Unlocking Bitcoin: Understanding Its Core Principles

[00:00:00] Speaker A: I think people, in the same way that we now look and say, do you know people used to use seashells as money or salt as money? Like, what were they thinking? We will definitely at some point in the future say, do you believe people use shiny rocks and pieces of paper as money is like so primitive, what were they thinking? Like, people could double spend, they could steal, they could inflate, they could forge, like all these terrible, terrible things with money. Now, of course, we have bitcoin and it's not forgeable, it's not stealable, it's backupable, it's is teleportable, it's instantaneous, it's supply capped. Why would. Why did those people use that? They were so primitive. And in a sense, we were. We didn't know how to create bitcoin until Satoshi figured out how to do it and suddenly, wow. And that's why so many of us are so excited about this thing, because it presents a capability to humanity that we didn't have before and something as important as money, the medium of exchange, the medium of peaceful exchange between civilized people. And we finally have perfected it. It's a pretty big invention. [00:00:58] Speaker B: Hello, welcome to the Money Adjustment. I'm your host, Dr. Mark Kramer. I am a chiropractor who loves investing and trading. Are you interested in what's moving markets and your money? Bitcoin is now proof of money. I like Michael Saylor's quote. He said, if you can remember 12 words, you become the money. Can we leave? Should we leave our audience with that? Yeah. Become the money. Become the money. Let's get started. Honestly, I'm probably going to go back and do it again because every time I listen, it's like a new synapse connects a new. I strengthen my understanding. [00:01:43] Speaker A: One thing I really want to stress is people listening to this and finding it a little bit confusing. It's not because you're dumb and hopefully it's not because I'm a bad explainer. It's. This is a complicated thing and, and we're trying to do it without the aid of visuals, but you can. You can Google Shot256 calculator and you can do a number of different things. If we do another one of these, we'll. I'll. I'll make sure to get some. [00:02:04] Speaker B: Yeah, I'm just saying this out loud because when I'm editing this later, I'm like, well, maybe I should go back and put some of that, because I could just smack an image on as you're talking. Which will be cool because then it'll help give people the visual and like a lot of times. All right, so for my guest today, Tomer Strolite, I've been trying to get this person on since October of 2025. I've been trying to get him on after I heard the first lecture in his three part series called Understanding Bitcoin Without Metaphors. And today with Tomer, it's kind of interesting because when I first tried to reach out to you to get you on bitcoin was in an uptrend and we were trending higher and everybody was excited and couldn't get enough bitcoin. And now when I finally actually have you on bitcoin is in a downtrend and the sentiment on bitcoin couldn't be any more bearish at the moment. And so one of the things that I remember you saying in your lecture was that if you understand what you own, if you understand what bitcoin actually is, then it's going to give you conviction. So I think for today, like the broader topic of and how we approach this is for people who are need some conviction because either they don't understand what they own or it's one of those should I buy or should I sell? But if you understand and that's what we're going to go through and that's what your lecture series does, then hopefully for our listeners today, the audience today, they will have a deeper conviction in the asset that they actually own, if they own bitcoin. I'm assuming if you're watching a podcast on bitcoin, you at least have interest in bitcoin. That being said, Tomer, I'd like for you to just start us all off with your bitcoin story. [00:04:02] Speaker A: Okay, I'll make it quick because there's lots of other podcasts that have asked me my bitcoin story and people can look them up. I got interested in Bitcoin in 2013. A friend of mine, who I was, who I actually only knew online, it was an online friend through some Reddit communities, said, have you heard about this thing called bitcoin? It's an Internet only money that exists only on the Internet and was created by some guy who nobody knows who he was and he disappeared and he may have said a couple of other and it's got a white paper you should read. So I was like, I'm really into digital things, I'm going to read about this bitcoin thing. And I was in private equity at the time, so looking at Investing at various digital startups, that was the focus. And when I saw this thing, I was really blown away. I was like, this is either going to be worth zero or all the money in the world. And so I, I tried to figure out which it was going to be. And I bought a little bit of bitcoin and started up a node, which was at the time really the only kind of wallet that existed. And it just fell down that bitcoin rabbit hole of. In increasing curiosity, wanting to understand how it worked, theorizing what its value might actually turn out to be. I remember in the early days for me thinking, there's only going to be 21 million of these coins and there's a hundred million houses in North America alone. Is each one of these things going to be worth five houses at some point in time? So they were just trying to get your bearings in this space and then understanding what transactions were, how they work, what the blockchain was, all this kind of stuff. It sent me down a bunch of technical rabbit holes, which is what my lecture series now in five parts. It's a trilogy in five parts. To quote Douglas Adams. Hitchhiker's Guide to the Universe trilogy in five parts. You know, trying to understand how this thing actually worked so that I wasn't lost and caught up in comparisons to other things like the gold or whatever, whatever you. The metaphor might be, so that people. So that I could really understand it. And then once I understood it, I was eager to tell other people about it. [00:05:59] Speaker B: Yeah, no, I appreciate it. And that's why I have you on is so my audience is generally my friends and family members who hear things in the media don't understand bitcoin really at all. They get their information from me. And I am myself trying to understand it at a higher level. And so what I'd like to start with is what your series starts with. Because actually this is going to. This is going to sound funny because this is how far off I was. Far off in the sense that I didn't even know what shot 256 was most like. I've been in the. [00:06:30] Speaker A: What need do the average person have to know what some cryptographic digest function is? [00:06:36] Speaker B: Right? So then I think, you know, there's a lot of junk, honestly, right now on the Internet, people saying things that if you're in the bitcoin space, you realize are ridiculous. And you think to yourself, wow, if this is what the masses are thinking about bitcoin, then this is an incredible buying opportunity, because what's being generated on the Internet is just a lot of fear, uncertainty and. Well, I'm trying to think of The D&FUD fear, uncertainty and doubt. So, yeah, and so what I would like to do, and we'll start with, is because you started with it and I understand now in retrospect why you did, is understanding SHA 2:56. [00:07:17] Speaker A: Okay, why does this, why does this matter? Bitcoin as, as people have come to understand, is a ledger or a database or, you know, a history of all the bitcoin transactions that have ever taken place. It's got this word crypto inside of it. It's a cryptocurrency. What exactly does that mean? It really all comes down to this one, this really clever utilization in many different ways of this one particular cryptographic function called a secure hash algorithm. SHA Shaw, that's where SHA comes from. 256 is how long it is. It's 256 bits long. And that, that means it's for people who know what a bit is. It's a 0 or 1, and one bit of data is a 0 or a 1. It's a binary digit. That's what bit is short for. Learn something new if you didn't know that already. So a binary digit of 250, a length of 256 characters. So you know, in base 10, you know you can get 10 numbers, 0 through 9 in one digit, 102, 0 through 99, 99 plus the 0 is the hundred. And, and then we, we know that these words all have names. A ousand in binary, one digit, you can have two values, zero or one. If you have two digits, you can have up to four. You can have 00-011-011. And it keeps going up in powers of two. If you have three digits you can have eight, eight possible numbers. If you have four digits you can have 16. So it's two doubling. And by the time you double two 256 times, you end up with a huge number. That range of numbers is anywhere from zero to a number that's as large as all the atoms in the visible universe for 14 billion light years out. So it's a bigger number than there are ever going to be people, than there are ever going to be atoms or seconds on the Earth, or seconds of atoms on the Earth. It's a really big number, really big range. And so when we were talking about results for SHA256, I'll explain what, how we use it. We're talking about vast numbers that, that never meet each other. It's like, you know, we rarely get collisions, rarely, we never get collisions of two inputs. And SHA 256 is a special kind