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What Is Bitcoin? Here's My Take.

I am so excited because today I’m doing my very first episode on something that I haven’t talked about much but that’s played a big role in our lives… and that’s Bitcoin.

The reason we came to El Salvador in the first place was that there was an announcement at a Bitcoin conference we were attending in Miami in 2021 that El Salvador would be the first country in the world to adopt Bitcoin as a legal tender. 2 months later we were on a plane headed for this tiny Central American country that, yes, we’d heard of before but that we certainly couldn’t have found on a map.

Fast forward a year and we moved here full-time. And it all started with Bitcoin.

Now, when considering how to structure this episode, there were so many different routes I could have picked but what I decided was, for today, my goal is simply to explain what Bitcoin is, why I believe in it, and why, for me, I consider it a good investment. I’m also going to throw in a disclaimer here because I’m going to do my very best to explain Bitcoin as simply as possible, but the reality is: it’s a complicated topic.

Please do not take every single thing I say to be the end-all-be-all truth – you are responsible for verifying any information for yourself should you choose to join me and the thousands if not millions of others who are part of the Bitcoin community.

To kick things off, I’d like to ask you to consider something: If I asked you to explain the Internet to someone who’s never heard of it before, what would you say? It’s difficult, right? You’d probably say something like: it’s a network of computers that can talk to each other and send information back and forth very quickly. And you wouldn’t be wrong – but that also wouldn’t make it a whole lot easier for your new friend to understand.

That’s a bit how Bitcoin feels… and, for the skeptic in you, stick with me because, to use the analogy of the internet again, what if you turned your back on the internet simply because you didn’t really “get it” the first time someone explained it to you?

Again, Bitcoin is similar.

It’s difficult to understand, but once you do, you cannot “un-see” the power that lies within it… it’s so much more than just money, and we’ll get to that, but to start, today we’re going to talk about it from the perspective of money since that’s what most people associate it with.

To begin, let’s discuss the history of money as we currently know it.


Before we get to the history of Bitcoin, let’s talk about the history of fiat currency…

Fiat currency means a currency that is not backed by a commodity, like gold.

For this episode, the fiat currency we’ll be discussing is the US Dollar.

Now, the US dollar wasn’t always fiat… before 1971 it was on the gold standard which means that for every dollar, there was a certain amount of gold.

I like to illustrate this with a fictional story… it’s possible pieces of this happened in history, but for the most part, it’s just meant to help you understand the importance of your paper money being backed by something of value.

Let’s say it’s a long time ago and people were trading in gold. After a while, if things were going well for you, you’d have quite a bit of gold… great job! Except there are 2 problems: not only is gold heavy, but it’s also a physical asset that thieves can steal from you. So you’re having a hard time physically carrying your gold, and also keeping it safe from all the people who want to rob you.

One day a man called a “banker” comes to your house, and he tells you that he has a highly-secure vault protected by armed guards in which you can store your gold and, so that you don’t have to come get your gold out every time you want to buy something, he’ll give you a certain amount of paper notes to show how much gold you’ve got in your area of his vault.

That way, when you go to the market, you can give one paper note to the guy you’re buying fish from and he’ll know that 1 piece of paper is worth 1 ounce of gold. Then, he can go to the bank later, and turn in that note which has your information on it and they’ll give him one ounce of your gold.

Hopefully that helps paint the picture of what the gold standard is.

Now, to get back to real-life, remember – before 1971, the USD was on the gold standard, however, that year, Nixon took the US dollar off the gold standard, which means ever since, the dollar has not been (and is not) backed by a commodity, or anything tangible.

I’d go so far as to say the dollar only has value because everyone agrees it has value.


Another thing to know about the US banking system is that it’s centralized, which means that there’s a main authority that controls it… that central authority is called The Federal Reserve, or “The Fed,” for short.

I’m not sure if you know this, but The Fed is a private entity… it’s not technically a part of the government. Its decisions do not have to be approved by the president, legislators, or any elected official... So, the checks and balances that apply to the government do not apply to The Fed.

