The basics of Bitcoin

HOSTS Blake Cassidy, Craig Jackson & Tracey Plowman|8 November, 2021

Brought to you by Bamboo

Meet your hosts

  • Blake Cassidy

    Blake has a passion for technology and fell down the crypto rabbit hole while studying in Europe in 2015. He then started trading Bitcoins while living in China in 2015 and ever since then has been immersed in the sector. Blake is now the CEO of Bamboo which helps people take their first step into crypto currencies.
  • Craig Jackson

    Craig developed an interest in crypto after hearing about Bitcoin at soccer training in 2017. Since going down the rabbit hole, Craig has endured the ups and downs of crypto, now working in the industry as Head of Growth at Bamboo. Craig hopes to bring a sensible approach to crypto investing for new people starting out.
  • Tracey Plowman

    Chief Operations Officer for cutting-edge cryptocurrency app, Bamboo; Tracey Plowman is among just a handful of women taking on executive roles in the digital assets space. Tracey is extremely motivated to encourage more women into technology and believes this can help to empower their investment choices and establish financial freedom. Tracey’s interest in cryptocurrencies was sparked, while working as operations manager for a digital investment fund. This fostered her passion for cryptocurrencies and trading in this new asset class.

Bitcoin may seem like a difficult subject to wrap your head around, but as we’ll learn in this episode, it’s actually a lot simpler than you think. We go further into the genesis story of the currency, breaking it down into simple concepts, so that you understand why it was created and the technology behind it.

Download the Bamboo app and use code CURIOUS for $10 in ETH.

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In the spirit of reconciliation, Equity Mates Media and the hosts of Crypto Curious acknowledge the Traditional Custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people today.

Tracey: [00:00:20] Welcome to the crypto curious podcast designed to help you navigate the dynamic world of cryptocurrency. Hello, my name is Tracey, and I'm joined by my pals, Blake and Craig. Hey, guys.

Blake: [00:00:31] Hey, Tracey. Great to be here on the second episode. 

Craig: [00:00:34] G'day, Tracey. Happy to be here. 

Tracey: [00:00:35] Hi, guys. So, yes, this is our second podcast. Thanks to those who have made it to episode two with us and welcome back. Today, we want to talk about the big one. Bitcoin, the king of crypto. Let's start by doing our best to explain bitcoin in a few easy to digest sentences. We talked a little bit more about this in our first episode, so make sure to go back and listen to that. This is the first time you've joined us. So bitcoin, a digital or virtual currency, an easy way to think of it is like cash for the internet. It was founded by someone named Satoshi Nakamoto in 2008 and went live first in 2009. Mystery surrounds exactly who or whom Satoshi Nakamoto could be, and if he or she even exists. No one has publicly admitted to being the founder of Bitcoin. Like, what have I missed there? 

Blake: [00:01:26] Now that was overall pretty succinct overview of the first episode, but bitcoin's just to reiterate what you said Bitcoin's don't exist in a physical form. Bitcoin's and digital currencies are stored in digital wallets, on our computers and on our smartphones, and the software that we download as wallets are very similar to our internet banking. Each wallet has a unique address, kind of like our account number where people can send us money, but with crypto, we provide them an address and people can send bitcoin to it.

Craig: [00:01:59] Yeah, that's a good Segway into how bitcoin works. As Blake said, it functions very similar to your Apple Pay, internet banking or PayPal, but it functions in a decentralised way with no central authority. So how is that possible? It's possible because bitcoin transactions are stored in a publicly available general ledger called the blockchain. 

Blake: [00:02:19] Yeah, this is a bit of jargon, Craig. General Ledger and can confuse people when you try to say, Yeah, it's decentralised, but essentially what it is is it records when I make a transaction to you and then when you make a transaction to Tracy. And that means it leaves an audit trail, a publicly available audit trail that people can follow and verify transactions with. 

Craig: [00:02:44] You know, you can actually see these public available transactions online if you want to, but it doesn't say, you know, Craig sends Tracy one bitcoin. It'll say zero one four F sends zero 11 for one bitcoin, which I'm not going to send you a bitcoin, Tracy. Sorry, but that's one simulant. 

Tracey: [00:03:03] So that actually goes into a next point that we know that to send bitcoins, you need an address and you need private keys. So these are those random sequence of letters and numbers are unique to that bitcoin. So when your coins are being sent from one bitcoin wallet to another, that transaction is then put into a chain of blocks. Hence, the blockchain 

Blake: [00:03:22] and private keys are kind of like a password. Particular to blockchains. 

Craig: [00:03:26] So blockchains is a network of computers around the world that are validating a transaction. These computers are called miners. Now, some of you have probably heard the terminology of miners before in crypto. I'm not talking about BHP or Rio Tinto. I'm talking about computers across the world that are pretty much since checking every transaction to make sure it's legit. That's what a miner is. 

Blake: [00:03:51] So in summary, it functions like PayPal and Afterpay, but without essential authority. Bitcoin has transparency where anyone can verify the transactions on the general ledger. Is that right, Tracy?