of function that takes in as an input any digital file of any length as long as it's finite. It'll never terminate if it's an infinite file, but of any length. And it's very fast to work on a file. You can take a file that's just, you know, like your name written in all capital letters or in all lowercase letters or in the mix of lower and uppercase. You can take in video file that's a whole movie, you know, multiple gigabytes. You can take in an entire library, a terabyte of data. The order that it goes in matters. But whenever you put in anything in particular that's defined what comes out is always the same thing. So if I put in this, if I put in my name spelled the same way with the same capital letters each time, I'm going to get the same result. I'm going to get a 256 bit string and as an output and it's going to be a different 256 bit string than if I put my name in with a mixture of upper and lowercase letters, it'll be different if I, then if I put in my name followed by the number one, right? And it won't be slightly different, it'll be completely different. It'll be pseudo randomly different. Each of the 256 bits in there will have a 50, 50 chance of being the same or different. It's very random looking. So when you have file and you, and you put it into SHA 256, what you get is a 256 bit digest of it. Most files are bigger than 256 bits in length. Like you take a picture, it's megabytes and 256 bits is just 32 bytes, which is 1, 3, 1 3,000th of a megabyte. So you get, you can't reverse the process, but you can get this exact fingerprint. And the traditional use for a hash of a file is if someone's sending you a file, they can send you the hash as well. And then you can see when you get the file that they sent you, you can run the hash algorithm on it and see if you get the same result. If you get the same result, you have the same file. If you get a different result, you don't have the same file. You don't know how different the file you have. Is, but you know, it's not exactly the same. And so it's very useful function for distributed systems to ensure that everyone's working with the same data because everyone can quickly hash whatever data they have that's supposed to be the same as the data that somebody else has and compare these very small things, comparing a whole gigabyte of data for each bit to match. There's a lot of things that can go wrong, but comparing 256 bits for 32 bytes is very easy and very, very quick. And so that's the tr that's the initial intended use of hash functions like, like SHA256. But Bitcoin uses it in many more clever ways than just the digest of, of something, although it does use it as a digest. You can. Every single thing practically in Bitcoin gets hashed and is known by its hash. So if you get a transaction ID that's you, you see this like 32 or 64 character long strings of 80 through F in hexadecimal. That's the hash of the text of the, of the transaction. When you get a block, it's known by its hash. It's usually called 0000something. We'll get to it in understanding why those hashes all start with a bunch of zeros in our explanation of how Bitcoin uses hashes. But the blocks are identified by their hashes. And so everything, every piece of data is identified by this unique fingerprint, this unique digest of a hash, so that people can quickly compare and say, oh yes, you know, this transaction. This block is exactly the same block that the other person has because I hashed it and I got the exact same result that they got. Now there's something pretty cool about these hashes too because they're often referred to as fingerprints. But you can't take a fingerprint of a fingerprint and you can't take a fingerprint of two fingerprints. That doesn't, that doesn't make sense. But you can do this in with data with hashes. So I can take the hash of a block, of the genesis block, say the first block in Bitcoin, I can take its hash and I can use it as part of something else that I'm going to hash. I can actually take the hash of all of. I can take, I can take all the transactions that I have all identified by their hashes and I can take the hash of all of those hashes and I end up with one hash that's 256 bit but that can only be arrived at by having the exact transactions in the first place to hash them to get their specific results, and then hashing that together to get those specific results. And I can put those two things together and then I can hash that, and the result of that can only be arrived at. That particular hash can only be arrived at by taking the hash of the genesis block and the hash of the root of all of the transactions in the second block. And that is what we call a blockchain. We chain the blocks together by hashing the new transactions and the previous block. And as we move forward in time, every time we add a new block, we're hashing it with, we're taking all its new transactions and hashing it with the previous block hash. But the previous block hash took all of those transactions and hashed them with the previous block hash and took all of those with the previous block hash. And so the only way to get to the hash of the block that we're using is to have done all the work of including all of the previous transactions and blocks with perfect fidelity, without one bit out of place. Because if we change just one bit, remember what SHA256 does, it produces a completely different result in order. So when, when we take the data and condense it into a deterministic hash, like what SHA256 does, we're getting a 32 byte 256 bit string that can only be arrived at with the inputs that it had. There's no other way to arrive at it. So there's authenticity and verification and proof of origin and proof of consistency between everything. And so when you have a Bitcoin blockchain that's 900,000 and some odd blocks long. Now just having the block hash of the most recent block and knowing how you got to it is proof that of every transaction that ever took place beforehand. So it's this amazingly powerful thing. Like we've digested hundreds of gigabytes, nearly a terabyte of data into a 32 byte string that can only be arrived at algorithmically by doing all the work of computation. But you get the exact same result. And that's why everybody in the world who runs Bitcoin is in consensus. Well, I'll talk a little bit more about those consensus rules, but that's why everybody is in complete agreement on every single aspect of the ledger. Nobody can go in and change anything. If somebody tries to change one transaction way in the past or in the most recent history, the most recent block hash will not be the same. And so people will say this is not the blockchain that is blessed by Bitcoin. So the ability to condense data into. Into very short strings whose authenticity must point to the original data is one of the big powerful uses of SHA 256. And it's used extensively this way in Bitcoin to tie block. To tie blocks to previous blocks, to tie transactions into what's called a Merkle tree, which is just a tree of all the hashes of all of them, and then to append it to the previous block hash. So you get all the new transactions, all of the previous transactions and all of the blocks through the previous thing and then we'll talk a little bit about the other things that go into the. Into what then gets hashed to create the new block hash. So that's a bit of a. That's a lot for someone who's, who's new to Bitcoin. But there's maybe a little something you might want to add at this point, if I've gone too confused. [00:17:15] Speaker B: Yeah, no, that as, as you were talking and visualizing this and I was thinking, yeah, a chalkboard or some visuals would be great for people because that's one of the things. Your lectures are fantastic because they really highlight key elements, but the visuals just even seeing zeros, ones and the hexadecimal numbers and things like that back. [00:17:34] Speaker A: Unfortunately, if we do another one of these, I'll. I'll make sure to get some more. [00:17:37] Speaker B: Yeah, I'm just saying this out loud because when I'm editing this later, I'm like, well, maybe I should go back and put some of that, because I could just smack an image on as you're talking, which will be cool because then it'll help give people the visual. And like a lot of times, yeah, a lot of times I go back and I watch these videos again because I like to try to understand it at a deeper level. So I've actually listened to your series two times already, independently of the first time that I've heard it. And I probably going to go back. Honestly, I'm probably going to go back and do it again because every time I listen, it's like a new synapse connects a new. I strengthen my understanding. [00:18:13] Speaker A: One thing I really want to stress is people listening to this and finding it a little bit confusing. It's not because you're dumb and hopefully it's not because I'm a bad explainer. It's, it's. This is a complicated thing. And we're trying to do it without the aid of visuals, but you can, you can Google SHA256 calculator and you can do a number of different things. You can put in your name and get it shot256 and then change one letter or make one capital letter a lowercase letter. And you can, and you can run it again, you can see how different it is. And you can take the hash of your name in all caps and the hash of your name in case and put them side by side and hash them together and see that you get a different result. And if you did it in the opposite order, that you'd get a different result. But