Now, think through history about all the times there has been a single person or entity in power without any kind of checks and balances in place. Would it be safe to say that, historically, more often than not, those people abuse that power?

That’s for you to decide, I’m just putting the question out there.

Regardless of your opinion, let me tell you the facts:

  1. Before 1971, the US was operating on "the gold standard" meaning the US used a monetary system in which the USD was based on a fixed quantity of gold

  2. In 1971, President Nixon took us off the gold standard which means the USD became a fiat currency (fiat money is a type of currency that is not backed by a commodity)

  3. So essentially, before 1971, there was a natural limit to how much money could be printed since the USD was tied to a fixed quantity of gold

  4. Now, since the USD isn't backed by anything, the federal reserve can print as much as they want, which leads to inflation, which robs you of your dollars and the life energy you used to acquire those dollars


As a result, fiat currencies like the USD are inflationary. With them, you’ll continue to see prices go up, and you’ll continue having to work harder and harder since each one eventually becomes worth less and less.

I know we discussed inflation in Episode 20, but I want to share a powerful story here about hyperinflation (which means inflation that’s gone completely out of control) to drive this point home.

In the book Digital Gold by Nathanial Popper, Wences Cesares, an entrepreneur from Argentina, tells a story about his childhood experience growing up in an economic climate of hyperinflation.

On one episode of The Unchained Crypto Podcast, he reflects, “I remember my mom came to take [me and my two sisters] out of school in the middle of the morning. She’d never done that before. She was carrying two plastic bags full of cash. She had been paid her salary. She was a receptionist at the government bureau with a modest salary and that modest salary took two plastic bags full of cash.

And she took us to the supermarket and she gave us each an aisle with a list of things. And we met at the cashier and when there was some money left after all of that, she’d send us back to get more stuff to spend all the money. And when one of my sisters asked her, “Why don’t we save some money for tomorrow?” My mom explained that “Tomorrow, it was not going to be worth as much.”

At the time there were no bar codes or computer systems as we see them today. So there was one person who worked for the supermarket whose job was to change the prices and our job was to go in front of that person. The person who went through all the aisles putting the new prices and when he finished it started again. So you literally saw the prices change if you follow this person. Our job was to be ahead of that person. It’s crazy, but I saw it happen.”

There are other examples of this throughout global history ranging from Germany, Yugoslavia, Hungary, Venezuela, Zimbabwe, etc. - and here’s a hard truth I had to accept: just because you may live in a first-world country does not make you immune to it.

I’m not sure if you’ve heard, but China, Russia, Brazil, India, and other countries have stopped doing trade based on the US Dollar… and I’m not saying that’s going to cause hyper-inflation of the USD, I’m just saying things don’t look as good for the USD as they once did.


The last thing I’ll mention about centralized banks is that, although having a bank account is beneficial in many ways, you’re also placing your money inside someone else’s care… it’s not 100% in your control and, while worst-case scenarios aren’t incredibly common, when they happen, they’re exactly that: worst-case scenarios.

Let me tell you a story about something that happened in Cyprus. In 2013, Cyprus hit a financial crisis and needed a bailout, which Germany agreed to, under the condition that Cyprus drain money out of its citizens' bank accounts to “help” pay for it.

Yes, you heard that right. The government in Cyprus literally raided its citizens’ bank accounts. Again, worst-case scenario. But, I bet you the people in Cyprus never thought that would happen...

I’ve lived many years of my life wearing rose-colored glasses and thinking that because I’m American this or that would never happen to me, but as I get older, I realize that being from the US doesn’t make me immune to anything, especially the acts of my own government or banking system.

And, please don’t get me wrong, I’m incredibly grateful to be from the USA, there are so many things that are fantastic about the States, and the freedoms we enjoy are so much greater than many other places in the world. I love being American. I really do.

