The True Value of Bitcoin: What You Really Need To Know

Hi, everybody. It’s Stefan Molyneux from Freedomain
Radio. I hope you’re doing well. This is just a brief preamble before we get
into the value proposition of bitcoin. I got to tell you, I have been struggling for days
to try and find the right analogy or metaphor or language to describe what an astounding
revolution bitcoin represents. It’s not like anything’s come before. So you
say, “Well, email is just faster mail and with additional features and so on.” Yes,
that’s very true. You can say like a bank transfer is faster than mailing a check, and
that’s true. You could even say that 3D printing is a way of moving the manufacturing process
from source to destination, eliminating shipping and so on, and that’s true. But they don’t
come close. The closest thing that I can come to in terms
of explaining what bitcoin and its revolution represents is I would imagine the closest
thing would be the invention of the internal combustion engine. I think in terms of how
that changes society as a whole. It is a tough thing to understand, but the
important thing to understand is bitcoin is not just money transfer. That’s very, very
important. That’s a component of it and it’s one of the things that gets a great value.
But bitcoin is not just money transfer. Bitcoin is an entire programing environment. Bitcoin
is a publicly audited ledger of what has occurred for you financially in terms of property,
in terms of ownership, in terms of contracts and all these kinds of things can be publicly
audited and verified. Bitcoin is immune from attack almost completely.
The argument being that if you have the computing power to attack the network of bitcoin, you
will actually gain far more from using that computing power to generate bitcoins than
you will from attempting to spoof the network. So it is practically impossible to hack. It
is completely encrypted. Your identity is completely encrypted. You can reveal it if
you want, right? You can be out there without avatar or you can just be your avatar and
the encryption is functionally impossible to break. This is why Julian Assange used
to protect his information. That’s his life. So you can assume that it’s in pretty good
stuff. What it does most fundamentally is it eliminates
labor in financial transactions. It eliminates labor in conflicts resolution. It eliminates
labor in things like wills. It eliminates labor in accounting. It eliminates labor in
lending. There is, in fact, an entire stock market running on bitcoin. It eliminates labor
in an initial public offering or going public. And it doesn’t just eliminate some of it;
it can eliminate most , if not all, of it. As you can imagine, the financial services
sector is completely insane in terms of how big it’s become, and we’ll get into some of
those numbers in a moment. The financial services sector is between 8%
and 15% of the entire economy in the west. If you can eliminate a significant proportion
of that, say, 70% or 80%, then that means that 8% to 10% to 15% of the world’s economy
can go back into the hands of the people and away from those vertical ice cube trade glass
towers of financial institutions. The money can go back to the people. For example, why do you put money in a bank?
Fundamentally, for two reasons: (1) because it might get stolen; and (2) because there’s
inflation and if you don’t put your money somewhere, it’s just going to get either way.
You put it under your mattress, you might as well have a box of termites in there as
well chewing away the paper. Well, you can’t have your money stolen in
bitcoin. I mean, you simply can’t. I mean, with even tiny and reasonable measures of
security, you can even keep your money completely offline. It’s never exposed to any computers
at all. You simply can’t have your money stolen through bitcoin. That doesn’t mean it never happens. It just
means that like if you leave your wallet somewhere, it’s going to get stolen but this is very,
very simple things that you can do to keep it completely encrypted and anonymous. So your money can’t be stolen so why would
you put it in a bank? Certainly, your bitcoin money isn’t any safer in a bank so that is
a very important thing as well. A bitcoin cannot be inflationary because the amount
of bitcoin is fixed to the maximum cap of $21 million. They can’t get progressively
harder to make. So it cannot be inflationary, which is why the value of bitcoin is going
up. Eleven months ago it was $10. Now, it’s approaching $11.50 Canadian. The question is why? What possible value could
bitcoins have that would generate that amount of growth, that amount of value per bitcoin?
Well, people who don’t know about what bitcoin can do view it as a bubble. They say, “Well,
it’s gone from $10 to $1,100 in less than a year. Therefore, it has to be a tulip mania
exuberant bubble.” I can understand that. I completely understand
that perspective, but I would argue that that’s because the true value of what bitcoin can
do in terms of replacing financial services is truly astounding and will be, I argue,
about the biggest revolution in economic history if a widespread adoption continues which I
see no reason given the amazing amount of value that is in having direct one on one,
no need for a third-party financial transactions, having vast available to people is such a
value that it’s irresistible. There’s just so much profit to be made from it. Of course, what it will do is to release all
of the people currently involved in heavy-duty accounting and heavy-duty conflict resolution
and financial services and banks and so on. It will release them to get real jobs. Obviously,
we have a great deal of concern for these poor people in the finance industry who maybe
threatened with the loss of livelihood. Naturally, of course, bitcoin charities can be set up
to take care of them and to make sure that they stay in the Lexuses and the Rolls Royces
and the Bentleys and the Jaguars to which they become accustomed because we wouldn’t
want them to have to downgrade. That would be, well, a great human tragedy, of course. I’m making a pretty big case here, and I’m
going to go through some details and help you sort of understand that bitcoin is not
just upgraded money. It’s not just PayPal without fees or bank transfers without fees.
It is those things but it is much, much, much more than that. We are talking a massive revolution
in money. Money is everything in terms of power. People
think that that’s having political power, having the power to have a law courts and
military and police and so on that that’s the real power. That’s not the real power.
The real power is always and forever in the money. You cannot wage war without debt. You
cannot have debt for wars since wars are so inherently not profitable, you cannot have
it without central banking, without government control, without fiat currency unlinked from
anything that is limited. Gold is limited so having a gold bank currency means you just
can’t keep printing money at least if you’re not the government. So having something that’s limited in terms
of money is very important. Otherwise, you just run the photocopier and you basically
turn into the Weimar Republic where you need a wheelbarrow full of money to buy a loaf
of bread, and it’s probably more cost-effective to burn their money for heat than it is to
actually spend it on something. So the real power in the world is the power
of money which is why governments will always try to gain control of money. When you gain
control of money, you then have to gain control of interest rates because debt drives up interest
rates and thus invalidates the value of borrowing money for governments. And so you get these
massive controls over the economy in terms of currency, in terms of interest rates, in
terms of debt. If you look at, say, the promises made by
politicians, they’re almost always to do with giving you something for nothing, pretending
that you can violate the laws of physics and biology and you give people something for
nothing. The only way they can do that is through control of money. This is one reason
