Charlie Munger, Amazon, Microsoft discussed on The Financial Quarterback
Appeal the Bitcoin as a financial guy is the decentralization of finance and that you don't need banks. You don't need block fi. You don't need Jim and I. You don't need coin base to me. Coin based gem in they're all really cool. Don't get me wrong. And I think they will be necessary sort of how Microsoft was necessary and You know, whatever Priceline and Amazon before we go to this new round of the Internet, you know yet like Internet one point our Internet to point out Coined based Gemini Block five those sort of traditional outlets. Will be necessary as we convert to sort of the Internet of money. But What? What I find pretty compelling to is the opportunities like a strike app where you can have the app. I can never happen and we can displace, Let's say a Western union, making them obsolete. With our own Bitcoin that we control, So I think some invention will make this easy to control it in your own wallet. But so that we don't lose people here. Break it down. Simply. Both the online storage with a coin base or an offline where you hold it yourself with the seed phrases. People, you know what Seed phrases are the average person. So if you could break that down mark because you're so clear again, not to go too deep into the technical weeds, but But at the end of the day, uh, digital assets right exist in the in the digital world, and therefore you have to have a means. For, you know, storing and retrieving them and Blockchain technology is really pretty simple, right? It's a ledger. And you know, we've got ledgers for thousands of years, right? We had a piras and we had clay tablets. And then it went to the Green Ledger paper that we all grew up with accounting class. Then we went to spread sheets, and today we have we have Blockchain and I'll block changes that basically takes in a in a digital form, a serious of transactions and over a 10 minute period called a block. It takes all those transactions, writes them down on this this digital ledger and then appends that block to the chain of previous blocks. Every 10 minutes secures that innit, immutable fashion, meaning it can never change. It is a permanent record. And that that system is secured by what are called miners. I mean that that's an unfortunate term to the actual, Don't dig stuff out of the ground. They don't wear little hats with lights. Mining is simply a data center, right In the old days. You had a data center, right? You buy computers. You plug them in, You pay for the power, and then you had to go find customers like aws or as you or whatever. And they would rent your computers that was a data center. Modern data Data Center are minors. So you take the computer's still buy computers a different kind of computer, A GPU instead of a CPU graphics processing unit and that computer then doesn't you have to go find customers? Like Amazon or or Microsoft. You basically rent your computing power to the network, and the network uses that computing power to secure This chain of blocks this block chain. So now we've got our record in in the block that says Josh has a Bitcoin mark as a Bitcoin. Okay, great. Now how do I know where it is? Well, I have to have a identifier. And that is this thing that we talked about is a seed phrase, right? That is a A wallet. Okay, like you would think of a wallet, but it's a digital wallet mean exist. In digital form, and they are identifiable and all of this goes back and got you two to technical. But all this goes back to cryptography. Crypto right is Charlie Munger said. I don't like any word. I don't like anything that has the word crypt in it. At my age. This has nothing to do with Crips that has to do with cryptography Bloods and the Crips. Yeah. You have to do with security. And so if we think about, uh, cryptography, there's something called a public key and a private key. Any public key is the address. It's a long string of letters. That is where your asset is stored on the Blockchain. So that public key, right is string of 24 letter. And anyone can know that because if even if you congratulatory that location on the chain, you can't get to it because you don't have the private key. The private key. Is secured by this seed phrase, and it's a serious of 12 words. And those 12 words are unique to you or me. And when you match that private key with the public key we can decrypt are unknown. We can reverse the cryptography and we can see What we have secured on the block change, so that is a little bit complicated, and that's a process that the average person just doesn't want to deal with. So like, you know what I'm gonna let coin base or block fi or or whoever or Gemini I'm a let them be my custody in the same way we might let Fidelity br custodian in the electronic world. There's nothing wrong with that. But there are people who say no, I don't want to pay a custodian. I want to deal with owning my assets. So I'm going to get a a storage device. Now that storage device could be Your phone, right? You could put it a wallet on your phone. Now. The problem with putting the wallow in your phone is your phone can be hacked. And you could lose your digital assets. And the way to think about security in this world is the same way we think about money. Right. How much money has been stolen from the Federal Reserve? $0. How about Bank of America's Home office in New York $0. How Bank of America's El Paso Texas branch. More than $0..