Andreas M. Antonopoulos - L.A. Bitcoin Meetup transcription

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Introduction
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First speaker: So I'm gonna just introduce Andreas. I actually have met him on twitter, couple months ago when the price was kinda skyrocketing, and I pretty much begged for him to come to Los Angeles, and then I ran into him again at Las Vegas conference, and again was begging for him to come. So I'm really happy that he came. Andreas, if you don't know Andreas, if you're in the bitcoin world you know who he is. He's the co-host of Let's Talk bitcoin, it's a podcast, really popular. Founder of RootEleven. And Andreas? He's just one of the strongest voices in our community.
At the Las Vegas conference, it was really exciting to see him speak, because he had just gotten out of a plane from Argentina, and did a conference down in Argentina. And in Argentina, if you know what's happening with the currency down there, I mean, it's a disaster, you know... People are flocking to bitcoin in Argentina because of much more serious concerns than why Americans are flocking to bitcoin, and I think that... You know there was a sense of frustration in your voice when we were at the conference. Because the panel that he was on was really focused on, on talking about "how can we legitimize bitcoin, how can deal with the regulators, and comply with the government, and really, like, embrace these regulations". And I don't know. He just had this powerful voice, which was like "why are we asking for permission if it's something we have every right to do?" And he got massive applause and it was just exciting and reinvigorating. So I'm really happy that he's here to speak to us, and I hope you enjoy. And with that, I will turn over to Andreas.

Andreas: Thank you. So let's get started!

I first discovered bitcoin in 2010, I heard about it, I thought: "nerd money". Sounds funny. And then I ignored it for another 6 months. And then I rediscovered bitcoin in 2011, and, that time, I decided to read the Satoshi paper. My background is in security and distributed systems, so I wanted to read the actual science behind it, and try to understand it from a technical perspective. So I started reading this Satoshi paper. If you haven't read it, you should definitely read it, it's 9 pages of one of the most brilliant pieces of science writing. Every single word in that paper means something. Satoshi was able to predict several things that took years to unfold in bitcoin, and just outlined every aspect of the currency in just 9 pages which is just incredible, I mean. It would have taken me a hundred pages to say the same things. So... Read that paper.

When I started reading that paper, a little light bulb went off in my head. Light bulb... A supernova sized light bulb... And it just completely overwhelmed me, because immediately, I realized this is not a currency. It's not a currency, it's a network, it's a platform, it's an invention. And, once I realized that, the possibilities just started unfolding in my mind, and I went into a state of fugue that's happened 4 times before in my career.
First computer I had, the first internet connection, the first website I visited, the first time I downloaded Linux.

All of those were just revolutionary experiences to me, and they put me in a state of obsession. I wanted to learn everything about this technologies. And for a long time, you know, during the... I guess 1998 to 2010 period, I didn't really see anything that excited me as much. And then bitcoin just hit me in the face like a sledgehammer. And so I spent the last 6 months obsessively consuming, and writing, and coding, and reading everything I could about bitcoin, until I lost so much weight that my family staged me an intervention. Cause I had stopped eating from the obsession. Yeah I'm not a healthy way to do it.
I have a better balance now, but that's the kind of impact the bitcoin had on me because it was something that aligned my interests and my passion for technology with my core principles. Social justice and pacifism, and ending war. You know, things that obviously are impossible to do, but, things that I aspire to, you know.
And so bitcoin was that perfect combination of an incredibly disruptive technology, that also had within it, the ability to empower people.

And so, that started my journey in bitcoin, I switched to doing in full-time bitcoin about a year and a half ago. I founded a company that did a few startups to provide various community services. Not for profit, but to build the community. And I started to get involved in media, and trying to use my skills and my expertise to promote bitcoin as much as I can. At the moment, I'm going at to conferences all around the world to talk bitcoin, and one of the things I'm doing this year is focusing primarily on the developing world. I'm gonna talk a bit about that, and why it's so important.


