Category Archives: Bitcoin

Bitcoin 101 – A Million Killer Apps – Part 4 – Trading & Insurance Solutions

My buddy, Leon Fu, and I really enjoyed the Bitcoin 101:  A Million Killer Apps” series from James De’Angelo over at the World Bitcoin Network.

I was suppose to do one of the episodes with James but each time I’m in Boston I’ve been so busy with work that I haven’t had time to shoot the video with him.

Recently, Leon Fu visited me in Dallas so we could test drive his new car and we decided to stop in a Bank Of America parking lot and shoot this 4th sequel to James De’Angelo’s A Million Killer Apps series. Continue reading Bitcoin 101 – A Million Killer Apps – Part 4 – Trading & Insurance Solutions

Examples Of Challenges & Confusions With Bitcoin at 30,000 ft on American Airlines Flight 1054

Tai Zen:  This is Tai Zen again and I’m broadcasting from 30,000 feet in the air from Dallas-Fort Worth to Boston-Logan airport on American Airlines flight 1054.  Thanks to American Airlines [during] this broadcast, they’re serving ginger ale.

With me today, I have right next to me here in my passengers seat is David, he is a high school teacher.

He’s a school teacher, okay.  He speaks multiple languages.

We had an interesting conversation about Bitcoin and asked him for permission to see if I can record this and the reason why I wanted to record this conversation and share it with everyone in the Bitcoin and cryptocurrency world is because I want everyone to see that this is a common problem that we face with Bitcoin and all the alt coins, whether it’s Dogecoin (DOGE), whether its NXT, whether its Ethereum (ETH) or Litecoin (LTC), or any of the new coins that’s coming out. Continue reading Examples Of Challenges & Confusions With Bitcoin at 30,000 ft on American Airlines Flight 1054

Part #6 – What Is Bitcoin Mining, Miners, & Mining Pools?

In this 6th episode of our Bitcoin For Non-Technical People Series, I will discuss the process of Bitcoin mining and how the process mints new bitcoins.

I will also explain how it’s extremely difficult to mine bitcoins by yourself and why it’s more favorable to unite with other bitcoin miners to form a mining pool so that you can share in the rewards.

Why Do People Volunteer To
Process Bitcoin Transactions
& Secure The Network?

There are thousands of transactions in the bitcoin network that happen during a 10 minute span, so one person can not possibly have enough computing power to process all these transactions that quick.

So what happens is that individual volunteers will unite with other bitcoin volunteers and “combine” their computing power into what we call a “pool” of processors.

This pool of processors will go out there and put all their computers together and make like a super duper giant computer to process the next block of information.

So their computers are running 24 hours a day processing all bitcoin payments and they’re hoping that they get that next block of information before the other group of volunteer processors.

It’s rare, it’s extremely rare that you will find one person trying to process all the bitcoin transactions.

It’s usually done by groups of volunteers who have united their computers to be more powerful.

Obviously some volunteer processing groups are bigger.  Some groups are smaller and there’s no rhyme or reason to who is going to be the first person to find the next block of information so don’t think that the bigger the group of volunteers will automatically find the next block of information.

The bigger the group of volunteers pooling their computer resources the higher the “probability” that they will find the next block of information but it doesn’t always mean it’s a guarantee.

However, as soon as one group of people process and get the next block to go into the public ledger (blockchain), that person gets a 25 bitcoin reward.

At this moment, on November 23rd as I’m writing this article, this 25 Bitcoins is worth $837 a piece.

So if we take 25 Bitcoins times $837 right now that is worth $20,925!

That is a very sizable reward for processing 10 minutes worth of bitcoin transactions in my opinion!

That’s a huge incentive for someone to go out there and try to process these transactions for everybody.

This is the genius of Satoshi Nakamoto!

Satoshi created an innovative incentive system that would motivate people to come and volunteer their computers to process and secure the bitcoin network to bootstrap a completely new currency system.

Right now, there are thousands of volunteers running around fighting to process your bitcoin transactions in hopes that they’ll find the next block of transactions in and receive the reward.

How Does The Bitcoin
Network Verify Transactions?

Now, keep in mind that every 10 minutes, thousands of these people are processing these bitcoin transactions from around the world, however, only one group is going to win that reward.

It’s the first one that gets it correct.

So how do we (and others in the bitcoin network) know the transactions are correct?

In other words, how does the bitcoin system know that the transactions in the new block are correct?

The method is extremely difficult and with my arithmetic level, I am not qualified to explain to you the mathematics of how they go about going through the history of the public ledger (blockchain), figuring out who has the funds, who doesn’t, if it’s a legit transaction, etc, but let me just do an example real quick for you right.

If you guys remember back in school when we did math find the square root of something like 4, it’s very simple, it’s 2 x 2 right?

Now, if we try to find the square root of 5, it’s more difficult.

It’s not something that you could do at the top of your head… at least I can’t.

You have to use a calculator (or do long hand math) to get it right.

We know it’s going to be 2 point something.

When I tried to find the square root of 4, I can just go:

  • 2 x 1 is 2
  • 2 x 2 is 4

… and BOOM!  I got it correct right?

Now to find the square root of 5, I can’t do that.

I can’t just go:

  • 2 x 2 is 4
  • 2 x 3 is 6

… so it has to be somewhere between 2 and 3.

So I’m going to go:

  • 2 x 2.1 = ?
  • 2 x 2.2 = ?
  • 2 x 2.3 = ?

… and ultimately I get the answer to where I know that the square root of 5 right equals 2 point something.

Now, it would take me a long time to do that, however, when you go to double check to make sure I did it correctly, it only takes you a blink of an eye because all you have to do is multiply the two numbers together and you’ll get the answer that comes out to be “5” and if it’s correct then you know that I did it correct.

Think about that for a moment…

I could take a day trying to figure out what the square root of 5 is but it would only take you a brief moment to check it to make sure it was correct.

Likewise, the bitcoin network works in a similar way.

When a group of volunteers who have united their computers figures out what the next block of information is they will submit it to the rest of the network and everyone will jump on it to verify it before the block of transactions gets added to the public ledger (blockchain).

It may take the volunteer group a long time and lots and lots of computing power.

I mean hundreds of “computers” to figure it out but as soon as they submit that and say hey, man I got the next block of information here, it only takes a brief moment for all the other guys on the bitcoin network to double check it to make sure it’s correct.

If network checks the submitted block and disagree on the accuracy of the “new” block, then that person/group who submitted the block does not get the reward.

Keep in mind that I’m just explaining the verification process in a simple and nontechnical way.

The reality is slightly more complicated.

If you are reading this and you’re a technical person and you don’t think I’m explaining it correctly…

Don’t jump on me okay?

