Hey, bitcoiners, how are you doing. My name is Ione Appleberg, and i'm your host, your friend and fellow bitcoiner. I'm excited as always to talk bitcoin, possibly the most important and interesting innovation in our lifetime, at least since the Internet. This is where you get the ideas, the philosophy, and the technical aspects of bitcoin explained, hopefully in a fun and engaging way. If I do my job right, welcome to the show.
One of the most exciting things about bitcoin is that it is an entirely new expression of money, radically different from any other type of money we have seen ever before. Money is one of mankind's oldest technologies, so there's evidence to suggest that we had money even before we had a language, and the earliest cave paintings are not of battle and of animals, but of ledgers with records of ownership and debt. The evolution of money is fascinating. When we began
to trade, we had barter system. Barter system is a direct exchange of goods without the use of money. I give you ten pounds of wheat and you give me a cow. Then we had salt, seashells, beads, feathers, and stones. Then we had gold and precious metals. Then we invented paper notes printed by the government, then plastic cards. We use money to communicate value, and the more abstract we make this communication, the more
abstract we make the money, the less friction there is in trade. So that's where the evolution of money has taken us towards ever increasing abstract forms of money. Each time the world has seen a new expression of money, it has taken a long time for people to accept it because new expressions of money are seldom easy to understand. You may think that paper money is easy to understand now, but imagine this. You're a peasant in the year eleven hundred,
nine hundred years ago. For thousands of years, mankind has used hard money in the form of tangible, physical, shiny gold dug off from the Earth's crust with hard and expensive labor. The gold has then been processed and made into coins that have been used as money. The gold coin is robust, it's heavy when you hold it in your hand, it looks expensive, it's hard to make, and it's scarce. Then paper money came along.
Paper money is cotton with ink. You can just print more of it, and you can tear it apart, and if it ends up under a horse bug, it gets destroyed. It doesn't feel like money when you hold it in your hands. How can you assign value to pieces of paper? It literally took hundreds of years for paper bills to be accepted as currency. When plastic cards came along in the nineteen fifties, it would take about forty years for widespread adoption, for infrastructure to be built, and for people to accept
plastic cards as a safe alternative to cash. Then Toshanakamoto came along as a Toshacamoto invented bitcoin. Bitcoin is not just the newest, most abstract expression of money, it is also extremely complex as a technology. And what we do when we try to understand a new technology is we use metaphors. Designed metaphors are powerful tools because they give us expectations based on something we're already familiar with, so that we can start to use the new technology through the help of
some preconceived ideas. When using metaphors, we essentially borrow understanding from a different area and applied to the new thing in an attempt to make sense of it. But the metaphors we use in bitcoin aren't very good for example the Bitcoin wallet. A wallet contains money, right, but this is not the case in Bitcoin. There are no coins in your bitcoin wallets. Your wallet displays a balance, but it doesn't hold the coins it displays. The coins are
on the network. They exist on the blockchain, and they can never leave the blockchain. This is what your wallet does. Your wallet looks at the blockchain and sees the value that you control through the keys that your wallet holds. That way, it can give you a notion of a balance. Your wallet holds the keys that allow you to send and receive bitcoins on the network. In other words, a bitcoin wallet is not so much a wallet as it is a keychain. And here's the cool part. If you understand how
a keychain works, you understand how a bitcoin wallet works. If you give someone your key, they can open the door to your funds. If you and no one else has the key, only you can open the door to your funds. Furthermore, you can't copy a wallet, but you can copy the keys on a keychain. For example, if I want to switch wallets, say I want to use the Sammarai wallet instead of the Jack's wallet, That's exactly what I do. I switch keychains and copy the keys onto my
new keychain. What I do, specifically is I download the Samurai wallet, which is going to be my new keychain, I enter my private keys, and poof, I've restored my balance from my Jack's wallet onto my Samurai wallet. I've copied the deprivate keys onto my new keychain. The wallet is a poor metaphor because it gives you the expectation that it should contain something. This is not the case with a Bitcoin wallets. A better metaphor would be a
keychain. Here's another example, and this is a much more profound flaw in the choice of metaphors for bitcoin. Bitcoin is not a coin. There are no physical bitcoins. Coin as a metaphor for bitcoin is a particularly poor metaphor because bitcoin is the most abstract form of money we have ever created, whereas a coin is a physical representation of money and the least abstract form of money we have ever created. You know what's weird. There are no digital coins
either. Bitcoin is even more abstract than that. There's nothing you can point to as say that's a bitcoin, So what is a bitcoin real? When miners mine, they receive block rewards with freshly minted coins that spring into existence and that they can sell, so they enter the circulation. Mining is how new bitcoins enter the bitcoin economy. However, miners don't create new bitcoins because there's no such thing as a bitcoin. Instead, what they actually create are
ledger entries. Bitcoin is a distributed open ledger that says Alice owns this and Bob owns that. It keeps track of who has what. So miners create leager entries. But a ledger entry doesn't represent coins either. Instead, ledger entries have outputs, and these outputs have a value, and the value of these outputs are infinitely divisible and can be recombined an infinite number of times.
So you have a wallet that doesn't contain coins because the coins are actually on the network and they aren't coins that they are outputs, and what you're really holding is a keychain. The list of broken metal for us go on balance address account. These things don't exist in bitcoin, but we have adopted these metaphors to make the technology easier to understand. The problem is that bitcoin as
a technology and as an expression of money is something entirely new. There has never been anything like it, so we don't have many adequate metaphors to borrow. Instead, we have to reinvent to words and give those words new meaning to fit the purpose. Fifteen years from now, the word wallet is going to mean something other than it did in the nineties thanks to bitcoin. The problem we're choosing the wrong metaphors, as we might have done in bitcoin,
is that a metaphor gives you expectations of how something works. If we use the metaphor wallets, we expect it to contain something. If the metaphor gives us the wrong idea about how the technology works, it's going to be confusing
when we try to understand how the technology actually works. But if talking about wallets and coins instead of key chains and output is the cost of being able to migrate from FIA to bitcoin, and then I'll buy it, and the words wallet and coin will gradually adopt new meanings as we slightly confused eventually begin to grasp what this new technology really is