Video - Bitcoin 101 What Happens When We Decentralize Money
Bitcoin is the world's first global decentralized, digital, programmable money. Scott Rose, the owner of ScottWorld Company talks about how Bitcoin works and how it affects our global economy. He also explained why Bitcoin enables instant money transfer between any two parties globally with no fees, no delays and no reversals.
MR. ROSE: Yeah, it might be. We'll find out soon enough.
MALE: All right, you're ready, man?
MR. ROSE: Yes.
MALE: All right, ladies and gentlemen, Scott Rose, the Bitcoin comedian.
MR. ROSE: Everybody, how are you guys doing tonight? Having fun? My name is Scott Rose. I run a company called ScottWorld and a very creative name. I'm a certified FileMaker Pro developer. I've been doing it since 1992. And I've been creating FileMaker Pro databases for clients all around the country. And, you know FileMaker Pro? Nice, all right, cool. More recently, I've become enamored with Bitcoin. And now I'm offering digital currency consulting as well. And later this year I'm going to be releasing the world's first Bitcoin plugin for FileMaker Pro. It's going to be a big year. Big year for Bitcoin. Thanks.
And one of my claims to fame besides looking like Clay Aiken is that I traveled around the country with Apple computer for six-years. This is a picture of me and Steve Jobs, my idol. And I spoke at all of Apple's major conventions for six-years and I opened up the first 21 Apple retail stores around the country. So, tonight I'm excited to talk to you guys about Bitcoin. And it's a revolutionary new technology. But what is it exactly? Well, Bitcoin is the world's first global decentralized digital programmable money. Huh, it's a lot of words, isn't it?
Well, more simply Bitcoin is independent money. We all know how important it is to have the separation between church and states. Well, you can sort of think of Bitcoin as the separation of money and state. So, Bitcoin is not controlled by any governments. It is a completely global currency and it's -- it can be used in any country. And it's also not controlled by any corporations or banks either. Bitcoin is not controlled by any central entity at all. So, what controls Bitcoin then? Well, it is a decentralized peer-to-peer network of computers which all work together to keep the Bitcoin network secure. And it actually is the world's most secure and most powerful network. It is actually more powerful than the world's 500 -- the world's top 500 supercomputers combined. That's how powerful the network is.
And your computer can be a part of the Bitcoin network as well. The network is totally open for everyone. Bitcoin is run by the people, for the people. So, what happens when we decentralized money? What happens when we remove government -- governments and banks from money. And we put the control of money back into the hands of the people again. Well, it turns out that a whole lot happens. We get financial fairness. We get financial innovation. And we get financial freedom. So, let's start by talking about how Bitcoin brings us financial fairness. And to do this, I would like to tell you a little story about the world's greatest bank robbery. Now, you might think I'm talking about one of the bank robberies that was organized by Bonnie and Clyde or John Dillinger. But I'm actually talking about a completely different type of bank robbery. The type of bank robbery that I'm talking about is more along the lines of this.
MAN: How can I help you, young man?
BOY: I got a $100 check from my grandma. And my dad said I need to put in the bank so it can grow over the years.
MAN: Well, that's fantastic. A really smart decision, young man. We can put that check in a money market mutual fund. Then we'll reinvest the earnings into foreign currency accounts with compounding interest and it's gone?
BOY: Ah, what?
MAN: It's gone? It's all gone.
BOY: What's all gone?
MAN: The money in your account. It didn't do too well, it's gone.
BOY: What do you mean, I have $ 100?
MAN: Not anymore. You don't, poof.
BOY: Well, what can I do to get back my --
MAN: I'm sorry. Sir, this line is for bank members only.
BOY: I just opened an account?
MAN: Do you have any money invested with this bank?
BOY: No, you just lost it all.
MAN: Then please stand aside for people who actually have money with us. Next please.
MAN: Hello, Mrs. Farr Nikhil how are you today? Making a deposit, are we? Great. We can just put that into your retirement account and make it go to work for you. And it's gone.
MAN: Sorry, yeah, that's gone. Please step aside for people who actually have money with the bank, next please?
MAN: Hey, I'm trying to teach my son the importance of savings? You already lost his money? Oh, Mr. Marsh. Don't worry we can just transfer money from your account into a portfolio with you, and it's gone. This line is for people who have money with the bank only. Please step aside.
MR. ROSE: So, that's right. The world's greatest bank robbery is that the banks are robbing from us. And they steal from us in dozens of different ways. I don't have time tonight to tell you the 129 ways I documented at home. But one of the sneakiest way is they steal from us is through inflation. Economist John Maynard Keynes said this about inflation, "Through inflation, governments can confiscate secretly and unobserved the wealth of their citizens and it can be done in a manner which not one man in a million is able to diagnose."
