We cover the basics of bitcoin. Learn what you need to know to make intelligent decisions about investing in bitcoin.

https://lightning.network

https://www.bitcoinbeach.com

https://missionsake.com

Hey everyone hope you're having an awesome day no one on this podcast is a

financial advisor all information presented on this podcast is for

informational purposes only now that we have the legal stuff out of the way

let's jump on in welcome to the generational wealth with cryptocurrency

podcast and today we're gonna be talking about Bitcoin now as I mentioned on the

last episode we're going to take the next few episodes and we're going to

cover what I would consider to be kind of the blue chip of cryptocurrencies

meaning cryptocurrencies that have been around for a while they've got good

market cap so total usage they're doing useful things with them they're not

going to disappear tomorrow which is important when we're talking about

building generational wealth of course so we'll begin with Bitcoin now

everybody listening to this podcast probably already heard of Bitcoin it's

been around the longest of the modern cryptocurrencies a Bitcoin was created

by an individual or a team of people who go by the name of Satoshi Nakamoto now I

say that because nobody really knows who this person or people are it could be a

man could be a woman could be a team of people we really don't know he kind of

showed up created Bitcoin and about three years later disappeared really

kind of odd kind of lends to the mystique of Bitcoin so here are some of

the highlights of Bitcoin there are approximately nine hundred and twenty

billion dollars in market cap for Bitcoin currently and this is in August

of 2021 late August actually and what that means is that's a the sum total of

the number of tokens times the value of the token at this point in time right

now that values approximately $47,000 and I think there's around 19 million

Bitcoin that have been mined one of the characteristics of Bitcoin is that it is

programmed so that there will only be 21 million Bitcoin ever mined or created so

it has a hard cap when we get to 21 million that will stop you will not be

able to mine anymore and that was done I believe that was done as a hedge against

inflation you will not be able to print Bitcoin so to speak countries there are

countries certainly speak about the United States for example that print

money from time to time we've just seen this in the last few years with recovery

programs for COVID as an example where they'll they'll disperse a trillion

dollars or more I think one of the programs was like three trillion dollars

last year if I'm not mistaken maybe and that money was it was just it was printed

it was created there was nothing to back it and that's a long long discussion

maybe one day we'll get into that but not tonight so unlike that Bitcoin has a

fixed supply there beyond 21 million never happened now I did mention it's

mined that does mean that Bitcoin uses what's called proof of work to create

this I explained this on the last episode as well what proof of work is in

brief the companies or individuals that mine Bitcoin do so by having computers

basically perform complex calculations on on cryptography puzzles so to speak

and when your computer figures out the puzzle first you get the block of Bitcoin

Bitcoin blocks are minted roughly every 10 minutes I believe a new one is

created and there are thousands and thousands of mining computers I don't

actually know what the total number is but it's quite large at this point so

yeah like I mentioned it's probably the well it is the first what I would say

modern meaning in the current era so to speak digital currency just as an aside

there certainly were other digital currencies that had been created in the

past I remember back in probably the late 80s early 90s they were talking

about digital currency and there were some things that were done never took

off the whole idea of a blockchain which is very central to both Bitcoin and any

of these tokens that we talked about was not a concept back then and it proved to