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The Network Effect
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So, bitcoin isn't money. Money is just the first application on the bitcoin network.
Unfortunately, the bitcoin network, the bitcoin system, the bitcoin invention and the bitcoin currency all have the same name, which can be confusing. So when people first experience this, they think that bitcoin is a currency, because they see the first app. And that's a bit like assuming in 1991 that the internet is an email network. Right? Yes, this is the major killer app, it is one of the things that's going to make bitcoin succeed, but bitcoin success doesn’t depend on the currency, just like the internet success and the impact it had on the world didn't depend on email.

In fact, nowadays, email is what my dad uses, right? And I don't really. I use twitter instead. But, so, something similar is happening in bitcoin because currency is the first application on this platform, on this network. So, let's talk a bit about the invention. What did Satoshi Nakamoto achieved with the invention of bitcoin.
Back in 1975, computer scientists in the distributed system environment first articulated a problem called the Byzantine general's problem, which is a problem of achieving consensus over an insecure network, a network where you don't have the ability to send messages without those being intercepted. And they described this problem using a metaphor of a number of Byzantine generals, generals who have amassed armies to conquer a city, and you have 4 generals (a raid) around this city. And they want to coordinate, and decide on when to attack the city altogether. But the problem is in order for them to send messages from one general to the other, they have to get their runners to go through the city. And, you know, the runners are not making it through the city. And even if they do, they don't know if the message that gets to the other side is really the message from the other general. And so this problem was expressed to describe this, because in distributed systems, when you have a network, when you have computer systems communicating over a network, achieving consensus is something very difficult to do. Being able to agree on what the state of the network is, and how it operates, is something very difficult, especially if you have active adversaries in the system who are trying to corrupt that decision. Right? Like the city that doesn't want to be invaded.

The problem was expressed in 1975 and they didn't have any good solutions. They had some optimizations, but no good solutions. And so Satoshi Nakamoto, when he first expressed this, didn't really talk about the Byzantine general's problem, but immediately, the people who read his paper understood that this might be related to this. And their reaction was absolutely predictable. They laughed at it. Because obviously you can't just solve the Byzantine general's problem, it's gone unsolved for 35 years, who does this guy thinks he his? So they laughed at him and 5 years later, we know it works.
It may not be perfect, it's not a perfect solution to the problem, but it works. And it works well enough. And there's this very interesting thing that happens when you have a technology that's good enough, that achieves network scale, and is able to be distributed over large network, where "good enough" suddenly becomes "perfect". Not because it is perfect, but because it enables the kind of innovation that makes it sticky, that starts accelerating the network effect.
"Network effect" is a term coined by Bob Metcalfe in 1984, he's the inventor of Ethernet. And he identified that on networks, a very interesting thing happens. When you have 2 people communicating and a 3rd person is added to that network, that person not only adds their own value to the network, but they also increase the value of the other 2 people, because they now have one more person to talk to. Right? So if you have an email system with 2 recipients, and you add a 3rd recipient, suddenly, everyone on the network now has an extra recipient. Which accelerates the adoption of the technology. This network effect has been seen in a number of different technologies, especially communication technologies, and bitcoin is one of the strongest network effects ever seen.

Why? Cause it's money. It's network effect, but with actual value. So when Bob Metcalfe said: "The value of the network increases exponentially with the addition of each node", he was using the term "value" metaphorically. In bitcoin, there is nothing metaphorical about it, it absolutely is the literal value of the network can increase exponentially. And that's why we see these logarithmic curves in the adoption, and the price, and the number of nodes, and the number of users, and the number of wallets, and every aspect of the bitcoin system is accelerating, at an exponential rate. We don't do "1, 2, 3", we do "1, 10, 1,000, 10,000, 100,000". So, on those rates of deployment and adoption, things become very different. And it acquires a power that is far beyond the power of each individual node.


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Emergent Complexity
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There's another effect that occurs within bitcoin, which is the issue of emergent complexity. The fact that you can have very, very simple rules on individual nodes, and based on those rules, the network as a whole starts exhibiting very complex behavior.

One of the best metaphors I like to use to explain that, is the leafcutter ant. Which is... an ant. Right? They cut leaves, and the interesting thing about these ants is that on an individual basis, an ant is a very simple organism that works by very simple rules. You can actually simulate, you know, all 200 neurons in an ant's brain on a computer, and have a virtual ant that works like the real ant. You put that in an environment with chemicals, pheromones in a real jungle, and suddenly you have an emergent colony that exhibits behavior and intelligence far beyond that of each individual node.

