Ep. 003: What Are You Buying When You Buy Bitcoin?

Do you know what you are buying when you buy Bitcoin? If you are like most people, you’ve heard of it but aren’t 100% sure what it is or does and what you are investing in when you buy it. In this episode, I’ll give you the cliff notes version of Bitcoin.

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What Is Bitcoin?

Bitcoin is software, running on hundreds of thousands of computer across the Internet, which allows people to exchange value directly with one another.


Bitcoin, as the first cryptocurrency, is different in several ways from previous forms of money:

  • It does not exist in a physical form. It is completely digital.It is not recorded in the database of some central authority like your bank or the Federal Reserve
  • Because of this decentralized trust structure, it cannot be forged, counterfeited, censored, seized or frozen… it can be transmitted across the world instantly.


What Is The Investment Thesis?

Bitcoin has two use cases for now:

  1. It is the reserve currency of the "Internet of Money”. It’s the unit in which everything else is denominated.
  2. As an investor, the value is in it being a store of value. And not JUST a store of value. But a much better store of value than gold.

Specifically, you are betting that some percentage of the value currently being stored in gold and offshore banks will migrate to Bitcoin.


Depending on where along the adoption spectrum you think we will fall, how big a percentage you think that is ...would determine whether the current price of Bitcoin is expensive or cheap.


Which is why you hear estimates everywhere from $0 to 1 million dollars and everywhere in between.


Of course, no one knows. But that is the bet.


That range of expectations is what creates Pascal’s Wager, discussed in Episode 001: Why Investing in Bitcoin Is a Better Idea Than You Think


When people say its just for terrorists, drug dealers and gamblers, and that nothing will come of it… that there is no there there… just remember they said the same thing about the Internet.

Bitcoin for Beginners - Anton Antonopoulos
Bitcoin Whitepaper - Satoshi Nakamoto
Podcast Episode 001 describing Pascal’s Wager

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Kim Snider