But what I’m saying is the simple fact that I was born on US soil, carry a US passport, and qualify as a US citizen does not mean that worst-case scenarios cannot happen to me.

And I felt it was important to admit this on this episode in case you, consciously or subconsciously, have been wearing the same rose-colored glasses that I did for so many years.

Now, let’s talk about Bitcoin.


Bitcoin is often referred to as “digital gold” because, like gold, there will never be any more of it. There is a fixed quantity, and that quantity is 21 million. And there will only ever be 21 million Bitcoin. Period.

You’re probably wondering how I know that, which is a good question because we just got done talking about The Fed printing as much money as they want.

Well, the reason we know this is because, at its foundation, Bitcoin is code, and it is written into the code that there will only ever be 21 million Bitcoin.

Don’t let the code thing freak you out, it’s just numbers on a screen - which you should be used to because, for most of us, the majority of the fiat money we deal with in our lives is also just numbers on a screen (remember: when you log into your bank portal and see how many dollars are in your bank account, chances are there are not actually that many dollars in your physical bank branch down the street and there’s certainly no physical gold).

In reality, it’s just numbers moving from one screen to another, from my account to yours, from here to there.

So, don’t tune out Bitcoin just because I said “code”.

Let me tell you why code (or, in other words, math) works in your favor here.


To explain why, I’m going to borrow a quote from my favorite Bitcoin documentary, The Rise and Rise of Bitcoin. Bitcoin is code and the reason that works in your favor, from a financial perspective or otherwise, is because it’s backed by the laws of mathematics. This means, as they put it in my favorite documentary, “Governments can point all the guns they have at 2+2, but it’s still going to equal 4.”

Math cannot be influenced. It cannot be biased. It does not have emotion or ulterior motives. It cannot be bribed or swayed. It does not get greedy or seek certain moves that will benefit it the most.

Math is math. Math has a fixed answer. It’s not this way or that way. It simply is whatever it is, in the same way that 2+2 will always equal 4.

Are you tracking with me?

Another way of saying this is: because Bitcoin is based on mathematical code, and the fixed max quantity of 21 million Bitcoin is written into that code, that’s the way it is, and the way it will stay.

“Well, Jess,” you might be wondering, “What if the person who wrote the code changes the code? What if they change the rules in the same way our government changes the rules every time they print more money and devalue the fiat US dollars we have?”

Great question, which brings me to the next incredibly valuable point about Bitcoin: it’s decentralized.


That means, instead of there being a single source of authority (like The Fed), the responsibility is shared among millions of people all around the world.

If you’re confused, stick with me – I will explain.

But to do so, I have to take us back to the original creation of Bitcoin in 2009, which was fitting because it was born in the middle of a fiat-based financial crisis. But first, let’s rewind even further to the mid-2000s.

In the mid-2000s, a person or group of people who went by the online name of “Satoshi Nakamoto” wrote what was essentially a long proposal for a decentralized digital currency that would eventually become Bitcoin.

I say Satoshi was “a person or a group of people” because Satoshi went through a lot of trouble to keep their identity a secret (and, if I were proposing something that would go up against the global banking system, I’d probably do the same). But, for this episode, I’m going to refer to Satoshi as a “he”.

Now, in the proposal Satoshi presented to other like-minded individuals online, he described the way new Bitcoins would be created and injected into the economy – and this process is what makes it decentralized.

So, remember how we talked about The Fed deciding to print more US dollars? Well, it’s important to note that most of the time the phrase “money printing” is figurative… most of the time The Fed isn’t actually printing physical dollars, what it’s doing is putting more money into the system by electronically adding credits to its banks, and it’ll buy assets (in other words, investments, giving those dollars to whatever company or government entity or whoever they’re investing in).

So, now you see why, in my opinion, the people closest to the figurative money printer benefit the most.

In Satoshi’s proposed decentralized model, he created an incentive/reward system for new Bitcoin to be released into the economy. And if you’ve ever heard of a Bitcoin miner, this is where that comes from.

