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

You might have seen the price

has been skyrocketing recently.

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

of Bitcoin and is gonna start accepting it as payment.

And you might have heard

of all these weird things called a Dogecoin

which are apparently going to the moon.

As such, this video is my personal guide

to the world of Bitcoin and cryptocurrencies.

It's the introduction that I wish I would have

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

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

to my friends whenever they ask me,

Hey are you investing in Bitcoin?

Why are you investing in Bitcoin?

How does it work?

Is it safe?

Are you gonna lose your money?

Isn't it illegal?

All of this sort of stuff.

So this video, which is for informational purposes only

and should absolutely not be construed as financial advice.

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

Firstly, I'll talk about what Bitcoin is

and how cryptocurrencies in general work

and why they work and why they're legit.

Secondly, we'll talk about why Bitcoin

and crypto is so controversial

and I'll share my hot takes about that.

Thirdly, we'll talk about,

why I personally do invest in Bitcoin

and crypto and I will share my portfolio allocation

and the reasons behind that.

And fourthly, we'll talk about

how you can get started investing in crypto.

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

with lots and lots of caveats

and cautionary tales along the way.

As always timestamps in the video description,

so you can jump around if you feel like it.

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

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

And on the channel, we normally explore the tools

and strategies that help us live healthier,

happier more productive lives.

But I have a personal pension for the topic of money

and I think more people should learn

about money and investing and finance

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

So here we are talking about this video.

Anyway, let's get into section number one.

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

and build up our understanding of Bitcoin

from the ground up.

Now, Bitcoin is a cryptocurrency.

There are hundreds of other cryptocurrencies out there

but Bitcoin is like the original, the OG.

And it's by far the biggest cryptocurrency around,

which makes the question, what is a cryptocurrency?

So here's my definition of a cryptocurrency

based on four central concepts.

A cryptocurrency is a virtual currency based on a ledger

which is decentralized and secured by cryptography.

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

Now what is a currency?

A currency is just a medium of exchange.

It's what replaces the old school bartering system

we used to have, when it would be like,

I will give you this bushel of wheat

in return for the shoe that you have kindly made me

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

Obviously, that system of bartering is quite inefficient

because you have to store

a lot of stuff that other people want

and that's just a bit of a pain.

And so we invented currency in the form of coins

usually as a system that everyone recognized

to be able to exchange stuff

without having the physical goods.

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

and then I could save up my copper coins

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

Back in the day currency itself

was tied to metals like gold

and silver and copper, which had like different values.

And so the actual metal of the coins

was worth something because everyone agreed

that these metals were somewhat precious

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

of paper notes and paper notes

aren't inherently worth anything

because the paper is just worth paper

but currency is worth something

because everyone agrees that it's worth something.

If I take $100 dollars almost anywhere in the world

most people, I mean most places in the world

will recognize that $100 is worth $100

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

If hypothetically the whole world were to tomorrow decide

that the U S dollar is a meaningless currency

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

Then the U S dollar would be worthless.

So really when it comes to currency

it doesn't mean anything real.

Currency is kind of just an abstract way

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

So coming back to Bitcoin, Bitcoin is virtual currency.

It is a digital form of currency,

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

and exchanging money over the internet.

Way back in 2009 when Bitcoin was first invented,

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

form of currency, but over the last decade plus,

as Bitcoin has become more and more popular,

people are starting to say

that maybe Bitcoin could be the currency of the future.

Maybe in the future, maybe a few years,

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

and services using Bitcoin over the internet,

rather than by using these old school,

old fashioned centralized banking

and government institutions to exchange U S dollars

and our actual local currencies.

Okay, so that was the currency part of it.

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

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

Let's now talk about the ledger system

that holds it all together.

And the thing to understand here

is that Bitcoin is effectively one giant huge spreadsheet.

This spreadsheet is called a ledger and in the spreadsheet

we've got a record of every single Bitcoin transaction

that has ever happened since January, 2009,

when Bitcoin was, was first invented.

