Money has changed significantly in the last
60 years. Credit cards first came in the late 1950’s,
but they would not see widespread use for decades. [Credit Card Commercials] “Available now
at Bank of America…American Express” etc. Bank checks were still the most popular form
of payment besides cash. “You can use checks, to buy things” Increasing use of checks in the 70’s let
to the development of an electronic payment network to replace the ever growing burden
of maintaining paper records of payments. This network would be called the Automated
Clearing House, or ACH. This is what allows your paycheck to be directly
deposited into your bank account. The 20th century saw a rapid growth in technology
across the western world. This growth was so drastically fast there
are multiple labels for this era. The communication revolution, the information
revolution, and the computer revolution… but we will call this the digital revolution. Our representation of money used to be cash:
paper bills and metal coins. The digital revolution has made money ever
increasingly become more virtual, and less physical. In fact, today only 8 percent of the world’s
currency exists in a physical cash form. Paper money used to be just a representation
of the historical money that is gold, because gold has high intrinsic value.
This was called the gold standard and was ended for the United States Dollar in 1971.
With the invention of the internet came some attempts to return to gold backed currency
by representing Gold digitally; two of such attempts were called E-gold and GoldMoney. Though money had become ‘more’ digital
in the late 1900’s, there still was not a strictly digital only currency until the
DigiCash company was started by David Chaum in 1990.
The new currency was rightly named ‘ecash’. eCash however did not gain much use. Only
one bank in the United States implemented the currency; and just a handful worldwide
and Mr. Chaum’s company went bankrupt by 1998. By this time the internet had spread to over
a quarter of U.S. homes.. Multiple digital currencies came and went.
Government regulation caused currencies like E-gold, GoldMoney, and Liberty Reserve to
cease progress. No digital currency created yet was safe from
censorship. Tom Carper (US Senator): “During the course
of this inquiry, we’ve examined the issues and potential risks and threats that virtual
currencies pose…” Then came 2009 when an open source software
for a digital currency was introduced. Bitcoin is the first virtual currency to not
have a central point of failure. Most importantly, it is resistant to government
force. “Bitcoins protect your privacy.”
[Robot: “But don’t forget to pay your taxes!”] Its entire system is distributed and thus
impossible to pinpoint and shutdown. Jerry Brito: “If the United States wants
to block money from going to WikiLeaks, where do they go?”
“They go to the PayPal’s, Visa, MasterCard’s of the world and put pressure on them there”
“With bitcoin there’s none of that. There’s no one in the middle to go after.”
It is able to achieve this feat through cryptography which is basically a fancy word for secure
communication. The software of course takes place via the
internet. As it was designed, a distributed network
of voluntary users provides the service to maintain the bitcoin software system.
This currency allows you to send a payment to anyone in the world online; without using
any bank, company, country, government, or otherwise trusted third party.
Sending bitcoin basically works like an email, except that a bitcoin’s unit of value cannot
be duplicated. Only a specified number of bitcoin units will
ever be in existence; much unlike the U.S. dollar money supply which is determined by
the Federal Reserve central bank. America’s money supply has basically doubled
in just the past decade; causing prices of goods and services to do the same. After it was released, the first bitcoins
had near zero value because at this time, almost all the users were simply cryptography
enthusiasts; computer nerds playing around with some new and ‘cool’ piece of software.
By May 2010 bitcoin was beginning to trade in the real world. James D’Angelo: “It is likely the first
transactions ever made with the fledgling currency which began in 2009.”
“This Papa John’s pizza might look like an ordinary delivery, but it seems likely
to go down in history as the most expensive food of all time.”
In May 2010 a member pleaded to the community for someone to provide him with two pizzas
delivered to his residence for his payment of 10,000 bitcoins.
This simple dinner, and perhaps, a little leftovers, cost the equivalent in bitcoins
of what would come to be worth over $10 Million by December 2013.
This is how fast bitcoin has increased in value or rather, how fast the increase in
its number of users and recognition has been. “My Fuhrer, [German language clip from Downfall
(2004 film)]” Online exchanges have been providing the trade
of bitcoins and dollars for years, though many have closed from site security issues
and lack of complying with government regulations. Adam Kokesh: “Bitcoin pirate scandal, SEC
steps in among allegations that the whole thing was a Ponzi Scheme.”
Mass adoption however will more easily happen from a recent trend that is growing fast.
Newscast: “Now if you haven’t heard of bitcoin yet, it is making international headlines
and changing the way we exchange money.” “It is the first of its kind in the world
and today, the Bitcoin ATM was unveiled right here in San Diego.”
Bitcoin ATM’s are deploying worldwide allowing the sale of bitcoins for cash, and cash into
bitcoins at physical locations. Newscast: “This machine changes it all by
allowing users to get cash out or make deposits to their accounts.”
There are already such machines in Boston Massachusettes, Austin Texas, Mountain View
California, Vancouver Canada and Tijuana Mexico. Bitcoin is like the internet in 1994. Few
people used it, and even fewer knew how it worked, but it would go on to revolutionize
nearly every industry in the world. Digital currencies are set to revolutionize
money. Bitcoin is such a versatile software that
hundreds of copycat spinoffs have already been created, including litecoin, dogecoin
(dough-j, silent ‘e’), and even auroracoin; the cryptocurrency introduced and distributed
equally to all citizens of Iceland. It appears that 2014 is the year of bitcoin
and digital currency. Steve Stockman: “The future. I really think
digital currency is more about freedom. If you had your own wealth and control of your
own wealth it’s about freedom, it’s not about anything other than that really.” We’d like to give you a free report on bitcoin
and digital currencies. Go signup at CrushTheStreet.com/bitcoin to
download this report. This report will give you more on the history, how to use it, and
why you should use bitcoin to have more control over your wealth.