Bitcoin a Ponzi scheme, with a lottery system attached to it, all right, it's time for the global Bob Show. And as you can hear from the title, today, we're going to be talking about Bitcoin. I like to thank everybody that tunes in regularly. And if you think you're getting a lot out of these podcasts, please feel free to suggest it to a friend. As always, you can reach out to Globalbob show@gmail.com. For those that have my cell phone number, you can call and text if you'd like for me to get more clarification on anything. But check out the other website globalbob.org, of which you can see some of the activities that I'm involved with. And also you can order your global bop merch. So before we dive right on in, let me give you a disclaimer. So I can keep the legal beagles off of me. I am not a financial adviser, nor do I pretend to be one or play one in any movies or shows, I currently do not have any investments into Bitcoin, or its derivative technologies, such as Bitcoin Trading sites, Bitcoin miners, or anything associated with Bitcoin. Anything I say is not financial advice. So please do not take it as such. And I'm warning you that if you dive in to Bitcoin and other cryptocurrencies, you stand a good chance of losing your money, but you also stand a very good chance of making money. So please do not take anything that I say as a tip or anything like that. Perfect. Now that we got that out of the way, let's get started. Before we talk about Bitcoin, we should back up a little bit and take a little trip down memory lane, we need to understand where currency or money has come from. Now, in my research, I found where this dates back over 40,000 years ago, where we had groups of hunters, hunters would go out and of course, do the hunting and gathering. Now, some hunters knew how to make weapons and tools better than other hunters. So these hunters would get together, and they would trade for the better tools, much of which was made out of Flint. Now, this is the first barter system, right? This was direct human to human transaction. So basically, transactions between two people or groups of tribes, someone had extra fish, someone knew how to make tools really well. And they would put a price on that tool and say trade for fish. Now a lot of these tools were made out of Flint rock, which was not as common. So you could see that even in the early phases of trading and bartering. They wanted to have something that was a little more rare. So they would trade with flat rock. Money as we know, it would evolve over the millennia. And the previous example, we had hunters and gatherers trading with pottery and spears, fast forward a couple of years, a couple 100 years. And we started trading and things like salt, there are regions of the world where salt is not easily acquired, and we actually need salt in our diet. And so these tribes and people would trade in salt, that's where the term worth your weight and salt came from. And then moving along things like glass would be used as currency, beads, jewels, and other metals, such as gold and silver. As a matter of fact, up until the time President Nixon took the United States off of the gold standard, we actually had our money backed by gold. Now our money is considered fiat money. Therefore, there is no metal or anything that backs our money, it is just a promissory note. So you can see that now people start to become more wary of this fiat money because its value is just based off of the government's promise of that value. At one time when we were on the gold standard, you could take your dollar bill down to a bank bank and exchange it for that amount of gold. Do you see a problem here with fiat money? One, it is a promise by a single government or entity that it's worth something. As you know, we went into Iraq, and at the time they were on the Iraqi dinar, they may still be on the Iraqi dinar. But there was two sets of dinars. One was the dinar with Saddam Hussein's face on it, of which after we overthrew the government, then those dinars were essentially worthless. I know whenever I was over in Iraq, a lot of people were buying these Iraqi dinars was sat on his face on it, thinking that one day One day, they're going to come back and be worth something. At this time, I still don't believe that they're worth anything. The second part of this is that the government doesn't have to honor the money, they can just say, Hey, we're no longer going to use the $20 bill from 50 years ago, and we're not going to accept it, so therefore, it would be worthless. Another part of this is that the money is controlled by a central government or entity. So therefore, they could artificially print up more money. And as they do, the value of said money would go down. There's a lot of governments that artificially stand up their money, we've seen it in China, where they're buying the the WAN themselves, to control inflation, and make their money have more value. A lot of people do not have faith in a government that controls the money. For the longest time, the whole world used the US dollar. However, some of the countries have grown leery of the US dollar. And so now we want to introduce something totally different in this evolution. At this time, before Bitcoin, everything was either tied to a promissory note with paper money or something physical that you could hold in your hand, whether it was gold, or silver, or even fish. Now we need something else, something that is not controlled by a central entity or government of which can be inflation proof, because we know