why you’re getting poorer and the rich are getting richer because the rich and the politically
connected have control of money and you don’t. Neither do I, if that’s any consolation. But people complain that bitcoin has a market
cap of this, that or the other. More bitcoins are being created. The Federal Reserve creates
about as much money in two hours as being created in the four years of bitcoin history,
and they’re only accelerating whereas bitcoin is decelerating. So these are just important
considerations to have. The choice is not between some sort of fantasy
money that you can have which is anonymous and gold backed and physical yet interest-bearing
yet not subjected to the whims and caprices and incompetencies of various administrations
or administrators. The choice is between some sort of electronic currency and our existing
fiat currency system which is rapidly accelerating towards its inevitable mathematical conclusion
which is not pretty at all. I think it’s really, really important to spend
a few minutes to really, really understand the capacities and potentials of bitcoin.
I’ll just give you a little teaser. Bitcoins and the bitcoin architecture not only can
replace the entire stock market, but it actually has in some instances. There are stock markets
running in the bitcoin environment. Bitcoin, once more, part of it is the transfer of bitcoins,
the bitcoin architecture; but the major part of it is just an entire programming environment,
an entire look-up environment. We’ll get into what that means in a few minutes, but it is
the biggest revolution in economics in history assuming that it is adopted. I would really
argue with a future freedom relies upon its adoption. So please educate yourself. We’ll provide
links to other bitcoin information provider so that you can check out more than what I
have to offer. My background, I worked in software for 15
years. I did a lot of database programming and a lot of presentations on the value of
software so I do sort of understand how to make a case for software, and I do understand
a good deal of what goes on in the land of software. I’ve also read the white paper that
the bitcoin originator wrote about his goals and purposes. I’ll link that in the video
below in the low bar and in the podcast notes. Let’s gets started, shall we? All right. So let’s get started. This is the
truth about bitcoin’s value proposition. Just as a minor note, I’m not a late adopter to
this in June of 2011, which I guess over two years ago now. I was on television talking
about bitcoin as the currency of the future so I hope I have some credibility there. Let’s dive into the value proposition. If
bitcoin can replace significant proportions or significant portions of financial markets,
well, what kind of size of market are we talking about? Financial markets in the United States
are the largest in the world. In 2011 — I don’t believe it’s gotten smaller since then
— finance and insurance represented 8.3% or nearly $1.3 trillion of the US gross domestic
product. Now, this is a rapid, rapid growth and it
has not coincidentally coincided with rise of the power of the size of the state. Of
course, a lot of these guys served the state and they served stock markets and so on. The
US finance industry was only 10% of total non-farm business profits in 1947, but it
grew to 50% of non-farm business profits by 2010. It is intensely eating up in many ways
the rest of the economy. Over the same period, the finance industry
income as a proportion of GDP rose from 2.5% to 7.5%, and the finance industry’s proportion
of all corporate incomes rose from 10% to 20%. The references for these will be, of
course, in the low bar as always. These are inflation adjusted. The mean salary in New York, the city’s finance
industry, rose from $80K in 1981 to $360K in 2011. Well, the average New York City salaries
rose from $40,000 to $70,000. It is a widely profitable in larger and larger sector of
the economy which is why I imagine that the originators of bitcoin will end up with a
horse’s head in their bed. Now, part of what happens, of course, these
are things like foreign exchange as you can imagine. Foreign exchange vanishes in a bitcoin
environment because there is no such thing as foreign exchange. Credit and debit card
processing take half the profits of smaller stores. If you run a mom-and-pop store or
a small restaurant or whatever, they literally will take half of your profits which means,
of course, you have to charge a lot more. It’s not entirely greed, of course. I mean,
credit card companies spend approximately 40% of their profits and incomes fighting
things like fraud and so on. It is a huge problem. Credit and debit cards are a huge
problem. I mean, you need the number, you need three digits on the back, and you need
the expiry date and you can pretty much go to town in most places. This is not the case
with bitcoins at all. Bitcoins cannot be spoofed or impersonated
in any way, shape or form. So if there is a way of transferring these kinds of transactions
from credit cards and debit cards to bitcoins, then you are doubling the profits immediately
of smaller stores which means they can lower prices and so on. That’s fantastic. I mean, 15% of the price that you pay is due
to shoplifting and fraud and other things. Of course, shoplifting will still occur in
a bitcoin environment but some of that will be significantly reduced. Again, we can shed
as many crocodile tears as we want for the people at the credit card companies, but we
don’t all cry that we don’t have to cut food by hand from the fields, right? We like that
there are combine harvesters. These kinds of improvements are the essence of our growth
as a species economically. So credit and debit card processing, if it’s
transferred to bitcoins through smartphones or bitcoin cards, there are no transaction
fees for bitcoins. You can pay a tiny bit if you want it to be slightly faster, but
there are fundamentally no transaction fees whatsoever for bitcoins. People say, “Well, what about the volatility
or what about if you want buy things not using bitcoins but using regular old feared currency?”
Well, I mean, there are services that, for a tiny fee, the moment you swipe, the moment
it’s approved will immediately transfer your bitcoins to cash and put it in your bank account.
There are lots of solutions. Remember, when you’re talking about the government,
it’s a monopoly control with vested political, financial and military interest in the existing
system. When you’re talking about bitcoin, you are talking about a decentralized group
of people who can adapt and can extend the architecture to do just about anything who
all have a vested interest in its stability, who all have a vested interest in its accountability,
and who all have a vested interest in maintaining the value of their bitcoins. Remember, if bitcoins go into a free fall,
let’s say, then they’ll go into a free fall either because the value proposition hasn’t
been made. All you can do in business, all you can do is make the value proposition.
That’s all you can do. The value proposition is so clear. It’s not going to be because
there’s no value proposition. It might fall because there’s some competitor to bitcoin
although almost all the electronic currencies are based on bitcoin at the moment. So if there’s some feature missing from bitcoin,
you have hundreds and thousands of people soon to be millions and millions of people
who all have a vested interest in maintaining the value of their bitcoins. They are going
to work to extend the feature set of the bitcoin architecture to absorb any new features that
people find necessary that may be causing a decline in its value. Yeah, fraud cost for
credit card companies run up to 40%. Here’s a number that might get your attention:
the bank bailout total worldwide was $29.616 trillion. You know you’re in crazy Googleplex
money territory when the third decimal place is still a jaw-dropping amount of money. I can tell you this for sure. I’m not a big
one for making predictions, but I can tell you this for sure: bitcoin will never need
a bank bailout. It will never need a bailout from the government. So we’re all ready as
