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  • - All right, let's talk about crypto.

  • Now, you've probably heard the word Bitcoin floating around.

  • You might have seen the price

  • has been skyrocketing recently.

  • You might've seen that Tesla has bought $1.5 billion worth

  • of Bitcoin and is gonna start accepting it as payment.

  • And you might have heard

  • of all these weird things called a Dogecoin

  • which are apparently going to the moon.

  • As such, this video is my personal guide

  • to the world of Bitcoin and cryptocurrencies.

  • It's the introduction that I wish I would have

  • had when I started investing in crypto about four years ago.

  • And it's the video that I wanna be able to send

  • to my friends whenever they ask me,

  • Hey are you investing in Bitcoin?

  • Why are you investing in Bitcoin?

  • How does it work?

  • Is it safe?

  • Are you gonna lose your money?

  • Isn't it illegal?

  • All of this sort of stuff.

  • So this video, which is for informational purposes only

  • and should absolutely not be construed as financial advice.

  • In the slightest, we're gonna split it up into four parts.

  • Firstly, I'll talk about what Bitcoin is

  • and how cryptocurrencies in general work

  • and why they work and why they're legit.

  • Secondly, we'll talk about why Bitcoin

  • and crypto is so controversial

  • and I'll share my hot takes about that.

  • Thirdly, we'll talk about,

  • why I personally do invest in Bitcoin

  • and crypto and I will share my portfolio allocation

  • and the reasons behind that.

  • And fourthly, we'll talk about

  • how you can get started investing in crypto.

  • If that's the sort of thing you want to do

  • with lots and lots of caveats

  • and cautionary tales along the way.

  • As always timestamps in the video description,

  • so you can jump around if you feel like it.

  • And if you new to the channel, hello, nice to meet you.

  • My name is Ali, I'm a doctor based in Cambridge in the UK.

  • And on the channel, we normally explore the tools

  • and strategies that help us live healthier,

  • happier more productive lives.

  • But I have a personal pension for the topic of money

  • and I think more people should learn

  • about money and investing and finance

  • and how it works and be open about that sort of stuff.

  • So here we are talking about this video.

  • Anyway, let's get into section number one.

  • All right, so let's take things back to basics to try

  • and build up our understanding of Bitcoin

  • from the ground up.

  • Now, Bitcoin is a cryptocurrency.

  • There are hundreds of other cryptocurrencies out there

  • but Bitcoin is like the original, the OG.

  • And it's by far the biggest cryptocurrency around,

  • which makes the question, what is a cryptocurrency?

  • So here's my definition of a cryptocurrency

  • based on four central concepts.

  • A cryptocurrency is a virtual currency based on a ledger

  • which is decentralized and secured by cryptography.

  • All right, so firstly, Bitcoin is a virtual currency.

  • Now what is a currency?

  • A currency is just a medium of exchange.

  • It's what replaces the old school bartering system

  • we used to have, when it would be like,

  • I will give you this bushel of wheat

  • in return for the shoe that you have kindly made me

  • because you are a, I don't know, leather worker.

  • Obviously, that system of bartering is quite inefficient

  • because you have to store

  • a lot of stuff that other people want

  • and that's just a bit of a pain.

  • And so we invented currency in the form of coins

  • usually as a system that everyone recognized

  • to be able to exchange stuff

  • without having the physical goods.

  • So I could sell my bushel of wheat for two copper coins

  • and then I could save up my copper coins

  • and I could buy your shoes for 10 copper coins, for example.

  • Back in the day currency itself

  • was tied to metals like gold

  • and silver and copper, which had like different values.

  • And so the actual metal of the coins

  • was worth something because everyone agreed

  • that these metals were somewhat precious

  • but in modern times, most of our currency takes the form

  • of paper notes and paper notes

  • aren't inherently worth anything

  • because the paper is just worth paper

  • but currency is worth something

  • because everyone agrees that it's worth something.

  • If I take $100 dollars almost anywhere in the world

  • most people, I mean most places in the world

  • will recognize that $100 is worth $100

  • and I'd be able to buy $100 worth of stuff from it.

  • If hypothetically the whole world were to tomorrow decide

  • that the U S dollar is a meaningless currency

  • and they're not gonna accept it for anything at all.

  • Then the U S dollar would be worthless.

  • So really when it comes to currency

  • it doesn't mean anything real.

  • Currency is kind of just an abstract way

  • that we've all agreed to value things in a certain way.

  • So coming back to Bitcoin, Bitcoin is virtual currency.

  • It is a digital form of currency,

  • i.e. a digital form of paying for goods and services

  • and exchanging money over the internet.

  • Way back in 2009 when Bitcoin was first invented,

  • most people didn't believe that it would be a viable

  • form of currency, but over the last decade plus,

  • as Bitcoin has become more and more popular,

  • people are starting to say

  • that maybe Bitcoin could be the currency of the future.

  • Maybe in the future, maybe a few years,

  • few decades from now, we'll be paying for goods

  • and services using Bitcoin over the internet,

  • rather than by using these old school,

  • old fashioned centralized banking

  • and government institutions to exchange U S dollars

  • and our actual local currencies.

  • Okay, so that was the currency part of it.

  • We can think of Bitcoin or crypto as like "Internet Money"

  • or like "Virtual Money" or "Virtual Currency".

  • Let's now talk about the ledger system

  • that holds it all together.

  • And the thing to understand here

  • is that Bitcoin is effectively one giant huge spreadsheet.

  • This spreadsheet is called a ledger and in the spreadsheet

  • we've got a record of every single Bitcoin transaction

  • that has ever happened since January, 2009,

  • when Bitcoin was, was first invented.

  • And the way that I think of it in my head,

  • it's like, let's say you're going on holiday

  • with a group of friends and you don't wanna

  • kind of keep on splitting the bill

  • and handing over cash because that's a total nightmare.

  • Therefore, someone makes a spreadsheet

  • to keep track of who owes what.

  • And so line one in the spreadsheet might be

  • Ali owes Sheen 12 pounds,

  • line two might be Jake owes Molly, 18 pounds.

  • And the idea is that as our holiday goes on,

  • we would keep on adding stuff

  • to our spreadsheet or a ledger.

  • And at the end of the holiday, we would all settle up

  • and then actual money would exchange hands.

  • Now, assuming you trust your friends, to be honest

  • this spreadsheet actually works reasonably well.

  • You can basically treat this whole spreadsheet

  • as virtual money.

  • I am giving my friend virtual 10 pounds

  • in exchange for them paying for dinner.

  • Other friend is giving me virtual 20 pounds

  • in exchange for me paying for the boat ride.

  • Now that's fine for a group of a few people on holiday

  • but imagine hypothetically, if the whole world were to run

  • on a similar spreadsheet, where instead

  • of money ever exchanging hands like physically

  • it would just be a line item in the spreadsheet.

  • Now imagine a world in which everyone trusted

  • the spreadsheet and everyone was being honest

  • and good and nice and friendly,

  • and only adding legitimate things

  • to the spreadsheet that everyone agreed on.

  • That's basically what Bitcoin is.

  • It's this giant spreadsheet that keeps track