I just told you at the beginning of the video that all I know is arithmetic so give me a break.

What Is Bitcoin Mining?

Now, one thing that you have not heard me mention okay is the word “mining” or the word “miners”.

Mining” is one of the first things that you hear about when you get into bitcoin and it confuses the hell out of people and I wish that if I could go back to when Satoshi first came out with this system, I would ask him and beg him not to use the word mining because it confuses everybody that tries to learn about bitcoin.

That’s the reason why you never hear me say “mining” until now.  I previously used the word “processing”.

When you hear people in the news, in the media and online and you hear the word “mining”, replace it with the word “processing”.

So whenever you hear me say that these people are “processing” all the bitcoin transactions for everybody it is the same as saying they are “mining”.

You’ll hear a lot of die hard bitcoin enthusiasts call it “mining”.

Mining is the process where your computer goes out there and double checks and processes all the bitcoin transactions for everybody.  That process in the bitcoin world is called “bitcoin mining”.

So these people that I call “bitcoin processors” are really “bitcoin miners”.

Bitcoin miners is the technical term for the people who volunteer their computers to process bitcoin transactions but remember, I don’t want to get too technical because I don’t want to confuse people.

When a group of these people unite their computers in order to have more computing power and increase their chances of finding the next transaction block they are called “mining pools”.

So basically, a mining pool is just a group of people processing transactions but they prefer to use a very fancy technical term called “mining pools” to confuse us public folks.

Sending A Digitally
Authenticated
Message Is Not New

I hope that this article answers some of the common questions people have of how the bitcoin blockchain is used to authenticate the funds you send me are legit and that I am the correct person that you are sending it to, so it doesn’t accidentally go to someone else’s account.

The ability to send someone a piece of digital information is not new.

The emails that we send back and forth, utilizes the same technology so the ability to send digital information is not really new and that’s not something we have to worry about when it comes to security because that’s pretty secure and that’s pretty tight right now.

Right now, all the banks in the world, software companies, American Tomahawk missiles all use some form of digitally authenticated message to secure their communications.

Bitcoin borrows the same technology to send and receive digitally authenticated information across the internet and electronic communication networks.

In order to use a digital piece of information as a currency, it’s important that the piece of digital information can only be used “once” and not “re-used” over and over.

What Is The Double
Spending Problem?

Double spending” is when you send a digital currency to me and turn around and send the exact same “copy” of that currency to someone else.

If you think about double spending for one moment…

What is to prevent you from sending me a “digital” dollar and then turn around and send it to someone else as well?

That would not be fair because if you could resend the same (digital) dollar to everyone and anyone as many times as you like.

If you could do this, you would be the same as the 1% banksters on Wall Street who can print money at will without ever having to work for it or provide value to anyone.

Satoshi Nakamoto’s
Brilliant Solution To The
Double Spending Problem

Satoshi’s innovative solution to the “double spending” is not so much a “new” technology but more of a “new approach” to using multiple current technologies that characterizes the genius of Satoshi.

When Satoshi invented the bitcoin public ledger (blockchain), he eliminated the double spending issue which was the biggest issue that kept everyone from being able to create a digital currency.

People prior to Satoshi struggled to invent a new digital currency (or digital cash system) because no one could figure out how to eliminate the “double spending” issue.

Satoshi invented the public ledger (blockchain) which provided a means for everyone in the bitcoin network to agree when and where a bitcoin (funds) were sent and receive.

Before a transaction gets recorded into the public ledger (blockchain) it has to be agreed upon by the majority of the users on the network.  Once there is a “consensus” or agreement that the transactions are correct then it gets added to the public ledger (blockchain).

This public ledger is openly available for everyone to view so there are no “closed door” dealings or hidden transactions.

The ability to reach a majority consensus is provided by the computing power that is supplied by the bitcoin processors (miners) in the network.

This is why having volunteers to donate their computers process bitcoin transactions is so important because the process of “mining” bitcoins provides a mechanism for consensus in the bitcoin network.

Bitcoin Allows For Privacy
When Using Your Money

In the legacy banking system, if you want to send me some money, you have to tell your bank, I want to send money to Tai Zen from PrisonOrFreedom.com and here’s is Tai’s bank account number, ID, driver’s license, etc. and a bunch of other nonsense.

Bitcoin on the other hand does not require all this personal and private information to send or receive funds…

In the bitcoin world, all you need is to have in order to send or receive funds is an account number (also called a bitcoin address).

All you do is just send funds to another person’s bitcoin and boom it’s done.

All you need to receive funds is have to create a bitcoin address and anyone can send you funds directly to your address.

You don’t need to provide your name or any personal or confidential information about yourself.

This is very important for commercial reasons.

A business can sell a service or product without the need to ever have the customer’s personal and private information.

Basically, I don’t have to give a business my personal information and none of that nonsense especially when I’m buying personal items such as:

  • weight loss pills
  • drugs
  • medications
  • sexual products
  • firearms
  • banned books
  • etc.

If you are a business, I just send the bitcoins to your business bitcoin address, you send me whatever it is I ordered and that’s it, deal is done.

There is absolutely NO REASON or NEED for you to know who I am if I’m ordering some balding cream or erectile dysfunction pills or heart medication.

Bitcoin Processing
(Mining) Is Decentralized

The people (the processors) who run out there and process all the Bitcoin transactions do not operate from a central location.

The volunteers (and their computers) who are busy processing the bitcoin transactions are located all around the world.   There is no bitcoin “headquarters” or data center.

Why?

This decentralized network prevents governments, law enforcement, hackers, banksters, and others from shutting down the bitcoin network.

As long as one computer is up and running the bitcoin software, the bitcoin network will continue to exist and process transactions for everyone.

Since there are thousands of people processing bitcoin transactions, it is nearly impossible for any individual hacker or government to shut down the bitcoin network.

It’s just like the BitTorrent peer-to-peer network.

They’ve been trying to shut it down for years now and they still haven’t been able to do it because there are too many people participating in the bit torrent network.

Therefore, it is safe to say that bitcoin borrowed heavily from the success of the peer-to-peer BitTorrent network.

Satoshi knew that when bitcoin succeeds, everybody in the 1% that’s in power on Wall Street, won’t like to lose their power.

The 1% in power will obviously try to destroy the bitcoin network because it threatens their only source of power which is the ability to randomly print money at will without ever having to work or provide value for it.

Decentralizing the bitcoin network and making it distributed so that there’s no one central location that processes all the payments eliminates any attempts to destroy the bitcoin network from any individual or government.

Thanks for watching this video and reading this article about bitcoin for non-technical people.

If you like this video and you want to subscribe to our freedom blog so that you can get updates about future videos, I invite you to go to www.PrisonOrFreedom.com/newsletter and subscribe there and I’ll send you some more future videos and articles to help you find more freedom in life.