a species up almost $30 trillion which is more than twice the GDP of the entire United
States. The fact that as a species, we already had
$30 trillion by not using the banks and by moving the bitcoin, well, I would say, that’s
not a bad value proposition for a day’s work. Here we can see from 1860 through 2008, of
course, it’s only higher since GDP share of the US financial industry, of course, it went
up to the 1920s because the Federal was printing all this money. When you print a whole bunch
of money and you force people into the stock market, stocks get out artificially inflated. The stock market is really an effective federal
policy just like the housing market which is not going to be the case with bitcoins
getting the cold, withering, crypt-keeper hand of the state off the throat of the economy
in terms of its financial, political and military motives is really essential to advancing the
course not just of human wealth and human predictability but of human liberty and freedom
fundamentally. As you can see, it’s just going up and up
and up. It went down, of course, at the end of the Second World War and it’s been going
up ever since. So bitcoin, what is it? It’s not a piece of
digital currency. It’s not bits and bytes and that you burp across the internet. It
is a tiny part of it, but fundamentally it is a revolutionary protocol for information
synchronization. Every client on the bitcoin network, every
computer gets all relevant pieces of financial transaction or property transaction or property
ownership or changes or anything like that. What it does is it sends out updates to all
the databases across the whole world, and it checks their validity without any central
authority. I won’t bore you with the details. You can listen to the podcast below if you
like to know more about how this works. It’s completely a genius, and I would never
have thought of it in a million years. Not that that’s the final test of something being
a genius, but it is really brilliant. It is a step forward in computer science technology
that is the equivalent, I would argue, of the heliocentric model of the solar system
for astronomy or the theory of relativity for physics and so on. This is a way for all computers to be updated
with valid transactions. You can’t double spend coins. You can’t spoof. You can’t take
your coins back. There are no charge backs in the entire system. You can still pay back
but there’s no charge backs. There’s no sort of boomerang. Boomerangs are very expensive,
right? You book something as a sale in a store 30, 60, 90 up to a year. That money can just
be yanked back out of your account and you have very little way to appeal it. This does
not occur in the bitcoin environment. You can, of course, send money back for free that
was sent to you, but there’s no charge backs which is hugely important as to its efficiency. It’s data that is shared worldwide that is
guaranteed to be valid and authentic, a true representation of what has actually occurred.
It cannot be spoofed. It cannot be intercepted and it can be as public or as anonymous as
you want it to be. So if you want to do all your financial transactions anonymously, you
can do that and that cannot be penetrated in any way, shape, or form if you take the
necessary steps. If you are a company that’s out there and
you want people to see your innards and you want people to see your profits and losses
and costs and all that, you can put all or some of them in a publicly digestible format
as you like. You can encrypt the contents of this information or you cannot encrypt
them. It’s really up to you and, of course, there is value in both. So when you’re dealing with someone on the
bitcoin network, you’re dealing with an avatar and the avatar can be themselves or it can
be just like a hand puppet and you don’t know who it is. But you still know whether that
hand puppet is trustworthy or not. The elimination of the need for a third party to validate
financial transactions, a credit card company, a bank, Western Union, the Federal Reserve,
you name it, the elimination of that is an astounding, astounding revolution in money
and thus society. The society is based on money. The history
of society is almost exclusively the history of money. Just look at the French Revolution,
the Roman Empire, the English Revolution, the American Revolution, all of it is founded
on cash. When you change money, you change the world in the most fundamental way. The
only way to change the world more is to adjust the laws of physics. I haven’t found the slightest
skills for those yet so I guess I’ll have to stop eating cheesecake. Now, the database that this bitcoin protocol
keeps synchronized is referred to as the blockchain, and that’s just a massive tree of everything
that’s occurred in the database from beginning to now and that’s called the blockchain. It’s
a giant accounting ledger. It’s the storage and transmission of financial information.
That’s one aspect to it. There’s other things. You can put anything you want into the blockchain. So when the FBI stole a whole bunch of stuff
from Silk Road, people sent them zero bitcoin transactions which had a bunch of graffiti,
anti-FBI graffiti. You can include anything. You can put a novel in there. You can put
a deed to property. You can put a patent. You can put DNA information. Any information
can be included in your financial transaction. Once the other person accepts that, that is
like a EULA that is publicly — like an End User License Agreement that’s publicly validated
which is why I’m saying you can include contracts in your financial transactions. And if the
contracts are violated, they can be automatically invalidated. If I say, “I want you to build me a website
in 30 days,” I include that and pay you 50 bitcoins to do this website in 30 days. We
can include automatically in that whole process that if the website is not up and running,
in 30 days the money reverts to me. We don’t need a third a party at all. We don’t need
a third party at all. All of this can be set up in the bitcoin environment. So as mentioned, it’s not the sole function.
It’s a public record of anything that you can consider valuable. Like back in the day
I used to write novels and you can gauge the quality of my novel writing by the fact that
I’m doing this rather than reading from one of my novels. But what I had to do was I had
to mail the novel back to myself so that it will be time stamped with when it was written.
I can now put the novel in the blockchain encrypted so that nobody can read it and that
I can decrypt it. That’s my ownership. That’s my ownership and none of this needs — you
don’t need to register with anyone. Nobody needs to look it up. They don’t need to pay
someone to send them the paperwork. It’s just right there. If you are a reporter, you can
use the blockchain to file a story and you’re the undisputed first person to file that story
if you’re first in the blockchain. These are all things that are there. There’s
a lot of possibilities that are baked into the bitcoin architecture that are only now
being explored. Let’s look at what you probably have heard
about bitcoin as money. So bitcoins blockchain is combined with simple encryption functions
and database rules to provide people with ownership rights to a certain balance of numbers
dubbed coins. It’s one of the challenges when you have a new technology is that you have
to use words from the old technology to describe it. It’s just data. The coins are just a data
that are attached to a particular identity that is all encrypted. It’s private as you
want it to be. With the right private encryption created
from a user of the database, one owner’s balance or partial balance of coins can be sent to
another user on the database. So I transfer these little bleeps and bloops and blurps
to you and you will call them coins because like Kindle still makes it look like you’re
turning over a piece of paper when you’re turn that — it’s kind of what we’re used
to, right? These database rules allow for a condition
by multiple private encryption keys must be used to send a balance to another owner. What