then if you did it in the original way, you get the same result as you got originally the first time as well. So you can start to see how this thing is, can be used to digest data consistently, reliably, and to tie data together by using hashes of other data as the pointer that goes into the hash. [00:19:12] Speaker B: Yeah, I was just going to tell you the visual that's going on in my head, and I apologize because it is metaphorical, but it's one that gets commonly used. And so I want to see how much of this I'm actually, I'm going to try to simplify, simplify this as much as I can so that people can have the visual and then you could break it down like where it falls apart. Yeah, so. So like I picture like the block stacking, you know, how they have the visual. It's like, how high is the block now? How high is the block now? And then, based off of what you're saying, I'm picturing that top block. Not only is it the top block or the most recent block, but it has all the information of every single block that is underneath it. Is that corre correct? [00:19:50] Speaker A: Yes. Yeah, absolutely. And when we get to proof of work, we'll actually see how it has all of the energy of each block inside of it. And so maybe we're a little bit ready for that. I'll tell you one metaphor that I hear often, which is useful, but also wrong. And so I'll tell you. So the metaphor is that the hash is like a blender. It's like you put in a banana and it blends it up and you get this 256bit thing that you only get if you put in that banana. And that's misleading because if you put in a banana and a strawberry, you're gonna, you're gonna have something whose volume is the exact same Volume of the two things that you put in. Right. Like it's gonna be a banana plus a strawberry and it'll all be blended together. So what's the difference? If you're hashing a banana, if you could, if, if you had a digital banana and you hashed it, no matter what size it originally was, it's coming out as 256 bits. If you put in a banana and a strawberry, how big is it going to be? [00:20:49] Speaker B: 256. Yeah, 256. [00:20:51] Speaker A: Always going to be this. The output's always 256 feed into this blender. The output's 256. And the order that you feed it in is. Is going to matter. If you put in a banana and a strawberry, it's going to be completely different than if you put in a strawberry. The same strawberry and a banana, but in the opposite order. Right. So that's why it's not a blender, because it's very picky, it's very. It's very unique and it always puts out the same amount of stuff. But yes, each time you put in another hash, right. You're. That hash could only be arrived at by putting together this one particular strawberry and one particular banana. And so if you then add an apple, if you take the hash of those two things and the hash of an apple, or an put an apple beside it and hash it, assuming these are all digital things, you're going to get a new 256bit string that could only be arrived at initially, even though you didn't put in. Now, the banana and the strawberry, you put in the hash of those two things with the apple. The only way to get that first number would have been to hash that original app, banana and strawberry. So it's, it's serving as a pointer to the original things that went into it, even if they're not around any longer or you don't want to calculate those things again. Right. [00:22:00] Speaker B: And I, And I love that because. Yeah, no, it is. It's a lot. And I encourage people that are interested in what you're saying. You just did that in less than 20 minutes. And the first lecture on SHA 256 was about an hour, hour and 20 minutes. So we're condensing. [00:22:14] Speaker A: All right. And a university course on hash functions, there would be a whiteboard and stuff, but you'd be looking at three hours to try to do what we did. [00:22:24] Speaker B: So this is. So for the audience, this is an appetizer. It's like, here's A little taste and I stuff makes sense. It's a digest. Yeah, it's a hash. But if you go back and you look, you're going to see that you're going to come to the same conclusion if you go back and follow all of the logistics that you were talking about. And again, this is where mind goes back to conviction because what you're. When people. I'm just going to say this, like when people are looking at the Internet and they're like, should I get in a bitcoin or not? Is it rat poison like Warren Buffett says? The bankers don't like it, people don't understand what it is and they're reading now. I mean, complete nonsense that anybody in the actual bitcoin spaces would know for sure is like this is not even close to accurate. For example, say, state the most current obvious one. Epstein is not satoshi. I know enough about bitcoin that I can confidently say that. And even if the slightest chance, because you never know what's possible. It's hard in my mind as a thinking person to rationalize how someone is intelligent and put together what Satoshi put together would have the same criminality of what this other person is. The only reason I'm bringing that up is because that's the kind of thinking that I see some people using when they're trying to decide, oh, I don't want to get into bitcoin because that's what bad people use and that's what bad people do. And it's. And I heard Eric say this on a space earlier today that he was hosting on bitcoin today is like, yes, you can use bitcoin for nefarious activity. Like you can use any type of currency for nefarious activity. The beautiful thing about bitcoin is bitcoin doesn't care. Not that it doesn't care that it's good or bad, but it is. That's why you can trust it. Because it different. [00:24:04] Speaker A: It's. [00:24:05] Speaker B: It's indifferent to what's happening because it's based on a protocol, it's based on a system. And if you're listening to what Tomer saying and starting to digest it, you at least for me personally, you get confident where it's like, did something happen to the protocol? Did something happen to the system for the bitcoin price to all of a sudden one of the things. [00:24:24] Speaker A: Yeah, I mean, let's bring it back to the. One of the things we're saying is nobody, whether they're the president of the United States Someone who's blackmailing the President of the United States, someone who is really mathematically smart. Nobody can alter any aspect of Bitcoin's history. Nobody can forge a transaction. We'll get into other things that people can't do. But it's like, it's that verifiability that every single thing in Bitcoin is a, is mathematically provable or verifiable and consistent with the rules that have been published, which are we can go get into as well. And so it doesn't matter who created Bitcoin or who is claiming to have authority over Bitcoin. Only the laws of physics and math have any authority over Bitcoin. And nobody gets to alter the laws of math or physics. So it's neutral towards all people, all comers is the point. It doesn't judge whether a transaction is good or evil. It judges whether it's valid or invalid. And if it's invalid, it doesn't accept it. And so you can't spend coins that don't exist. You can't spend coins that have been spent. You can't do it mathematically. But in other accounting systems and other monetary systems, you can produce money out of thin air if you print it. You can make a fake coin that's gold plated but not gold throughout. You can claim that you have money that you don't actually have in Bitcoin. Every one of these things can't be cheated, they can't be falsified. And that's really the, the power of the thing. So let's get back, let's get back to another important use of SHA 256 in Bitcoin. This is, this is perhaps the most important. Although they're all equally like, it doesn't work without any one of these uses. So it's another important use. This, this is this notion of proof of work. People hear Bitcoin uses energy, they hear Bitcoin wastes energy. What is this energy that Bitcoin uses to run SHA256? I mentioned it was quick. It's very efficient, but it still takes a little bit of energy to run it. If you put in a megabyte of data, your computer has to ingest the megabyte of data and it goes through it in 512 byte bit chunks until it gets to the end of it and then it gives you this 256 bit thing. So although that takes only 1 1000th or 1 100,000th of a second for it to do that with a Megabyte, it still uses a little bit of energy. Remember, the output that it puts out is this random looking string of 256 ones or zeros. So that has a value, right? That has a numeric value. And a SHA256 that starts with 0 is less than a SHA256. It starts with 1, just the same as a number 256 decimal digits long that starts with 1 is greater than 1 that starts with the 0. So these things translate into numbers. They have an order to them. And because of the random nature, when you hash together the previous block hash and the hash of all the transactions and the current time, you get a number, you know, you get a value, you get 100-1111-00 for 256 times. And everything in that block can be valid. It can be the mo, you know, using the most recent block that's been discovered, all the transactions are completely valid. They have digital cryptographic signatures which we should explain what they are a little bit later on. They don't spend coins that don't exist. They don't spend coins that have already been spent. They only create the newly permissible amount of coins to be, that are allowed to be created. But the value may