I like to talk about things that allows people to find freedom in their health, wealth and relationships.

So it’s a bunch of good stuff, no spam, no nothing, so thanks for watching this video checking out this article.

If you have a friend that’s confused about bitcoin and it’s revolutionary technology, please share this video and article with the.

Thanks for watching this video and reading this article and I’ll see you in the next one.

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You can support and donate to our efforts on our donations page.

Part #5 – Why Do People Volunteer To Manage & Protect The Bitcoin Public Ledger (Block Chain)?

In this 5th episode of our Bitcoin For Non-Technical People Series, I will be discussing the reasons why people would volunteer their computer hardware, software, resources, etc. to protect Bitcoin’s public ledger.

I will explain the creative plan that Satoshi Nakamoto developed to motivate people to want to protect and secure the bitcoin protocol and money transfer/payment network.

Bitcoin Transaction Fees

The next thing that I want to talk to you about is the bitcoin processing fee.  Some people refer to it as the transaction fee.

I mentioned in a previous video that no one is going to sit there and use their computer, electricity, time and effort to process all the bitcoin transactions to make sure that you have sufficient funds (bitcoins) to send to me, and that I have enough bitcoins to send to John and keep going back in history to look in the “public ledger” to make sure that each person has the bitcoins before they can send it.

In the old days, the legacy banking system or the “1% bank system” was designed to only benefit the 1% of the population.

The legacy banking sysem likes to charge you a fee for every transaction you make and only the banks themselves are allowed to process the transactions and earn the fees.

In the bitcoin public ledger Satoshi did something that was very brilliant.

Satoshi wanted to make sure that no one can destroy the bitcoin public ledger system (aka, blockchain, protocol, system, network, etc.).

Not even the banks or the government can come in and shut down the bitcoin public ledger (blockchain).

Satoshi was very concerned that if the bitcoin public ledger (blockchain) works that the guys that are in power are going to come try and destroy it.

He was really concerned about maintaining the “survival” of the bitcoin public ledger (bitcoin).

Satoshi figured that if he tried to put the public ledger in one centralized location where only a small handful of people have control and management over the public ledger (blockchain) that there may be a problem.

No matter how honest the person (or group of persons) managing the public ledger is going to be, if the people from the 1% (on Wall Street) don’t like it, they’re going to come and destroy it because the people on Wall Street have more money and more power.  Plus, they also have bigger guns.

So what Satoshi did was very, very brilliant.

Bitcoin Is Built On
Decentralization
And Volunteerism

Satoshi created the bitcoin public ledger (blockchain) and he/she announced that anybody can come and volunteer their computer and resources to process all the bitcoin transactions that occur in the network.

Therefore, if you want to volunteer your computer to come in and process my bitcoin transactions to make sure that I have the funds to send it to John and that John has the funds to send it to Obama, then you will be compensated for your time, efforts and computer resources.

In the legacy banking system, all financial transactions are processed through a centralized location that is owned by the bank owners.  This is why they refer to it as a “central banking system” because everything is centralized and controlled by a small group of elite business people.

In America, our central banking system is called the Federal Reserve.

The term “federal” in Federal Reserve can be misleading because it is a private business and not a government agency like many people think it is.

It’s just a fancy name that is used so that it makes people think that it’s part of the government agency but it’s not.

The name Federal Reserve is no different than the name Federal Express, it’s not anything that has to do with anybody in the government.

It’s just a company that makes money by printing money for the smaller banks and issues money to the public.

The legacy banking system was purposely centralized so that it only benefits the 1% on Wall Street which are the Central Bank and affiliate banks underneath.

In the bitcoin financial system, it is completely different because it is a decentralized financial system.

This means that there is not one person, organization, government, or company that can control the entire bitcoin public ledger or system.

Bitcoin was designed to be controlled by the 99% of the population that do not work on Wall Street.

So everybody has a say so in the bitcoin public ledger.

If you are willing to volunteer  your computer, electricity, hardware, software, etc. to process the bitcoin transactions, you get rewarded for that and that reward is similar to the bank transaction fees for sending money except in the bitcoin network it’s for processing bitcoin payments.

Initially when Satoshi invented the Bitcoin system back in 2009 he invited anyone who was willing to jump in, volunteer to process all the bitcoin transactions would be rewarded.

People who volunteered their computers to help process all the bitcoin transactions and build out the network would be rewarded 50 bitcoins.

By the way, BTC is the symbol for bitcoins.  It’s the shortcut like in the US Dollar, the symbol for the US Dollar is USD and the symbol for the Japanese Yen is Yen.

So initially, Satoshi said hey, if you are willing to volunteer and come in and help process all these bitcoin payments and transactions that’s going on from people sending money back and forth and buying different stuff, you will be rewarded 50 bitcoins for your efforts, time, computer resources and to help compensate for your electricity and everything, what happens is that every 10 minutes, a new block that includes all the bitcoin transactions in the world was created and added to the public ledger (blockchain).

Basically, someone used their computer and actually went back in history and said hey, this guy has this much bitcoins, this guy does not have enough bitcoins and they compiled it and then submitted it to the entire network and everybody in the network reviewed it and verified it was correct.

If it is correct then that volunteer gets rewarded 50 bitcoins.

What Is The Difference
Between A Bitcoin
Confirmation And
A Bitcoin Propagation?

Now, you might say okay, why does it take so long?

Why does it take 10 minutes to confirm these bitcoin transactions?

Well, it does not take exactly 10 minutes.  It’s 10 minutes in theory.

In the real world, it takes roughly 8-10 minutes.

In the bitcoin world, it’s important to understand the difference between bitcoin “confirmation” and “propagation”.

After you make a bitcoin transaction, it gets propagated throughout the network instantly similar to the speed that you would send and receive an E-mail.

In other words, there are a bunch of people out there with computers, just sitting around doing nothing and all they’re doing is they’re waiting for bitcoin transactions to come through and process it.

These people with their computers are willing to volunteer their time and their computers to process the bitcoin payments and transactions that propagate through the network.

Out of these thousands and thousands of people around the world and you might even say at this point, by the time you see read this article, there might even be millions of people around the world who are volunteering their computers to process bitcoin transactions.

When the volunteers process these payments, whoever gets the next block correct will submit it to the rest of the bitcoin network for review and verification.

Other people in the bitcoin network can see it with their computers and their computers will go in and check it immediately to make sure that it’s correct before it gets added to the public ledger (blockchain).

If the volunteer finishes compiling and processing all the transactions for the block, the volunteer will get rewarded 50 bitcoins.

If your bitcoin transaction is in the new block of information which gets added to the bitcoin public ledger (blockchain), then it means your transaction has been “confirmed”.