does that mean? Well, it means that you can have three people involved in a financial
transaction, and two of those people have to agree for it to complete. So if I am doing
something with you and we both agree it’s been done, then we both put our pass code
in and the transaction is complete. If you and I disagree, it doesn’t complete until
a third party, which could be human or could be automated, agrees with either one of us. So let’s say we go to some guy, Bob, the wise
elder down the street, and we present our case and he says, “I agree with you, Stef,
or someone else,” then he agrees with that person and that person then gets the money
or it could be automated insofar as if a certain condition is not fulfilled, the transaction
reverts or the money reverts back to the original owner or it doesn’t get sent at all. Imagine, right now, let me tell you, dispute
resolution for small transactions is almost completely unavailable to people who aren’t
in mesh in things like credit cards and paying all of those points for that. For poor people,
people in the Third World, it’s just not really available. The architecture of bitcoins allows
for this to be baked right in and to be part of people’s financial transactions and to
be done either virtually for free or for a very small amount of money. It extends dispute
resolution. Like I have once was thinking of using a court many years ago. I was told
it was going to cause me a quarter million dollars and five to ten years of my life.
I think the value proposition of bitcoin relative to government courts is pretty key. So these are escrow functions. Escrow, of
course, is generally withholding money until a particular condition is completed so you
know the money is there and then when the condition is completed the money is released.
So the buyer and the merchant agree and the mediator or the merchant and the mediator
agree, that is what occurs. Bitcoin protocol doesn’t care where these
private encryption keys are used to authorize transactions. It doesn’t care where they come
from as long as they’re the correct keys. Does the origin, the IP address that originates
from the computer or the VPN or whatever, it doesn’t care. It doesn’t care at all. It
just does this key, open this lock. I don’t care whose hand is holding it. It could dangled
with puppet strings for all it cares. As long as the key fits, it matters. So a program in the blockchain called a script
which contains the correct private encryption keys could be used to authorize a specific
transaction. What that means is that bitcoin is an entire global programming environment
for the transfer of information. Now, some of that information can be keys. Author of
that information could be any number of things. Maybe I’m going to write you an article, and
you’re going to pay me a bitcoin. I write that article and I send it to you. It’s encrypted
on the bitcoin network. You like it and you approve it. These are all things that are
possible with no need for any third party whatsoever. Nobody’s in charge. It just works.
This is unbelievable. If you don’t get how exciting this is, just keep listening. It
gets better. So you can send a transaction of bitcoins
that are not executed for a certain period of time or in a certain date and so on and
that is impressive. If I say while I want to leave my bitcoins to my daughter when she
turns 18, I can set it up now. When she turns 18, she just automatically gets it. I don’t
need a lawyer to set up a will for my property, the degree to which my property deeds and
the value of my bitcoins are embedded in the bitcoin network. I don’t need a lawyer to
set this stuff up. I can just set it up myself. You can also do things like kickstarter projects
so people can say, I say, “Well, I need a thousand bitcoins to finish my documentary
because JLo is pricy,” and people can say, “Well, I’ll donate, but I don’t think you’re
going to get that far.” Until I reach that, it doesn’t get deducted from anyone’s account.
All of these things are possible in the bitcoin environment. Now, there are scripts that can check the
internet, right? Of course, bitcoin environment is on the internet so it can check information
that’s on the internet. So there’s a variety of things that you can do. Let’s say, I want
my daughter to get my bitcoins either when she turns 18 or when I’m dead. Well, say states
like Missouri put people’s death notices online. You could ping that and as soon as your name
and date of birth and maybe some special key shows up there, then the money will be released.
Again, you don’t need a lawyer to execute this stuff. And again, it’s tough to think
of reducing the amount of money that lawyers make. Anyway, we’ll hold hands. We’ll sing
some Kumbaya to help them transition. If you say that let’s say you host with a
particular web time company. They guarantee uptime and if your website is down, they’ll
pay you bitcoins every minute that it’s down, again you just set this up. The bitcoin chain
will be paying the website anytime it goes down the money will be transferred. When it
comes back up again, the money will stop being transferred. Again, no people are necessary
for any of this at all. A reward can be automatically delivered on
the completion of some sort of online project. For instance, there are pretty good translation
tools on the web but let’s say it’s really important that I read the site in Turkish.
Well, I can just put something up there and say, “Translate this for me on the fly,” and
when I’m satisfied with it, the bitcoin automatically gets paid to the person. Again, you don’t
need human intervention or a third party from that standpoint. So we talked a little bit about the money
aspect. Again, money is just one form of the data the bitcoin can accept and transmit to
everyone and verify but it can be any kind of information. Time stamping and verifying
information without revealing what that information is or who posted it because if you’ve got
the key to your identity on the blockchain and you have the key to whatever is encrypted
that you put there, I mean, it doesn’t care. It’s a blind photocopy. It just replicates
whatever is there and that’s just astounding. As we mentioned, you can use it to protect
yourself from plagiarism or from other people claiming they come up with the idea first
or anything like that. Here’s a slightly more complicated example.
Again, it is only limited by the imagination of the programmers and the market demand for
services. This is why it is so revolutionary. You can have it do almost anything that involves
data and these days, what doesn’t involve data? To those blue-collar workers who were
put out of work by some of the robots and some of the other automation that has occurred,
don’t worry. The white-collar workers are next and that we can all get on to finger-painting
clouds and other cool stuff. An inventor could use the blockchains to verify
and time stamp a digital thing to print called the hash of a document describe an intervention
for free. So even if you don’t reveal the information about your invention, the block
chain could be use as proof of its existence if at some point later they said, “Well, who
invented this?” blockchains solve that. It has nothing to do with money fundamentally
but it’s right there. Marriage certificates, divorce certificates, anything that you want
could be put in these things as well. If you remember that this thing called the
blockchain which is the ecosystem of bitcoin, it’s a giant public record of ownership or
giant public record of data independently audited and verified by computers all over
the world with ownership rights secured by cryptography. One of the projects that’s underway in the
bitcoin community is called the colored coins project. People say, “Well, what if you get
up with a competing currency that competes with bitcoin?” Well, you can put that into
bitcoin. I can come up with Stef bucks if I want. I can say, “I want to finish my documentary.
I will take Stef bucks,” and they will give you — every Stef bucks gives you a half of
a percentage point of the profits of the documentary. And then I say, “Oops, fooled you! I’m releasing