be too high. Bitcoin is fussy. Bitcoin wants the value to be below a particular target. Why? Well, anyone can participate in this process called mining Bitcoin, which is finding the next valid block, which is taking the previous block hash, taking a bunch of transactions that are valid that haven't been in any previous blocks yet, getting the hash of all those things and trying to find a ha and finding a hash of that that meets a certain difficulty requirement. This is hard to find. Now remember when we said like, you know, a one bit number could be zero or one, a two bit number could be up zero through four, you know, and, and by the time you get to 256 bit, it can be something between zero and all the atoms in the universe. Bitcoin sets a expected difficulty. It, it does so off of a very deterministic calculation. So everyone ends up with the exact same difficulty of validity. And Bitcoin tries to, to make it so difficult, but not too difficult, but so difficult that a block will only get found by people on the network trying to find it about once every 10 minutes. It, it targets 10 minutes and I can get into the equation that it uses in a minute. But, but just to say how like Bitcoin doesn't know how many people are out there trying to run hashes of the, of this data, right? And, and they're allowed to change a little bit in the, they have to use the exact previous block hash, they have to use the exact root of the Merkle tree, although everyone has a different one because they're all rewarding themselves different coins. So they have a different initial transaction in their thing. They're all rewarding the coins themselves. And then you have an area where you can keep changing a number. It's called a nonce, which stands for number used once and that changes. And by changing that you get a different result each time. And by changing, you don't know what the result's going to be. So you run it once, you get a one in the first position, you're out of luck. You run it a second time, you get a zero. But then a one, that's still only a one in four chance of what you got. That's not good enough right now. It's like you need, the difficulty is so hard that you need like a hundred or like 600 sextillion tries before you actually get a win. And that's because so many people in the world are trying to do this hash with so much specialized equipment and so much energy that it has to be that difficult because there are, there are people taking 100 sextillion guesses or 600 sextillion guesses. I can't remember what the exact number is, but it's like mind boggling large number every 10 minutes. And so that's how difficult the network has set itself to be. So for a block to be valid it must, it must do all the things about pointing to the previous block hash, using the hashes of all the transactions in there. And finding a nonce, which is very hard to find, takes a million, millions of millions of millions of random guesses in order to find it so that you get the reward. And everybody agrees that you get the reward. And this is, this is key to the decentralization of Bitcoin. Bitcoin doesn't say who gets to write the next entry in the ledger by picking a favorite. It's someone has to have done the proof of work and the proof is there because they have come up with a number that's so small that it's a 1 in 100 sextillion chance of finding. And they clearly, clearly the whole network had to do all this work for somebody to finally discover it. And it took the time that it took. And so Bitcoin only rewards Bitcoin. This is by the way, how every bitcoin that exists is created. It's created through mining. There's none that were issued to anybody or anything except for through this process of finding the next block. And so bitcoins themselves are money that take time and energy to produce. Well, isn't that interesting? Because what do you do to earn money? You have to put in your time and your energy to produce it. So bitcoin is this fair money in the sense of it takes time and energy to produce it. Nobody gets to produce it out of thin air for free or for nothing. And it's as difficult to produce as the willing effort of voluntary participants that are prepared to put into it. So it's a free market for the mining and production of bitcoin, all because of this cool little function that produces a 256bit string out of whatever you put into it. [00:32:14] Speaker B: Yeah. Can I interject for a second? [00:32:16] Speaker A: Yeah. I recently been trying and I've. [00:32:18] Speaker B: Yeah, no, and it's good. [00:32:19] Speaker A: And I did. [00:32:20] Speaker B: I didn't want to interrupt you because I, I love what you're saying and I'm like even thinking to myself, I'm like, man, some of this I am going to have to listen to again, but just to expand out the forest for the trees. Right, you're talking about the trees. We're getting very into the details. Sorry again for the metaphor. Bringing it back out to. When I set up initially, I was talking about how you had this three part series, which I know is five because you get into lightning, network and energy. But just for simplicity's sake and just building the foundation. You talked about SHA 256, which was the. You have, you have to have some basic level understanding if you want to give yourself conviction in terms of what's actually happening, of what SHA256 is, which is why we begin. Or you begin with SHA256. And then I said the second part in the series is the bitcoin network. So like you already transitioned into that because you started talking about the mining. So there's miners and then. I don't think we've touched on it yet or use the word yet or if we did, we haven't gone into it. Are the nodes. So then you have like these components of the network that are using the hashes which are based off the shots you have. [00:33:27] Speaker A: The miners have to do all this incredibly intensive work. It's very expensive to mine bitcoin and to get it. But a node is someone who run like you and I can both be Nodes, and I am. And I hope you are too, which just receives all the data and verifies it. So that's computationally much easier. You're not guessing six sextillion things. You're given the one answer and you're running the math on it, which takes a fraction of a second to say. Is this valid? Is it. Does it use the previous block hash? Yes. Does it have the Merkle tree root, hash root of all of the transactions in here? Yes. What's the nonce when you hash all these things? That. That previous block hash, the nonce, the Merkle root tree, the timestamp, does it arrive at a value that's less than the target value? Yes. Okay. It's a valid block. Now, I accepted into my version of the blockchain. And let's go. Let's find the next block altogether. Yeah, that's how it works. [00:34:20] Speaker B: I get so excited here, and I'm sorry to, like, interject, because this is where I want to jump in. I think it is. That's why I loved having you on, because I could tell. I can sense your genuine, authentic enthusiasm for the protocol itself, which I don't hear from a lot of people in the spaces either. They're just not interested in explaining that level of it. Everybody has kind of their voice in terms of what they're trying to educate people on with regards to Bitcoin, but yours is so fundamental to what Bitcoin actually is, which is. I get really excited because I want to understand the actual protocol itself. One of the things with regards to the nonce, and that's particularly when you say nonce, I was like, oh, I got to interject here, because that's where that was like a big, like, aha moment for me. Because the hardest part I've had with understanding Bitcoin is this. People are solving complex mathematical problems. That's what you hear. Oh, Bitcoins, they solve complex mathematic. These miners are solving complex mathematical problems. And that's where some people, myself included, kind of check out. And it's like, oh, well, you have to be a mathematician to understand this complexity. But if you understand the nonce and the SHA256, it's not overly complicated. [00:35:34] Speaker A: It's not complex. You know what it is? I think people substituted the word complex for hard. You have to solve a hard mathematical puzzle, right? And that mathematical puzzle is you have to take these things that I described, and they have to. And it's hard to solve. Mathematicians and computer scientists use the term hard because it takes A lot of computing energy to solve it. Right. Not because it takes a particular brilliant genius who understands all the branches of mathematics and figures out how to use geometry a lot. But there's none of that. There's just this brute force hard to solve prop puzzle which is you, which you need to put in a particular input to get an output that's less than a certain value. But it's, it's such a hard value. It's not, it's not like I need a number that's less than 10, it's, I need a number that's less than 100 gajillion out of set of a hundred billion gajillion. Right. Like that's. And, and I can only brute force it with random numbers. [00:36:29] Speaker B: So again, can I give you my lay person how I'm visualizing this? And, and I'd love for you to kind of pick it apart where I, where I'm getting it, where I'm not getting it. So when I'm thinking of these large numbers and we started going back to binary code, so it's 1-0-01-10-0, whatever. The sequencing is up to 2:56, right. That's the, the, those are the bit components of it. So then to get that number, to validate that number, the nonce is