Therefore, a bitcoin confirmation occurs when your transaction has been finalized and added to the public ledger (blockchain).

If it is not included in the public ledger, then it is just a “propagation”.  Basically, a propagation is like a “pending” status because it is waiting to be confirmed and added to the public ledger (blockchain).

Why Do People
Volunteer To
Process (Mine)
Bitcoin Transactions?

The 50 bitcoin reward can be worth quite a bit of money.

For example, in the fall of 2013, each bitcoin was worth over $1,200.

Depending on when you started to volunteer and process the bitcoin transactions, each Bitcoins could be worth $30, $40, $50, $100, etc.

Even if it’s $10 per bitcoin that’s still $500 for the volunteer’s time and effort to process all the transactions that everyone is making around the world.

Therefore, no longer are the banks getting the fees.  Anyone can volunteer their computers and earn transaction fees.

By the way, the process of compiling, verifying, confirming and adding new blocks of transactions to the bitcoin public edger is called “bitcoin mining” and the people who volunteer their computers to do the processing are called “bitcoin miners”.

However, there are a couple of caveats to processing the bitcoin transactions.

First, every 10 minutes, only one of the many thousands (and possibly millions) of volunteers get that bitcoin reward.  So it works on a lottery system.

This means that just because you volunteer your computer does not guarantee that you automatically receive the bitcoin reward.

You have to be the first person to “find” and compile the next block of transactions and add it to the public ledger.

The second caveat is that every 4 years, the reward for finding the next block gets cut in half.

Right now the reward is 25 bitcoins.

In another 4 years (2017) it drops down to 12 ½ bitcoins.  It keeps getting halved and halved until it’s just a miniscule fraction of a bitcoin.  So much that its negligible and we’re not even going to talk about it because it’s so small.

By doing this, by the year 2140, there will be a total of 21 million bitcoins created.

That’s it!

21 million bitcoins to ever be created!

If you keep cutting the bitcoin reward in half and half, it’s going to get smaller and smaller and smaller.

So we say 21 million but there might be just a little bit over 21 million.  Don’t freak out on that, just go with the big number of 21 million because that’s easier to calculate and easier to understand.

I first heard about Bitcoins in 2012 when the reward was still 50 bitcoins.

However, by the time I actually bought my first bitcoin, the reward had already been cut in half to 25 bitcoins.

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You can support and donate to our efforts on our donations page.

Click here to watch part 6.

Part #4 – Why Is Bitcoin Anonymous (No Real Name) & Pseudonymous (Fake Name)?

In this fourth episode of Bitcoin For Non-Technical People Series, I will discuss the anonymous and pseudonymous features of Bitcoin’s currency and money transfer and payment network.

Privacy Concerns About Bitcoin

The natural question that you may have when you first hear about the bitcoin public ledger (blockchain) is, what about privacy issues?

If all the bitcoin information is public…

  • What if I don’t want people to know that I just sent you a bitcoin?
  • What if you don’t want somebody else to know your financial transactions?
  • What if I don’t want somebody else to know that I just received a bitcoin from you right?

So there’s a privacy issue here and so what Satoshi Nakamoto did was really brilliant.

Remember, this Satoshi is a cryptographer.  Satoshi had to be a cryptographer.

It’s not a debatable question otherwise Satoshi wouldn’t able to create bitcoin.

What Satoshi did was to make each account in the bitcoin public ledger “anonymous”.

Some people like to say bitcoin is anonymous.

Anonymous meas that you don’t know who it (account) is but it’s not really true.

A lot of people proclaim you can use or spend Bitcoins and nobody knows who it is.

That’s not true at all.

There are ways to do it to where you can make your bitcoin transactions “anonymous” but it’s not 100% anonymous because the bitcoin public ledger (blockchain) records all the transactions that’s ever been made in the history of the bitcoin.

So you can’t completely say that bitcoin is 100% anonymous, however, you can say that it is “pseudonymous” and if you’ll remember “pseudo” means “fake”.

What Does A Bitcoin Address
Or Account Number Look Like?

Instead of your bitcoin account displaying your full name, it will actually show an extremely long account number which consists of a bunch of random numbers and letters to represent you.

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For example, if you look at any YouTube video such as the one listed below:

www.youtube.com/watch?v=8RVGpHZUKpw

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You will notice that after it says YouTube.com in the address bar, you will typically see a bunch of weird numbers, punctuation marks, letters of the alphabet and all that nonsense.

Those weird looking numbers and letters are used to uniquely identify the YouTube video.

Similarly, that’s how a bitcoin transaction or account is recorded in the public ledger using a string of random numbers and letters.

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Here is an example of a bitcoin address:

19HHZ1yEimKUYVFM9TkXqd9xwM54jSFrmc

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This is the bitcoin donation address for my freedom blog, PrisonOrFreedom.com.

If you would like to send me some bitcoins or a donation for my efforts to help people find freedom in their lives, you can send it to my bitcoin address above.

When you send it to my bitcoin address, no one knows that it’s me unless I tell you.

If I tell you that the bitcoin account listed above belongs to me then you will know that that long string of weird looking numbers and letters belongs to Tai Zen.

If you did not know that or if I did not tell you that the Bitcoin address or account number belongs to me, you will never know that it’s me.

Likewise, when you send me the bitcoins, if you don’t put a note in the donation message saying who it’s from, I will never know who it is that sent me the bitcoins either.

Don’t forget that when you send me some bitcoins, it will come from a long and weird looking address as well.

Bitcoin addresses are randomly created so you will never find 2 bitcoin addresses that are identical.

If the sender or receiver of a bitcoin does not identify themselves then nobody knows who they are.

So that’s why bitcoin is “pseudonymous”.

It’s not 100% anonymous.

So whenever somebody tells you that bitcoin is anonymous, I would not fall for that.

Many folks believe that bitcoin is anonymous but that is incorrect due to misinterpretations and how it is presented to the public by media outlets.

Unfortunately, it’s just how bitcoin was presented when it first came out but the reality is it’s pseudonymous which means that nobody knows what the real name of the account holder.

By the way, you may have heard or seen the long string of letters and numbers that are used to represent a bitcoin account number often referred to as a:

  • bitcoin address
  • bitcoin public address
  • bitcoin account address

They all mean the exact same thing, don’t let the labels confuse you.
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You can support and donate to our efforts on our donations page.

Click here to watch part 5.

Part #3 – How Bitcoin Authenticates A Payment & Eliminates Double Spending

The biggest challenge to creating a digital currency is not the security issue but an issue of “double spending”.

How do you prevent a user from sending the same amount of currency to 2 or more different people?

