Excerpt
I explain how Bitcoin works and why it gives you control over your money. You’ll learn how to get, save, and spend Bitcoin safely, without needing a bank. Watch now to see how Bitcoin is changing lives and why it matters for you!
Transcript
Thanks for showing up to my workshop and talk about Bitcoin, what it is, and in the second half of this hour, we’re going to install a wallet, and I will explain what’s the best way to secure your Bitcoin. Because this is a self-custodial wallet, which is a very important differentiator in the Bitcoin space. Because Bitcoin is basically giving you ownership of your money, and you only have that with self-custody. And I will explain what this is in this talk. And my name is Anita Posch. I’m the founder of Bitcoin for Fairness, and we have been doing work on the African continent in several countries so far. We helped set up local initiatives in Zambia, in Zimbabwe, in South Africa, in Namibia, in Ghana, in Botswana, and had a little bit our fingers in the game setting up initiatives in Malawi and Nigeria too. And I’m a Bitcoin educator. I wrote a book about Bitcoin, and we also have a train-the-trainer program, which is called Crack the Orange. Why? Because our goal is to train the trainers and help scale Bitcoin education and knowledge here in African countries. Because I believe it’s actually the place where Bitcoin is needed the most. Not only as a tool to save money if you can afford to save money but also as a tool to be able to send money in and out of African countries, which are within itself not very good connected and where also the banking, the traditional banking system, is actually a problem. So Bitcoin has several use cases. One of those that is most widely known is investing, as people say. I rather say it’s saving—I save my money that I can afford in Bitcoin. I’m not an investor because it sounds so institutionalized. I’m just a regular saver. And for that, you need to have a long-term perspective. Because we are now at a time where we just had an all-time high, meaning the price of Bitcoin was never as high as it is at the moment. And if you look at that slide, you see that exactly five years ago, the value of one—or let’s say the price of one Bitcoin on the market—was $7,000 US. And today, only five years later, it’s $100,000. And there’s no other savings instrument that gives you actually this kind of profits, let’s say it like that. But you need to be aware of that—that all the time, Bitcoin is very volatile. So it can go down in its value, in its price, very fast. And if you’re not set up for that, so if you don’t count on it in that sense that you plan, you put an amount of your savings into Bitcoin, and you know you don’t need it in the next three, four, five years, then you can do it. But other than that, if you need your money all the time, I would say spend it, you know? Because the danger is there, of course. If you need, like, let’s say money in a year, and the value of Bitcoin has gone down very much, you’re basically at a loss. So always plan for the long term with Bitcoin, with saving. And for the short term, it’s a very important perspective in these countries here. Because where I come from, in Europe or in the US, people only use it to save or to invest, and they call it HODLing. So they hold their Bitcoin; they don’t want to spend it. Which is in my sense of the view—I mean, of course, everyone can do with their Bitcoin what they want—but I think it’s a money; it’s digital cash. And if we don’t use it to adopt it, then it also gets a bad rep, you know? In a way, in Europe, in the US, people say, “Oh, it’s just a tool for speculation. It needs a lot of electricity. We don’t need it. It’s only for terrorists and gamblers. We don’t need it.” But that’s actually a very shortsighted view. So what can you do with Bitcoin? Where can you spend it? There are more and more merchants accepting Bitcoin all over the place. There’s, for instance, a map. It’s called BTCmap.org, where you, as a merchant, you can put yourself up and say, “I’m now, as a business, accepting Bitcoin.” And if you travel somewhere, you can look it up and see if there is a possibility to spend your money. Most times, like in many African countries, like in Zimbabwe, for instance, you don’t have any exchange because they are banned. That means you need to look for someone who exchanges Bitcoin for cash on the ground peer-to-peer, which is actually great because it’s like exchanging your goods, you know? A lot of people think that Bitcoin, they need to wait for their government to make it legal. It’s not illegal to use Bitcoin. You can just use it. It’s like as if we are bartering a good, you know? You do something for me, and I give you a present or whatever you need. And Bitcoin is that tool that you can use for that. So in many countries, there are also Bitcoin meetups, where bitcoiners meet with each other. Beginners can come to ask questions, and there, you also might find people who will exchange Bitcoin to local cash for you. Just as an example, when I came here to Kenya two weeks ago, we didn’t have any Kenyan shillings. We met someone from the community, gave them Bitcoin, and had cash. But even better, what you also can do here in Kenya and in other African countries all around the world is purchase airtime for your mobile phone or eSIMs with Bitcoin. It’s a website called bitrefill.com. I’m traveling here. I have an eSIM from Bitrefill. I pay it with Lightning, and I’m set up here. I don’t need a phone number; I also don’t need to give away my ID to Safaricom, so they can’t trace me. I’m not a criminal; I just want my privacy, and I don’t want to endanger myself by