin?
Magical gold that fits into your pocket and can be teleported across the world in mere minutes for a negligible fee.
What is Bitcoin?
It’s money. It can be used as a store of value, unit of account, and a medium of exchange. Although it’s not very good at doing any of those things… YET
What is Bitcoin?
A decentralized network of computers working together in order to constantly secure the data it creates.
What is Bitcoin?
Software that took the characteristics of money and transformed it into bits and bytes.
What is Bitcoin?
A safe haven from central banks constantly printing money and degrading the dollar/yen/euro/etc.
What is Bitcoin?
Simple, it’s a Peer-to-Peer Electronic Cash System.
What is Bitcoin?
Libertarian ideology baked into cutting edge technology being served to the masses as a financial tool.
What is Bitcoin?
The United States calls it a commodity. Fidelity calls it an alternative asset. Paypal calls it an offering. Square calls it a reserve asset. Many people in Venezuela call it a life (savings) saver.
What is Bitcoin?
The first and most secure blockchain network.
What is Bitcoin?
The Future.
The hardest thing about understanding Bitcoin is the most simple question: What is Bitcoin?
I’ve read five or six books on the subject. I’ve taken a blockchain course at an established University. I stay up to date on Bitcoin Twitter, the most wonderful corner of the universe. I listen to “The Pomp Podcast” and “What Bitcoin Did” almost daily. I hodl as much coin as I can (it’s not much, sadly).
Yet, every single time I try to explain Bitcoin to a FIAT friend, I find myself rambling to nowhere.
“Dude, ok, so like Bitcoin is this network of computers that race to solve this super complicated math problem. Whenever a computer wins the race it is rewarded bitcoins, with a lowercase b, and that is how bitcoin created. We call that bitcoin mining and it is also how the network is secured cuz like the harder the math question is to solve the better the networks security….”
*friend’s tilts head sideways, mouth slightly agape in absolute confusion*
“Ok ok let me restart. So Bitcoin is basically this piece of code that transformed the properties of money into digital form. You know the three basic principles of money right? No? Well, for money to properly function as money it must be a store of value, unit of account, and medium of exchange.
~friend’s eyes start to glaze over due to econ 101 ptsd~
“Alright, alright, alright. I can see you’re not listening anymore. Whatever. Bitcoin is the future of money. Simple thought experiment: what will your future kids (insert quick side conversation about how unlikely that either of us will have kids any time soon due to the cosmic ineptitude of 20 year old dudes to understand females) be more likely to buy: a piece of paper with a dead white guy on it, a digital currency, or a bar of gold?”
@friend thinks for roughly twelve seconds and asks…
“Why didn’t you just start with that? All that other stuff is way too complicated.”
Occam’s Razor tells us that the most simple of two explanations is often the answer. I choose to believe that Bitcoin is digital gold. That is not a groundbreaking idea. The first book I ever read about Bitcoin was literally “Digital Gold.”
What is not simple is the underlying technology, ideology, and utilization of Bitcoin because…
It can be disconcerting to someone not versed in the pseudonymous world of crypto to type into Google: “who invented Bitcoin”, only to find the faint outline of Satoshi Nakamoto haunting the early forums of Bitcoin developers.
It can be easy to dismiss Bitcoin as fake internet money when it swings 30% in a week… or 300% in a month… or 3000% in a year because something so volatile must be part of a bubble or ponzi scheme or something illegal and sketchy.
It can be tough to grasp the concept of Bitcoin when someone must first understand the concept of money and the power of inflation in order to realize what makes Bitcoin special. The halvening, “ONLY 21,000,000 EVER CREATED,” the central bank goes “brrrrrrrr,” and everything that makes Bitcoin scarce functions as a direct contradiction to how many central banking platforms act.
It can be hard to understand the difference between a public key and private key and how to store Bitcoin safely when every article you run into reminds you that “IF YOU LOSE YOUR PRIVATE KEY YOUR BITCOIN IS GONE FOREVER AND NOBODY WILL HELP YOU FIND IT SO GOOD LUCK AND ALSO EXCHANGES SUCK SO DON’T USE THEM EVEN IF THE USER INTERFACE IS SUPER EASY COMPARED TO THE HARDWARE/SOFTWARE WALLET YOU ARE CURRENTLY USING.”
Bitcoin is scary to the Fiat Friends and Family of us crypto-maniacs.
It’s confusing and a bit sketchy and wonderfully volatile.
It’s a deflationary store of value secured by the worlds strongest nest of cyber hornets constantly updating itself in order to evolve into something…. Something the world has never seen before.
And before you go and try to explain it to Fiat Fred or Dollar Don or Gold Gary, bring it back to the basics, to what makes Bitcoin special…
Somehow, some way, we have figured out how to transfer unique bits of value over the internet in a way that cannot be hacked and has the characteristics of money.
In an era of technology and innovation…
What is going to be used by the next generation?
A physical safe full of gold?
Or a network of digital gold?
I have my money on the bitcoins.
KRAM 