In this 3rd episode of Bitcoin For Non-Technical People, I will discuss the brilliant solution that Satoshi Nakamoto developed to eliminate the problem with “double spending” which plagued many computer scientist and cryptographers before him.

I will also discuss how the Bitcoin network authenticates a payment on the most secure payment network on the market.

Bitcoin Is Based On Cryptography

Bitcoin is considered a crypto-currency and based on cryptography.

In case you don’t know what cryptography is…

…‘crypto’ simply means secret…

… and ‘graphy’ means writing…

So cryptography is the science or study of writing a secret message so that other people don’t know what it is.

Bitcoin is a virtual currency that is also referred to as a:

  • crypto-currency
  • digital currency
  • or electronic currency, etc.

It doesn’t matter what you call it so don’t let those labels like crypto-currency, virtual currency, digital currency, electronic money, etc. confuse you.

It just all means that it’s going through the internet or it’s in the form of electricity.

It’s not in the physical form that you normally see as gold or silver or coins or a piece of paper.

Creating an entirely new currency is not easy.

The first challenge for Satoshi Nakamoto (inventor of bitcoin) to make this new currency system so that it can benefit 99% of people like you and I on Main Street was to make sure that the currency could not be spent twice since it was in a digital form.

What Is A Bitcoin Public
Ledger Or Blockchain?

Remember, bitcoin uses a “public ledger” technology called a “blockchain”.

Just a quick review here in case you forgot….

The blockchain is nothing more than an electronic public ledger that is available to everyone in the world for free.

It’s just a public notebook that indicates all the transactions that’s ever been done in the bitcoin world.

Let’s say that you wanted to send me money…

If you want to send me let’s say, a U.S. dollar, in the fiat money system, you would send me a dollar.

On the other hand, in the bitcoin system, it’s going to be called a “bitcoin”.

It’s not going to be a dollar because it’s a bitcoin system now.

When you send a bitcoin, one of the first things that Satoshi was concerned about was that it actually came from you and it actually goes to me and not to someone else.

Satoshi created bitcoin by borrowing the latest computer science, mathematical science and cryptography technology that software companies and spy agencies (like the CIA, FBI, and all the “big-name” government agencies) use to make ensure that the information (or bitcoin) that is sent across the bitcoin network will go to the correct person.

That was one of the keys to making bitcoin possible …  is “authenticity”.

Meaning that it comes from you and it’s going to me and not to someone else.

All the software companies like Microsoft and places like Adobe use this process (of authentication) all the time.

Every time they send you a new software update they make sure that they authenticate with your computer so that your computer knows that it’s coming from Microsoft directly, it’s not coming from a scam website.

They authenticate that first which is very easy to do with current technology.

What Is A Double Spend?

The authentication part was easy.

However, the part that was very, very, difficult was to create this new digital currency or “digital cash” system was the “double spend” issue.

Double spend means that if you were to send me a dollar (since it’s an electronic money) what’s to prevent you from sending that “same” one dollar to someone else?

If you can do that, infinitely, then it would just be the same as these people over the central banks who randomly print money without ever having to work for it.

Obviously, such a new “digital currency” would not work.

For 20-30 years, since cryptography came into existence and into heavy study using computers and stuff, a bunch of people have been trying to figure out how to create a digital currency or digital cash that could NOT be double spent.

Satoshi was not the first person to attempt to create a currency that could NOT be double spent.

However, he/she was the first person to come up with a system (based on existing technology) that brilliantly prevented a double spend transaction.

That brilliant and innovative system is what we call the “blockchain” or the “public ledger” in the bitcoin world.

How Satoshi Used The Blockchain
To Avoid Double Spending

What Satoshi proposed is that all the transactions that’s ever made – remember I told you in the previous video that every block takes ten minutes to create?

Every ten minutes, the bitcoin system goes around the world and gathers all the transactions and records how much everybody spends.

In the next ten minutes another block would come up and be added to the public ledger or blockchain.

What Satoshi did to prevent this double-spending issue (which was a huge issue) because lots of math scientists, lots of computer scientists have tried to figure out how to create a currency system where we can send it to another human being without it being double spent and used again to be sent to someone else.

What Satoshi did was pure genius…

She said, “What if we create a public ledger and we make it public so that all the transactions ever made are recorded inside this public ledger?”

What happens when you send me a bitcoin, is that it gets recorded in the public ledger and it will show a -1 in your account to show that you have deducted 1 bitcoin from your account.

Likewise, in the same public ledger, my account will show that I have received +1 bitcoin.

Now I have +1 in my account and you have a -1 in your account.  All this is recorded in the public ledger or blockchain.

Let’s say that I want to spend that bitcoin and I want to send it to, let’s say, I don’t know, let’s just make up a name.

I’m just going to say John because in America John Doe is a common name that we use for all examples.

What happens when I send 1 bitcoin to John Doe?

The first thing that the bitcoin system is going to do is to make sure that I have that bitcoin so it will go and scan the blockchain and check to see if I, in fact, do have a bitcoin to send to someone else.

It’s going to go back through the public ledger (blockchain) and check for my account balance, “Oh, there it is! There goes that transaction where Tai received one bitcoin from you.”

What’s going to happen is it’s going to authenticate that and say, “So Tai does have a bitcoin.” Now I am authorized to send that bitcoin to John.

How Do Banks
Get More Money?

Keep in mind that in the old banking system or what they call the ‘legacy banking system’ – legacy just means the old or outdated system.

In the legacy banking system (that only benefits the 1% on Wall Street) they don’t have to go back and check to see if they have the money or not.

If they don’t have it, they just simply print a bunch of numbers on the computer and they instantly have more money.

It’s not like they have to print out a piece of paper or anything.

They just go into their computer and type in their password, hit a few buttons and boom!  They instantly have more money in their account.

This is what they call in America “the good ol’ boy system“.

Bitcoin is NOT based on a good old boy system.

It’s based on proof!

It’s based on proof that you actually have that money in your account to spend or to send to someone else before you are allowed to make a transaction.

When I send a bitcoin to John, the transaction gets recorded in the next block of information in the public ledger (blockchain).

Remember, this public ledger is called a “blockchain” because it’s a chain of blocks and each block contains all the bitcoin transactions in the world that happened up to that point.

The number of blocks continues to grow bigger and bigger as new blocks (of bitcoin transactions) are added every 8-10 minutes.

In the future, if John wants to send that same bitcoin that he received from me and let’s say that he wants to send it to Barack Obama.

I’m going to say Obama just for the hell of it since everybody knows who he is. He’s probably not going to like to receive bitcoin because he wants to keep the legacy banking system in place.  I don’t know. I’m not Obama so I can’t say. I’ve never met the guy, I don’t know.