Tracey: [00:04:05] That's perfect. I think I think we've covered a fair bit of just then and there's heaps more detail we can go into about these concepts at a later time. But for now, you understand the fundamentals and the terminology, and that's the most important part. We know bitcoin is the first digital currency, so let's talk about why we didn't go digital before. Why was this the first time it was done? We'll get into this in just a moment, but first we'll hear from our sponsors. We know bitcoin is the first digital currency, so let's talk about why we didn't go digital before. Why was this the first time it was done? Yeah. 

Craig: [00:04:40] So there was many failed attempts of bitcoin before bitcoin was bitcoin. There was a few in the 90s, a few in the early 2000s, but bitcoin was the first digital money that solve the double spend problem. Now what is the double spend problem? So it's something we've encountered before because we've used cash. So think about it. If you pay for a coffee with a $5 bill, you hand it to your barista. They give you the coffee. The physical cash leaves. Your hand goes into this. Now think about this. But with data, if I send Tracy a cat meme, it goes from my phone server to her phone server. There are now two copies of that cat meme. So this is where the trickiness in sending data online comes in, but it's also where the blockchain comes in. Since the blockchain records and ties every transaction in a train of transaction, it removes the risk of a double spend problem. Therefore, it can be used the same way as cash for transferring value across the internet. 

Tracey: [00:05:37] So we're talking here about bitcoin being used as cash. And we've spoken a few times now about bitcoin being digital money. But at this point in time, in 2021, not everyone is using bitcoin as money. Bitcoin is mostly used as a store of value. So I mean, I know I certainly don't spend my bitcoins at the local shop. Craig, are you spending your bitcoins at the shop or you spend your bitcoins on on anything? No, I 

Craig: [00:06:05] haven't actually, Tracey. 

Blake: [00:06:06] Yeah. So I think using bitcoin as a store of value is a bit of jargon. And basically that means that people are holding value in bitcoin like they would hold value in a house. And, you know, most people aren't using it for digital cash anymore. I have an example of when I tried to use bitcoin as digital cash. I was in Cairns in far north Queensland and there was a surf shop there that accepted bitcoin. And I tried to buy, you know, a couple of T-shirts and a pair of pants back in 2017 with my bitcoin. But the transaction took like 45 minutes to, like, confirm. So I had to hang around the shop and wait for wait for my bitcoin transaction to clear before he would give it to me. And that's when I realised that, hey, at this current time, the technology just isn't ready to be a peer to peer digital cash, but it is good for storing value. 

Tracey: [00:07:00] So do you have those shorts and t shirts? 

Blake: [00:07:02] Yes, I still have them. 

Tracey: [00:07:04] So have you worked out how much they're worth right now? 

Blake: [00:07:07] No, I haven't done that exercise. 

Tracey: [00:07:11] Okay, so this brings us on to looking at, you know, the fact that there are a lot of companies currently allocating part of their Treasury into bitcoin and other currencies. So why is this happening, Blake? 

Blake: [00:07:23] Yeah, I suppose over the last 50 years, the our dollar has been reducing in value, not just the Australian dollar, but the US dollar and all inflationary debt based economies. And the value of the dollar has fallen substantially because governments keep printing more and more money. And we call this an inflationary system because they're inflating the economy with currency. And this means that every time they do that, they print more money. The value of your savings in your bank account goes down a little bit every year.

Craig: [00:07:55] Yeah, so Blake has set the scene there. But what does inflation mean for you? So think about inflation in its simplest terms. So if you ask your mum or grandmother how much they paid for a movie ticket, they would say probably 30 cents, three dollars, something like that. Now, a movie ticket is at least 20 bucks, 15 bucks. This is a very basic example of inflation. You can ask him for ice cream, coffee, whatever. I'm sure everything that you are saying will be more expensive today. Now, since the pandemic hit in 2020, governments around the world, particularly the US, started printing astronomical amounts of money, with about 22 per cent of all US toys printed in 2020 alone. So this is really the catalyst for people and companies with lots of cash to reassess where to put their money, and bitcoin has been looking like a pretty good option. 

Blake: [00:08:47] Yeah, exactly right, Craig. I think that companies and individuals like you and me are starting to look at you. The value of the savings reduce if they actually leave it in their bank. And now bitcoin is seen as kind of like a digital gold or a safe haven for their money. And it's become apparent that companies would rather hold sank with a fixed supply rather than something that can be inflated with bitcoin. There's only ever going to be 21 million bitcoins. They can never be any more printed, which makes it a deflationary asset. And this means that bitcoin encourages people to save over time, and it will become more valuable the more people that save it. 

Tracey: [00:09:28] Yeah. Okay. So what we're saying there is bitcoin is. Stationary, because this supply is limited, as Blake said, there's only 21 million coins that will ever be available and money is inflationary because the supply is increasing. The US printed over 22 per cent in the last year alone. But what can we actually use our bitcoin for? Let's look at use cases for bitcoin now. 

