 Andy Hibachi talk. Gordo the techs are here by myself again. So Mr. Lanning is off scuba diving in Palau. Some people have it tough and some have to work. I'm working. Anyway, thanks for joining us here in Hibachi talk. Grab yourself a libation, pull up, sit down and we're going to do something a little different today. I've been asked a number of times because I talk about cryptocurrency and Bitcoin. If I could ever explain to someone what cryptocurrency and Bitcoin are in less than 30 minutes. So that's going to be my task today, but without talking super, super fast. So we'll sit down here and we'll talk about cryptocurrency and what it is, how it works. And then maybe in a future show, if I get more responses and so on, we can talk about the governmental ethic issues related and surrounding this particular form of currency. So anyway, sit down. We'll spend the next few minutes and we'll talk about cryptocurrency and Bitcoin. And I'll talk about what that is and I'm going to try to make this easy for you. So in order to do this, so we got to step back in time. We got to take a little step back in time. So let's go back in time and talk about in the early days. And unfortunately, I can remember these days when we used to use barter. You know, I would, I would, you would go and cut the grass or someone and they would give you some eggs or some jam or a chicken. And then you would be trading these different things in order to keep yourselves alive, but also it kept whatever the existing economy was alive at that time. And then over time, you know, governments got involved and they created this wonderful thing called cash. Now, believe it or not, I remember a time in my life when there was no such thing as a credit card or an ATM machine. And then as we've matured and evolved over the over the centuries and decades, centuries for me maybe, but decades for most of you, credit cards came about. And this is another form of currency that you could not have to take the cash out of your wallet and you could buy something and then you would accrue a debt, but then you would pay it back at the end of a certain period of time. And then it matured even further. You could accrue the debt and then you'd make the credit card companies a lot of money. And that was how that that evolved. And then along came this new form of currency. It's a cryptocurrency. And I'm going to get into this cryptocurrency and what that means and how that works around the how it works around the globe today. I mean, it's something that works around the globe today. So think of this and I'm going to try to turn this into something that will make it easy to understand, but I'm going to use a digital currency known as Bitcoin. Now, there are a number of different digital currencies out there. One is Bitcoin. That's been around for probably the longest. It came out in 2009 and a Bitcoin in 2009 was valued at about 13 cents. I'm going to save for you to the near the end of this program what a Bitcoin is worth now. Now, there are other currencies out there, digital currencies out there. One coin is a latest one. It's a new one. Bill Gates is very much involved in this one. Ethereum was one that I followed for a while because I thought the banks might be getting into this, but there's over 20 different types of digital currencies. But I'm just going to talk about the Bitcoin and how it works underneath the foundation of all digital currencies, the blockchain. And we'll talk about that as we move forward in this program. So let me tell you, you all have, not everybody, but anyone that travels and saves airline miles, you already have a form of digital currency. You have airline miles and they have value. I mean, you use them to buy plane tickets. You use them to rent cars. You even transfer them to members of your family or they transfer them to you. That's a form of digital currency. Now, you're not holding the miles in your hand. You don't have them under your pillow. You just trust that the airlines that you have been flying with and the credit cards that you have been using and the car rental companies you've been going to have been accruing those digital miles for you. So that's a form of digital currency. So if you keep that in mind, you're kind of familiar with it already. Now, Bitcoin, though, by example, is not attached to any bank. There is no federal agency. There's no bank. There's no central issuing authority for Bitcoin. Now, we'll get into a little bit later in the program, but realize that if there's no central authority that can issue bitcoins. So now we'll go to the next thing. That's also when it comes to bitcoins from an organization standpoint. There's no government agency or whatever deciding when to make more bitcoins. Now, think about it. Governments can decide to print more dollars. They can print more lira. They can print more yen. It's up to the governments to decide when they want to print more. And when they do that, it impacts the value of that particular currency. You get inflation, deflation, all of those kinds that happen. So with that happening, there's no one trying to figure out how many bitcoins to make. And I'll talk later how bitcoins get created. But there's no one person out there saying, there's a lot of bitcoins out there. Let's make some more so that the value goes down or we need to have more of this. We can buy more. There's no one doing that. There's also a very unique way of keeping track of where the Bitcoin values are located. So there's no one