Hi, my name is James Shepherd.
In this video, I'm going to talk to you about where did bitcoin come from?
Where did bitcoin come from?
I'm sure you've heard a lot of buzz about bitcoin.
One of the things I would love to do; I'm not going to do it just because I don't
want to embarrass people, but I would love to go through my LinkedIn messages from back
in November and December of 2017, when I was getting messages.
I literally had one guy, I think it was actually a public comment on YouTube, if I am not mistaken,
that watched one of my videos on YouTube and literally said to me, "You should sell your
whole business and get out of this.
You need to get into trading bitcoin.
It is so much more profitable."
That was back when bitcoin was at about $17,500 for one bitcoin.
Today it is at $8100, which is actually up from where it was.
I think it got down to $7200, maybe in the $6000 range, but it got down really, really
low.
It literally lost like a third of its value in I believe 48 hours, or 24 hours, something
like that, so bitcoin in the course of just a few months has gone from $17,000 in change
to $8,000 in change.
That's just insane for a currency.
The U.S. currency, we might have a 10% fluctuation over the course of a year.
It's not like it is fluctuating that much.
That's ridiculous.
Where did bitcoin come from?
What is bitcoin?
Then in the next video I'm going to talk about why it is such a mess right now.
Bitcoin came from a couple of different things.
First of all, you need to understand a bank.
What does a bank do?
Why do we even have banks anymore?
Obviously they are lending institutions, but as you've all found, you don't really
need a bank to lend you money.
There is other types of institutions that just do lending.
So as far as using a bank to move money around, why do have them?
What do they do?
We used to go there to get cash.
They use to actually keep cash in their vault and one of the main things you would do at
the bank is you would go and get cash out, so that you could go and buy stuff.
But what happened after that was of course, checks.
People started writing checks giving those.
Then we have credit cards.
Now it is mostly digital.
The vast majority of transactions are digital.
We are just digitally moving money from one place to another and it's going to through
the bank.
When you think about the bank, the bank really is just a ledger system.
That's all the bank is.
When you talk about transactions, the only thing a bank does is the bank is a trusted,
secure ledger that says, "This dollar belongs to Joe.
This dollar belongs to Susan.
Susan wants to pay this dollar to Joe, so now Susan doesn't have this dollar.
We are going to take it out of her ledger and we are going to put it into Joe's ledger.
Now Joe has two dollars and Susan has zero."
Again, those types of things are happening billions of times a day, transactional things
where there has to be a ledger that everybody trusts.
Imagine if you didn't trust the bank.
The bank has made some mistakes for us.
I remember I think a few weeks ago we made a deposit of several thousand dollars in the
bank and then it didn't show up.
We went back in.
My financial secretary went back in and showed the receipt and here the person just manual
error literally put it in somebody else's account.
They had a really good day.
That does happen.
We always check our receipts, but you know generally speaking I mean if I go use my card
at a restaurant, I pretty much trust the fact that you know they took the money from my
account and the restaurant owner generally trusts the fact that the money is eventually
going to get to his account.
Banks are trusted and secure.
That is really important.
What happened was bitcoin came along and said, "If that is what banks do, and they are
this ledger, if we could come up with a ledger system where we didn't need a central ledger.
We didn't need a central bank ledger, then what we could do is we could move money around
for free because the banks are charging interchange rates and all this.
We can just move money around for free."
It sounds like an awesome idea.
Well, what happened was they created a technology called blockchain.
Blockchain is awesome.
It's very important to understand though blockchain and bitcoin are totally different
things.
Bitcoin is built on top of blockchain.
I'm going to talk about blockchain in a second, but I want you to imagine thinking
about the internet.
I think all of us agree the internet is here to stay.
It's not a fad.
Everybody likes the internet.
It's a huge part of our culture and our society.
Just because the internet is doing really well, that doesn't mean that if you just
build a website on the internet, it's going to be a huge success because the internet
does well.
No.
You are building on top of something.
Your thing that you built on top of this core technology also has to be good.
Right?
If you build a website like people did back in the dot com bubble and burst and your website
sucks and what you sell doesn't make any sense and nobody wants it.
It doesn't matter that millions of new people are on the internet every day.
Those businesses went broke because their website was terrible.
Your technology has to be built on top of it.
Just like in that case with the internet, you have blockchain.
Blockchain is I'm going to explain it to you in like three or four sentences, so for
those of you that actually understand blockchain, I realize this is like a massive over-simplification,
but the idea of blockchain is basically instead of having one central ledger that everybody
trusts, we have millions of ledgers on a bunch of different computers and servers and all
of those ledgers are going to match eventually and so if a transaction, if somebody puts
a transaction in and it doesn't match and they say, "I want to transfer $200 to so
and so," but they don't have $200 available in their ledger and the ledger gets somehow
changed.
Well, that's going to be pretty obvious because there is like a million other ledgers
that are now different than that one.
So what is going to happen is people are going to say, "No, no, that transaction is fraudulent,"
or "That's not right because all of these other ones, none of these other ones are matching
up with that at all."
So what's happening is blockchain is an amazing technology.
Actually there is a lot of banks that are even using blockchain to reduce their costs.
Block chain is here to stay, but not necessarily bitcoin.
So where did bitcoin come from?
Bitcoin came from this idea of not only reducing costs, not competing with the banks, but the
idea of let's eliminate the banks.
Let's eliminate government involvement with currency and let's do that while we just
get rid of all the costs and make this cryptocurrency that nobody can track and people are going
to like that so much better.
Now that is where bitcoin came from.
That's the whole idea behind it is let's make a cryptocurrency that is untraceable.
People are going to love it because there is no cost to use it and all that stuff.
That's where it came from.
We are going to talk about in the next video is why is it such a mess right now.
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