A Bitcoin miner is a fancy phrase that describes a specialized computer that races against other computers to solve complex mathematical problems and, whichever computer solves the problem the fastest is rewarded with Bitcoin. It’s a win-win situation because the people who own the miners get Bitcoin (which, for our purposes, you can think of as “money”), and the more miners there are, the stronger the Bitcoin network is.

The Bitcoin network (or, the network of these specialized computers) is responsible for keeping a public ledger of every Bitcoin transaction. In other words, they’re responsible for verifying and processing Bitcoin transactions and keeping a record of those transactions on the network (which is also called The Blockchain).

If it sounds complicated, think of it in terms of something you already understand – say, a payment processor. When you pay for something with your credit card, it’s not just you and the merchant involved… there’s a third party, the payment processor (think: the company logo you see on your credit card).

The payment processor validates the payment, makes sure everything looks good, and confirms that money should be reduced from your account and added to the merchant’s account. In exchange, payment processors normally charge the merchant a percentage - and that’s how they get paid.

All of this is to say that although Bitcoin was “one person’s” idea (Satoshi Nakamoto), the way he designed it, the network is made up of now thousands of people who all play a vital point in not only helping with the transactions but also in maintaining the code – which, again, states that there will only ever be 21 million Bitcoin.

That’s what makes it decentralized and that’s why no one person or group can suddenly change the rules.


While we’re on the topic of the 21 million cap of Bitcoin, I’d like to point out that this is what makes it deflationary. In Episode 20 about inflation, I mentioned Bitcoin was a deflationary asset, and this is why.

Because, like gold, there is only ever going to be a fixed amount (for example, you can’t just ‘make’ more gold… and, because of the way Bitcoin is set up, you can’t just ‘make’ more Bitcoin in the way The Fed can just print more dollars), the percentage of Bitcoin you hold (as compared back to the total of 21 million Bitcoin) will always be the same percentage – meaning your purchasing power will never decline.

Whereas, as we discussed in Episode 20, the percentage of total dollars you hold decreases every time The Fed prints more money.

The fact that Bitcoin is deflationary is one reason I think it’s a smart investment.

Another is because you have the option of digital self-sovereignty which, in normal language, means you’ve got the option to be your own bank. Let me explain.

But first, a word of caution: being your own bank comes with a lot of responsibility. For example, in the traditional banking system, if someone steals your money or your identity or whatever, there is usually some protection or process in place to manage that – you’re either insured up to however many hundreds of thousands of dollars or there’s some other way for you to be reimbursed for anything wrongfully taken from you.

When you’re your own bank and someone steals from you, there’s no 1-800 number to call to get your money back… it’s gone.

“So why would you want to do this?” you might ask. Well, remember those people in Cyprus? The ones whose government and banks drained their personal money from their personal bank accounts?

Again, none of us are immune to the worst-case scenarios.

Another reason you might want to be your own bank is to avoid any censorship… for example, last year you may have heard about the truckers' strike in Canada. But did you know that not only did the banks freeze the truckers’ bank accounts and assets, but many people all around the world who were donating money to the cause were also blocked from sending the truckers funds?

If you’re your own bank, you can send any amount of money to anyone anywhere in the world at any time for whatever reason and no one can stop you. There are no maximum limits like you see with many traditional banks, and there’s no censorship – you can pay who you want for whatever you want, and you can support whatever cause you believe in.

Here’s a personal example of where this would have been helpful in my own life… last year, Cory and I sold our first property and, when the deal closed, we had six figures deposited into our bank account. We’d also made a plan before then regarding what we were going to do with that money so, as soon as the money hit, we started moving it into various investments.

About one day later, the bank shut down our bank account with no phone call, and no warning, and when we called them to ask what was going on, they told us they couldn’t discuss it via phone and that we’d have to come in.

When Cory finally got an appointment and went in person to the bank branch, they essentially said our activity looked “suspicious” (we still don’t understand how money that came from a real estate broker as a result of a property deal in one of the fastest-growing cities in the US looks suspicious).