out there keeping track of where they are. It's just not out there. And then there's no one out there determining about fraud. But then if that's the case, then why would you even want to get involved in Bitcoin? And we're going to talk about that next. And Bitcoin is monitored by people, you and I, not by governments. It's monitored by people on the internet and the worldwide web. They use a technology called cryptography. And that's a way of concealing the messages that go back and forth. There are hundreds of thousands of computers on the web that are tracking and monitoring what's going on in the cryptocurrency field. Again, I'll talk to you a little bit later like why would you even do that? And it's on this giant peer to peer network of computers all around the globe. So let's talk about peer to peer, because that's really kind of the point of it. Think about the day when and you're still doing it, but I can think of days when people were actually sharing music, not legally, people were sharing videos, not legally, and they're removing videos and music throughout the worldwide web and across across the world. And so that was happening. But Bitcoin is not quite like music or our video because video, you can make a copy music, you can make a copy of Bitcoin, or any other cryptocurrency, you cannot make another copy, you cannot duplicate it. It is what it is. There's one. And that's all that that's it. So now we take a look at so we've talked about Bitcoin, the currency itself. Now, but how does it work? How does it work within the worldwide web? And how do we secure it? And how do we make sure that it has value? Well, there's a thing called the blockchain, and it can get very complicated. And I'm going to spend a little bit of time on this blockchain. And you may want to come back and look at this video a couple of times. And if you look at a couple of times, hopefully it'll it'll set in. But Bitcoin is an entry in a huge global global ledger. So if you think a ledger is a book, right? So it's an entry about this Bitcoin in the ledger. Now, how am I going to explain to you how that how that's going to work? So what I'm going to do is I'm going to move forward and talk about things. So record the ledger, which I talked about was this book, records every Bitcoin transaction that ever happens throughout the entire worldwide web. So every single Bitcoin transaction. At the end of 2016, the ledger was 107,000 was 107 gigabytes of data was on that ledger. Think of the size of the ledger you would have to have to be doing this. But it's out there and it's it there's multiple copies of it. So here is this ledger. So now what do I do? How do I how do I send a Bitcoin? So I want to let's say I'm going to send a Bitcoin to Angus and how does the the blockchain and the ledger track that Bitcoin that I have that it knows I have and sends to Angus who has the ability to receive that Bitcoin. So we'll talk about that next. But how am I going to do this? So I'm going to use poker as an example. I'm assuming that most people that are watching this know how to play a game of poker. So you got four or five people sitting at the table and you're going to be playing poker. But what happens if you have no money or no chips? How are you going to track what goes on? So what we'll do is we'll give everybody a piece of paper, a ledger, and they can write on that the bets. So we deal out the cards and I bet one chip, this person bets a chip, bets a chip, everybody writes it in their ledger. Then we get our next set of cards and someone says, OK, I'm going to bet two chips. They see or don't. This one does. Again, and we all write it in the ledger until the hand is played out and then the winner wins. Now you've got these four ledgers sitting here in front of you and you put the ledgers in the front of the table and you look to make sure no one is cheating and they wrote down exactly what they had said they bet and who won. And we all make a note of who that is and we say, yes, OK, Susie, you won. That's in the ledger and we're going to make note. We know that you deserve this amount of money. That gets recorded into the ledger and also gets recorded then into the blockchain. So we've just taken that and pushed that into the blockchain. So now what happens is that there are other people looking at that ledger besides the people here at the table because people are playing poker all over the world and everybody's watching all the different games and tracking all the different things that are going on and they're comparing the ledgers to make sure everything is OK and that those non-physical dollars or chips are being transferred all around the worldwide web and around all the players that are in there playing the game. Can you imagine after if you've got hundreds of thousands of poker games going on there's a lot of transaction happening because every bet is a transaction that's happening. So let's now we'll go to the notes. We'll just kind of elaborate a little bit further on the blockchain. So millions of people are playing poker. We don't have money. We're all tracking the blockchain. Some are playing. Some are playing but some are just watching. Some are just watching the games but they're also recording them and making note of what's happening. Those are called miners and I'm going to talk to you in a little bit about miners and the importance of who the miners are. So everyone is looking at all the different poker games going on. Everybody's making entries into the