his is a free sample lesson from 'How To Confidently Join The Digital Money Revolution - Master the basics of Bitcoin and own a stake in the future of money'.
What Is Money Really?
Digital Money Revolution
Bitcoin is...
An open source software protocol which enables a blockchain to be built on a trustless peer to peer decentralised network via the Internet, which can be used to host a public database which tracks changes in ownership of assets and is secured by cryptography and consensus.
A bitcoin is...
A unit of digital currency that exists on the Bitcoin blockchain, is stored in a wallet and can be used to track the exchange of value in a free market economy.
Digital Money Revolution - What Is Money Really?
Bitcoin Is A Crypto-Currency
We have explored the crypto part in the lesson on encryption
So a logically a crypto-currency must be a currency that is encrypted
Only the owner of each bit has the key to unlock it
Digital Money Revolution - What Is Money Really?
Bitcoin Is Also A Digital Currency
The thing about making something digital is it immediately makes it easy to copy (piracy)
Think of the disruption because of digital music
All digital goods have this problem
Can I just copy my Bitcoins and make myself an instant millionaire?
No, because there has to been consensus on the network about how much is in each Bitcoin wallet
That’s determined by all the transactions made to you since Bitcoin began
Digital Money Revolution - What Is Money Really?
At The Most Basic Level Currency Is...
The thing we use to buy stuff
If that’s true, can’t I use air as money?
No? Why not?
Because it’s to easy to get hold of on your own
Because no one else will accept air as payment
Digital Money Revolution - What Is Money Really?
VERY IMPORTANT POINT
Money is whatever someone is willing to accept as payment
So Are These Money?
American Dollars?
British Pounds?
European Euros?
Japanese Yen?
Indian Rupees?
Digital Money Revolution - What Is Money Really?
YES AND NO
In one country
In another country
Why Do Those Countries Accept It?
I mentioned that money has value because we can spend it
In any given country, where is the ultimate place money is spent?
The place you have no choice over?
Digital Money Revolution - What Is Money Really?
The Government
Taxes
Could I Accept $ As Payment?
As a British citizen yes I could
But I’d have to convert to £ to pay taxes
Or to spend with anyone else in the UK
I’d also have to tell the government how much I’d earned in $
So they could charge me the right amount of tax on my earnings
Digital Money Revolution - What Is Money Really?
How Does A Government Decide What To Use As Money?
What can we use that is:
Portable
Durable
Recognizable
Fungible
Scarce
This is why we can’t use air, it fails the test.
Digital Money Revolution - What Is Money Really?
Summary
Digital Money Revolution - What Is Money Really?
Money is whatever someone is willing to accept as payment
The more people accept it as payment, the stronger the currency is
It boils down to people who use the currency having confidence in it (trust)
The five characteristics make sure people trust that it will last and be spendable
The government in each country typically sets the laws on what can be used as currency (and they collect taxes in that currency)