WEBVTT

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If you could use bitcoin to buy
things like a chocolate bar at your local

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grocery shop, would you There are
many reasons to spend bitcoin. For example,

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you could spend bitcoin to learn about
bitcoin. Perhaps you would buy a

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chocolate bar with bitcoin to try out
the technology and gain a new experience.

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Spending bitcoin and even just holding bitcoin
are fantastic ways to begin to tumble down

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the bitcoin hole. Spending and holding
bitcoin are great ways to learn about bitcoin,

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because nothing beats immersive learning. You
could spend bitcoin to help bitcoin grow

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in terms of users. By spending
bitcoin where they accept it, and by

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asking your local merchants to accept bitcoin, you provide incentive for further development of

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infrastructure, more and better bitcoin ATMs, more and better exchanges, more ways

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to accept bitcoin, and ultimately more
merchants accepting bitcoin. You could spend bitcoin

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to inspire. Perhaps you want to
transmit your passion for a bitcoin to a

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friend, a family member, or
a colleague. And what's better way than

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gifting them a few satosha that they
could use to buy a chocolate bar on

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their own. That would be a
fun and diffusing experience for someone who's new

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to bitcoin. It would make bitcoin
much less scary and much less abstract.

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There are many reasons to spend bitcoin, but from an economic perspective, it

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doesn't make a lot of sense to
spend bitcoin at this point in time.

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The reason it doesn't make sense to
spend bitcoin right now, at least not

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mindlessly, is because bitcoin is an
appreciating asset. By that, I mean

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that bitcoin is purchasing power will increase
with time. In twenty ten, you

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needed ten thousand bitcoins to buy two
pizzas. Today you can buy I used

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but fairly decent car for just one
full bitcoin. In a few years,

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one full bitcoin could buy a decent
home. And who knows where bitcoins purchasing

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power will be when it's time for
the next generation to inherit our generations bitcoins.

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So what is it that makes bitcoin
and areciating assets. Bitcoin has many

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great qualities that makes it superior to
all other forms of money that have existed

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prior to bitcoin. But let's look
at something really fundamental about Bitcoin that makes

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its unappreciating assets, namely, bitcoins
heavily skewed supply and demand. Bitcoins monetary

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system is disinflationary, meaning that the
rate at which new bitcoins are created is

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gradually decreasing until the inflation rate or
issuance rate is at zero and that no

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more bitcoins will be created. In
other words, bitcoin has a fixed supply

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and this is a much bigger deal
than it sounds. Here's why. The

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dollar, like all fiat currencies,
has a supply that is constantly being expanded.

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We have no idea how many new
dollars are created out of thin error

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every day, and we have no
idea how many dollars there are in the

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world, but we do know this, Substantially more dollars are created than are

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being destroyed, and hence the currency
supply is being diluted at an alarming pace.

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This is known as quantitative easing,
which is a fancy word for extreme

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money printing. When the currency supply
is diluted as the vast amounts of new

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currencies constantly being injected into the economy, the purchasing power of each unit each

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dollar is gradually reduced. We notice
this reduced purchasing power of the dollar as

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price is going up as food or
real estate, transportation, etc. Getting

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more expensive. But what is really
going on is that the purchasing power of

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the dollar is reduced due to more
and more dollars entering circulation. Just think

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about what a pair of genes,
an apartment, or a bar of chocolate

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costs when you were a kid,
and how much do it cost now.

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How much does it cost to fill
up your car or buy an apartment today

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compared to when your parents were your
age. The increasing prices is a consequence

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of inflation. Bitcoin is disinflationary,
which means that bitcoin has a predetermined and

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predictable slow down in its issuance rate. At the time of making this video,

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bitcoin inflation rate is about four percent, meaning the bitcoins supply is increased

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by four percent year to year.
This is an amazing chart. It contains

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a world of information. On the
x axis, we have time, but

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here measured in a number of blocks
or block height as it's known. Two

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hundred and ten thousand blocks is roughly
four years, so every little box here

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is four years. On the left
hand y axis, we have number of

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bitcoins. If we follow the blue
line and look at the y axis,

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the supply started at zero. About
seventeen point five million bitcoins have been created

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so far, and there is never
going to be more than twenty one million

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bitcoins, meaning that there are only
three point five million bitcoins left to be

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mined. If you're born in the
eighties, you will reach the age of

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retirement somewhere around here when twenty point
ninety eight million out of bitcoins, twenty

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one million bitcoins will have been mined. On the right hand y axis,

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we see bitcoins issuance rate or inflation. In the beginning, there were no

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bitcoins, so the expansion of the
supply was exponential. Then we see very

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clearly that bitcoins inflation rate is decreasing
in steps. This continuous slow down in

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inflation rate will continue until there are
no more bitcoins left to mind, giving

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bitcoin a fixed final supply of twenty
one million, we know exactly how many

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bitcoins there are right now, We
know exactly how many new are being created

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every day, and we know exactly
how many bitcoins there will be at any

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given point in time in the future. Bitcoins issuance model is predetermined and predictable,

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and words like this miner's mind.
Bitcoin blocks. With every newly mined

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Bitcoin block, new bitcoins spring into
existence. One block is mined on average

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every ten minutes, meaning that new
bitcoins are created every ten minutes. This

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is how new bitcoins are issued.
In the beginning, fifty new bitcoins were

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created with every new block. Every
two hundred ten thousand blocks, or roughly

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every four years, the issuance rate
is cut in half, so after the

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first two hundred and ten thousand blocks, after the first four years, the

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issuance rate dropped from fifty new bitcoins
every ten minutes to twenty five new bitcoins

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every ten minutes. Four years later, there was another halving event and the

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issuance rate to dropped from twenty five
new bitcoins with every new block to twelve

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point five new bitcoins with every new
block. And this is where we are

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now. The next halving event will
be next year, in twenty twenty.

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Then there will only be six point
twenty five new bitcoins with every new block.

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The supply of bitcoin is fixed at
twenty one million, and the issuance

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rate is gradually reduced as we approach
that number. The last bitcoin will be

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mind sometime around the year twenty one
forty. Unlike the dollar, bitcoin will

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by design not have its supply expanded
over time. Demand will increase, but

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the supply will not, and this
is very important. Just like real estate

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on Manhattan, bitcoin supply is inelastic. It cannot grow, which is going

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to drive demand into disguise. There
are seven point five billion people in the

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world, but only twenty one million
bitcoins. There won't even be enough bitcoins

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for every millionaire in the States to
own a full bitcoin. You do the

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math. Demand will increase, but
the supply will not. The dollars purchasing

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power decreases over time because it has
a constantly expanding supply, which gives us

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the people, incentive to spend our
fee at fast before it loses any more

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of its purchasing power. Then there
is bitcoin, providing us the people,

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with incentive to save instead of spending
because bitcoin increases in value over time