WEBVTT

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Hey, bitcoiners, how are you
doing. My name is Ione Appleberg,

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and i'm your host, your friend
and fellow bitcoiner. I'm excited as always

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to talk bitcoin, possibly the most
important and interesting innovation in our lifetime,

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at least since the Internet. This
is where you get the ideas, the

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philosophy, and the technical aspects of
bitcoin explained, hopefully in a fun and

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engaging way. If I do my
job right, welcome to the show.

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One of the most exciting things about
bitcoin is that it is an entirely new

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expression of money, radically different from
any other type of money we have seen

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ever before. Money is one of
mankind's oldest technologies, so there's evidence to

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suggest that we had money even before
we had a language, and the earliest

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cave paintings are not of battle and
of animals, but of ledgers with records

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of ownership and debt. The evolution
of money is fascinating. When we began

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to trade, we had barter system. Barter system is a direct exchange of

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goods without the use of money.
I give you ten pounds of wheat and

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you give me a cow. Then
we had salt, seashells, beads,

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feathers, and stones. Then we
had gold and precious metals. Then we

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invented paper notes printed by the government, then plastic cards. We use money

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to communicate value, and the more
abstract we make this communication, the more

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abstract we make the money, the
less friction there is in trade. So

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that's where the evolution of money has
taken us towards ever increasing abstract forms of

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money. Each time the world has
seen a new expression of money, it

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has taken a long time for people
to accept it because new expressions of money

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are seldom easy to understand. You
may think that paper money is easy to

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understand now, but imagine this.
You're a peasant in the year eleven hundred,

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nine hundred years ago. For thousands
of years, mankind has used hard

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money in the form of tangible,
physical, shiny gold dug off from the

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Earth's crust with hard and expensive labor. The gold has then been processed and

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made into coins that have been used
as money. The gold coin is robust,

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it's heavy when you hold it in
your hand, it looks expensive,

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it's hard to make, and it's
scarce. Then paper money came along.

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Paper money is cotton with ink.
You can just print more of it,

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and you can tear it apart,
and if it ends up under a horse

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bug, it gets destroyed. It
doesn't feel like money when you hold it

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in your hands. How can you
assign value to pieces of paper? It

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literally took hundreds of years for paper
bills to be accepted as currency. When

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plastic cards came along in the nineteen
fifties, it would take about forty years

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for widespread adoption, for infrastructure to
be built, and for people to accept

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plastic cards as a safe alternative to
cash. Then Toshanakamoto came along as a

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Toshacamoto invented bitcoin. Bitcoin is not
just the newest, most abstract expression of

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money, it is also extremely complex
as a technology. And what we do

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when we try to understand a new
technology is we use metaphors. Designed metaphors

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are powerful tools because they give us
expectations based on something we're already familiar with,

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so that we can start to use
the new technology through the help of

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some preconceived ideas. When using metaphors, we essentially borrow understanding from a different

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area and applied to the new thing
in an attempt to make sense of it.

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But the metaphors we use in bitcoin
aren't very good for example the Bitcoin

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wallet. A wallet contains money,
right, but this is not the case

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in Bitcoin. There are no coins
in your bitcoin wallets. Your wallet displays

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a balance, but it doesn't hold
the coins it displays. The coins are

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on the network. They exist on
the blockchain, and they can never leave

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the blockchain. This is what your
wallet does. Your wallet looks at the

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blockchain and sees the value that you
control through the keys that your wallet holds.

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That way, it can give you
a notion of a balance. Your

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wallet holds the keys that allow you
to send and receive bitcoins on the network.

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In other words, a bitcoin wallet
is not so much a wallet as

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it is a keychain. And here's
the cool part. If you understand how

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a keychain works, you understand how
a bitcoin wallet works. If you give

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someone your key, they can open
the door to your funds. If you

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and no one else has the key, only you can open the door to

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your funds. Furthermore, you can't
copy a wallet, but you can copy

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the keys on a keychain. For
example, if I want to switch wallets,

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say I want to use the Sammarai
wallet instead of the Jack's wallet,

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That's exactly what I do. I
switch keychains and copy the keys onto my

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new keychain. What I do,
specifically is I download the Samurai wallet,

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which is going to be my new
keychain, I enter my private keys,

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and poof, I've restored my balance
from my Jack's wallet onto my Samurai wallet.

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I've copied the deprivate keys onto my
new keychain. The wallet is a

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poor metaphor because it gives you the
expectation that it should contain something. This

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is not the case with a Bitcoin
wallets. A better metaphor would be a

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keychain. Here's another example, and
this is a much more profound flaw in

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the choice of metaphors for bitcoin.
Bitcoin is not a coin. There are

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no physical bitcoins. Coin as a
metaphor for bitcoin is a particularly poor metaphor

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because bitcoin is the most abstract form
of money we have ever created, whereas

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a coin is a physical representation of
money and the least abstract form of money

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we have ever created. You know
what's weird. There are no digital coins

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either. Bitcoin is even more abstract
than that. There's nothing you can point

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to as say that's a bitcoin,
So what is a bitcoin real? When

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miners mine, they receive block rewards
with freshly minted coins that spring into existence

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and that they can sell, so
they enter the circulation. Mining is how

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new bitcoins enter the bitcoin economy.
However, miners don't create new bitcoins because

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there's no such thing as a bitcoin. Instead, what they actually create are

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ledger entries. Bitcoin is a distributed
open ledger that says Alice owns this and

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Bob owns that. It keeps track
of who has what. So miners create

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leager entries. But a ledger entry
doesn't represent coins either. Instead, ledger

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entries have outputs, and these outputs
have a value, and the value of

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these outputs are infinitely divisible and can
be recombined an infinite number of times.

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So you have a wallet that doesn't
contain coins because the coins are actually on

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the network and they aren't coins that
they are outputs, and what you're really

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holding is a keychain. The list
of broken metal for us go on balance

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address account. These things don't exist
in bitcoin, but we have adopted these

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metaphors to make the technology easier to
understand. The problem is that bitcoin as

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a technology and as an expression of
money is something entirely new. There has

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never been anything like it, so
we don't have many adequate metaphors to borrow.

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Instead, we have to reinvent to
words and give those words new meaning

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to fit the purpose. Fifteen years
from now, the word wallet is going

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to mean something other than it did
in the nineties thanks to bitcoin. The

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problem we're choosing the wrong metaphors,
as we might have done in bitcoin,

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is that a metaphor gives you expectations
of how something works. If we use

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the metaphor wallets, we expect it
to contain something. If the metaphor gives

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us the wrong idea about how the
technology works, it's going to be confusing

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when we try to understand how the
technology actually works. But if talking about

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wallets and coins instead of key chains
and output is the cost of being able

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to migrate from FIA to bitcoin,
and then I'll buy it, and the

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words wallet and coin will gradually adopt
new meanings as we slightly confused eventually begin

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to grasp what this new technology really
is