be very crucial to the ability to make this stuff work anyways January 2009

that's when things got started when that what's called the Genesis block this

first block was created and if you listen to people talk about Bitcoin if

you listen to podcasts where people who are what they call Bitcoin maximalist

meaning they're all in for Bitcoin they think bitcoins the best there's nothing

else and they only own Bitcoin they talk about Bitcoin in the terms of a store

of value and that's a good place to start so what they mean is a store of

value you could compare that to gold and in fact that comparison quite often is

made I might buy some gold to save put my safe as a hedge against inflation as I

don't know in case the economy crashes that Bitcoin or excuse me that gold is

gonna retain its value same idea with Bitcoin it's a store of value it's going

to appreciate it's gonna act as this hedge against inflation originally when

it came out they talked about it as being a true digital currency you could

use it you know to buy things settle debts between individuals all the things

we use money for right I I go I go to the store I purchase something with my

cash or maybe I go to somebody's house that has a lawnmower for sale and pay

them money for that lawnmower all the same kind of use cases there that we use

money for now but what they did in my opinion is that as the value of Bitcoin

started shooting up they said oh wait wait we have this thing that's

appreciating and maybe it wouldn't be so wise to spend this because three months

ago it was you know half the value that it is now so it's doubled in value in

the last three months and yeah I probably don't want to spend these so

this whole idea of store of value as the primary function of Bitcoin came about

interestingly one of the first commercial and doesn't well it doesn't

mean that commercial uses aren't there right in fact Elon Musk famously started

taking Bitcoin at least for a short period of time for Tesla sales earlier

this year there's certainly many companies that do take Bitcoin in fact

the first known commercial transaction for Bitcoin actually happened back in in

2010 that's when the first known commercial transaction with Bitcoin

took place you may have heard about this a guy named Laszlo will go down in

infamy as the guy who bought two pizzas from Papa John's there the Bay Area of

California with Bitcoin and I hope you're sitting down because he spent

10,000 Bitcoin roughly $41 in 2010 10,000 Bitcoin and now if you take that

10,000 Bitcoin I'm gonna run a quick calculation here oh it's $47,000 times

10,000 I think I did that right one to 470 million dollars I wonder if he gave

a tip anyways so things have changed people don't go to Papa John's and pay

with Bitcoin at least not right now so over the years there's been challenges

but Bitcoin has continued to you know to progress I think you'll find in general

one of the things about Bitcoin is that they I don't want to say they're adverse

to change but they don't change very quickly and what I mean by that is if

you compare Bitcoin to Ethereum which we'll be talking about in the next few

days Ethereum their change is is quite rapid compared to Bitcoin they will they

will make software changes to add new features to adjust things on a regular

basis Bitcoin does not do that it doesn't mean that they never change but

the changes is very slow and they view that as a they view that as a benefit

without a lot of change it does keep the bugs down that happen

unfortunately it means quite often that there don't get some fancy new features

that may turn into really big things and so you see a lot of growth in these

other coins that you you see a lot of growth in terms of different uses and

other coins that you don't see on Bitcoin but as a store of value Bitcoin

has continued to appreciate so you can't knock that now one of the things that

until fairly recently has been difficult to do with Bitcoin is to manage this as

Bitcoin is gained in value you know what if we want to use it as a currency it's

it's hard to do that one of the projects that's had a great deal of success that

I want to talk about for just a minute is called the lightning project and the

lightning project with with Bitcoin when you send or with most with most crypto

in general when you send it to somebody there are fees associated with that that

can be quite steep with ether they're called gas and for example and those

fees I've seen them as high as even a couple hundred dollars to send your

your coin and that doesn't make economic sense it certainly doesn't make sense

when I want to buy a cup of coffee oh that'll be five dollars for your cup of

coffee and twenty dollars in fees it would never work so they created

something called the lightning network there was a company I think it's called

lightning labs they created what's called the lightning network and this

lightning network actually sits it's called a layer two not to get bogged

down into this but it sits on top of Bitcoin so Bitcoin is layer one and I'll

use layer one and layer two occasionally during these conversations the layer one

protocol is Bitcoin or aetherium or Ada right versus a layer two which is

something that operates on top of that lightning network in this case and

lightning network is is a way to have transactions happen extremely quickly

and with very low fees so I can actually use Bitcoin as it has its original

intent where I have an app on my phone so I have an app on my phone I say oh I

want to pay for this with my money and here here's QR they scan the QR boom the

transactions done and it happens super quick and for very very low fees so it's

just a couple of satoshis I a satoshi is a the smallest part of a Bitcoin there's