So for example, the leafcutter ant is the only known insect species that has domesticated another insect species, and farms them as cattle. Leafcutter ants don't eat the leaves, they ferment them with an enzyme and then they feed them to aphids and then they eat the aphid larvaes. So this is an incredibly complex behavior, farming, exhibited by an insect colony, in which none of the individuals in the colony actually have that behavior in them. bitcoin is exactly like that. It's a system that exhibits complex behavior as a sum. That complex behavior emerges from the collaboration of thousands of nodes, all executing very, very simple rules. And that's one of the best ways in nature to organize decentralized systems.

Nature doesn't do hierarchical systems. Humans do hierarchical systems. And usually, humans do hierarchical systems to solve problems of scale. All of the hierarchical systems we have in our society, the institution of democracy and corporations, of nation states, of currencies as we know them today, are based on hierarchical systems because in the 17th century, you couldn't get a message across the continent. So you needed representatives to gather to express the will of the constituents.

bitcoin is simply an evolution of that concept. It is taking the concept of a decentralized system that has emergent behavior and applying it to currency, or more specifically, to a distributed asset ledger which I'll get into in a second. So, what's interesting about this is that decentralized systems are more effective at scale, at large scale, than any hierarchical system can ever be. And they also solve one of the main problems of hierarchical systems, which is that when you have a hierarchy that is organized by people, and institutions. The people who arise to the top of this hierarchy become corrupted. And co-opted. And they gradually subvert the purpose of the hierarchical systems to serve their own needs. And this repeats in every political system and every social system we have, which is as soon as you rise to the top, you pull the ladder, so you can make sure that none of the rabble get up there with you. Right? And you can take full advantage of your nice high position.

Hierarchical systems don't scale, and they don't deliver a quality for very long, because they get co-opted. Decentralized systems scale, and as long as the rules they are based on continue to operate, they continue to deliver the primary goal, which is leveling the field. Leveling the playing field for all participants. One of the things that I believe is that if you have the ability to put a decentralized system next to a hierarchical system, and people have a choice between the 2, the decentralized system will always deliver more value to every node in the network, than the hierarchical system. And it will do it with better accountability, with better predictability, with less uncertainty, with less risk, and it's much harder to corrupt and co-opt. And now we're doing it to money. For the first time in history.

That's a very big deal.
As you can see, I get emotional about this.


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The Other 6 Billions
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So, it's hard to see from the perspective of western nations why this is important, because here in North-America, we have the world's reserve currency. And it's a really good stable currency. I mean, we might disagree and I know there's a lot of libertarians and austrian (?) economist and people like that, who would say, you know, “the dollar sucks”. Yes, it sucks, it sucks a 193 times less than the other 193 currencies, though.

I'd say if you were to put a hierarchy of currencies and you have the dollar up here, and down here is the Zimbabwe dollar, right? And you wanna talk to a Zimbabwean about how they feel about their currency. There is this great picture on the internet, of a stack of hundred trillion dollars Zimbabwe bills. And that stack is used to buy a cup of coffee. So that Zimbabwe dollar has been eroded to the point that it's less valuable than goat shit. And the reason for that is that you can actually burn goat shit better. So you can use it for heating and cooking and things like that, whereas the Zimbabwe dollar doesn't burn very well. It literally becomes less valuable than the paper it's printed on.

So, when we ask ourselves “why does bitcoin matter in North America?” The answer is “it doesn't”. It doesn’t really matter as much. It matter far more in every other place in the world. We have it easy, here. We have a currency that allows us, to a certain extent, to have predictability, to be able to invest in the future.
You go to Argentina, their currency is devaluing at 30% a year, right ? Now, imagine you're a parent and you're trying to plan for the future of your children, and you have your own personal wealth depreciating 30% a year. The education of your children is disappearing in front of your eyes. The future is being stolen from you, by a central bank, right in front of your eyes.
And for these people, bitcoin is now a choice that allows them to achieve economic independence.
Now we would like to have economic independence here, because our financial system is fucked up and corrupt. We all know that. Compared to the rest of the world, you know, it's easy, it's great.