ledger. Every time there's a winner that gets moved into the from the ledger and is entered into the blockchain so that the rest of the world knows that Susie won that particular hand in poker and we're letting everybody know that it's there but there's also people checking the checkers to make sure that this was all valid. So that's what's happening within the blockchain. So every bet you announced to the network is told to them but they can't use your name because there's lots of vanguses out there and there's lots of Gordon's out there and there's lots of techsars out there and there's like Andrews and whatever. So what happens is you end up having to get yourself an account number. Well we're all used to getting account numbers. You have an account number at your bank, you have an account number at your credit card, you have account numbers everywhere. So you end up getting yourself a unique account number, digital account number, which you have if you look at your miles, your mileage plus account number. So that's unique to you and you know it and so every person that is out there sending and betting and playing this poker game has an account number and everybody else that's playing this game also has an account number. So how many and they know how many bitcoins you're sending, they know when you're sending them, all of those kinds of things. So your account number, your account number of the person you're sending the bitcoins to and how many bitcoins you are sending. So now we move on. Hopefully you're following this but it's happening but how secure is it? I mean we all know with our credit card transactions that you've got people monitoring and watching what's going over there. So account numbers, which is the one I just talked about, is not enough. So in the cryptocurrency world, Bitcoin world, there's a cryptography piece that's added which means the transactions that are being happening over the worldwide web are encrypted so no one can see what's happening. But also what's happened on that, keys have been added to make it even more secure. So there's another set of another layer that's in there. So and then to make it even more secure, there's a thing called mathematical chunks of information that can be used to compute whether this transaction is real. And I'm going to get into those in a little bit more detail as we move along. So let's take a look and see what you've got here. So you've got your account number, which will be like an electronic wallet. So hold that spot. So we're going to talk about your wallet and then we're going to talk about where you go from here. So this quarter of the tech start at Hibachi Talk, we'll be back in a minute after we pay some bills without Bitcoin. Hi I'm Donna Blanchard. I'm the host of Center Stage, which is on Wednesdays at two o'clock here on ThinkTech. On Center Stage, I talk with artists about not only what they do and how they do it, but the meat of the conversation for me is why they do it, why we go through this. A lot of us are not making our livings doing this and a lot of us would do this with our last dying breath if we had that choice. And that's what I love to talk to people about. I hope you enjoy watching it and I hope you get inspired because there's an artist inside G2. Join us on Center Stage at two o'clock on Wednesdays. Bye. Aloha. I'm Carl Campania. I hope you please visit us this summer. It's a wonderful summer. It's actually a cooler summer than we're used to. But I hope that you come back and visit us and watch our show Education Movers, Shakers and Reformers here on ThinkTech Hawaii. It's at noon every Wednesday. See you then. How you doing? Welcome back to Hibachi Talk. Go to the Tech Star here and today by myself and we're talking about cryptocurrencies and bitcoins. So I'm trying to do a Bitcoin 101 if you will here to try to introduce people to what this really is. So we talked earlier on at the beginning of the program about cryptocurrency. We talked about the ledger. We talked about Bitcoin and we talked about the blockchain and how those all fit together. So now let's talk about how we execute and move forward with a transaction. So when you create your account, your Bitcoin account, you get almost an electric Bitcoin wallet. So it's a wallet that's on your mobile device. It looks like a QR code and that's your unique private key. So call that your signature. And we all have our own unique signature when we sign a paper or whatever. They always check to make sure that's your signature. This is your unique signature and it's on your mobile device. So you're carrying this around and that is carrying your private key. But there's also a public key that everybody else can see that can verify that your signature and you are who you are. And that's what's sitting out there in the public and that's what everybody sees. It's the combination of this private key and public key that helps make this secure. So the head of again, so the private key has data about you. Let's call it your signature. The public key is used to verify that that signature is really you. Just like when you go to sign it when you sign your banks, right, you have the notary to check what you're doing. And they verify that that's your signature. So the public key is verifying that your signature. Then everyone knows that every time I try to do a transaction and move a Bitcoin from one place to another, it gets verified on the worldwide web using, in addition to other things, these keys. And we talked about what