a hundred million satoshis in a Bitcoin so even at the current prices and even

as the prices continue to go up over the next few years a satoshi is well under

a cent right so if it only cost me a couple of satoshis to send my payment

across the network well that's far cheaper than a visa charge or you know

one of these credit card charges on a credit card network so things get real

interesting at that point it does make sense I'm obviously I've got Bitcoin

that I'm saving but if I'm using Bitcoin for things like this I can pull money

out of my bank account have it converted into Bitcoin and use it for actually

buying things or paying people for that matter for services and that kind of

thing one of the places that this project has gotten really good traction

and it's gotten really good press is a place down in El Salvador called Bitcoin

Beach you go to bit Bitcoin Beach calm and they've got a write-up on it it's

actually a non-profit project that was put on by a place and I do not know how

they say their name I believe it's mission sake but their

website is www.mission in my ssio nsake com and the whole goal here was to help

the people in El Salvador and you need to understand something about El

Salvador and actually many countries around the world but for El Salvador in

particular they have a large group of people who are what we call a bank to

meaning they do not have access to a bank account they there's no bank in

their village they can't get even if it was there they the bank would not take

them on as a customer or whatever in El Salvador it's something like 70% of the

population it's a crazy high number here in the United States basically anybody

can get a bank account if they want to we have people who don't necessarily

want to but they certainly have the ability to there's banks on every

street corner practically not so in a place like El Salvador and if you don't

have a bank then it makes it or well if you don't have a bank it makes it very

difficult to save right you put some money under your mattress maybe in the

cookie jar or whatever but that's not a real good way to keep to build up your

money so we need a bank for that well we don't have a bank what can we do well if

you have access to a digital financial network like lightning you can have

your own bank if I can accept payments and Bitcoin on my phone which most

people in El Salvador have then my phone becomes my bank now we have to do

things to we have to have a good password we have to you know practice

safe computing so to speak to safeguard that but it but now I have a bank and I

have a bank that I can carry around with me so this lightning network was

revolutionary so they go into Bitcoin Beach and they it's called Bitcoin Beach

because it took place it it's taking place it's still ongoing I think I'm

probably gonna butcher the name of the place I think it's Elizonte something

like that which is a town small village that's on the Pacific coast if I'm not

mistaken and it's just a little small village most of the people very poor and

very much hand-to-mouth subsistence type lifestyle obviously no bank just like

we were talking about and they've come in they've gone in they provided the

necessary infrastructure and they've taught people how to use this network

and it's taken off and it's just been phenomenal so much so that actually the

government in El Salvador noticed what was going on and just a couple of months

ago the president of El Salvador says we're going to pass a law that says that

Bitcoin is legal tender now that was a profound thing the US dollar is the

current legal tender of El Salvador and what he said is we're going to make

Bitcoin equal to the US dollar it we both of them the US dollar and Bitcoin

and businesses will be required to accept them now they make exceptions for

people I don't know if there's just a situation where they really can't accept

Bitcoin they deal with that it's not like a huge onerous thing but what they

do is they require the businesses that can deal with that except Bitcoin so

they're spreading that network and they're giving their citizens a way to

save their money and one of the things I didn't mention and one of the driving

forces behind this is the GDP which is I think it's gross domestic product so it's

like the money of the country like this generated a lot of the GDP of El Salvador