that inflation goes up when we print more money. Now enter the arena, the King, the first one of them all, Bitcoin. What is Bitcoin, at the highest level, the most simplistic terms is that it is a virtual currency that is not controlled by one entity. Now there are a few technologies that make up Bitcoin, of which may be too technical for this podcast. But as always, you could reach out and we can have a nice conversation about it. But bitcoin is based off of the open ledger. Open ledger means everybody can see everybody else's accounts and transactions. Now, if you're looking at the open ledger, you cannot necessarily put my name in and see what my accounts are. The accounts are represented by a hash, or a very long string of numbers and letters. And so with the open ledger, everybody can verify that that person has access to those particular Bitcoins. That gets us around one of the major problems, which is the double spend problem. Now, if I have a bank account, and I transfer money to it, that bank has their own ledger system, but it is a closed ledger system. We don't know how much money the bank actually has, unless, you know, you have access to their systems, or there's some kind of subpoena or something like that. But as far as I know, I take my cash down to the bank, and I put in $100, that bank records that transaction as my $100. If someone wants to take $100 out of the bank, the bank issues them their $100 and records that in the ledger. If I transfer money between my account and say, my wife's account at the same bank, well, that is a closed ledger transfer. No money actually really left the bank. It just went from one account to the other. However, with these closed ledger systems, we have issues that have arised in the past, just like in the 80s when we had had the savings and loans, banks that were kind of unregulated, you can see that as long as people don't start pulling their money out, these banks can essentially, you know, change the ledger. And that's what we saw in the savings and loan, everything was working great until there was a run on the banks and the banks had to produce this money because of their closed ledger system, they could take your money that you deposited and actually make other investments. So when Bitcoin was invented, they needed to get rid of that double spend, right? Therefore, you can only spend the Bitcoins that are in your account, and also the ledger is open. So therefore, you could trace Bitcoin, all the way back to the original Bitcoin, or the genesis of Bitcoin, one of the main components of Bitcoin, and for that matter, all digital currency, is the wallet. Now a wallet, some people think, is where you store your Bitcoin. And technically, you don't store your Bitcoin, in your wallet on your computer, what your wallet is, is an interface into the blockchain, the wallet consists of a public key or public address. And that's how people send you Bitcoin. The wallet also contains the private key. And that private key is what used to interface with your wallet to send bitcoin. So if someone wanted to look into my bitcoin wallet, they could use my public key, they could get my public key by asking me what my public key is to send me money. And once they have that public key, they can look and see what my balance is. So if I was going to transact, let's say, a few Bitcoin for a product, and someone did not believe that I had a enough Bitcoin to cover it, they could simply ask for my wallet address, then they can look it up on the open ledger and say, Hey, he has plenty of money to cover this. So that is one of the problems that Bitcoin solves for kind of like writing a check to somebody and not knowing if it will clear or not well, with Bitcoin, you know, at the time of the transaction, that it will clear. Now talking about the wallet, I need to make one mention here. And that is, when you generate your wallet, you can have as many wallets or accounts as you want on the blockchain. However, if you lose your password passphrase seed values, you know, there's a couple of different ways of getting into wallets, which is, you know, a little too technical for this podcast, just know that your money, your bitcoin is gone forever, no one can recover it for you. Matter of fact, I was doing a little research for this podcast and found out that there's over 4 million lost Bitcoins that people believe will never be recovered. And so you cannot call your bank like if you try to log into your bank account too many times they lock you out, you can call identify yourself, and get your access to your money or you can physically go down to the bank. So just a word of caution, a word of advice. When you create your bitcoin wallet, if it's a wallet that's hosted on your computer or something like that, make sure that you have a backup of your your your password. One last note about the wallet and your password. So since bitcoin is not physically stored on your laptop, or your phone, or whatever device you have, it's not physically stored there. The way to access bitcoin is to know the password or seed value of the wallet. And if we can get that then anybody anywhere in the world could essentially open up your wallet and send money around. That's why you see a lot of these crypto viruses that are out there. And what they're doing is either using your computer to generate cryptocurrency through mining, of which we're getting ready to talk about, or they're stealing your password for your wallet, and once they get it they log in, they transfer it to their own wallet. Now