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

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

with a group of friends and you don't wanna

kind of keep on splitting the bill

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

Therefore, someone makes a spreadsheet

to keep track of who owes what.

And so line one in the spreadsheet might be

Ali owes Sheen 12 pounds,

line two might be Jake owes Molly, 18 pounds.

And the idea is that as our holiday goes on,

we would keep on adding stuff

to our spreadsheet or a ledger.

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

and then actual money would exchange hands.

Now, assuming you trust your friends, to be honest

this spreadsheet actually works reasonably well.

You can basically treat this whole spreadsheet

as virtual money.

I am giving my friend virtual 10 pounds

in exchange for them paying for dinner.

Other friend is giving me virtual 20 pounds

in exchange for me paying for the boat ride.

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

but imagine hypothetically, if the whole world were to run

on a similar spreadsheet, where instead

of money ever exchanging hands like physically

it would just be a line item in the spreadsheet.

Now imagine a world in which everyone trusted

the spreadsheet and everyone was being honest

and good and nice and friendly,

and only adding legitimate things

to the spreadsheet that everyone agreed on.

That's basically what Bitcoin is.

It's this giant spreadsheet that keeps track

of absolutely every single transaction

that's ever happened regarding Bitcoin

since the start of Bitcoin.

And so that means that this spreadsheet

has a record of everyone in the world

who has ever bought and sold Bitcoin

and it tells you how much Bitcoin

they've bought and sold, so you can work out

how much Bitcoin each person has in their account.

Now let's say I have two Bitcoins in my account

which is quite a lot of money these days.

And I were to give one Bitcoin

a friend we could add to this spreadsheet.

Ali gives one Bitcoin to Jake.

And because it's all in one spreadsheet

the spreadsheet knows that my Bitcoin account

has now one Bitcoin and Jake's Bitcoin account now

has one Bitcoin in it as well.

Now, fundamentally, this is all Bitcoin really is.

It's just a giant spreadsheet

but it's got some other fancy features

that make it really really clever,

and that make it a potential candidate

for the currency of the future.

See, the problem with our ledger system

is that if it's on a spreadsheet

usually it's one person who's maintaining the spreadsheet.

So let's say I'm on holiday with friends

and everyone trusts me to do this, to be the spreadsheet guy

because I'm a massive nerd.

And therefore, anytime they want to post a transaction

they would say, Hey, Ali,

Catherine has given Lucia 10 pounds

and therefore I will add it to the spreadsheet.

This is fine because my friends trust me

and I'm a massive nerd,

but we don't want a entire system

of financial stuff based on this centralized model

because that's kind of what we have already.

Like every bank financial institution,

government in the world is some sort

of centralized authority that handles money.

And so the us dollar is tied

to the federal reserve and the U S government,

the UK pound is tied to the bank of England

and then it's all somewhat related

to like the international monetary fund.

And then like the government has something to do with it.

But essentially it's a small group of actors

like governments and banks that manage the financial system

for basically every country in the world.

And so the third part of our definition

of a cryptocurrency is that it needs

to be decentralized and the way that Bitcoin

and all these other cryptocurrencies work

is that there is no central person in charge of them.

There is no one person or one company saying, Hey,

I have got the master spreadsheet.

Instead, what happens is that every single person

in the world can have a copy

of that master spreadsheet if they want.

And so with Bitcoin, for example,

there are millions of people around the world

on their computers who each have a copy

of the master spreadsheet.

And each of those computers are running software

that's constantly checking to make sure

that master spreadsheet is legit.

And it's the same as every other copy

of the master spreadsheet on the network.

And that means that if you wanna hack a Bitcoin

it's quite hard to do because there's like millions

of people all around the world

who are helping to maintain it.

And it means that if you want to unduly influence stuff

like if you're a bank or a government

or some other evil person, it's quite hard to do

because again, it's decentralized.