giving all my data away. So you can overcome banking problems with that. You can, for instance, send airtime to someone in, let’s say, from here to Zambia—so into their mobile phones. So that’s a good way also to send money. I know of cases where people from South Africa send money to their mother in Ethiopia with Bitrefill airtime, and the mother then sells the airtime in her house to her neighbors, and that’s the way how she gets cash. In Kenya now, you also have a great way to spend Bitcoin with Tando. It’s an app you can download in the Play Store and also for iOS. I’ve used it several times here already. I can pay basically every M-Pesa user with Bitcoin, and they don’t even know that I use Bitcoin. They just get their Kenyan shillings into their M-Pesa account. For me, it’s great because, yeah, I can pay my taxi driver, I pay the groceries, I pay my massage therapist—everyone in Bitcoin. And they all get Kenyan shillings. Over time, the idea with that is also that merchants or people who receive from people like me who pay in Bitcoin think, “What are you using actually for that? That’s interesting! Maybe I should directly accept Bitcoin,” which is much, much better actually for them because they can save in Bitcoin then. In South Africa, so South Africa, Nigeria, and Kenya are actually the African countries with the highest adoption of Bitcoin. In South Africa, you can also spend Bitcoin in every Pick n Pay. I don’t know if you know Pick n Pay. It’s a supermarket chain, a big one, like here Carrefour or Naivas. Naivas, I think. It’s comparable. And you can pay there with your Lightning wallet—for flights, for local municipal bills, you can buy electricity with Bitcoin, and your groceries, of course, you can also buy with Bitcoin there. What are the advantages of that? You’re spending money peer-to-peer. You’re going into a shop, you’re buying something, you’re not exposed with this “know your customer” identification. Because with M-Pesa, your mobile number is exposed. Everyone you receive money from or send to knows their mobile number, which is actually quite dangerous. So this gives you a lot of privacy and freedom. And you can even use it, as I said before, in a self-custodial manner—no one can hinder you from using it. It’s uncensorable. So if you have protests going on or whatever, your authoritarian government can’t close down your account because they don’t have access to it. There is no bank that is an intermediary. Remittances are fast. They are cheaper. You don’t have to go to Western Union to get it and things like that. You also have no payment limits. With banks, you often have that. You have no deduction of taxes because the government doesn’t know that you use it. You can, of course, pay your taxes nonetheless. I’m not saying you commit tax fraud. I just mean it’s a possibility that your digital transactions are not being taxed in that way. And you also don’t have national inflation on your Kenyan shillings or whatever your national currency is. You know that inflation, like in Kenya, I think it’s 20% a year—I don’t know exactly—so every year, the value of your money loses 20%. In Zimbabwe, it’s 1,000%. And with Bitcoin, you don’t have this kind of inflation. So Bitcoin is both—you can use it for saving and for spending. So now the question is, how do I get Bitcoin? The best way, actually, to get Bitcoin is to earn it. You’re doing a service, you’re a merchant, you’re a freelancer, for instance, you’re a developer, you can work remotely for international companies, you can ask them to pay you in Bitcoin. The great thing is there’s no KYC on your earnings. It’s not an exchange; it’s not a bank that you’re getting your Bitcoin from. So you maintain your privacy. And for everyone who’s interested, there’s a website called bitcoinorjobs.com. If you’re a developer or you want to work in that space, there are a lot of remote jobs on that site. Then, as an example, if you’re in the human rights space, for instance, this is especially interesting for you. Because there are a lot of human rights groups that receive funding from abroad. The government realizes that, they target them, say, “You’re a terrorism organization,” and they shut down their bank accounts. That can’t happen with Bitcoin in self-custody, which I will show you later how you do that. Then you can buy Bitcoin on exchanges, like in Kenya, I know a lot of people are using Bitnob or Binance. Then there are others, like Yellow Card is also big in African countries. They offer you convenience—you can buy Bitcoin with your credit card or directly from your bank account. But you need to know that basically, the Bitcoin you buy there is then forever connected to your name. And the Bitcoin blockchain is a transparent network. You can follow transactions. It’s pseudonymous—you actually don’t know who is doing these transactions, but if your identity is connected to your Bitcoin, then they could know what or who you are paying. It’s a little bit better when you use the Lightning Network, which is a faster, cheaper way of transacting Bitcoin. It’s what most people here in Africa are using. When it comes to the wallet, I will explain to you what the differences are. So you can purchase Bitcoin from private individuals on several platforms. One is called RoboSats, another one is called Hodl Hodl. Then, for those who are a little bit tech-savvy, you can install Bisq, which is a decentralized Bitcoin exchange. Or what you can also do is go to these Bitcoin meetups. You can also set up your own community of private individuals—people, your friends, or relatives—who want to buy and sell Bitcoin. There’s an app that you can use for this. It’s called