Created: December 5, 2021
Modified: January 27, 2023

Episode 59: What Is Bitcoin and How Does It Work?

Today’s question is, “What Is Bitcoin and How Does It Work?”

Representation of Value

In a sense, Bitcoin is a currency, like the dollar. Let’s say we’re back in ancient times and I wanted to buy a goat from you. I would have to find something you wanted and trade you that item for your goat. Maybe a bale of hay, or a tractor, something like that. So, I’d have to go find this item, give it to you, and then you would give me your goat. That was trade back then. Well, obviously that was inefficient, so people came up with money. In ancient days it was coins, today it’s dollars for us in the US. If I want to buy your goat today, I simply give you dollars and then you use those dollars to get what you want. I could pay you in Bitcoin, and so think of it like a currency. Bitcoin is also a representation of value. There’s a lot of technology that goes on behind it, you’ve probably heard the words blockchain and so on, but Bitcoin itself can be used as a currency.

Challenges with Bitcoin

The challenge with Bitcoin is the value compared to the dollar bounces all over the place. You’ve probably heard that Bitcoin was worth $60,000 and then it went back down to $40,000, then it went back up to $60,000. That’s because the value of converting Bitcoin to dollars jumps all over the place, and that is a challenge right now with using Bitcoin as currency. So, will we use Bitcoin in the future as currency to represent something where if I want something from you, I can give you a Bitcoin and you can give me that item? Maybe it’s a car that you’re looking to sell? Yeah, possibly, but the value needs to stabilize, or we need to agree that we’re just going to use Bitcoin as currency versus dollars or euros or whatnot.


It is absolutely a valid store of value, a representation of value that we can use. But again, if we’re going to convert Bitcoin back to dollars, that becomes a challenge. So, think of Bitcoin as currency. It’s in its young stages compared to a currency. There’s some secrecy that was touted as we’re going to be able to keep those transactions secret from taxation and so on. That has yet to be seen, but Bitcoin is just simply a store of value.

Thanks for joining me and I hope you found this information helpful!

P.P.S. Feel free to submit questions here for a chance to have them answered!

  • Sandy and Thomas C.
    Sandy & Thomas C. are clients of Johnson Brunetti and received no compensation for their statement.

    “We always felt our financial needs were in very capable hands. Alex Angst is great to work with. Our advisor always made us feel he had our best interests at heart and explained things so we could understand them.”

  • Lisa D.
    Lisa D. is a client of Johnson Brunetti and received no compensation for her statement.

    “Working with Johnson Brunetti has had a positive impact on my life by providing me with the knowledge, confidence, and peace of mind to move forward with my retirement plans. The process of getting to this point, through their guidance, has been informative and pleasurable.”

  • Ken D.
    Ken D. is a client of Johnson Brunetti and received no compensation for his statement.

    “I view your company as one that puts my interests first. I think that is very uncommon and very refreshing. “

  • Jeanne P.
    Jeanne P. is a client of Johnson Brunetti and received no compensation for her statement.

    “Matt does an awesome job! So easy to understand and he listens to our concerns and addresses them! happy I chose your firm!”

  • Anonymous
    This testimonial was provided by a client of Johnson Brunetti and received no compensation for their statement.

    “I have been pleased with the help and service I have received from the company. I have met several team members on Eric’s team and have found all of them very well prepared to meet with me when reviewing my portfolio. I always feel that I am an important customer and appreciate that very much. I hope the firm continues to focus on the customer and maintains its great service. I think you do a great job for someone like me!!!! I’m happy I chose your firm!”

Johnson Brunetti
Welcome to Our New Website!
Everything was designed with you in mind, making our retirement planning resources more easily accessible to you.
Check out your new resource center, where everything can be organized by article type or topic
Are you ready to speak with a financial advisor?
Johnson Brunetti

Investment Advisory Services offered through JB Capital, LLC.
Insurance Products offered through JN Financial, LLC.
Atlanta • Boston • Hartford | Tel: 800-208-7233

JB Capital LLC is a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. Information presented is for educational purposes only and is not intended as an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.

JB Capital's Form ADV | Disclaimer | Privacy Notice | Client Relationship Summary

*Information about our Affiliation with the UConn Huskies

Johnson Brunetti is a sponsor of WFSB Better Money, WCVB Better Money Boston, WSB-TV Better Money Atlanta, WTNH Money Wisdom, and WTIC Money Wisdom.