Craig: [00:09:55] Yes, you're right. Bryce his time goes on. People be more reluctant to buy close to their bitcoin or in the case of, you know, the famous Bitcoin pizza guy. He paid 10000 bitcoins for two pizzas, which is now $500 million. So that's quite expensive. Meat Lover's pizza, he's got himself. But I mean, to answer your question around use case, I think the real world use case for bitcoin is a hedge against inflation, and it's a way for people to park their wealth, as Mike said before, not in the house or in stocks or in other investments, it's being seen as another another avenue. 

Blake: [00:10:36] And it was really developed to be a global peer to peer cash. But because of all these factors, people now using it more as their savings. There's a lot of people working on improving the technology that the bitcoin network so it can be used for day to day purposes. We've recently just seen Twitter integrate it so you can tip people on Twitter with very small amounts of bitcoin. But I think this technology is going to take 30 years to mature in the same way that it took 30 years for the internet, mature and permeate into every aspect of our life. 

Tracey: [00:11:10] So what you're saying is that we are all quite early and there is a long way to go on this journey. Exactly right. Hopefully, you've all got your bamboo apps there and you're looking at purchasing a little bit more bitcoin and Ethereum. But today we're talking about bitcoin. So let's rounded out with a little pros and cons list guys who wants to do the pros and who wants to do the cons here. 

Blake: [00:11:31] Yeah, I might jump in first and just talk about the cons. It's really important that people are aware of, you know, what's good about bitcoin and what's bad about bitcoin? And most recently, there's been a lot of talk in the media about bitcoin being dirty from all of the electricity that it uses. Now, the amount of electricity used to support the Bitcoin network network is more than some nation states like Switzerland. So it is very intensive from an energy point of view. But the industry is looking at this and trying to respond to it by using, you know, green sources of fuel to support the network. And there's are a couple more risks that people should be aware of, you know. For example, if there's issues with the internet or if the internet ever goes down, then it would make it very difficult to transfer your bitcoins around. And probably the third and final point that I'm going to talk about is, you know, the industry is largely unregulated, which makes it harder to integrate deeply into our economy because it is hard for regulators to kind of police. 

Tracey: [00:12:38] OK, three decent arguments are before I give the floor to you, Craig. Just one question from me blank. If you don't mind when you talked about the the going green side of things there. Is it true that they're using the energy from a volcano at the bottom of the mountain to mine a bitcoin in El Salvador? 

Blake: [00:12:57] I have heard rumours that volcanoes are being used. 

Tracey: [00:13:00] So, OK, that's the counter. They can get more green than that, Craig, over to you for your proposed list. 

Craig: [00:13:07] Well, who doesn't want an asset powered by a volcano? 

Tracey: [00:13:10] I think that I know that's so cool. 

Craig: [00:13:12] I think that's pretty cool. But OK, so I'm pro bitcoin. I mean, from an asset class perspective, we say digital gold gold market cap is nine trillion. So market cap is if you tried to buy all the gold in the world right now, it costs you nine trillion. Bitcoin is hovering at one trillion. So there's a whole group of young people who don't want to buy gold and want to buy digital gold. So, you know, my Houdini hat on says that that's an easy 10x. All jokes aside, though, institutions, companies and even countries assigned to buy and use bitcoin. We've got Tesla, we've got El Salvador, PayPal, I think Brazil now looking at it. So that's a pretty big deal. And all of this, coupled with the scarcity of twenty one million bitcoins, is just a recipe for a pump. I hope so. 

Blake: [00:14:03] This this is not financial advice.

Craig: [00:14:06] It's not financial advice. So all in all, I'm very pro bitcoin for those reasons. 

Tracey: [00:14:11] Tracey, thank you. Okay, that's good. Blake, I think you've probably got a couple of pros to add if you got any other pros because are all pro bitcoin here and good on you for taking the cons, because that's always hard. But if you go any extra pros that you want to add to why bitcoin makes a solid investment? 

Blake: [00:14:27] Yeah, it creates lots of opportunities because bitcoin is. The the technology allows us to remove middlemen from the financial system, and this means it reduces costs for people. So you know, those segments of the market that previously couldn't have things like banking because they couldn't afford it can suddenly, you know, have access to the global financial system as well as that is sovereignty, or people can have more autonomy and what they can and can't do. For example, you know, easily sending money abroad instead of having to use payment processors. So it really democratise finance and it creates a space of innovation that is just really exciting to watch. 

Tracey: [00:15:12] Yeah, the innovation and democratising from Blake and the quick pump from Craig. So, yeah, awesome. Look that round things out. So that was really interesting. And we only touched on bitcoin. Lots of other things to come, including my favourite Ethereum. Let's look at that one next episode. We want to know what you want to know about crypto. So send us an email, a podcast and get Bambu Io email or follow us on social media. All those details are in the show notes below. And don't forget to write and review our senior podcast app, and that's it for our second episode of Crypto. Curious? Thanks for joining us. I'm trying to stay curious as a black. I'm Craig. See you later.

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