A lot of people say things about the President but they’ve never met him in person, they don’t know him, they don’t hang out with him. I’m not going to say anything about him because I really don’t know him. I haven’t researched his biography or anything like that so I don’t want to throw things out there that I don’t know about.

It’s hard enough to try to figure out things that I barely know, much less try to talk about something that I don’t know. But I’m going to use his name here anyway because everybody knows who he is just for the hell of it.

Let’s just say that if John wants to send that one bitcoin to Obama… before he can send it, the bitcoin system has to go back through the public ledger to check in past history to make sure that John even has a bitcoin.

The system will go back and find the block in the public ledger that previously contains the transaction between John and I.

The system will scan that block of transactions and it will show that John indeed has a bitcoin.

After the system verifies that John does have a bitcoin to send, the public ledger gets updated to show that there’s a -1 for John and there’s a +1 for Obama.

That’s how the bitcoin public ledger works.

At any given time, you can go back through all the bitcoin transaction history and check to see all the transactions.

That block chain technology completely eliminates the problem of double spending which was a huge problem that prevented the creation of a purely digital form of money or cash.

This process of making the ledger public so that everybody can see how much money is inside each account was a huge innovative invention by Satoshi Nakamoto.

Until Satoshi invented the public ledger (blockchain) technology, no one was able to resolve the issue of a double spend when using a digital currency.

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Part #2 – What Is A Bitcoin Public Ledger Or Block Chain?

In this 2nd video in the series on “Bitcoin For Non-Technical People“, I want to explain the core component of Bitcoin which makes everything works.

The heart of bitcoin is a “database” of historical information known as a “public ledger“.

In the world of crypto currencies and virtual currencies, the public ledger is often referred to as the “blockchain“.

What is the blockchain?

The block chain is a historical recording of all transactions that has occurred in the bitcoin money transfer and payment network.

When Satoshi Nakamoto invented bitcoin – let me put his name down here because when somebody is this revolutionary, we need to give him credit for it.

Anyway, a lot of people say that they don’t know who he is because nobody knows.

After he invented bitcoin’s public ledger technology, he released it to the world and no one ever heard about him again.

Some people say that bitcoin is a Central Intelligence (CIA), National Security Agency (NSA), Secret Service job or Federal Bureau of Investigation (FBI) or government project, etc.

I really don’t care about none of that; all I care about is what it’s going to do to revolutionize and help the other 99% of people that’s on Main Street.

The people on Wall Street are often referred to as the 1%.

By the way, if you are watching this video – the chances are if you’re part of the 1%, you’re probably not going to be watching this video. That’s why I’m not afraid about giving secrets about bitcoin to them.

Let’s just say that we are part of the 99% that’s on Main Street.

Who Is Satoshi Nakamoto?

Apparently, Satoshi Nakamoto – a lot of people say he’s Japanese because the name sounds Japanese, a lot of people say it’s a guy.

I’m just going to go out on a limb and since nobody knows if it’s a guy or a girl, I’m just going to refer to it as a chick because I think that’s way cooler than referring to it as a guy.

A lot of people say only guys can come up with this kind of stuff, but I think in this day and age I think women have the mindset to come up with this stuff, too.

It’s possible.

Who’s to say if I’m wrong or I’m right?

Nobody knows who the real identity of Satoshi Nakamoto is so I’m going to refer to it as a chick.

This chick Satoshi Nakamoto, she must have been working inside the banks as somebody that has to deal with security and somebody that has very, very good computer science and mathematical skills otherwise they wouldn’t have come up with some of this stuff.

It has to be somebody that works in the finance and the banking industry.

A lot of people say that Satoshi probably invented bitcoin by accident or by luck.

I refuse to believe that.

I don’t believe that anything that’s revolutionary such as bitcoin ever comes up by accident or by luck.

Like Mark Twain says, “Luck is the marriage of preparation meets opportunity.”

Satoshi had to be somebody that was working as a cryptographer, computer scientist and definitely involved in computer security.

He was a very, very intelligent person.

There is no doubt whatsoever that Satoshi was one smart chick.

She must have worked in the finance industry and saw what happened and what the 1% was doing to suppress and take away power from the 99% that’s on Main Street.

She must have thought about it and she thought about it and she kept thinking…

“What can we do to get rid of these third party people? “

“Why is it possible that we can send messages, emails, text messages, live streaming video and everything across the world to the other side of the world for free, at no cost or anything?”

But…

“Why is it that we have to pay a fee or transaction fee or bank fee to send money from one person to another across the world or across the state lines or cross-country borders?”

That was one of the things that frustrated Satoshi… that the 99% of the people on Main Street have to pay these expensive bank fees to transfer money around the world.

The other thing, too, that was a concern for Satoshi is why is it possible that the banks and the powers that be – the government, the man, the corporation, etc….

However you want to call it, I don’t want to get all “conspiracy theory” in this video…

But, the 1% on Wall Street can look inside the bank ledgers and determine how much money everybody has, how they’re spending that money and everything.

On the other hand however, you and I, as the private people (the 99% that’s on Main Street):

  • We cannot view the bank’s ledger.
  • We cannot see each other’s account.
  • We cannot see the account of what the President’s making.
  • How they’re moving money around or what the government is doing.
  • What the congressmen are doing and all the rich people are doing?

What Satoshi proposed was that we take the private ledgers in the banks (that was only available to the folks in government or Wall Street) and make it public to everyone.

When we operate under the fiat system (basically the 1% system that’s on Wall Street) what happens is that everybody that you don’t want to look at your account has the ability to look at it.

What I mean by that is that the FBI can look at your bank account.

The CIA, the NSA, Homeland Security, immigration, IRS, the tax people, etc. and everybody that you don’t like in the government has the ability to look at your bank account and all the people that you don’t mind looking at your account cannot look at it (such as family and friends).

What Is A Blockchain?

What Satoshi did – that was insanely brilliant – was that she made the bank ledger public.

That was the first thing that she did.

She made it public so that every transaction that’s in the bitcoin world (network) is public.

So that when you buy anything or make any type of transaction in bitcoin, it is recorded in this public ledger.

In the bitcoin world, this public ledger that records all the bitcoin transactions that’s made between people is referred to as a “block chain”.

The reason why it’s called a block chain is because every 10 minutes all the transactions in the world that happened with bitcoin regardless if somebody in China uses bitcoin to buy or sell anything to somebody in America, in France, in Europe, in South America, in Africa gets recorded.

It doesn’t matter where in the world the transaction occurred, if there’s a transaction that occurs that involves the use of bitcoin, it is recorded in this block of information.

Every 10 minutes all these transactions are compiled and processed and recorded into this bitcoin public ledger.

The bitcoin system was set up so that 10 minutes would allow for all the computers in the world to process and gather the bitcoin transactions together to form the next block of information and add it to the bitcoin public ledger.