Now, I don't know about you. But this sounds like a warning to me. But instead of taking this as a warning our banks and our government took this as an instruction manual on how to control our country's money supply. And so, the banks and the Federal Reserve are allowed to print money out of thin air. There's nothing backing US dollar. The US dollar is no longer backed by gold. Every time a bank gives out a loan to someone., they create the money for that loan out of thin air. Every time the Federal Reserve buys a government bond, they create that money out of thin air. And the more they print the more it devalues our existing dollars which we have already earned.
Take a look at this chart. This is the purchasing power of the US dollar. And you noticed that the purchasing power of the dollar has lost 96% of its value since 1913. If you had one thousand dollars in 1913, it would only have $40 worth of purchasing power today. And I'm sure your bank account balance of course would still say a $1,000. But the difference is that in 1913, $1,000 could buy you two brand new automobiles. One for you, one for your spouse. How many brand-new cars can you buy today for $1000? This is about all you can get.
So now, if you and me were to print money out of thin air we would get thrown in prison for counterfeiting. But the banks and the Federal Reserve they're allowed to commit this crime every day. And you might hear the Federal Reserve say that "Inflation is on target. It's only 3% this year." Well, first of all, that number is a lie. Because when they calculate the inflation numbers they don't include little unimportant things like food and gas. You know, I mean like who needs food and gas, right. But now, when you do include those things the real inflation numbers were something like 8 to 10%. But even still for them to say that inflation is on target is sort of like asking the fox, who's guarding the henhouse, "Hey, how's everything going in there?" The chicken attrition is on target. Very good for the fox. Not so good for the chickens. Where are the chickens, everybody?
And that is one of my favorite things about Bitcoin. Your Bitcoins cannot be devalued through inflation, why? Because Bitcoins cannot be printed out of thin air. They will only be 21 million Bitcoins in circulation. And if that doesn't sound like enough note that each Bitcoin is divisible down to eight decimal points. So, there are plenty of Bitcoin units to run a global economy. And everybody has to earn Bitcoins equally. You can sell your products and services to earn Bitcoins. Like we're selling T-shirts and other merchants tonight, or you can purchase Bitcoins with money that you've already earned? Or you can earn Bitcoins by becoming a Bitcoin miner. Bitcoin miners are the people who protect the security of the Bitcoin network. And they get Bitcoins in return for that so that is financial fairness.
So now, let's chat about how Bitcoin brings us financial innovation. You know, we're here in the year 2015 it's -- it's really truly amazing times. I mean, we're living in a global interconnected instantaneous society. We can instantly send an email to anyone in the world for free. We can video chat with anyone around the globe from a little supercomputer that lives in our pockets. With one click we can self-publish a book or a blog article and anybody on the planet can download it or read it immediately. We can stream live television shows from anywhere including an airplane. We can get GPS directions from our cars with live traffic updates. We can even witness a revolution instantly through Twitter breaking news at the speed of light.
But what happens when we need to transfer money to someone else? We're instantly sent back in time. I mean, it's like we have our very own time machine. If you ever want the time travel now you got it. No matter which way we choose to send money to someone there are tons of problems. And just a few of the problems we're sending money is that it's slow, it's expensive and it's completely insecure. All of these payment methods have different problems. Or you can just pick and choose your favorite problems from the list. High fees to receive. High fees to send. Currency exchange fees. Lengthy delays, security issues, privacy issues, fraud, chargebacks, bounced checks, identity verifications, unauthorized charges, minimums, maximums not available in every country, the list goes on and on. And don't even get me started on credit cards by the way. How can it be a security code if I'm telling everybody what -- what it is, right? It's ridiculous. And every time you pay with your credit card you're trusting that the merchant is going to keep all of your personal information safe and secure. We should ask Target and Home Depot how that's going?
100 million customers hacked, all their personal information and all their bank information. And that's actually part of the reason why we have 13 million cases of identity theft every year in America. I mean, identity theft is a real problem that ruins people's lives. And the great news is that Bitcoin solves all of these problems. Bitcoin enables instant money transfer between any two parties globally. There are no fees to receive payments. Can you imagine if you run a business how much I could save you in credit card fees every single month. Now if you send payments with Bitcoin it will cost you about three cents to send your payment but that three cents is no matter how large your transaction is. So even if you send like $10,000 to someone it would still just be 3 cents. There are no delays. No more waiting three to four business days for PayPal to deposit the money into your checking account, everything is instant. There are no reversals. There's no credit card chargebacks or bounced checks. Each transaction is completely secure. Your confidential information cannot be compromised. Each transaction is as private as you want it to be. You get to choose how much personal information you feel comfortable revealing to the other party. There's no minimum amounts, no maximum mounts. You can send a few cents or you can send a few million dollars. It's all the same to the Bitcoin network. It treats all the transactions just like data. Just like sending an email.