those other things were earlier on. So now this has to be confirmed. This is where we're going to get into some really kind of cool stuff. So I have sent a Bitcoin to Angus. Angus has a private key and there's a public key out there that confirms who he is. There's my key. This private says this is me. And that's my public key as well. It also confirms and verifies that I do have the bitcoins available to me to be able to send them to Angus. So there's people out there that track that on their ledger. Remember we talked about the ledger? Track that on their ledger to make sure that that happens. That transaction is confirmed. And once that transaction is confirmed, it's added to the blockchain. The moment it goes to the blockchain, this is where some exciting things happen. But what has to happen first is a win factor. And I call it a win factor because when did this transaction happen? Because let's say I have 10 bitcoins. I could say okay, let me do this. I'm going to give 10 to Angus and 10 to Andrew and 10 to Zuri and then 10 to somebody else. But I may only have 10. So there's a win factor in both the Bitcoin network and your digital wallet automatically checked for previous transactions to verify that you have the amount of bitcoins available to you that you're going to move on to the next person. So again, another layer that goes in there to ensure that this digital currency is available. That's still not enough. The system is still designed is still not enough. And what they've added to it is a math problem to every single transaction is called a cryptographic hash function that must be solved by these track, well those tracking the transactions. So remember I told you there's miners tracking the transactions and there was other people monitoring the transactions like the poker game. This is another piece that has to happen in order to verify that this transaction can occur. So hash function, you know this gets to be really tough and I tried to simplify this as best I could. So what it does is it takes multiple input sizes and turns them into a single output. So for example 1 plus 2 plus 3 plus 4 equals 10. So there's right, multiples 1 plus 2 plus 4 equals 10. You know the answer is 10. Well that's easy to figure out. But here's the big challenge. How do I know what was used to create the answer 10? And this is what happens with the hash function. It's a algorithm that computers use to determine that what created this transaction to get the answer 10 was either 1 plus 2 plus 3 or 4 or it was a 5 plus 5 or was 3 plus 2 plus 5 could be any one of those combinations. And that's known as the hash, it's hashing. That's what happens. Not the hashing you use on Twitter. They're different. So it's different than that. So you end up with 1 plus 2 plus 3 or 4 to get the answer 10. But we have to determine the miners or those viewing it which one was used to create the transaction. And so hash functions have been around for a period of time. The one that we use or Bitcoin uses I should say is hash function SHA256. And so it's it's just that the tool that computers use to try to determine what gave the answer number 10. So pages and pages are in your ledger and notebook. Millions of people are playing poker and checking ledgers. Some are playing and some are monitoring what's going on trying to solve this equation. Now why would they want to do this? Well you'll find out in just a second. So everybody's doing this to verify that I really did transfer my one Bitcoin to Angus. I had it. I hadn't given it to someone else and Angus had the right to take it. So secure hash algorithm 256 comes in. It was divided developed by the United States of America National Security Agency. And it takes a computer on average 10 minutes to verify that how I how I created the number 10. Whether it was one plus two plus four or five plus five. So the computer system goes through all this and it makes the determination and it takes about 10 minutes. So think of hundreds of thousands of computers around the world tracking my Bitcoin going from me to Angus with all the security I mentioned earlier and then saying OK I figured it out this is what they used to create the number. I should get a price. Well they do get a price. Whoever solves the problem gets 12 today at this point. 12.5 new Bitcoin. Now think about it. I solved the problem. I verified that Texar sent Angus one Bitcoin. I verified it. You give me I get from the system or we get added to the system 12.5 new bitcoins. Once that 12.5 new bitcoins go into the system the same thing happens. They have to verify that those 12.5 bitcoins are available and the 12.5 bitcoins get to go to the miner that found them. So now we're back into the circle and that's how that's how new bitcoins get added to the system. Remember earlier on I talked about a government can say we're going to add more currency. This is how bitcoins get added to the system. And this is this goes back into the blockchain and another transaction occurs and they go through the whole verification process again. Another miner finds that one goes back to square one and away we go. And in the meantime people are moving bitcoins all over the globe back and forth to each other buying and selling things and every time they do that this is happening. So this whole whole series of organizations out there that do nothing but mine bitcoins to get their 12.5 bitcoins. There's millions of computers doing this right now. So why would I want to do this? Well today a bitcoins