In this bitcoin public ledger, new blocks get added roughly every 10 minutes and it goes on and on.

Every 10 minutes you can expect that a new block of data or information that contains all the bitcoin transactions in the world are recorded and it’s on to the next one.

In a separate video, I’ll explain how people are volunteering their computers to process all the bitcoin transactions and information.

For now, I don’t want to get too much into depth about how bitcoins are processed and get you too confused.

How Bitcoin Takes Power
Away From The Central Banks

What’s important to understand is that the bitcoin system is designed to take power away from the central banks and all the big banks on Wall Street and the 1% of the population that it benefits by taking away their primary source of power which is the power to print money at will without ever having to work for it.

When you use bitcoin, you can no longer just print money at will.

There’s only a set number of bitcoins and that’s 21 million.

There’s only going to be ever be 21 million bitcoins ever created and no more.

In a future video, I’ll explain why it’s only 21 million bitcoins and no more.

The second thing is that the 99% of people on Main Street (lke you and I) have to work 9 to 5 everyday to produce an income and money whereas the 1% on Wall Street don’t.

Bitcoin eliminates that disparity and inequality between the rich and poor in society.

It eliminates the 1% from just sitting on their butts doing nothing and getting paid all these millions of dollars.

What Is The Golden Rule?

The other thing, too, is that bitcoin takes away Wall Street’s monopoly on money.

They can no longer control the money and debt in the world.

This is important because whoever has control of the money supply also wields tremendous power in the world.

I think some of you guys may have heard of the “Golden Rule”.

Some people believe that the Golden Rule is to “do unto others as you would have done onto you

I think that was the version that was out of the bible or something like that.

However,  in today’s times, the Golden Rule actually means that “whoever has the gold (money) makes the rules”.

Basically, whoever has the money has the power.

What bitcoin does is it takes away the power from the central banks and all the affiliate banks and take their ability to just print money at random without having to work for it or give value to another human being to get that money.

It takes the power to print money at will away from them so they no longer control the power and it gives it back to the 99% of the people that’s on Main Street.

Bitcoin Does Not
Require A Middleman

The fourth thing is that it takes away the third party or middle man when you need to make a financial transaction.

No longer do you have to waste a portion of your money going to two different 3rd party people just for you to send me money. That’s very, very important.

I hope that this video gave you a good start about the bitcoin public ledger and why it was created.

In the next video, I’m going to talk about the people who are volunteering their computer to process all the bitcoin transactions and why they doing it for “free”.

  • Why are these volunteers turning on their computers and jumping in to help process the bitcoin transactions that are being used around the world?
  • Why would someone go out of their way to go and do this for free and for nothing?
  • Etc.

The next video will explain that.

I hope you enjoyed this video.

If you have any questions or any comments about bitcoin or the tools, technologies, and strategies to help people find freedom in their lives. Just leave a comment below this video and I’ll be happy to answer any questions in a future video.

Thanks for watching this!

If you haven’t subscribed to our freedom blog yet, I invite you to go to my blog, PrisonorFreedom.com/newsletter and sign up for my freedom newsletter and I’ll share more ways to help you find freedom in the future.

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Click here to watch part 3.

Part #1 – What Is Bitcoin Compared To Fiat Currency?

This is the first video in a series of bitcoin education videos entitled, “Bitcoin For Non-Technical People“.

In this series of videos I’m going to talk about how to understand bitcoin for the non-technical people.

My Bitcoin Background

Just to give you guys a little background about myself so that you guys understand where I’m coming from and how these videos are going to be structured – I’m not exactly sure how many videos it will be but I’m going to keep making it until I have all my friends and family members understand bitcoin.

Many of you guys know that I’m a college dropout; I don’t have a very big background in computer science or mathematics.

I learned about bitcoin at the beginning of 2013.

I watched as it went into the crash, that first 265 dollars crash, it went up to two hundred and sixty-five dollars and then it crashed back down. I started getting some money together to start investing into bitcoins.

In this video series, I’m going to help you guys understand what I went through and what I learned about bitcoin.

Bitcoin’s public ledger is a key inventions that’s never been done before until Satoshi Nakamoto came along.  Satoshi is the anonymous inventor of bitcoin.

Since I’m not a very computer-savvy or a very mathematically-savvy person, I’m not one of those Asians that was gifted in math and science so I’m going to make this as dummy-proof as I can so that non-technical people like myself can understand it.

Before you can understand what bitcoin is and why it is so revolutionary, in my opinion I think it’s going to be even a bigger invention and bigger revolution than the worldwide web.

You might disagree on me on this, you might find it shocking, or surprising for me to say this but I can honestly say that there’s not too many things that I’ve seen in the technology world or anywhere that has revolutionized the vast majority of the people on this planet as much as the invention of the bitcoin protocol or the bitcoin network or the bitcoin system, however you want to call it.

A Quick Disclaimer About
My Technical Background

I just want to give you guys a disclaimer real quick.

I will try as best as I can to avoid any kind of technical stuff here in this explanation about bitcoin.

If you want a really detailed and very accurate explanation and technical perspective about bitcoin I highly recommend that you get on YouTube and search for Khan Academy’s bitcoin video lectures.

That’s spelled K-H-A-N Academy and add the word “bitcoin” behind it.

I think that the Khan Academy has one of the best guides that explain what the technical and the mathematical science behind bitcoin is.

In this video I’m not going to talk any math or science that Khan Academy uses to describe bitcoin.

The most math that I’m going to talk about in this video series is just basic arithmetic because that’s all I know.

Before we get started with bitcoin here, guys, it’s very important that you understand how our current banking system works and how many is being transferred between one person to another and you will realize how revolutionary bitcoin is as a currency, as a system of payment and as a protocol itself.

In this specific video, in this initial video that I’m making here, it’s only going to talk about bitcoin as a currency or a payment system, a transfer system.

In the future videos I’m going to talk about how bitcoin is used for other things other than just currency.

Bitcoin vs. The Antiquated
Banking System

Before we talk about money here, I have a few boxes up here; one box over here represents Bank Of America. If you’re not in the financial world, it’s commonly known as BOFA which stands for Bank of America.

Over here is HSBC bank, whatever it stands for is not important, it’s just a couple of international banks that I use here so that you guys can have an idea.

I didn’t want to just use American banks only that are currently in the state of Texas because some of you people that are watching this are from the international countries and other countries outside the U.S. and you may not recognize them.

I’m pretty sure that almost everybody has heard of the legacy banks such as Bank of America and HSBC bank.

Before you understand bitcoin, like I said, it’s important that you understand how money is being transferred or how it goes from one person to another.

I’m going to use Bank of America as an example and I want you to participate in this illustration or this example with me so that it can help you understand.