And you are in complete control of your money. Nobody can take your money without your permission. No more unauthorized charges on your credit cards, for example. Although Bitcoins aren’t a credit card you know what I'm saying. And it only takes a few seconds to get set up with Bitcoin. All you have to do is download a Bitcoin Wallet App to your smartphone and you're all set. Right now, the three best mobile wallets on the market right now are AirBitz, Breadwallet and Mycelium. And once you download these apps you'll get your own QR code for receiving Bitcoins. That's my QR code up there. And if somebody wanted to instantly send me Bitcoins all they would have to do is just scan my QR code and about one second later the money will instantly show up in my Bitcoin wallet app. And you could put this QR code on your blog to receive instant donations from anyone around the world. You can put the QR code on your invoices to receive payments from clients. You can even hold up a sign with your QR code on it.
This guy held up his Bitcoin QR code at a football game on ESPN. And you're not going to believe it. He received twenty thousand dollars in donations from strangers around the world. I mean people just scanned his QR code and sent him money. You don't even need to know the person in order to send them Bitcoins. You just scan their code send them money. There's even a service called change tip that lets you instantly send Bitcoin donations to people on Twitter, Reddit, YouTube, Facebook and a whole bunch of other sites. Strangers sending money to each other on the internet instantly with just one tweet or one comment. This was never possible before Bitcoin. And that is true financial innovation.
So finally, I'd like to talk about how Bitcoin brings us financial freedom? We have a little problem going on right now where the banks suppress our freedoms through financial censorship. Now, in a truly free society we should really be able to engage in a financial transaction with anybody that we choose as long as we're not hurting anybody else. But the banks and the government don't really see it this way. For example, Chase Bank shut down the bank accounts of hundreds of porn stars in Los Angeles which is a perfectly legal profession. Chase Bank apparently did this for "moral reasons". Now, I'm not so sure of the two-big-to-fail banks should be talking about morality, do you guys? Another example, PayPal froze all the funds of a political organization called the Swiss Gold Initiative. The Swiss Gold Initiative was trying to bring back fiscal responsibility to the Swiss -- the Swiss National Bank by limiting how much money that they could print out of thin air. It sounds like a good idea to me. But the Swiss National Bank of course did not like that idea. They publicly opposed the initiative and they ordered PayPal to permanently freeze all of their funds. And they can no longer receive any donations and the initiative failed.
Another example of financial censorship. Marijuana dispensaries in Colorado. It's completely legal to buy and sell marijuana in Colorado. But the marijuana dispensaries cannot accept credit cards. They can't even open up a bank account because no bank in the entire country will do business with them, why? Because they're considered a high-risk business. I know, it's super high risk to sell plants from other nature, right. I mean, especially medicinal plants very very high risk. And then there's WikiLeaks. There has been a global banking blockade against WikiLeaks since 2010. Now, I personally happen to think that WikiLeaks is one of the more important institutions of our time. Because -- thank you. Because they use the freedom of the press to expose war crimes, government corruption, unconstitutional spying and many other atrocities that undermine our individual freedoms. But of course, the US government doesn't like this very much. So, the US government in cooperation with every bank and every payment processor around the world blocked all donations to Wikileaks in an effort to financially strangle them. There was no way to get your money to WikiLeaks. You couldn't even write a check to them because the banks were looking for checks made out to WikiLeaks.
The only way that WikiLeaks was able to survive was through Bitcoin donations. WikiLeaks received over $1 million in Bitcoin donations. Because Bitcoin transactions cannot be censored and they cannot be blocked. And also, the US government regularly blocks off entire countries from doing business with our banks. Right now, there are thousands of US citizens who are trying to send money back to their families back home in Russia, Somalia, Ukraine but they can't because our government has prohibited all banks from servicing those countries even Western Union is not allowed to service these countries. And bitcoin is the way around this. These protesters were raising money for Ukraine citizens who had no access to any banking services during the Ukraine revolution. Because the banks all stopped service in Ukraine. The stranded Ukraine's citizens had no money for food, water, clothing, blankets, medical services but strangers from all around the world scan these QR codes which were put up on Twitter. And strangers from around the world instantly send sent them $15,000 worth of Bitcoins. So, Bitcoin brings financial freedom to everyone.
Bitcoin is permission less. You do not need anyone's permission to use Bitcoin. Bitcoin accounts cannot be frozen. Bitcoin transactions cannot be censored or blocked. Bitcoin is open and accessible for everyone to use. You can use Bitcoin whether you're poor, whether you're wealthy, whether you're young, whether you're old, whether you live in a third-world country or you live in a first world country. And the Bitcoin network cannot be shut down because it is decentralized. And that is the power of decentralized money. Financial fairness, financial innovation and financial freedom. And believe it or not I have just scratched the surface with Bitcoin because money is only the first app of the Bitcoin network. Similar to how email was only the very first app of the internet. There is so much more to Bitcoin that goes way beyond money and I encourage you guys to learn more about it. Thank you so much. Thanks.