is actually in what they call remittances and that means that maybe a

family has somebody who went to the United States got a job and they're

sending back money on a regular basis maybe they're sending $200 a month for

example back to El Salvador and maybe in that village in El Salvador that $200

it's a big deal to them right it's it makes a huge difference in their life

well you can't just send somebody $200 it's not that easy unfortunately if

you've ever dealt with Western Union to wire somebody money or gone to a bank to

wire money between bank accounts it's it's a it's a hassle you got to go in

show your ID and blah blah blah all this kind of stuff and B it's expensive

right just recently out of real estate transaction and I just send some money

from my bank to a partner's bank they wanted $25 to send money from one bank

to another and I'm filling out all this paperwork and doing all this stuff and

I'm like this $25 this is ridiculous I could use lightning and click and send

it to them so if the family member in the United States has a lightning app

like strike which is a lightning network app and the family in El Salvador has

that same app or a lightning enabled app they can send money between each other

both ways really but the money would be sent in from the United States to El

Salvador to help out the family back in the home country and maybe they send

$200 and it costs two satoshis to send and two satoshis is remember less than a

cent so now instead of $25 or whatever ridiculous amount it is that they charge

it's less than a cent or maybe it's a couple of cents it doesn't matter now

that is profound that is earth-shaking and that is the kind of stuff that crypto

allows us to do one of the reasons why I'm so bullish on crypto is because of

these type things the things that will change the world and we don't even see

it coming just like the internet changed the world we didn't know what was gonna

happen when I got out of college in 1991 the very early days of the

commercialization of the internet there was no concept of what was coming we

couldn't see it and we can't see the same thing we think crypto most people

think cryptos about day trading and making a little bit of money or maybe a

lot of money I don't know it can change it will change the world some ways it

may be not as good but some ways like this it will change the life of those

families back at El Salvador okay so I for one love seeing this kind of stuff

now El Salvador was the first to declare Bitcoin to be a legal tender they are

not the last there's actually two or three other Latin American countries

that I know of that are looking at it for the exact same type reasons they've

got populations that are highly unbanked and maybe they get a lot of remittances

from overseas or you know wherever and so we'll see we'll see what the future

holds but but Bitcoin being declared as a legal tender is good good in another

sense because it actually it gives it legitimacy on the world stage I

understand and I'm not a legal expert just like I'm not a financial expert

that the IMF that actually means that the IMF they have to make certain

concessions because it's a legal tender just be like if you know if the country

would have if El Salvador was said well we're gonna we're gonna make the El

Salvador and pay so well that means the IMF has to do certain things by by

contract by law same case here it should be we'll see how that goes I'm actually

interested to to see how how that goes down there's a lot of resistance against

Bitcoin against crypto in general so I don't know we'll see but the times are

changing and some of these things that are happening are just fascinating now

in general Bitcoin certainly something you need to watch I am I'll be honest

with you and you need to do your own research you may choose to think

differently I'm not a Bitcoin maximalist and in fact as I kind of view

this like buying stocks you know most people would suggest you don't buy all

of the same stock you should kind of buy a basket of stocks because it's the old

thing about you know don't put all your eggs in one basket I think the same

thing in general applies here I certainly see a lot of good things in

Bitcoin and I certainly believe that over the next three four years and

probably far longer that Bitcoin will continue to go up in value but what I

don't see on Bitcoin is that innovation and we'll talk about that some more when

we're talking about aetherium specifically because there's a lot of

innovation going on there so you know maybe maybe Bitcoin doesn't go up as

much but I don't know maybe Bitcoin becomes the central the digital currency

of the kind of the central banks of the world does that make sense so the US

dollar is currently used for world trade predominantly maybe maybe at some point

ten years from now maybe less Bitcoin replaces that I don't I don't know and

you know at that point obviously it's super valuable and it would be really

good to have some knowing that there will only be 21 million minted of it

which is certainly not the case of some of these coins is I believe very big for

Bitcoin and that is programmed into the protocol it will not go you know they're

not gonna change that you can count on that so anyways that gonna that's gonna

wrap it up if you got any questions you can shoot me an email

mcintosh.fintech at gmail.com so hope you enjoyed this I believe next time

we're gonna talk about aetherium and I will try and get that out in a few days

I apologize it's been a little bit longer between this episode and the last

I was actually going to record last night which I was late even then but

yesterday afternoon we had a lightning storm and I had a crazy thing happen

I've never had this happen before had lightning come down the cable modem line

and blew out my cable modem so we lost the internet until I went and got the

cable modem replaced fortunately our cable company has a local office so I

was able to get one this morning so I could get online and get back to work

but anyways I do apologize for the delay I'm gonna try and put these out every

every three or four days so I'm try and shoot for twice a week we'll see in the

long run I may make a longer recording once a week I don't know we'll see still