So, one of the things I talk about a lot, is the fact that bitcoin is all about the other 6 billions. And I want to talk a bit about that and explain what I mean. In the world at the moment, the World Bank estimates there are about 3 billion people who have no bank account. But that's a very narrow measure. They're counting only the working adults, none of their families, right? And they're counting only the people who don't have a banking account at all, who live in an entirely cash-based society. But the reality is there's a whole spectrum between the 2 extremes.

There's about a billion people in this world, mostly in western societies, in Northern America, in western Europe, in the upper echelons of the social classes in these countries, who have the ability, not only to have bank accounts, but to have ample access to credit and large pools of liquidities, so they can start businesses, so they can borrow, so they can buy cars, so they can buy houses on mortgages. They have access to international finance. They can transfer money to other countries, with very few currency controls, right ? And they can do international trade with this money, essentially working above governments, and above nation states, in a state of complete economic freedom. That's a billion people.

Then there's the other 6 people. And they may have bank accounts, but these bank accounts have currency controls, they don't have the ability to do international trade. They're stuck in a specific currency that's controlled by a central bank, that uses inflation as a means to steal from the people. Essentially, inflation becomes a form of taxation, right? Because if your currency is depreciating 30% a year, that means that that money is going somewhere. And where it's going, is in the new money that's being printed by the central bank, usually to buy guns, and tanks, and bombs... which is why I'm in bitcoin.

So, one of the reasons I'm interested in bitcoin, is because, in the state of human affairs, if you ask a nation to invest its wealth in order to fund war, the only way you can do that is by stealing, is by lying, is by cheating. If you ask for the consent of the governed to fund war, they will say no. They would rather fund education, healthcare, social welfare, development, things here, not abroad. And that applies here as that applies in any country in the world.

So, one of the things that happens when you have a currency that's not subject to central bank control, is that you achieve separation of money and state. You take away the power of state to use money as a tool of power, as a means of control, and as a means not only of control, but as a means of enrichment. And money has been a means of control for governments for centuries. Until now, each government was able to apply control through money, not only by issuing it, and then taxing in that money, but also by controlling the flows of the money in and out of the country.

So bitcoin is not the 194th currency, bitcoin is the first international currency. bitcoin is the first algorithm currency. bitcoin is the first currency that is not controlled by governments, is not controlled by corporations, is not controlled by banks. It's controlled by mathematics. And we can trust mathematics, because we can predict exactly what's going to happen on the bitcoin network. In the next 10 minutes, 25 bitcoins will be created. Not 26, not 24. In 2016, that will change to 12,5 bitcoins every 10 minutes. I know this. How do I know this? I can read the source code. I can look at the source codes, and I can know exactly how it's going to work. And again, we've never done this before.

So bitcoin offers for the first time, on a global basis, the opportunity for people to make a choice, to make a choice to use a currency that is outside of the control of hierarchical institutions that have become corrupted everywhere. And that's why I think bitcoin is much more than just a currency.

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The Blockchain
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Let's talk a little bit about the technology. Within bitcoin, there is a common distributed asset leisure, the blockchain. What that is, is like a big book that contains all of the transactions that have happened on the network, and that distributed asset leisure allows the entire network to arrive at concession, as to what the current ownership of bitcoin is. I like to think of it a bit like the network layer protocol, like Internet protocol, IPv4. It provides a neutral, and transparent way for transferring value from one owner to another owner, in a way that's accepted by everyone on the network.
Very importantly, the only two participants in a bitcoin transaction are the sender and the recipient. There is no third party. There is no counter party. In finance that has some very important implications. A lot of distractions we have in finance, around fraud prevention, the overheads, the fees, the charges, all of those things have to do with managing counterparty risk.