Vexl, V-E-X-L. So stepping back to the properties of Bitcoin, which make it such a special tool for people to empower them—Bitcoin is a “RIPCORD.” You can remember that maybe because it’s: Revolutionary, it’s Immutable—no one can change Bitcoin transactions, no one can freeze your Bitcoin transactions. It’s Public—it’s basically like a common good, like the internet. It doesn’t belong to anyone. Bitcoin, the technology, doesn’t belong to anyone. There’s no company called Bitcoin. I mean, there are companies who call themselves that way, but that’s not what the network is about. It’s Collaborative, it’s Open—meaning transparent, which is very important. Resistant to censorship and it’s Decentralized The fact that it’s open also means it’s permissionless—you don’t need to ask anyone, “May I use Bitcoin?” Like, “Can I please have a bank account?” “No, you can’t; you don’t have enough money, you don’t have an ID, you’re a refugee.” You won’t get a bank account. With Bitcoin, anyone can use it. As an example, I want to bring up a story from human rights activism during the protests in Nigeria. The Nigerian Feminist Coalition supported the EndSARS protest movement a couple of years ago. They collected donations via their bank accounts—until the central bank shut them down. The women remembered that there is something like Bitcoin. They set up a server to receive donations, and they were able to support the protests again. This shows the power of Bitcoin. Also, Zimbabwe is a very isolated country because of international sanctions. It is very difficult for people from Zimbabwe to send or receive money from abroad. With Bitcoin, it’s totally easy to send money into Zimbabwe. And there are also opportunities to exchange it on the ground to US dollars. Actually, it’s very easy because the traders there want Bitcoin. There is high demand for Bitcoin, of course, because of that high inflation. Or in Kenya, I know that many women don’t have inheritance rights. They are not allowed to own anything—property, for instance. So they don’t have securities to go to the bank and say, “I have a business. Can I please get a loan?” No, they won’t, because they don’t have securities. With Bitcoin, they can own their own money. No one can take it away from them, and they gain independence. That’s why we say Bitcoin is freedom money. But it’s only freedom money when you have ownership of your Bitcoin. And you do that with self-custody. So your funds are in your own hands as soon as you have a so-called seed phrase, which is 12 or 24—but mostly 12—English words in a certain order. You have to keep that order correct. That’s weird, but that’s basically the technology that will always give you ownership of your Bitcoin. So no one can steal it from you. The thing is, as soon as someone gets hold of these 12 words, they can also use your Bitcoin. That’s why it’s so important to keep them safe. And if you own this Bitcoin through self-custody, through your private keys, as we call them, then you basically own it like cash. But it’s not a national currency. It’s international, neutral, people’s money. So you have ownership of it, like a banknote—you don’t need a bank account, no ID or registration. You don’t have any centralized control. For example, if Facebook Coin were a thing—maybe it comes again, they tried to release it a couple of years ago but weren’t allowed to by the regulators—Facebook Coin would be a centralized currency, given out by Meta, the company of Mark Zuckerberg. So it’s corporate money. That’s a big difference from Bitcoin. You don’t have centralized control. Bitcoin came out of a grassroots movement. During the financial crisis of 2008, a person going by the name Satoshi Nakamoto—which is not their real name, no one knows who the inventor of Bitcoin is—presented Bitcoin. And on January 3rd, 2009, the first public block of the blockchain was mined. That was the date Bitcoin technology was born. Satoshi Nakamoto—why do we know it’s a grassroots movement and an alternative to the traditional banking system? Because Satoshi Nakamoto put the headline of The Times newspaper from that day into the first Bitcoin block, called the Genesis Block: “Chancellor on Brink of Second Bailout for Banks.” And we know from some of the writings of Nakamoto that they said Bitcoin is an alternative to the traditional banking system because banks and centralized governments cannot be trusted with the value of your money—they inflate it by printing more money all the time. And that’s basically the reason why your national currency loses value every year—until countries issue new currencies. In Zimbabwe, it’s the sixth time in 20 years that they have issued a new currency because they stole everything basically from the people. So, it has also a long history. It’s not like that this Satoshi Nakamoto came into the world, and there you have it. There’s a lot of, like, cryptography, mathematics, different technologies involved in the birth of Bitcoin. Basically, from the 1960s on, 70s, people were researching ways how to make digital money secure, and only with Satoshi Nakamoto it worked out. So, at the moment, if you look at the traditional banking system, if you pay with a PayPal transaction, for instance, if you buy something and the seller receives your money, you have up to seven intermediaries in that equation until your money reaches the point. Every one of them gets money out of you. Every one of them can shut down your account. With Bitcoin, it’s only you and the other person. There are no intermediaries. You don’t need to trust anyone. The technology can be trusted because the code is open-source. Bitcoin is also decentralized. What does that