you're changing number only used once. So it's kind of like you're rotating 010101 to try to match. [00:37:09] Speaker A: It's a bigger number than just a 0 or 1. Yeah, but you're like, if we use it in decimal, you're going, you're going 0, 1, 2, 3, 4, 5, 6, 7, 8, all the way up to millions and millions and millions. And you're using a machine that does it really fast. But that's what you're, that's the nonce. It's a bigger space, but. [00:37:23] Speaker B: I see, I see. That's what I'm glad for. A little bit of distinction there. [00:37:27] Speaker A: That's why miners can search this whole space very quickly because they don't have to change the, they can't change the previous block hash. They can change the Merkle root tree by changing the transactions that are in the tree. But for each one of these things, you know, and they change the timestamp kind of every second as a second clicks by. But those are, you know, those are really the only things that go in there. There's another thing called a version bit, but I don't want to confuse people with, with that. What they change is this nonce and so they may run a hundred million. Like they run machines that do trillions of guesses a second. These machines are rated in terahashes. That's trillions per second. And, and so they have a space where they, where they can run trillions of variations on this. But that's why they ultimately have to run trillion sextillions of guesses, hundreds of sextillion guesses as a network, because they got competitors who are also running machines. [00:38:25] Speaker B: That's the hard part of it. That's the hard part of it is running those. You have to run those numbers really fast. Not you, but the machine has to run those numbers half. [00:38:35] Speaker A: Yes. And when you run a trip, when you take like a little drop of water a trillion times, you end up with, you know, a swimming pool full of water. So you use a lot of water. When you do the same thing with electricity, you end up using a lot of electricity. And so, you know, the amount of energy that people are prepared to put into Bitcoin is, interestingly enough, limited by how much energy costs are. And miners are always pursuing the cheapest source of energy so that they can find bitcoin, new Bitcoin and mine new blocks for the lowest possible cost they can. In the, in what's a very competitive world, like anyone can participate. You don't need a license to mine. You just need a machine that can run a lot of shot 256s and connectivity to the Bitcoin network, which is an open source, open network that transmits itself freely on the Internet. So I want to give you just like the Most recent block block 935,943 as, as its block hash. I won't read the whole thing, but it's got that 00000000. And this is in hexadecimal, by the way. So it's like, it's, it's even more, it's. There's 16 characters, not, not 10 characters. Like we have zero through nine in the decimal system. In the hexadecimal system, we also add A, B, C, D, E and F so that we've got 16, but it's 000-000-00000000. So every one of those zeros in binary represents 16 zeros. So, so the odds, the difficulty in finding these things is I, I think I counted something like 20 zeros in hexadecimal, so times 16, which would be like 320 zeros. So it's, it's really, really hard to get number. Find. Find these numbers. Yeah. Sorry. [00:40:24] Speaker B: That's okay. I. This is where again, it comes back. [00:40:27] Speaker A: This is. [00:40:27] Speaker B: I want to come back to the theme again, which is conviction. This system that is happening. It is so far removed from the narrative that is happening in what people talk about bitcoin and what people want to put their attention and energy on, in the. In the general public, that if you're someone who's looking into this or doing this or interested in this or trying to figure out people. Someone reached out to me. It's one of those kind of shoeshine boy things like this. I have an uncle, and occasionally he talks to me about bitcoin, but the other day he sent me this really long text. So I'm like, oh, wow, he's really. Some news is hitting him and. And he was saying, yeah, the people I'm talking to, they're saying that this is gonna. It's a game of musical chairs, and at some point it's all gonna collapse. But it's like, who gets the musical chairs? And. And it. And there's like the lesser fools theories in the same vein where it's. It's like, you know what? I can only sell it to. [00:41:20] Speaker A: Yeah, yeah. Do you know what this is like? This is like when airplanes were new and people were saying, sure, they look like they're flying right now, but they're gonna drop any day. They're gonna drop out of the sky like rocks. You know, you'd be crazy to get on an airplane because they don't understand the engineering. They didn't understand anything of how it worked. They didn't understand lift and drag and. And indeed, these things were a little bit more dangerous initially, before they were. Before they were mastered and the jet engine and, you know, modern aviation was created. People don't walk around saying, I mean, you have your conspiracy theories, but for the most part, people don't walk around saying airplanes are all going to fall out of the sky. It's. It's, you know, it's a. It's a game of musical chairs. At some point in time, it's just going to stop. And because they trust the physics now, not because they actually understand the physics, though. They just see, airplanes don't drop out of the sky. And what we've seen for 17 straight years right now is bitcoin not falling out of the sky. No errors, no double spends, no block reorganizations, no errors introduced into the history of this thing. This thing is the most rock solid invention in the history of humanity as far as Data integrity is concerned. And we talked about this in the most recent and fifth lecture that I did about Bitcoin and energy. In order to make any change to Bitcoin's legacy history, you need more energy. You need to get into the blockchain, more energy than has been used since that entry was made. And this thing is using so much energy that there's not enough energy available to rewrite any portion of it. And there isn't enough equipment and all the equipment is being used to add to it it because the incentive is to, to earn more Bitcoin rather than to try to undo a spend of Bitcoin which isn't worth as much and will be worth even less if you, if you damaged Bitcoin. So Bitcoin is really an. It's like an. It's shielded against any kind of attack. Right? Everyone who runs a node anywhere in the world has a complete copy of the entire history with all the proof of work that's been done on all the transactions that have been done. So if you wipe out half of the Earth, Earth and the other half of the Earth is still fine, Bitcoin is still fine because it's on both halves of the Earth. It's in fact, in every location pretty much that has an Internet connection, there's somebody running Bitcoin. If you want to, you know, if you launch nuclear missiles, you won't destroy Bitcoin, right? You have to destroy all of, all of the power grid all over the world and all of the Internet all over the world. And the Internet was designed to be decentralized, so that as long as any server is running and connected to any other server, there's Internet connectivity there. Bitcoin is essentially indestructible. And not just indestructible, but immaleable. So it's much safer to put your Bitcoin, to put your savings in Bitcoin and you'll have your Bitcoin always than it is to fly in an airplane, which is an incredibly safe thing to do. And I don't worry about flying in an airplane. So, like when, when people who don't understand any of this stuff go around reading the news written by reporters who don't understand any of what's going on, and say this thing is a game of musical chairs and the music can stop any minute and the thing will stop, don't have a clue what they're talking about. And they're not scientific and they're not mathematical. They're just flapping their gums yeah, absolutely. [00:44:31] Speaker B: Absolutely. That's what. That's what gives me a lot of conviction. Like, I don't. I. I wish I had this level of conviction in 2020, because 2020 is when I finally put skin in the game and. And purchased some bitcoin and I had it. I went through Coinbase. I did that. I wasn't. I was aware of self custody, but I was too intimidated by it to do anything. Uh, when the FUD started to happen, I didn't sell all my bitcoin, and I did have financial needs. So it wasn't like I was just selling bitcoin because I didn't have other needs for that to other places where that money needed to go. But I had enough confidence that I'm like, I had. This thing's gonna come back around. I. I don't know why, I don't know how, but I can read a chart and I can see its history, and I know there's smart people in this space, so I'm gonna hold on to a little bit so that I at least have someone who comes back around. And now it. Man, did it come back around. And when it came back around, I was like, wow, I didn't. I sold too much. I should have, like, if I had known what you're saying. [00:45:30] Speaker A: Mario, you and everybody in the world, including Michael Saylor, says they wish they had bought more sooner. Right? [00:45:36] Speaker B: Right, Right. [00:45:38] Speaker A: There's very few people who don't wish they had bought more at some earlier point in time, because there's always a point in time when it was cheaper. Given the conversation that we're having right