it for free but thanks for the money!” And then it comes on the best deal. But colored coins, they allow anyone to mark
a bitcoin or a fraction of a bitcoin with ownership rights of just about anything you
can imagine. Here’s an example. If I sell you my house at 123 Lincoln Road, I can complete
the transaction by sending you a scrap of a bitcoin that I have uniquely marked with
ownership bid for that property. So the legalese equivalent of this bitcoin entitles its owner
to the property at 123 Lincoln Road. No registry, no contracts, no big old dusty filing cabinets
with overweight public sector workers shuffling back and forth like zombies. It’s just right
there in the architecture. No need for a third party. This ownership transfer of 123 Lincoln
Road will now be publicly visible and auditable on the giant public record of ownership information. Again, that doesn’t mean you live there. You
can privatize and keep encrypted and anonymous that it’s you who live there but the ownership
can be there and if anybody questions it or opposes it, you can prove your own ownership.
No need for lawyers or registries or central authorities. This is what I’m talking about.
Are you getting exited yet? Let’s keep going. So the colored coins project takes the application
of the blockchain as a public record of ownership law one step further. Imagine, it’s a company
that marks or colors of bitcoins or fractions of them with proof of ownership and shares
of that company. So these are like shares. They’re not tradable. You cannot go in and
buy a car with a share but they entitle you to partial ownership of an organization and
partial share or dividends in its profits. People can take full ownership of shares in
companies they invest in because right now they’re physically or digitally stored with
a third party. Oh, man! But then we face the emotional barrier of not being able to give
as a society, so much money to stockbrokers. Hold me. Well, we’ll try. We’ll try and struggle
through that as best as we can and release these people to do something productive in
the world. This would facilitate the purchasing, selling
or trading of shares without the need of intermediaries such as brokers or stock exchanges. Oh, my
goodness! Are you getting excited yet? Von Mises said, a great Austrian economist, that
the foundational difference between a free society and all other economies was the existence
of a stock market. We’re talking about people. We’re talking about privatizing stock market.
Isn’t that amazing? Isn’t that astounding? It grants everyone in the world equal and
free access to the stock market. Do you ever think, “Oh, I know this great company. I’d
really like to get it at the stock market.” Oh, the regulations. Oh, I’m going to find
a stockbroker. Oh, I got to set up my account.” Forget all about it. Forget about the overhead
of these people granting you the right to buy and sell stuff. Imagine you couldn’t buy
your groceries. You just got to go to a third party who are going to charge you 40% of your
grocery costs to go and buy the groceries for you. It’s madness! Direct economic opportunity,
that’s what we’re talking about. Not even low barrier to entry but definitely no barrier
to entry. This is how we help people in the third world. It gives individual and entrepreneurs and
small businesses equal access to public funding. A business of any size could have an IPO.
You’re daughter is thinking of opening a lemonade stand. You can have an IPO and get the cost
of lemonade upfront. What is this going to save? Oh, it’s astounding. Companies that
want to offer shares to the general public. I went through this when I was an entrepreneur.
The average cost is $3.7 million plus an underwriter’s fee of at least five percent of whatever value
their IPO raises. In moral terms this is called highway robbery.
In bitcoin terms this is called, “Oh, I think that’s gone in the rearview. We don’t have
to worry about that anymore.” This makes the ability to raise public funds extremely prohibitive
for small and medium businesses, a luxury only available to companies of a certain size
and class. Now those companies like the fact that this is a massive barrier to entry to
having an IPO. We’re talking about leveling the playing field. This is going to shrink
the gap between rich and poor. As society and rules and regulations and laws
and governments and money and financial instruments become more and more complicated, more and
regulated, more and more dependent upon certifications and approval by the state, it becomes harder
and harder for small businesses to access that which is why big companies get bigger
and small companies stay small. We’re talking about equalizing opportunity for access to
capital with almost no overhead whatsoever. Come on. For an artist or a band or a mom-and-pop shop
having equal access to the ability to offer shares to the public, to raise money for new
projects would be invaluable. Think you’re putting plumbing in your African village,
why not? Have an IPO. Again, we will have condolence cards to all of the bald, empty-headed
suits at Goldman Sachs but again, I think I can find my way to struggle through that. Support traders already built into the bitcoin
protocol, easy piecey nice and easy. It’s one programming project, a way to create online
bitcoin wallets that support colored coins. The front end, this is stuff that sits on
your computer. It removes the need for stock exchanges, brokers, underwriters and other
various entry in public finance. That is yummy, tasty futurism right here and now. Our people
say, “Well, but it’s open source and so on.” Hey, you know what else is open source? Linux.
You know what the basis of Android is? Linux. Linux is the most widely propagated programming
environment in the world and it’s open source. These are just tips of the icebergs. Again,
this is some ideas that I have gathered together. The sources are below. Really this guy is
wide open. The possibilities are literally, not just virtually but literally limitless.
It has been described as the internet of money but given that it’s not just mainly for porn
and fraud that it is also a much more secure — it is infinitely more secure than the internet,
infinitely more anonymous than the internet. This is a complete revolution and a way of
bypassing all of these third parties. You could argue there were some necessity
for them in the past although through those process of regulatory capture, they have invaded
and infested the state and used the state to their own advantage. Right now, they’re
generally parasitical upon the future health and wealth of mankind. This is sunlight to
these vampires and it is a way of having us tunnel out the labyrinth and maze of financial
regulations and complexities and have a clear, direct, friction-free interaction with each
other. If you can replace stock markets a significant amount of banking, a significant
amount of underwriting and IPO expertise, if you can eliminate the need for credit card
companies I believe we can literally, literally, double our wealth within a few years. Double the wealth of society, that means more
help for the poor. That means more help for the third world. That means more help for
people who need medical care. This means more income for people so if they want to stay
home with their kids rather than putting them into bug-infested daycares, so much the better. This is not just the revolution in money.
This is the revolution in what it is possible for us as a society and species. Plus, all
the people who formally used to do these stuff, who are all very smart and some of which could
theoretically be very ethical, they can all go out and do really, really productive things.
Not only are we reducing overhead. We are liberating some of the best and brightest
minds of the species to go and do stuff that is really market-driven, consumer-driven and
isn’t just increasingly complex government foodadle overhead that slowly strangles the
human race. This is Stefan Molyneux from Freedomain Radio.
Get yourself knowledgeable about this stuff. It is the future.