mean? It means that every transaction since 2009 is being stored on 10 to 100,000 computers worldwide, synchronized all the time. So, that means, if someone wants to hack Bitcoin or the the blockchain—the database of all transactions—they have a hard work. They will not manage to do that, because if you hack 10 computers, there are thousands of others having a synchronized copy of the blockchain, of all transactions. And that is part of Bitcoin’s censorship-resistance. You can imagine Bitcoin like a public deposit box with private ownership. So, everyone can send money to a Bitcoin address, but only you, when you have your keys, can send it somewhere else. So, you need Bitcoin addresses. A Bitcoin address is a long line of numbers and letters, and you also get it as a QR code so you can scan it and you have a Bitcoin address. You give it to someone else if you want to receive money from them. They send the money. It’s basically in your private deposit box, and with the private key, which is a part of the 12 words I showed you before, you, your wallet, can unlock that deposit box and you can send the money, as you wish, to someone else with a Bitcoin address. And the seed is basically like a keychain. It incorporates all the private keys to open all of your boxes. And there’s a lot of talk about Bitcoin mining, that it’s so energy intensive—electricity, actually—which is true, but it’s needed for Bitcoin’s security. Bitcoin mining basically secures all the value stored in Bitcoin. And if you think about the fact—I don’t even know how many billion dollars now are stored on the Bitcoin blockchain, it’s very important. So this is not a waste of electricity. We also have a lot of miners who are using stranded energy to mine Bitcoin, etc. And, to be honest, if I think about the energy and electricity the traditional system uses, I think I don’t have a problem with it, to be honest. So, Bitcoin mining is basically the process where transactions that you do are stored on the blockchain, are made secure. That process involves solving a puzzle. So, computers are solving a puzzle. The mining machine who solves that the fastest puts the transaction into a block and it’s added to the blockchain. That’s why it’s called a blockchain. And the winner receives 3.125 Bitcoin for that block. That is basically how Bitcoin is brought into circulation by Bitcoin mining. And I just want to show you, like, in a scheme—it’s not really how it looks—yeah, this is a block, how it’s chained together. And each block has a so-called hash, which contains all the data of this block. And approximately every 10 minutes, a new block is added to the blockchain with transactions in it. So, maybe your transaction is here now, and you see that these hashes, they are the same, they are connected with each other, and on and on it goes. And that’s why Bitcoin is so secure. Because if you wanted to change these transactions, you would need to do all the work that all the miners have already been doing to redo what is written in there. I know it’s very complicated. At the beginning, I had to learn a lot to understand it myself, but this actually helped me a lot to understand what a blockchain is. It’s just data blocks connected to each other cryptographically through these hashes. Yeah, there is a lot of explanation to it. If anyone of you is interested in that, I have an online course, a train-the-trainer course, where you learn what a hash is, why this is all working like this, and things like that. I will give you the link afterwards. So, Bitcoin is an open blockchain. You just saw the blocks of transactions. There are websites, this is called mempool.space, where you can look up your transaction, where it is on the blockchain. So, that in the middle is basically the moment all transactions here have just been done. So, I sent you a transaction, it goes through the internet to the Bitcoin miners. These transactions have not been mined yet. They are not confirmed. They are not done in that sense. And these, on that side, are mined, and then you will see on your wallet your transaction is confirmed. Then it’s also important to know, why is Bitcoin such a great savings instrument? It’s also because there’s a limited supply in Bitcoin. So, there will only ever be 21 million Bitcoin. That makes Bitcoin a scarce monetary tool. I said before, national inflation, central banks, politicians can inflate the amount of money that’s circulating. If you think of a banknote like a good—if the demand for a good is high, then the price goes up. If the demand for a good is low or stays the same and the supply is being inflated, the price goes down. And that’s actually happening with your national currency as well. So, I said before, in every block, a new 3.125 Bitcoin are being issued. Every four years, this amount is halved. The next halving of this amount that is given out for each block is in 2028. And this process goes on until 2140, the year 2140. At the moment, we have already 94% of all Bitcoin in circulation. So, only six percent are waiting to be mined in the next years. That means already 19.8 million of these 21 million are in the hands of someone. Someone has the keys for it. Someone owns it. Okay, so for using Bitcoin, it’s also important to know that Bitcoin has different units. So, the smallest unit of a Bitcoin is a satoshi—one satoshi. That’s why we often speak of “send me 1,000 satoshis.” It’s like 100 million satoshis are one Bitcoin. So, at the moment, it’s like that, that one million satoshis is $1,000, or 1,000 satoshis is $1. And this, of course, changes over time as the value of Bitcoin changes, but the amount of Bitcoin you hold always stays the same.