worth a thousand US dollars. One bitcoin is worth a thousand US dollars. In 2009 a bitcoin was worth 13 cents. You just do the math. So right now one bitcoin is worth a thousand US dollars and I can buy things with it and I'll talk about that in just a few minutes. So miners get 12.5 new bitcoins for solving the problem. They also and that's the math problem and they also get a small tip. And the reason they get a small tip because at some point in time 2140 because it's all math in the year 2140 there will be no more bitcoins being added to the system and the only thing that the miners are going to get is the tip. And the anticipation is that the value of the bitcoin will be significantly more at that point in time. So every so every time these transactions or ledgers are going into the blockchain they're counted. When we get 210,000 blocks new ones added the number of bitcoins that the miner will get will get cut in half. So they'll go from 12.5 to 6 and a quarter and then when 210,000 hit again it'll drop again and drop again. But based on the math and what's happening it's 2140 we will go to no more bitcoins being added into the system. So who takes bitcoin? Why do I want to do this? I mean like who really cares? Is anyone taking bitcoin? Well if you go online and you can just google it on Bing or Bing it on Google you can just say who takes bitcoin and there's all kinds of ways that and options out there. Microsoft takes bitcoin, Subway takes bitcoin, Expedia takes bitcoin, Remax London in the UK take bitcoin for real estate transactions. Tessa will take bitcoin for you're buying your car. Bloomberg now Bloomberg are huge investment organization they take bitcoin. Walmart takes bitcoin, Home Depot takes bitcoin, Kmart save the children, nonprofits takes bitcoin, GJB and Associates that's me takes bitcoin, Hibachi Talk takes bitcoin. If you want to tip us for doing this program you can go to the Hibachi Talk website and it says right up there give Hibachi Talk a bitcoin and or a portion of a bitcoin. You can give us a millionth of a bitcoin. I don't care and tip us for putting on the show. Go to Think Tech of Why and give them a bitcoin. If they won't take it give it to me and I'll give it to Think Tech of Why. So there's just a whole number of things that can happen in that space. So is investing bitcoin a good idea? Don't ask me. I'm not I am not going to tell you whether or not it's a good idea to invest in bitcoin. It is shaking up the globe on how currencies are being passed around the globe and here's I'm going to give you a couple of examples of things that make it kind of very unique. Poor countries who are making $2 a week in their salary and dollar amounts, they can't afford the costs of credit card transactions. They can't afford the cost of banking but what you find they do can't afford and have been affording across across the nation are mobile devices. These countries many of the people have mobile devices and if they can use cryptocurrency like a bitcoin to do a transaction with their friends or their business associates they can do that and there's literally minor minuscule charges for it not three or five percent like next to nothing percent charges for doing that. So now all of a sudden a $2 transaction can be handled well within the bitcoin model or cryptocurrency model because if they get broken down into a millionth of a bitcoin and they can start moving these things around. So you're seeing a lot now in Mexico, you're seeing a lot now happening in North Africa, in Somalia, India, the Philippines. A lot of those countries now are using bitcoin as a form of transaction of money even though we can't see it to buy and sell their goods. The other thing that I find is interesting and I have a business associate who is working for a company that's in the bitcoin business and he he's working not in the U.S. he's working in another country and his total paycheck is given to him in bitcoin. So his pit his salary is bitcoin and he works there because that's how he wants to get paid. Think about the implications of that. No government is managing, controlling, and tracking bitcoin. That's tax-free money. I'm not telling you it's legal or illegal, I'm just telling you right now it's tax-free money. So if he's making the equivalent of a hundred thousand U.S. dollars per year in bitcoin that he can use to transact almost anything, guess what? He gets a hundred thousand dollars. It's not a hundred thousand dollars, that's 25 or 35 percent. Based on your income bracket it's a hundred thousand dollars. So just think about what those implications are doing. The state of Hawaii is talking about now taxing all of your online transactions. So what if I start now saying instead of my online transactions being taxed I'm going to start doing with bitcoin. I'll give you another example. Amazon. Amazon does not take bitcoin but there are sites where I can go and buy Amazon gift cards at a discount and then use that gift card to buy my amazon product. All kinds of different ways to work around it. Anyway, so I kind of walked you through in 30, well less than 30 minutes how cryptocurrencies work, how the bitcoin works. You'll probably have to go back and look at this a couple of times. Think about the poker game and think about what it is. But don't ask me if you should invest in bitcoin. And as I like to thank you guys for watching this again. I watch you talk. We'll see you next week. We got a super guest next week by the way. It's gonna be awesome.