100 thoughts on “The True Value of Bitcoin: What You Really Need To Know”

  1. Came across this video today, ah the FOMO of not seeing it in 2013….you must be doing well after the last week. Would like to see you do more videos like this, I've come across a youtuber at BiteSizeBitcoin. The host has 3 masters degrees, has a religious science and tech startup background, has a very data oriented approach. I think the two of you would make a great bitccoin show to watch.

  2. What you said in this video is now reality! Ethereum did the contract part, Maybe ETH will replace bitcoin someday.let's see.

  3. I come from a stock market background and i tell you…. I would HATE to see HFT firms and algo front running firms take over the crypto trading market and rig everything up… I really hope the crypto community don't let these pigs do to crypto trading what they have done to the stock market.

  4. I fear that the naiivty of the young people in this community will not see HOW the big hedge funds and institutions are gonna start manipulating the crypto market. So many retail stock market investors lose money and wonder why its so difficult… Because of course its rigged to the teeth by these "big boys".

  5. This is a very pro bitcoin video. But there were always negative bitcoin videos out there. I just stayed away until a few months ago. A few thousand in bitcoin back then and you would be looking pretty good now.

  6. Facebook, 10,000 employees, makes nothing, $500 Billion market cap. Ford Motor Company, 200,000 employees, makes millions of real cars, worth $50 Billion. Bit coin, debt notes, counterfeit currency, buys wage slaves, sex slaves, debt slaves. Real money, gold and silver, worth nothing? What is bit coin really worth? Same as counterfeit currency.

  7. I don't get it. 'It is a public ledger of all your financials' Like my bank statement?

    When you say it 'eliminates labour in financial transactions, accounting, lending' But to get bitcoin you need extremely powerful machines and people who validate transactions across the world.

    When you say the money can go to the people, but banks give people jobs. So no bank = No job. No job = No money = No bitcoin.

    'You cannot have your money stolen with bitcoin' My money cannot be stolen in my bank either. Unless, like with Bitcoin, I let someone access my pin/ key. Or I pay a crook and cant even prove who I paid it to.

    The problem is not the money, the problem is the way people spend/invest it. The same principles apply to bitcoin.

    I truely understand that bitcoin is a tulip, a waste of time. Lose your key and there is no place to go to get it back, unlike your bank who will let you show your ID and proof of address and provide your new pin within minutes.

    I understand the masses hoping for some fantasy way to get rich, but I would not bet on it. I would buy stock of companies that impact my life and forget about anything else. Just my own two cents (or 0.000000000000000000000000000000000000001 btc)

  8. Unbelievable for the use of contract law, and contract enforcement. Now, you get ripped off, you don't have 20,000 to defend your rights, your out of luck, your money is tied up, until released by agreement, or small court resolution. Revolutionary!