now, just to, you know, I want to bring it back to technical discussion, but it's like, look at how early you still are. Right? Like, you're actually curious enough to understand what's going on here, while the overwhelming majority of the world is saying that they don't believe in it. And the airplane example is a good example, because in those early days, maybe we need to think of something else that was new that people were really skeptical of, that people here, watching here, lived to see. But people did not believe that this would work. Right. And now they thought it would take three months to get from New York to California because. Because the idea of flying in a plane was absolutely suicidal, and no plane could cover that distance. And now you can do it safely, reasonably, comfortably in five hours. Right. And so, like, what. What changed? There's some comedian who has a joke is if you went to California in the old days, like, you were a different set of people you had, you know, your grandchildren are the ones who showed up in California. Not you, not you. Because you had kids along the way and you died along the way. But like that's how much the technology has, has moved. And, and you're still early enough that you know it. But it's not so early enough that it's vulnerable or fragile. It is, it is completely anti fragile. Every time it gets attacked it actually gets stronger and it's demonstrated it's invulnerable. Like it's not like people are prevented from attacking Bitcoin if Bitcoin was vulnerable. It's sitting out there in wide open open to attack from any single person ever. And, and it's not as though nobody's tried to exploit it or, or attack it. Governments have been against it. Powerful, the best hackers in the world. There's a giant prize for break cracking and breaking bitcoin. You can short all the bitcoin that you want or you can maybe steal some. Nobody's been able to do any of it even though it's out there available to be attacked. So like if you want to know something is not the music's not about to stop. Is like this thing for 17 years has been operating flawlessly with a hundred percent uptime while exp to every attack serve every attack in the world. That's that if that doesn't give you conviction, I don't know what, I don't know what will. [00:47:49] Speaker B: I have it and I have you on because I want other people to have the conviction that are in the space that are starting to feel what we're describing here. Now again I keep coming back to want to summarize it. So if people are feeling lost, it's like there's three pegs in my mind there's three pegs and that's because this is the way you framed it and I learned it from you is understand SHA 256. Then there's the bitcoin network which we touched on which is the mining and the nodes very just like again layperson's. The miners are, they're mining the actual bitcoin. They're actually getting the bitcoin and the nodes are like I see them as validators. Like they're seeing what's actually happening. Yes, validators. [00:48:30] Speaker A: Watch. [00:48:31] Speaker B: They're auditing. What's that? [00:48:32] Speaker A: Yeah, they're auditing everything. And they're also backups because. Because every node is a complete backup of the entire history of the whole thing. So. So they're Enforcing the rules. And they're making a copy of the results of the rules in all these different places all over the world. [00:48:46] Speaker B: Right. [00:48:46] Speaker A: And this is 40,000 nodes or something. [00:48:49] Speaker B: This is the decentralization component of it. You can have a centralized network. And if the network goes down from a one source or two, like the however it's controlled at the top, then your address. [00:49:01] Speaker A: Like Twitter, has a few databases, but it doesn't go down, it goes down. [00:49:05] Speaker B: Bitcoin has not gone down because there's so many. All you need is. And the larger the network gets, the more secure it gets because the more nodes there are, the more opportunities, like, you'd have to wipe out for it to go down. You'd have to wipe out every node, like everybody in every part of the world in different countries and in different spaces, different regions. [00:49:26] Speaker A: You have to wipe out human civilization. [00:49:28] Speaker B: Yeah, I kind of. I don't know if this is accurate or not. [00:49:32] Speaker A: And then bitcoin is worthless, but there's no humans to value it in the first place. Right? Right. Yeah, exactly. Civilization that's using money. I don't want to say all humans are gone, but if we lose the Internet and electricity, it's not long before billions of people start to starve to death. It's not a worry about, like people stop worrying about bitcoin, they start worrying about how their refrigerator is going to work. Work. [00:49:55] Speaker B: Right. Yeah. Bitcoin is not top of mind at that point. [00:49:57] Speaker A: They're gonna get food to their house because there's no power to move things. So like we. We live. 8 billion people live because of our access to energy, that before we started using oil, before the internal combustion engine, the world population was under a billion people. We don't get. Get to live a billion of us simultaneously on the Earth without access to energy. So. And now we don't really get to do that efficiently without the Internet. So. So Bitcoin's not. And Bitcoin doesn't actually depend on the Internet. You can transmit these signals in lots of different ways. It uses very little bandwidth. But then we get into, you know, all the different things. There's an endless stream of fud. And my counterpoint to all of the FUD that bitcoin's going to go away is then why hasn't it already? Right? If it someone could just knock this thing out, why has no one been able to do so so far? It's not like there aren't people who want to knock it out. It's not like there isn't a Big incentive to knock it out. But nobody can knock it out. That tells you something. Yes, yes. [00:50:55] Speaker B: I don't know how much more time I'm going to have you for. So I want to transition from. We talked about. You talked about SHA256, you talked about the bitcoin network. And then the final part in the series is the human element. And this is like, okay, we know we have this software component of it. We know we have these operating systems around that. And then for the average person, so what, so what that we have all these things? What can a person actually do with bitcoin? [00:51:26] Speaker A: Well, this is pretty interesting. You can own coins on the network called bitcoins. And these things are so secure, right? Like you can own gold coins in your house, but if someone comes into your house and takes them, it's theirs. And this scales up, right? Wars have been fought between nations over gold. Spain invaded the Aztecs and the Mayans and took all their gold and killed them all. Won. Many wars, you know, in Europe's history have been fought over, over gold. So gold is a seizable asset. And dollars are seizable in all sorts of ways. They can be taken, they can be physically stolen from you if you have them. Physical inflation is a form of stealing your dollars. It's reducing your dollar's purchasing power. The government inflates the money supply. And what used to cost a nickel now costs a dollar. And what used to cost a dollar now costs $10. And what used to cost a hundred thousand now costs a million dollars. We've all seen inflation. So inflation is a form of seizure, invisible seizure of purchasing power by diluting the money supply through inflating the supply of money. Bitcoin is immune to all of these things. Nobody can. There's only ever going to be 21 million Bitcoin. I'm sure you can explain to other people at another time how it is that that limit is enforced. But it's enforced through the mining algorithm. All the only bitcoins ever issued are through mining. And mining assures that they will only ever be 21 million. And they get issued at a reduced volume them through these cycles called having cycles. So you can do the job of explaining that, but you can own these things. And once you own a bitcoin, the only way to move it is cryptographically. And that's through knowing what's essentially a very large number again generated randomly, so nobody else in the universe can ever guess it again. It's also a 256 bit string. Can be even bigger if you want it to be. It can be as big as you want, but typically, 256 bits being a number that's as big as all the atoms in the universe is sufficient protection that nobody will ever guess that number ever again, as long as you generate it with enough randomness. So don't, don't pick a number like three. You roll a hundred dice and you get a random enough number to, to get it. And then you can use on that number a cryptographic algorithm to generate what's called a public key, that your secret key is called your private key, that secret number number. And you can deterministically generate a number from that that you can share with others. That is called a public key. And that becomes your Bitcoin address or a hash, ironically, a hash of that. You hash it for added security and, and that becomes your Bitcoin address. And when people send money, send Bitcoin to that, because you bought a bitcoin off of them or you did some work that they gave you some Bitcoin for, you sold them something that they gave you some Bitcoin for. The only way that that can be moved is, is by creating a message, assigned a verified message, using your private key at that