When you use a credit card, part of the fee you're paying, the biggest fee you're paying is for fraud prevention and for the risk of charge-back that you introduce through the counterparty to the merchant. The merchant doesn't that they're gonna get their money. They get a promise, that maybe Visa might get them the money.
And this applies across the entire financial system. Our financial system is riddled with counter-parties, because that's the legal solution to solving counterparty risk.

bitcoin for the first time enables financial transactions that have no counterparties, where it is entirely peer-to-peer, so that one sender can send to one recipient. Once he encodes that transaction in the blockchain, that is irrevocably redeemable. What do I mean by irrevocably redeemable? It means that as long as you can produce the necessary encumbrance, the necessary proof that you own the keys, you can redeem that transaction and no one can stop you. And in fact, the fact that it's on the blockchain has immediately made that transaction redeemable by the owner. Done. And from that moment on, there is no risk that you can not redeem that transaction, as long as the network continues to exist.

bitcoin also, for the first time, converts money, or asset ownership, into a content type. A bitcoin transaction is about a 350 bytes of information. I can write in HEX on a napkin. I can hand it to someone to type in a computer and Kuala Lumpur, and when it hits the blockchain, I have executed that transaction, I can transmit it over shortwave radio to a listening station, in burst-mode, and no one can stop me from doing it. You cannot stop money that is information. Because in order to stop money that is information, you have to shut down every means of information transfer on the planet. And you can't do that anymore. So stopping bitcoin actually involves shutting down the Internet.

As of a couple of months ago, some groups are now working to introduce a fully indexed blockchain node, on a satellite. So you can put a bitcoin node in space. Good luck shutting that down!
The bitcoin network only requires 2 nodes to be communicating the blockchain among each other and mining, and it survives. So you would have to eradicate it everywhere, simultaneously, and ensure it never comes back.
There's one other form of species on our planet that operates like that, and it's a virus. And we're not very good at eradicating those either.

So, when I hear about the idea that governments will stomp on bitcoin and shut it down, I find that highly amusing... Because it's very similar to the idea that governments can now stop the Internet. They can't. And bitcoin is just an Internet application and can be stopped even less. The biggest difference? There's an economic incentive, a ten billion economic incentive, from all of us who are invested in the bitcoin network, to ensure that that never happens. So I truly believe that bitcoin is absolutely unstoppable, from external perspective today.

Now that doesn't mean that bitcoin will survive, it means that if we fuck it up, it will fail from the inside.

There are certain failure modes that bitcoin can exhibit today. Probably the most serious is a bug that allows someone to subvert the elliptic curve digital algorithm, in a way that's not noticed from a long. And if that's done effectively, you wouldn't know who owns what, and you wouldn't be able to make sure that a transaction was executed by the actual owner of the key. If there was a fundamental bug in the way ECDSA was implemented on bitcoin, that could crash bitcoin.
Then what happens? The very next morning, we start again with bitcoin 2, and we implement a better digital signature algorithm. And all of us get a chance to be back on the system from the ground level. We can now mine on CPU's again! Difficulty 1! And if you have already understood what bitcoin can do and you've bought in to this idea, you'd want to be on bitcoin 2.

So, one of the things I talk about which I think is really important to understand is that bitcoin is a network. And bitcoin-the-invention-of-crypto-currency, the-invention-of-a-distributed-asset-leisure, based on proof-of-work and consensus will survive bitcoin-the-currency.
If the currency goes away tomorrow, the invention has not been uninvented. It could set us back by a couple of years. We're gonna have a terrible job doing all of our public relation and branding again, right? It's going to lose a lot of credibility, but in a few years we're gonna boot it again, and we've got all the time in the world, cause this is history-making technology, that has been invented, has happened, and will change the world.


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The Next Layers
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So, the reason I'm excited about bitcoin is because of all the other applications that can also be built on top of the currency. Already, we're seeing the emergence of additional layers. I talked about how bitcoin (the blockchain) is a network layer that allows you to do transfers of assets from sender to recipient. But within that, there's a transaction scripting language. If you look at how a transaction is executed, when Alice pays Bob one bitcoin, that's actually encoded in a transaction script that uses a fourth-like stack-based language, reverse polish notation (if you're into computer science, you know what I mean).

What that means is that language is capable of expressing much more complex transactions, including multi-signature transactions, but even other conditions that have nothing to do with currency or signatures. You can do trust, you can do escrows, you can do time-locks : you can do infinite complexity within that. And already based on that transaction scripting language, which I think is equivalent to TCP on the Internet, we're now seeing the emergence of higher level protocols: Colored coins, Mastercoin, NXT, ethereum, and a whole bunch of others that are coming along right now.