you will see the wallet that it transferred to however you really don't know who controls that wallet and there's no way anybody could ever get that cryptocurrency back. Now we understand how we evolved from trading for tools and pottery all the way up to the need for a crypto currency or virtual currency. Now Oh, how do we get this virtual currency? Some people may say, Well, you go out on exchange and you buy it. Yes, that is one way to acquire cryptocurrency. But it's not the way we actually get cryptocurrency or Bitcoin. Bitcoin has to be mined. Now mining Bitcoin can get very, very technical as far as the technology behind it. But in the opening of this podcast, I said that Bitcoin was a Ponzi scheme, with a lottery system attached to it. So let's talk about that lottery system. Bitcoin is mined, which I don't really like the term mind. But that's the term they use. So we'll stick with it. But it is mined by a bunch of computers trying to guess the answer to a complex problem. And so if the miner or computer that you control is the first one to guess the correct answer to that problem, you are rewarded with Bitcoin. When Bitcoin first started out, and you unlocked a block, then it was around 50 Bitcoin. But now, to keep the Bitcoin inflation down, there is an algorithm that says the more miners you have, the less Bitcoin you unlock. And so they're trying to keep a steady flow of Bitcoin. At this time, with so many people mining Bitcoin, you only get about six Bitcoin, plus a little extra Bitcoin for processing transactions. And so you can see that one of the problems that Bitcoin solved is for inflation. Because if you have more miners out there, therefore, the problems become harder, and there's less Bitcoin that are received every time you unlock a block. So think about Bitcoin mining, is just a way to try to solve a problem. And once that problem solved, you get to write the next block into the blockchain. And that block could contain all the transactions of people sending money between wallets and stuff like that. And so that's how the blockchain continues to grow more over. Since it's an open ledger, everybody is looking at that blockchain. And they are ensuring that no one tries to put things into the blockchain that are not valid. Now we know the main components of Bitcoin, you have your open ledger of which everybody can take a look at and make sure that everything is copacetic. Then you have your wallet, which is how you interact with the open ledger and the blockchain. And this allows you to send money around, one of the last things we need to talk about is an exchange. What is an exchange? Well, just like we have in the regular banking system, you can take your Bitcoin and send it to an exchange. And on that exchange, you have kind of two options. One, you can buy other crypto currencies, so you can exchange Bitcoin, for other cryptocurrency, like Aetherium, or helium, those are two that are on the exchange, there's hundreds and hundreds and hundreds of alt coins, what they call alternative coins. In the case of Bitcoin, Bitcoin, is called a proof of work. So therefore, Bitcoin is only value is the electricity it took to produce it, because these miners are out and they're consuming electricity, and they're trying to get their guesses. Other coins that you could buy on the exchange is say, x, y o, which x y O is a coin that is tied to GPS coordinates. And so people can download this program onto their phone and they wander around the world. And they're collecting Geo coordinates and they're sending them back to this company, and they reward you and x y o coin. So that is a geo coin. So Bitcoin is a proof of work. Now there's all kinds of different proofs right and think of the proof as what's behind the coin itself with helium. Helium is a another alternate coin that uses something called Proof of coverage. Proof of coverage is a method that people can use to say if you transmit on this frequency, this quote unquote miner can pick that up and so you're being rewarded for your proof of coverage. The reason why I mentioned these other ones is is that I want everybody to realize is that not everything is a proof of work type hash. There's other ones such as the XY Oh, that's based off a GPS coordinates, and another one that's based off of a proof of coverage. Now, the second operation, that exchange will do some exchanges will take your Bitcoin and turn them into dollars or any other currency that you would like, they will also take your dollars and turn them into Bitcoin. And this is where some people try to use Bitcoin to skirt the taxing system. And so if you are accepting money in Bitcoin, and then you want to turn it into dollars, you would have to do that at an exchange, and then that exchange would put the money into your account. When Bitcoin first came out, a lot of people thought that this would be used not to pay taxes. Now, the IRS, the United States, Internal Revenue Service, they're under this. And so a lot of them exchanges, they have access, just like they do with your bank account. More over like I mentioned, once they flag a wallet is being controlled by you, then the IRS can monitor this without any problems. And so you don't want to use Bitcoin is a way to skirt the system. Also, with exchanges, you're putting all of your trust, you're no longer are in control of your Bitcoin, because you're putting your trust in that exchange. And who's to say that that exchange is actually legit. Given the nature of Bitcoin, anybody could pop up a site that says, hey, I'm a