address. So we won't get into the technical details of what that is, because we don't have time, but nobody, it's like a signature that nobody can forge. And it's a signature that applies only to the message that you send, which is like, I tomer, I'm sending 0.1 Bitcoin to mark Kramer. You don't use your names. You say, I this address, sending this to that address. And you, and you cryptographically sign it, which means that everybody, every network participant can mathematically prove, mathematically verify that the sender did indeed have the private secret key to that, corresponding to that address without having had to reveal that private secret key. And so that's one of the magic things about cryptography. It's called public private key encryption. And you're not really encrypting. You're just signing a message. You're validating a message from what you have. And so once you have these things and you can keep backups on, unlike gold coins or dollar bills, you can keep backups of your secret key in different locations. You can split it up so that it's in two different places. So even if someone breaks into your house and steals a portion of the key, they don't have enough to move your coins. There's a thing called multi signature, which is certainly what I use and what I recommend. People where you can have multiple private keys located in different locations. The typical setup is that you set up your wallet so that two out of three of those need to be used in order to move your coin. So that if somebody obtains one of your keys, they can't spend your coins. And if you lose one of those keys, you haven't lost your coins because you still know where the other two are and they're geographically distributed and you can keep backups of them. So this is something that you can't do with money. It's something that you can't. Like traditional money, it's something that you can't do with precious metals. You can, you can put half of them here and half of them there, bury some here and bury some there. But if you forget where one of them is, you lose half your money. This is not the case with bitcoin. Multi stuff sake. It's like you have to lose a majority of your keys to lose your, to lose your money. So that's what you can do. And, and when you have self sovereign money that you can take anywhere in the world with you, right? Like try taking $10,000 worth of gold or a hundred thousand dollars worth of silver with you somewhere. You have to physically carry it, you have to physically secure it to store it, you have to physically secure it again in a vault, armed, potentially in somebody else's custody. Like you can keep self custody. You can memorize your, your special password, you can do it through mnemonic phrases. There's ways to represent these keys with words. So you can actually keep your Bitcoin in your head. Although I don't recommend doing that exclusively because if you forget them, then you've lost your coins. But there's all sorts of different ways. And so Bitcoin is more portable, it's more lightweight, it's backupable. There's a whole tweet that I've, I made that you can share 10 things that Bitcoin does that you can't do with gold. Gold you can teleport. Like if I can send it to you and you'll have it within a few minutes. I don't even know where you are and you're certainly not within physical distance of me. But if I wanted to give you gold, we have to set up some arrangement where that gold gets to you. And it could be lost in transport. Bitcoin is never lost in transport. That gold that I send you might not be pure bitcoin. Is always 100% pure bitcoin. There's nothing else you can put on the network and no way to dilute it with anything else. So it's a really, really powerful, amazing innovation to the point where I think in the same way that we now look and say, do you know people used to use seashells as money or salt as money? Like, what were they thinking? We will definitely, at some point in the future, say, do you believe people used shiny rocks and pieces of paper as money is like, so primitive. What were they thinking? Like, people could double spend, they could steal, they could inflate, they could forge, like all these terrible, terrible things with money. Now, of course, we have bitcoin, and it's not forgeable, it's not stealable, it's backupable, it's teleportable, it's instantaneous. Is it supply cap? Why would. Why did those people use that? They were so primitive. And in a sense, we were. We didn't know how to create bitcoin until Satoshi figured out how to do it. And suddenly, wow. That's why so many of us are so excited about this thing. Because it presents a capability to humanity that we didn't have before and something as important as money, the medium of exchange, the medium of peaceful exchange between civilized people. And we finally have perfected it. It's a pretty big invention. [00:58:25] Speaker B: It's incredible. And you reminded me of something when you were talking how. When I had Terrence on. Terrence goes by proof of Money. And he does a really good job of educating people on. On how to use. Actually how to use Bitcoin. And one of the cool things that he did is he got me set up on a. On a cold storage. It was warm storage. Cause it was on the phone. But he's like, it's the blue wallet. And he. And he said, this is as close as you can get without actually getting onto the. A hardware device. But the cool thing about it is he did the 12 words. And he does this on bitcoin today every so often. And he does it, I'm sure, on other podcasts and everything. But it's so interesting to your point and how transferable this is. Couldn't do that with gold. You couldn't come on somebody's show and say, we're going to put gold into the air. And then Whoever sees these 12 words can grab that gold and then have it with them. This was a very light. You can have it in real time. Magic Internet money. It is. There's something magical about it. And when you understand it, it's like it's. It is math, it is mathematical, and it can be valid. And if anybody's a thinking person thinking through these things, you can see it. I think to myself, I'm a doctor. I had to learn organic chemistry. And so I had to go through a lot of years of study to understand parts of the body and in the inner workings that are not easily explainable. And even now, if I had to go back and to teach an organic chemistry class or something, I wouldn't be able to do it. But I, I saw and I understood while I was learning it, enough to give me conviction that there are other people that can validate this. And as long as I know there's other people that can validate it, I have confidence in that. So if nothing else, for the people that were listening to this episode, you can at least know that there is very intelligent people like Tomer that have done the work and are able to. I'm so grateful to have you, have had you on, because one of the special things about you is not only have you done the work, but you're very compassionate about sharing the knowledge. And I've heard you say this, like in the bitcoin space, it could be some. I don't have anybody in mind, so this isn't calling anybody out. But sometimes people can say, it's over your head. Don't even think about it. You wouldn't understand it. Where your approach is very much like anybody that wants to take the time to have a deeper understanding of what bitcoin actually is, can do it and it's friendly and it can be as friendly or, you know, as. As it needs to be. And you, you're one of the great voices in the space to educate people and, and help them to get there. [01:00:55] Speaker A: I'm very committed to offering explanations to people who are curious to people who want. [01:01:00] Speaker B: Yeah, I found you very generous, very generous to come on and do this podcast. I'm so happy that we finally got to it. And I hope you consider. Yeah, I, I hope that. I know I had the jury. It drove me and it was. That was the most. That was what frustrated me the most about the jury duty was like, it was. Took me so long to get Tomer on the books and now I'm gonna have to miss it because of jury duty. So I hope you'd consider coming back on sometime when there's, you know, like there's other lectures in the series. You're such a great voice and interesting person in the space. And I hope that I've allowed you to feel comfortable enough to share your perspective. [01:01:39] Speaker A: This was great and I'm happy to come on again if you want to go deeper on some other topic or you know, maybe get a whiteboard session going that we can prepare for and schedule for. [01:01:47] Speaker B: Sure, for sure. And would you like to leave the audience with any final thoughts? [01:01:53] Speaker A: I mean, I just, I would just re echo this if, like, if you, if you really. The more, the better you understand bitcoin, the more conviction you're likely to have in it and also the more important you're going to recognize this invention is to, to, to humankind and to, to you personally. Right. And so I do encourage people to listen to what I've put out, read the essays that other people have put out. There's, there's a lot of great minds in bitcoin who are super excited about what it represents. And you know, it's as exciting as it is to get rich, to get, to make a lot of money because bitcoin, a lot of people have made a lot of money in bitcoin. It's really much more important the, the social impact this thing is going to have where people can and earn money that they know they can save, that they don't have to gamble on the