2014 will be the year of the next layers.

We're already moving the innovation up a layer. And these layers represent the HTTP of bitcoin. They represent the ability to start to innovate a layer application on top of the core transport, to enable other types of assets to be exchanged. For example: stock certificates, that are redeemable by the buyer completely anonymously, fully transferable, that allow the bearer of that stock certificate to both vote (in terms of a board / shareholders election, as well as receive direct dividends to that coin.
So we can reinvent corporate management and governance, on a global distributed corporation basis. You may hear people talk about distributed autonomous corporations : the idea of having a structure that allows people to associate in business, without the legal component, and without the hierarchy of the board of directors, replacing both of those with an algorithm.

bitcoin represents the first step, cause what we've done is replace central banking (the issuance and minting of a new currency) by an algorithm. But at its core, it allows us to do this with all other things that are hierarchical and replace those with algorithms.
There are already coins that can do income redistribution, based on proof of stake. So that's taxation, social welfare, and basic income guarantees, implemented as an algorithm. The decentralized nature of bitcoins allows us to implement meta-politics, politics as an algorithm. Governance as a predictable algorithm.

And so it's not just disrupting money. Money is just the first step. It's going to fundamentally disrupt corporations. It's going to fundamentally disrupt nation states, because it allows those forms of organizations to be redesigned on a decentralized principal, that remove the levers of control, that historically have been grabbed by the first adopters, and manipulated to prevent others to using them.
So equitable solutions can be implemented in an algorithm in a way that cannot be corrupted.

Some of the applications that come out of the bitcoin invention are things like distributed fair provable elections. You can use a pseudo-currency to vote on a global basis. So the hierarchical concept of representative democracy, where you have no direct access to decision making, itself can be disrupted by immediate and direct decision making on a global basis.
You can implement global lotteries. You can implement crowdfunding, global stock markets, where a digital autonomous corporation, registered nowhere, can fund-raise from shareholders from the entire globe, and then implement its corporate strategy and respond to the demands of their shareholders without any regulation. And the shareholders can then execute their decision by voting with their coins, and getting dividends back with their coins. You can implement bonds systems.

So we start by disrupting the core concept of currency, and we do that by reinventing the central bank as an algorithm: we replaced the FED with a hundred lines of Python code (laughter). But that's only the beginning.


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Peer-to-Peer
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Out there in the world there's an enormous need for financial solutions that are independent of corruption. Probably one of the most exciting to me, is the ability to use the payment network to do peer-to-peer payments. And the most important application for that is 'global remittances'. Global remittances represent a 510-billion-dollar market, where migrant workers, residents here in the U.S., in northern Europe and in other rich countries send 510 billion dollars / year home to their own countries and their own families. And this money goes to funds, entire communities and extended families in the poorest nation in the world.

Today, Western Unions and companies like that extract 74 billion dollars in fees from those flows of money. And they do it in the most exploitative and corrupt manner possible, by charging the highest interest rates to send money to the poorest countries in the world. So even as the developed world is providing 150 billion dollars in direct foreign aids to the developing world, that foreign aid is going to the top of the pyramid in these developing countries, and we hope eventually trickles down to the bottom, and we're stealing 74 billion dollars from the bottom of the pyramid. If we solve this problem, we can re-inject that money that would transform communities around the world. bitcoin has the ability, in the remittances market alone, to redirect 74 billions into sanitation, clean water, food, in the poorest countries in the world. And this is not our money, this is their money, and allowing to keep more of it. It just means taking it away from Western Union, and it couldn't happen to a more deserving bunch of crooks.

Peer-to-peer payments are the first step. The next step is peer-to-peer lending. I personally invested in Kiva Lending Club with some of my money. Lending Club is a peer-to-peer lending system that exists mostly here in the U.S., that allows people to get loans for cars, TV's, to restructure their debt, and things like that, by getting funds from other individuals that want to invest directly in those loans. And by diversifying by thousands of lenders, you can essentially cut out the credit-making banks and allow people to extend credit to each other. Kiva does this, on a global basis. So, for example, for a few thousand dollars, I've invested in more than 5000 people around the world, who use that money to re-stock their shop inventory in Kenya, to buy seeds for the next production in Tanzania, to buy a motorcycle as a taxi in Zimbabwe. And this is something you can all do, kiva.org, it's very easy.