bitcoin exchange. And as I found doing my discovery work for this podcast, there are story after story of exchanges, not being aboveboard board, one of the more famous ones was an exchange out of Canada, and it was ran by a fella named Jerry. And these people were transferring Bitcoin into the exchange. And then they were, you know, a little bit of Bitcoin hitting their bank account, a little bit of Bitcoin getting sent out. But when Bitcoin started to crash, everybody started to get their Bitcoin out of Jerry's exchange. Now, Jerry went missing. And so the claim is that he's the only one that had access to the wallet of where all the Bitcoins were stored in the exchange. Now, anybody that's involved with security, or even people that run businesses, no, You never have a single point of failure. But because it wasn't audited, then Jerry was able to transfer that Bitcoin because people have it in their wallet, and then they move it to the exchange there inside the exchanges Wallet. So Jerry had full access to this and what they did with forensics accounting is discovered that the money that was coming into the exchange was also being transferred out to another exchange, of which Jerry was banking on other people's money, Stan in his so he could use their Bitcoin to basically day trade on the market. Now the whole thing imploded, just like most Ponzi scams, that's all well and good until people start calling their cash back. And so I want you to be very careful, if you do get bitcoin and you start using exchange, please use the well above board. I'm not affiliated with Coinbase, but it's one of the larger exchanges. And I feel like it's pretty safe. And so you want to use those just be leery of exchanges that are in other countries and exchanges that are kind of fly by night or ones that promise you some kind of crazy dividend, if you'll simply store your Bitcoin there. Now we know the components right? So we can send and receive Bitcoin, we know how Bitcoin is mined, and how it enters and exits that fiat money system, such as your bank account that is tied to the US dollar, I can talk at length, how the US dollar can be converted into bitcoin via an ATM machine. My friend Stan and I actually constructed a live working Bitcoin ATM machine probably about six years ago. So before they were accessible now I know that there's certain gas stations that have these Bitcoin ATM machines. And so he and I constructed one so we can understand what the threat landscape was of such machine. And I can tell you that you got to have a lot of trust. Now in our Bitcoin ATM machine, someone could come up and put dollar bills in. And when the dollars or $20 bills were entered into the machine, the machine would verify because we used a real cash unit that could count cash and know the difference between counterfeit cash and a piece of paper, it would verify the last step, the ATM machine would ask to scan your phone's wallet. And so most modern wallets on your phone, you can click a button and it will present a image that's called a QR code, you would hold that up to the camera of our ATM machine. And as soon as it read it, and it had a good read on it, it would transfer the Bitcoin from the machines wallet into your phone's wallet. Now, once you do this, that key that's on that QR code is public, there's no risk or anything. So the main risk in our ATM machine would be is if we didn't transfer all the money or we took a bigger cut. But what we wanted to understand was, is that if someone is running these Bitcoin ATM machines, they could have popup messages that say the network's busy, your money will be deposited in 30 minutes by that time you leave, and we have your money, and we're not transferring any bitcoin. And with that, we kind of figured out that these Bitcoin ATM machines, they are nothing more than wallets with a cash reader on them. And you have to have explicit trust in that machine that they would transfer your money. Now that was a fun project. And we really learned a lot from it. But one of the things that I am most interested in, is the machine working in reverse, could we have transferred Bitcoin to the machine, and then it would spit out money. We didn't take it that far, ours only converted the dollars into Bitcoin and not the other way around why governments don't necessarily like Bitcoin, and why they feel like they need to regulate it. And it all stems from taxation. Now, if someone writes me a check for services rendered, I deposit that my account, and that person can send the IRS a form that states they paid Brian$100. Also, I need to report that as income. Now, some unscrupulous people believe that Bitcoin is anonymous, and so they can transfer millions of dollars around the world without falling under the scrutiny of the international monetary system. Now, that's okay, if you're just a couple of nerds, and you're trading some bitcoin for some pizza, as we saw in the early days, where someone actually bought pizza for like 10 Bitcoin. And now if that person would have kept that 10 Bitcoin, gosh, it'd be worth millions of dollars. But at the time, it was only worth like 10 bucks. So the government quickly started to look at Bitcoin, when one person and one country let's say there in the European Union, could transact millions of dollars with somebody and the United States. And as more people started to accept Bitcoin, and companies started to accept Bitcoin, you can see where the problem is that someone can transfer large sums of money without the IRS getting their cut. And a lot of times when