stock market. They risk losing to inflation, risk seizure from incompetent government. The responsibility and soundness of our civilization is in jeopardy. And bitcoin can help restore a lot of it and fortify a lot of it. So it's much more important than just being another investment, but it's also a really good investment. [01:02:58] Speaker B: Yeah, I love that. I love all of that. And I did read your recent article. So if people haven't checked it out, I think you just posted it a couple days ago on Axe. Your very active on X. I hear you in the bitcoin today and other bitcoin spaces all the time. So if you're interested in hearing Tomer live, I believe you have a substack as well. I think I've seen you on Medium. Yeah, well. Oh, Medium. Yeah, I love, I actually like Medium better. There's something more about the interface that's more user friendly. So check Tomer's writing out on Medium and this is a great guy. So if you have, if you have serious questions about bitcoin and you're looking for a trusted voice in the bitcoin space on X in particular, I think Tomer, if he sees a legitimate question, is very happy to help people through this process. So thanks again, Tomer, for coming on and for every. Yeah, appreciate it. Yes, I had to. I just knew it was like, you have such great information and I'm glad I got to just kind of hear it from you directly. And I'm going to see what I can do at the end in terms of trying to give some people visuals as you're talking. It'll be useful for me in terms of. Terms of deepening my own understanding, but I think it'll also be helpful for people to see what you're talking about when, when you're saying it. And Tomer, just stand for a minute just so I can, you know, debrief with you and everybody else. Thank you so much for watching this episode of the Money Adjustment. The whole shebang, like, comment, subscribe. I want to do more of these. I want to get cool voices in the space to help you understand bitcoin and get past the noise that we are all subject to on online. So bye everybody. Thank you for watching this episode of the Money Adjustment. If you want more like comment and subscribe, you can follow me on X at Mark Kramer until the next episode. Stay healthy and wealthy. Yeah, so yeah, I, I'll edit let it after this if it, if anything interesting comes out. [01:04:55] Speaker A: Yeah. [01:04:55] Speaker B: Thanks for coming on, man. [01:04:57] Speaker A: Pleasure. [01:04:58] Speaker B: I recently watched the interview you did with. And I've had him on before too, with Jesse. [01:05:04] Speaker A: Okay. [01:05:05] Speaker B: Tevlaw. Yeah. And I think you've been on his a couple times because I thought I was watching one. [01:05:10] Speaker A: We did one. He wanted to know about my article and then he wrote an article that I liked. I said, let me interview you about your article because I thought it was a good article. [01:05:17] Speaker B: No, I actually love that with the convergence of AI and bitcoin and how those two things come together. And one is a very fast moving infinite technology and the other one's like a slow, steady kind of anchoring technology. Yeah, for sure, for sure. And one other, one other question I want to ask, ask you. This is like a personal one for me and it has to do with the nodes because I was listening to the bitcoin today spaces and you guys were talking about running a node. I, honestly, I don't, I don't. I just got cold storage in 2025. Was like, I finally made that transition to cold storage. So like I, I'm finally appreciating that aspect of it. But you, the deeper down the rabbit hole you go, the more you want, if you're into it, you, you want to run a node because Then you really have more insight into what is actually happening. And so one of my reservations for starting up a node was I reached out to a friend who I trusted about it, and he had looked into, and he's like, it costs $60,000 to set up. [01:06:22] Speaker A: That's a no. Yes. [01:06:25] Speaker B: Yeah, yeah. Okay. [01:06:26] Speaker A: For one, you can run a node on your laptop for no incremental money whatsoever. You download Bitcoin Core or Bitcoin Knots and run it probably in prune mode because you probably don't have a big hard drive with lots of capacity, but you can run it in prune mode to, say, only give up to like 10 gigabytes or 20 gigabytes to the blockchain. It'll prune all the spend transactions from it. And you're running a note, and then you can connect your hardware wallet to your node. Because, like, right now, how do you know your balance of Bitcoin is still there? You have to go to a public blockchain explorer and type in your address. Address. Right? Right. [01:06:59] Speaker B: Yeah. With Trezor, I just plug it. Yeah, but plug it into Treasure. [01:07:03] Speaker A: So Treasure Trezor knows. And you like what your balance is because you're plugging into Trezor's website, right? Right into your own node. And Trezor, you know, so there could be data leaks. Your privacy of your ownership of your coins potentially leaks to, at least to Trezor. Each time you contact, you connect to the web to their node, saying, oh, look, someone's looking at this address from this IP address. I bet you they're looking at their own coins. But so you can run a node for free, right? Like, it'll take a little while to sync up. You have to leave it for a couple of days. But once it syncs up, you can also close it and, you know, every time you open it and rerun the software, it'll sync back up again. So running a node is nothing. If you want to run a 24.7 node and get involved in lightning and self custody, which, as a student of Bitcoin, I recommend it, you know, I think it makes you like, you're very curious. You want to understand about the hashes. You want to. You want to see how things work. It's one thing to understand how planes fly, and it's another thing to, like, get yourself a little plane and fly it. And that's what running a node and you know, and running one of these. So if you're prepared to spend, I think it's like $500 on a Star 9 device. That's one I'm familiar with. I'm not, I'm recommending it because I'm familiar with it, not because I've tried out all the others and I'm, and it's, I know it's better, but it's very good and very easy to use. It's something you put in your basement or your attic or your bedroom and you leave it running. It's the size of like one of these, you know, little cable boxes. It's, it's about that big and that thick and, and it'll connect to the WI fi and it'll connect to the Internet and it'll sync up the bitcoin blockchain and store the full bitcoin blockchain from Genesis to the current block and constantly updating and you can run a lightning node on it. So you can figure out how to put lightning into a lightning wallet and move stuff sats into a lightning wallet and move them around. And there's all sorts of other applications that are privacy related and self hosted that you can run that you don't have to surrender your data to the Internet. It'll probably not be long before you can run AI agents on it. I know that there are already simple versions but not state of the art versions of AI you can run on it, private messaging platforms, all kinds of stuff. But the main use of it is look, be it 24,7 node for Bitcoin so that you can actually natively self custodially run lightning. So there's no hurry. But whoever told you it cost $60,000 to run a no node was so badly misinformed that they're out of their mind. [01:09:17] Speaker B: Was there a time when it was more expensive? Because they've been in. [01:09:21] Speaker A: If he, if he, maybe he was thinking to run a particular model of miner, maybe one that consumes like 1000 consumes like what would it be like not a megawatt but like a kilowatt of energy. If you're consuming a kilowatt, like a kilowatt year might cost $60,000. So if you're, if you're buying enough mining hash power, power to consume kilowatt continuously for a year, you might be spending $60,000 but you might also then expect to mine a bitcoin. [01:09:49] Speaker B: I was going to say you're looking at it in a business standpoint at that point you're looking at more. And I, maybe, I mean because this friend is not, I know he's a smart guy. He might have been wrong on this particular aspect. Or maybe he misinterpreted what I was asking him. [01:10:02] Speaker A: Yeah, there's a lot of confusion out there, but running a bitcoin node is like the whole block size war was fought so that bitcoin nodes would be super cheap to run. That blockchain would like that. You wouldn't even need a big hard drive. That was the whole idea. And that's why there's all this frustration, fury over. Over bitcoin knots versus Core, because Core is welcoming transactions that are bloating the blockchain, requiring eventually a harder. A bigger block, a bigger hard disk. They're saying it's trivial. Other people are saying, well, I don't want it to be trivial. I want it to be trivial to own, to run bitcoin, not to have to buy increased hardware. And we're. But we're talking about like adding another hundred dollars of hardware to last for several years, rather than tens of thousands of dollars a year. So it's. Right. [01:10:48] Speaker B: Yeah. No, I'm glad I listened into that spaces today because I was like, I've been wanting to run a node and my. And then. And you know, you have little. It goes with anything. You get a piece of information that's not accurate for whatever reason, and then it becomes a barrier. [01:11:02] Speaker A: Awesome. [01:11:02] Speaker B: So.