I want you to imagine that you have your money over here in Bank of America and this is me over here.

I’m just going to put my name here so that you can see it.

Let’s just say that you wanted to send me one dollar, whether it’s one dollar, one yen, one Euro, it doesn’t matter what currency you’re using.

If you were to send me this, the way that it works is that inside Bank of America, they would have a ledger. I’m going to talk about a ledger in this video because it’s one of the key components of bitcoin. It’s one of the key inventions that’s never been invented before.

In the past, what happened was most banks would use a ledger. In this ledger there would be accounts.

A ledger is nothing but a notebook that records how much money each person has inside that bank. You would have a ledger and the ledger would show that you have a hundred dollars, a thousand dollars, a million dollars, a billion dollars or whatever it is that you have in there.

Every time you want to send me a dollar, you would tell your bank and your bank would send it to me at my bank at HSBC. What happens is that in my bank there’s also a ledger. This ledger – I’m just going to draw it out here – here’s a ledger with everybody’s names on there and how much money they have.

What happens is the ledger over here that they keep track of that has everybody’s name including yours and how much money everybody has, they would take money off that ledger and they will forward it to HSBC and HSBC will take that dollar that you just sent me and record it on the ledger and say that Tai just received a dollar from you over here at BOFA or Bank of America.

That’s how it’s normally done. Every time I spend that dollar, it gets deducted out of the ledger.

This works all fine and dandy but there are some problems with this.

Legacy Banking Systems
Always Require A Middle Man

The problem is that – let me put it over here – the problem is that it requires a third party. I’m going to get to these three in a minute, it doesn’t have to be in a particular order, I’ll just jump around.

The first problem that we run into is that you can never send the money directly to me.

We always have to ask your bank to send it to your bank and then my bank will let me know. This third party, any time you involve a third party like Bank of America or HSBC bank, the problem is they’re going to charge you bank fees and transaction fees.

These banks do not charge cheap fees, either. In the US, if you were to send me anything over a thousand dollars. It would be at a $20 fee just to send me that thousand dollars.

That may not seem like a lot, but in some countries, that $25 dollars could be somebody’s month salary.

That’s a very expensive way to send money and as long as we involve a third party, you can never send money directly.

The only way that you could send it to me directly is if you took cash, carry it to me and hand it to me physically, the currency that you use, whether it’s the Yen or the Euro.   That’s just one problem.

The next problem with this whole entire system, with the way the banks are set up is that the banks get to print money at will.

They print money at will without ever having to work for it or provide value for it. Let me explain to you how this process works.

How Do Legacy Banks
Get Their Money?

There are several ways to do it but one of the main ways to do it is from what we call a “central bank”.

In America, at the time that I’m writing this, they call it the Federal Reserve.

The person that is in charge of the central bank in America right now is a guy named Ben Bernanke; some people like to joke around and call him, “The Ben Bernanke“.

Right now, he is in the process of leaving the central bank, the Federal Reserve.

Somebody else is going to replace him, some lady named Janet Yellen.

What happens is, at any time they can borrow money from the central banks at extremely low, low interest rates.

We’re talking like less than one per cent or one per cent; it’s extremely low. It’s lower than even you and I can ever get. They can loan it to these guys and they guys will loan the money to you or they’ll loan it to me so that we can go buy our homes or cars and do those things.

At first, when you think about it, it’s actually a good system because if you don’t have any money to go buy a house and you pay for the whole amount of house, it’s nice to have the banks there so you can go and borrow it. Sorry about the allergies, guys, my nose is very itchy right now.

What happens is you can borrow money from the bank to pay for the house or the car which is nice.

However, the problem is that remember, you go to work from 9am to 5pm, you work your eight hours a day and you deposit money into that bank.

BOFA and HSBC can also take that money that you deposited in there… let’s say for example you deposited a hundred dollars into this bank.

They only have to keep 10% in the reserve and they can take the other 90% and lend them to anybody they want so they can lend it to other customers. If someone wants to buy a car, buy a motorcycle or they want to buy a house or anything like that. They can take your money that you put in that bank and they can lend to someone else.

That’s where it becomes, in my opinion, unfair or unjust because you cannot do that with your money.

If you try to loan your own money, there are all kinds of loan shark laws in American and most of the developed countries where they make it illegal for you to randomly go out there and loan people money.

You can’t do that; you can get away with that in a third world country or something like that, but you’re not going to be able to get away with something like that in America for very long.

The other thing too, is that because they only have to keep $10 in reserves, that other $90, let’s say that they loaned it to me to go buy a car or they loaned it to another customer in the bank…

When that customer takes that $90 and deposits it back into the bank, they keep 10% of it which is nine dollars.

They take that $90 from the second customer to go buy a car or home or whatever. They’ll keep $9 of it and loan out the other $81.

This is called fractional reserve banking.  You can learn more about fractional reserve banking at the Khan Academy.

I originally learned about fractional reserve banking from Bill Still in the documentary “Money Masters“.

The cycle of fractional banking just continues until they have as much money as they need to do business and to loan out to people and they collect interest on it.

This whole time… keep in mind they never have to work on anything. It’s all computers, it’s not like somebody has to sit there and count a stack of cash  or anything like that; no physical and manual labor done.

That’s one way that they make money.

Fiat Money Is
Not Real Money

The other way is where they get more from the central banks, they borrow from it at an extremely low interest rate and they’ll loan it back to you and this is just a vicious cycle.

I don’t want to get into details about this, but if you go to my website, I have a link that explains this whole process of how they print money and everything.

That should help you open your eyes to how the fiat currency system works.  This is what it’s called, by the way. Fiat just means “fake” (in my opinion) because there’s literally loaning you the money that’s not there.

Basically, they’re loaning you a hundred dollars but there’s not really a $100 in the bank to back it up. There’s just $10 in there.

To me it’s kind of like a Ponzi scheme. It’s like “robbing Peter to pay Paul” is what they typically say.

They really don’t actually print a piece of paper or currency up, it’s just a bunch of numbers on a computer. They don’t even have to spend money to print that.

Like I said, the problem with this fiat currency system that we currently use around the world is that the guys that’s up in the banks, the 1% of the people that’s on Wall Street, we’ll call these folks the “one percenters”.

They get to print money at will, however, you and I cannot.

It doesn’t matter what background you come from, you aren’t going to be printing money like they do and you can’t loan out money like they do unless you’re one of the family members or one of their buddies or friends or things like that.

That’s why I call them the “one percenters” on Wall Street and that’s what a lot of people that don’t like the fiat currency system call them too.

They don’t have to work for money.

Another thing too is that they have a monopoly on the whole business of printing money.

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Click here to watch part 2 of this series.