this happens, it's not the person that is above board. A lot of times this bitcoin is being used to pay extortion fees. It's also being used to pay for drug deals, because that's one of the main problems with the drug industry and, and other unscrupulous industries, right? People have large sums of cash, and it's really hard to get rid of cash. Imagine if someone gave you $40,000 in cash. And you think, well, this will be pretty easy. Let me get rid of this cash by going and buying a car. Well, you go down to the dealership to buy your car and you're going to pay in cash, the dealership is probably going to say, hey, we don't have a mechanism to even process this cash. But if you were to go down to that dealership and pay them in Bitcoin, I mean, it's just a pretty simple transaction and you don't have to lug all this cash around. And so what you're seeing is, is that once people start using it, to try to evade taxation, that's where the government gets involved. And there's been plenty of stories where people have transferred large sums of money around with Bitcoin thinking that the government cannot D anonymize it, right, because your wallet is just a cryptologic hash. However, it's very hard to keep things anonymous. And one of the easiest way that the government does this is is that they go to an exchange, say, you know, name your exchange, I'm not going to name any, but you name your exchange, they go to that exchange and say, hey, this person we're looking at, we see from their banking system that they transferred us dollars into your exchange. And then from there, we would like to know what their wallet address was. Remember, if you have the wallet address in the open ledger, you can track all outbound. And so let's say they started looking at my wallet address, they see a single transaction on the open ledger that happened 10 years ago, from my name, my bank account, right? Bank of America, they see one transaction that hit that wallet, now they have that wallet tied to Brian. Now, with the open ledger, they can see all the transactions in and out of that wallet. So it's pretty easy to start through forensics, accounting to see where that how much that wallet was for and how much it transferred, right, because they see a million dollars coming in that wallet, I wish it was a million dollars. But they see a million dollars come in, and then they start seeing all these other wallets Well, what they're doing is they're starting to form a database of wallets that are controlled by certain entities. Now, it's beyond the scope of this podcast. And please, I will not tell anybody how to hide money on the blockchain. But there's tons of sites that take this Bitcoin and then they wash it, and they put it in all these other wallets, and then bring it all back together. However, I don't recommend them. And once again, if you're sending your Bitcoin to this washing company, it goes back to the ATM machine. They don't necessarily have to send you back all your money, and there's nothing you can do about it. If they steal it, right, you don't know who these people are, you find them out on the internet, they say they'll watch your Bitcoin and stuff like that. So just know that we need to use the cryptocurrency as the next iteration of our monetary system, I totally believe in it. Because it's decentralized, it's open, everybody can see everybody else's transactions. And don't try to get into this to win a lot of money off of your investments, or to hide money from the US government because you're going to get caught. But you got to realize, right now in Russia, the ruble has tanked quite a bit. There's a lot of countries that have cut the Russians off from the international money system. There's a system called Swift, that allows money to be sent around different banks, they've been cut off from that they've been cut off from American Express, Visa, PayPal, Venmo, name all all these centralized currency systems, right? The centralized currency systems that are using a closed ledger they have been cut off from, but if I'm in Russia, and I have money inside the United States, well, someone could transfer that money to a bitcoin exchange, and then transfer it to my wallet. And it doesn't matter where I'm at that money is my money in the form of Bitcoin. And so you can see why the the US government and also a lot of the other governments that are trying to support Ukraine and keep Russia off of the International Trade international monetary system, they're starting to get tuned in to who's moving things between different wallets that they've have a flag. The point I'm making is that if you're going to use Bitcoin, use it as the next iteration of money. It's decentralized. It has a lot of benefits. And don't try to use it to avoid taxation. Don't try to use it to, you know, buy things that you normally would not buy with your credit card, because you will get caught. All right, well, this was the fourth installment of the global Bob Show. You can reach out to me at global Bob Show on Twitter, you can email me Globalbob show@gmail.com. And for those that have my phone number, please feel free to call or text. Also, if you have anything that you might want me to explain, please let me know and I will do a podcast on it. The reason why I do this is for all of y'all. And I really enjoy the podcasting and I hope everybody gets something out of it. With that. We will see you next time and go out and buy some bitcoin. You can play around with it but just don't lose your wallet key or else it will be gone forever