  9. I'm buying bitcoin, though I'm not entirely sure about it. If it will explode in price in the next few years, I will make a lot of money and use it to get me out of debt and possibly by additional precious metals. Or…depending on how its going i will just hold on to it. There is plenty of time to see what the end game is. Whether you see it as a great thing or a fraud/ ponzi scheme, why not take advantage of an amazing short term investment opportunity at the very least? Regardless of your views it seems silly to not take advantage of it.

  10. Urgh! I've been watching you vids for years but this is only just popping up for me… If only I'd watched more! (Got into crypto in Jan '17 via Cody Wilson)

  11. A great video lecture. I've been investing in crypto for a few years as well as physical gold.
    It's simply revolutionary….
    The bankers must be shitting themselves..

  12. (Copied from the 1st video). Serious question. I had an accident at work and claimed against my employer and there is no exact figure yet but it could be in the five digit range. So, my question is should I invest in bit coin? I have the feeling it would be pretty pointless buying now given one is 5800 dollars the last I checked so I would likely only be able to buy one. Or should I try mining? I have always been a PC gamer but only just started to look into bitcoin however I have the rig to mine.

    I have made a lot of mistakes in life, both professional and personal, so any advice from the internet regarding this matter would be appreciated.

  13. for Cryptocurrency milling and how to make good wages on your invested funds, contact me if you are good with it and i will show you how to earn over $500k within 3months and also every little detail you need to know or secret there is about it. reach me via email [email protected]

  14. Thank God for bit coin. We can get rid of stocks, bonds, civilization, and gold. Bit coin is the savior of the Western AND Eastern world. It's Jesus Christ on steroids, here to save us from the government, and Wall Street. Hallelujuiah, we have found Jesus, and his new name is Bit Coin, the NEW savior of humanity. Praise the Lord. God Bless Bit Coin the new religion.

  15. 3rd time I disagree, dont date single mothers, Monsanto is a great company, and now this.. yes, blockchain is groovy, but bitcoin is bs.. another but greater form of control, YOUR WRONG AGAIN… please reexamine your prostitution, position . . Bitcoin is worth 7 times gold right now.. created by who? When you Prove who created it. Then I WILL LISTEN to your ramblings on it, Perhaps AI? think about that ! Sometimes your a complete idiot!

  16. In theory decentralized currency sounds great , just eliminating the central bankers from getting their vig would be a great benefit but the reality is that you it is not truly anonymous. I just tried to buy some recently and the identification procedures to open a wallet were more than a bank requires. It has been two months and I am still not able to trade on Bittrex. They took my initial deposit bit I can't trade because they are not satisfied that I am real. I would check out the youtube SGT report interview with Lynette Zang before investing to much.

  17. Stock market regulations are there for a reason with out the SEC the markets would just be a huge orgy of insider trading pyramid scheme or any other scam anyone could think of. Any company or individual could have there own IPO and if you got ripped off you would have literally no one to complain to

  18. You could do lots of thing with cryptography but is this really worth $10000 per bitcoin and after some huge rise in price who is buying this stuff you really should be looking for assets that are under valued not bloated 1000% that when you should sell not be buying I feel like everyone is gone insane over a cryptographed ledger!!!! Like it's the only one there are literally a thousand of these things!!

  19. can someone sit outside your house and hack your system?..steal your code?….what about a home invader forcing you to give your code to him?

  20. This is one of the most uplifting and inspiring videos you have done to date! Bravo good sir bravo. The money will clearly start flowing to the people bringing the real value. Construction workers, farmers etc..

  21. Stefan,I am wondering about Bitcoin being created in the first instance by a person unknown? Why would a person do that? Is it possible foreseeing a collapse of the present financial system the big banking world themselves have created this and so have used an anonymous ? untraceable unknown as it's instigator.Isn't the fact that one has to give personal details when signing up for Coinbase ect.killing anonymity?If we are still subject to Federal laws re our money and personal assets . How does that work?.The anonymous inventor is a real big ? for me.As well as the wallet of bitcoins can be cleaned out in one fell swoop If anyone has access to the "key".paranoid I know but it has nuances of TNW order to me.Also when it is gone it is untraceable right? Perfect government set up too.

  22. "You could only say it"  Glows, lol, sounds like Stef has been listening to Christmas music!  Keeps repeating the saying.

  23. Finally watching this now … "Its gone from $10 to $1100….." …and now I go to the bathroom and its jumped $2200 by the time I get back

  24. This video focuses too much on the "Pros" of Bitcoin and not the "Cons". Too much wanting to stick it to the rich and have this "perfect" financial tech-driven system. This is naive. Bitcoin is run by people. People are greedy and corruptible. Just like the priesthood of the banking industry is greedy and corrupt, the "priesthood" of Bitcoin is not immune to these human tendencies. It will end up just as corrupt as the current financial system because the people at the top ALWAYS get corrupted. And it is even more worthless than paper because it is just electrons. And if the web/grid goes down nobody has any physical money. The rapid rise is due to the power of belief and is pure speculation. So we are supposed to replace the current currency with a speculative electronic fiat currency that behaves more like a hot stock? I see nothing but red flags…people buying bitcoin to make a profit does not bode well for a more stable financial system than we have now. And then Linux is held up as a success story? Android? LOL!!!! Don't let your hate for the current system blind you to the pitfalls of Bitcoin…and human nature. "Meet the new boss…same as the old boss".

  25. After watching my stash of gold and silver being BEATEN down by naked short selling over the last 6 years… I add crypto .. Litecoin to the stash .. found out about it in 2009 from Max Keiser who was basically giving it away FREE .. or at a LOW LOW cost of about 3 bucks per coin . .I passed.. the ass kicking continues as I realize an investment of 100 bucks would have made me a at least a half millionaire.