But Kiva is a centralized approach to doing this, and it's limited in its reach. We can redo this on a decentralized basis and provide peer-to-peer lending, where an individual in a developing world can actually source credit from thousands or tens of thousands of lenders from around the world. Do you really need a credit rating if you give someone a dollar ? But you get ten thousand people to give a dollar, and you've changed the community.

And after peer-to-peer lending, we can do peer-to-peer crowd-funding. We can allow organizations to do kick-starters, in a completely decentralized fashion, to raise funds to start new innovative businesses. Without a middleman, without the banks, just directly peer-to-peer, where individuals in the bitcoin community can invest in the businesses around the world that they want to invest in directly, without regulations, without middlemen.

So, peer-to-peer payments, peer-to-peer lending, peer-to-peer crowd-sourcing : Western Union, the Big Six Banks, and all of the stock market. And that's just the beginning. bitcoin is the most disruptive thing that has happened at least in the 20 last years.

And the great news is that by the time they figure this out, they've already lost.

I think they've already lost.
And they haven't figured this out yet.


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Deliberate Distraction
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I also like to address the issues of crime and money laundering on bitcoin because that's something that comes up often and it's such a ridiculous issue. If you watch the senate hearing on bitcoin, only one of the senators really grasps some of the disruptive effect and started asking questions about how this would affect the monetary policy of the FED. All the other ones were talking about whether there would be money laundering on this new network, completely missing the point.

First of all, out of the 7 and a half billions of people on this planet, how many of them are going to use bitcoin for criminal purposes? And how many of them are going to use it to achieve personal empowerment? There's more of us than there are criminals. Secondly, the vast majority of crimes happens on one currency : the U.S. dollar. In cash. Everywhere. If I manage, somehow, to buy a joint for a bitcoin on the Silk Road, I've added a tiny amount of bitcoins to a pipeline that is being founded, from planting to cultivation, to distribution, to processing, to smuggling, all the way until it reaches me. And I can't roll up a bitcoin and use it to actually snort the drugs up my nose. But you can do that with a dollar.

This is a distraction, and it's not an arbitrary distraction, it's a very deliberate distraction.

On the Internet.
When we started using the Internet, I was on in 1989 as a teenager, but really got into it around 1991. I remember clearly, the Internet was not an engine of innovation and growth. The Internet was a den of thieves, pornographers and terrorists, and it's exactly how it was portrayed by the media. And we were asked the exact same questions about the Internet then, which was "What do you mean, anyone can publish? What do you mean, anyone can say anything without any controls? Society would implode, that's impossible, we can't do that!" And so now we're having the same conversation. "What do you mean, people can send money anywhere in the world without controls?" Well guess what, that's how it's always been.

The current experiment (a fiat-based currency, that are not tied to tangible goods, that are used to fund war, that issued by central banks, with income taxation directly out of a worker's paycheck) is a sixty-year failed experiment. We have the opportunity not to bank the other 6 billions, but to un-bank all 7 billions of us.
We have the opportunity to allow the developing world to leapfrog directly from their current state of cash-based societies, to digital cash societies, and bypass the entire fiasco failed experiment of central currencies that we've experimented in the western world. And they're going to take this opportunity just like they leapfrogged landlines and went directly to cell phones.

In Africa, you see this one-foot square panels on huts, huts that have no running water and no electricity. Huts that use wood to cook their food. And guess what that solar panel is doing? It's charging a Nokia R100 dumb phone. Because with that SMS connection, the person in their hut in connected to the world : they can find out the price of grain in Kinshasa without having to travel 40 miles. They can use M-Pesa, global payment network based on cellphone minutes, to create 40% of GDP of Kenya, completely bypassing the official currency. If we are able to simultaneously down-tech bitcoin, and up-tech the means of using it, we can allow the developing world to bypass currency as we know it.

So, that's my vision, that's why I'm in bitcoin, It's not my vision, it's the vision I got from talking to bitcoin communities all around the world, and so I'd like to wrap it up there, so thank you very much.