The point is: someone besides us was watching our transactions, made a decision, and without consulting us closed our account permanently (which is irreversible, apparently) and it resulted in a lot of wasted time and effort on our part to go in person to the bank, cancel all the old cards, get all the new cards, update all our auto-payments and bill pay that we pay every month, etc.

It’s important to note that with Bitcoin you don’t have to be your own bank… you do have the option to keep your Bitcoin in what I’d essentially refer to as “crypto banks” – companies who allow you to keep your Bitcoin or other cryptocurrencies with them and some offer some protection like insurance against theft, but again, you run into the threat of those worse-case-scenarios.

What if the crypto bank fails and goes under (as we’ve seen some do – both traditional banks and crypto banks)? Or, what if they decide to drain your crypto bank account or censor your spending in some way?

Again, there are pros and cons to each, but if you’re willing to learn how to be your own bank, I can see the benefit of it.


Bitcoin is a type of cryptocurrency, but not all cryptocurrencies are Bitcoin… there are loads of other types of cryptocurrencies, but I personally only hold Bitcoin.

Again, disclaimer, it’s not like I’m an expert in every single cryptocurrency out there, but in general, from my experience and what I have learned about some of the other cryptos, I believe mostly in Bitcoin and not as much in other cryptocurrencies – and what it comes back to for me is decentralization.

The way this mysterious Satoshi figure created Bitcoin is important. He did not appoint himself the leader of a board that runs Bitcoin – again, he made it in a way that spreads the power across thousands throughout the world, and then he all but disappeared. As far as I understand, no one’s heard from him in years.

Other cryptos have known leadership teams who make decisions that will ultimately impact their respective cryptos. But with Bitcoin, it really does feel like the people’s money… a beautiful gift and great responsibility that is shared among people around the world. To me, that feels “safer" in terms of an investment. Because no one entity is in control, short of turning off the internet, there’s no way to stop Bitcoin.


When Cory and I explained Bitcoin once to a family member, they said, “I asked a financial advisor from my bank about Bitcoin and they advised against it,” and, if you talk to your banker, I wouldn’t be surprised if you got the same response.

To which I’d respond with another quote from my favorite Bitcoin documentary, which is: "Explaining Bitcoin to a bank feels like explaining to Barnes & Noble". Of course they’re going to tell you it’s not a good idea because the very existence of Bitcoin threatens the system upon which the traditional banks are built.

To borrow just one more quote from the documentary, one man says "I think Bitcoin will do to the US financial system what email did to the post office... It won't make it irrelevant, but it will force it to focus on its strengths" – and I must say I agree.


I’ve mentioned this on the show lately, but the truth is, although I’m someone who believes in Bitcoin, I don’t “use” it enough in my life yet. It’s something I’m working on now, especially since living in El Salvador, which was the first country to adopt Bitcoin as a legal tender.

It’s important to note that you can buy fractions of a Bitcoin – so in the same way $1 can be broken down into 100 cents, 1 Bitcoin can be broken down into 100 million satoshis, or “sats” for short (appropriately named in honor of the creator of Bitcoin). So you certainly can buy fractions (even very, very small fractions) of Bitcoin.

So don’t feel like you have to have $28,000 (which is the price of one full Bitcoin the day I'm recording this episode) to try it out. You can get started with $1.

And if you’re not quite ready to dip your toe into the pool – or, rather, the ocean – that is Bitcoin, I’d recommend starting with the documentary I’ve referenced several times throughout today’s episode… it’s called The Rise and Rise of Bitcoin.


I’d be remiss if I didn’t say that, yes, right now Bitcoin is volatile. That’s the nature of new technologies; it’s very normal. You should never put any money into Bitcoin (or any other investment) that you can’t afford to lose.

You can use my free budget calculator to see how much money you’ve got left over each month to put into your emergency fund or investments. I always recommend you start with your budget first.

I hope to see you in the Bitcoin world very soon!




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