  26. Hey!!! I''m anxiously awaiting a call regarding my bank teller job application which will take me out of minimum wage!!  Darn it!!

  27. I have a very old and very true explanation for the bitcoin phenomenon.

    "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." (Charles Mackay)

    I make it a point to avoid parades, mobs and herds and invest opposite of market trends. Right now coins of gold and silver are not trending and i'm backing the truck up.

  28. I'm a huge fan, but after watching this video I'm now convinced that we're in the "New Paradigm" point in the Mania phase….

  29. Look at it from this perspective: Bitcoin was just invented to make the inventor filthy rich as he could mine before others, and he doesn't even release his name.
    Also, Bitcoin has no physical value. Once people realise that it will come crashing down.

  30. I say bc is the same as fiat, has NO value, they are laughing at any bc believer, cant believe it but they are buying it again hahaha

  31. Stephan, you and receiver agree to write /buy your/their article. But publisher needs rewrites edits not anticipated. What happens then?

  32. Almost 2018 and bitcoin is 17K. More and more vendors are learning about cryptocurrency and soon they'll be setting up a way to barter electronically for cryptocurrency. I'm wondering what banks around the world are going to do when the average public simply utilizes cryptocurrency for their transactions instead of paper currency? I wouldn't even be surprised if a nuclear event occurs high in the atmosphere over Western nations wiping out the power grid. That's how desperate I think Western banks will be to gain control of the money supply again.

  33. I wonder when the state will start forcefully opposing blockchain, as it literally can make most of the things obsolete which people see as legitimizing the state. I say that we go all in on every imaginable front – but I can't imagine the state going along with this for very long. This may turn out to be a very interesting time indeed to be alive.

  34. Stefan not following your early has literal cost me millions!!! Still got in pretty early($7000~)thanks to you. Thank you!!!

  35. I thought the creation cryptocurrencies in the internet is to ERADICATE to use the money paper which is all we known as DOLLAR and the Dollar is created by FEW in FEDERAL RESERVES BANK. But still, YOU CANNOT use your bitcoins without converted it DOLLAR, RIGHT? PLEASE EDUCATE ME. THIS IS WHAT UNDERSTAND IT

  36. It will allow competition between currencies too.

    Welcome to the free market boys and girls.

    Pray the Leftists don't fuck it all up.

  37. "The True Value of Bitcoin" is nil since there is nothing to back it up. You might say that fiat currencies also have no value but issuing government have "real" hard assets while bitcoins have none.

  38. 22:20 well what about the dispute? What if the website designer insists he did the job and you say he didn't. You'll still need an authority to settle the dispute. The power will simply transfer towards those settling the dispute.

  39. Has anyone considered that if bitcoin mining was such a desirable "value building" thing for people, that those who are already wealthy could have a bank of computers that are much faster and advanced than the commoner could afford and snatched up this digital money before the masses do. I worry that what this really is. . . is one attempt to rid the world of physical money and when that happens those who control the flow of information would also control all the money. In the long run the overlords of tthe world control us even more so. I'm just a mid-west manual labor type of guy that tries to look at things at many different angles then extrapolate the senerio out to different time frames. Think of this. If all money was electronic digital type right now. Then the power goes out or you drop you cell phone and it breaks and it's the form of banking you do. What if your internet service goes down? I'm also not a conspiracy type but man this just looks too in your face to miss.

  40. Hundreds of millions in bitcoin has been stolen from exchanges. Saying "it can't" be stolen isn't true. Of course, offline it can be much more secure, but to say it can't happen is a lie.

  41. Dat "decentralization" miners (owners of the block chain) are becoming more and more centralized as it becomes less profitable for the "small guy" to run rigs.

  42. do i understand this video correctly- that basically there's nothing stopping everyone who does NOT work for the government from basically hiring and/or working for each other using bitcoin with ZERO income tax going to the government?
    it would be so easy to simply agree to a financial revolution against the government.
    of course the people AGAINST it would be the perpetual welfare bums and all federal employees because they'd be screwed,instead of them screwing the working folks.

  43. Condolence cards to Goldman Sachs but now they just bought a crypto exchange for 400 million dollars lmao. I wish I would've listened to you in 2013. You, my friend, are a genius. Or maybe a time traveler. What's going to happen next? I need a few million dollars.

  44. i wish i would have seen this video that long ago. i just recently got into crypto in november 2017 near its peak (fml). but im still in, learning from my mistakes, buying the dip. this is the best video you have made. definitely trying to spread the word myself. trying to get others to join the party. long live the blockchain (btc).

  45. Everyone's face started to turn yellow over recent years(including me), is it because of nuclear leaked radiation? Can people realize there are so much problems of humanity escalate as world population keep rising? The cores of all problems of human on earth are pretty much a few: overpopulation, inner rage/evil/degeneration turning even good into ruin, pollution due to lack of natural knowledge, problematic incentive system i.e. greedy money system, lack of truth. that's it!!! Referencing from Bi[lly M]eier.

  46. Thank you Stephan, with the recent downturn in the Bitcoin, as well as the entire Crypto market, it seems a little daunting to keep my chin up and search for that light at the end of the tunnel. But when considering Bitcoins rollercoaster ride since 2009 I realize it is only a matter of time before it swings up and with the entry of new investors, reach higher gains than ever before.

  47. FATAL FLAW: if the U.S alone changed from fiat to cryptos, how would there possibly be enough for the workforce? how about foreign trade? medical bills? the flaw I see is there will not be enough crypto for just these, unless you pay with small fractions. it is a complete paradigm shift that would and cannot be used efficiently imo.

  48. I don't trust fiat money but I trust Bit coins even less. The state of Ohio is now accepting Bitcoins for taxes but they invested in collectable coins a few years ago. The guy in charge of this ended up in prison. A lot of Lottery people have gone to jail also. Bitcoins allow too much crime.

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