Bitcoin is punk rock – deal with it!


[ANDREAS] Hi everyone. No slides in this
[presentation]. I’m sparing you that ordeal. How many of you have heard of Bitcoin before today’s
session? All right, pretty much everybody [has]. Great. [Looks like we are] doing a good public relations job.
How many of you own or have used bitcoin? A much smaller number of people. If you have never
used bitcoin, I have a pledge from two other people… who will be speaking after me; [we] would be
very happy to help you set up a wallet today. Come see us after these talks. We will [help you]
set up a wallet and give you a bit of bitcoin, to help you try it out and experience it. Bitcoin is better experienced than explained. I will not give you a whole bitcoin, because
that is worth quite a bit of money right now. I will probably give you £1 in bitcoin. You may be
wondering, ‘What could [I] do with £1 in bitcoin?’ With £1 in bitcoin, you can do about fifty transactions. That will just give you a glimpse
into what is possible with bitcoin, which would be simply impossible with any other
kind of [currency] system [besides cash]. What is Bitcoin? I won’t try and explain Bitcoin in fifteen
minutes. I wrote a book which answers that question. It is three-hundred pages long, and it was obsolete
the moment it was printed. It must be corrected… and updated every three months,
just to keep up with “what is Bitcoin?” If you do get engaged in Bitcoin, you will quickly
find out that Bitcoin is mostly none of the things… you thought it was. It is a lot more than, and very different from, what you thought. Many of the people who get involved in Bitcoin describe
this experience as “going down the rabbit hole,” this instant effect where you feel that something
special, something amazing, is happening. Then you start reading about Bitcoin, get obsessed,
read more, annoying your friends and family about it. You start talking about it at parties and dinner parties, and your significant other says, “Oh god,
here we go again… It’s the Bitcoin talk.” Then you get really obsessed and read about it for
months. You don’t eat and get even more obsessed. That experience has happened
to a lot of people in Bitcoin. Bitcoin is not just a minor, incremental
change. It is not just a payment network. Bitcoin is one of the most fundamental
transformations on the system of money. What is money? That becomes the center of
the conversation when you talk about Bitcoin. You realize that the vast majority of
people don’t know what money is. We use it every day, and yet most of us
really don’t understand how it works. We think we understand how it works,
but try explaining it to a five-year-old. You will quickly find out that [there are]
limitations on your knowledge on money. The average person can’t answer more than three
questions from a five-year-old about what money is. “Mommy, why can’t we have more money?
Who makes money? What’s it made of?” Most parents, after about three questions, will
revert to the good old “go do your homework,” and that is the end of that conversation. How old is money as a technology? It is not thousands
of years old, but hundreds_ of thousands of years old. We don’t [accurately] know how old money is because
every archaeological site has evidence of money in it: beads, feathers, stones. We [know of] four major transformations in the forms
of money: physical objects (like beads and feathers), to precious metals about five or six thousand years ago,
transformed through many civilizations. Including Greece, where I come from. Then we start seeing the evidence of paper
money, an abstraction of the previous metals. In the 1920s and 1930s, we gave up on the precious
metal part and went for just paper. Very convenient. In 2008, Bitcoin happened. A lot of people look
at Bitcoin and say, “It is just a payment network.” “It is [not] a currency. It is not a big transformation.”
But that would be a mistake. Bitcoin is a fundamental transformation of every aspect
of money, the most abstract form of money we created. The name is terrible. It has the word “coin” in it,
and a coin is [a very] physical form of money. Bitcoin is the least physical form of money
you can imagine, so that can be confusing. Bitcoin isn’t [just] a currency,
Bitcoin isn’t [just] a payment network. Bitcoin is a protocol, a network-centric platform
for recording ownership on a peer-to-peer basis. Those are fancy words, but it means this: saying “bitcoin is a currency” is like saying “the internet
is email.” Currency is [just] the first application. If you have a [decentralized] platform that allows
you to record ownership, the first type of asset… that you are likely to record on
that ledger is obviously a currency. [Currency] is the most obvious application, but it is only
the beginning. Bitcoin is not money for the internet. Bitcoin is the internet of money,
and currency is jut the first app. Why is it so hard to grasp what Bitcoin is?
It changes many of the fundamental aspects of money. Change is difficult, and the experience of
trying to explain Bitcoin changes over time. When I first started trying to explain
Bitcoin, I was faced with denial. People would tell me, “bitcoin isn’t real money.” Serious scientists wrote theses on why bitcoin isn’t
real money. Yet I was living on bitcoin for two years. My own personal experience was a direct counter-
factual to the [assertion] that bitcoin is not real money. If I can use it to buy goods and services, it is money.
If I get paid for my goods and services, it is money. Denial was the first reaction, and then we went to anger.
“Bitcoin is about drug dealers, terrorists, paedophiles, and criminals!” I had people ask me, on air, whether
I was a drug dealer [while] I tried to explain Bitcoin. They didn’t ask the HSBC banker if they were a money
launderer, but they asked me if I was a drug dealer. That is kind of bizarre. What comes after anger?
We have reached the stage of bargaining. “Bitcoin is really disruptive, strange, and different.
Let’s try to polish it up, smooth out the rough edges.” “Let’s make it more palatable to regulators,
more comfortable for the corporate boardroom.” “Beyond Bitcoin: unleashing the power of the blockchain!
Bitcoin is just a silly currency.” “The important stuff is the blockchain.” [They will have] this great marketing and white-washing
experience, where [they] pretend to want disruption. This is the buzzword of the time. “Disrupt! “We want to
disrupt our industry, our company from the inside-out.” “We want to change the way that banking is done.”
Really? Great! Let me tell you about Bitcoin. [It is] open, decentralized, permissionless innovative,
and completely without borders. Identity and KYC? Won’t do it, can’t do it. That is not a bug, it is a feature. [Centralized] control? No. Can’t do it.
That is not a bug, it’s a feature. You want disruption? Here you go! Radical disruption.
Completely decentralized money with no borders. “Well, calm down, Che Guevara. We said ‘disruption,’
but we didn’t mean that kind of disruption.” “How about we take this decentralized, open, borderless,
network-centric money without intermediaries… and we add a bit of control?” “Centralize it a tiny bit? Maybe throw some
KYC in there? We will rename it ‘blockchain.'” “Now we can start investing in this stuff.” But if you look at what companies are being invested in,
[they aren’t] companies even doing ‘blockchain.’ They are doing centralized banking with bitcoin currency,
but without any of the disruptive potential. Bitcoin is not smooth jazz,
Bitcoin is punk rock — deal with it! It is disruptive and that is precisely why it is so difficult
to swallow, to swaddle in traditional investment terms. Bitcoin is the first completely decentralized,
transnational platform for exchanging value. It has no borders and doesn’t care whether you like a
transaction. It is based on mathematical verifiability. It is the internet [of money], unleashed,
unvarnished, unpolished, and uncensorable. [Even] if you can’t swallow that pill, another startup will
[embrace] that innovation and disrupt your industry. They can swallow that pill. As we saw with the internet,
when the first-tier telecommunication companies… wanted to control and polish the internet,
make it nice and cozy, [they] came up with… ISDN, colored faxing, and CompuServe. A few of the third-tier companies, who knew they
couldn’t compete on that field, took to the internet. [They] used it as a trojan horse to disrupt
the entire telecommunications industry. They used that early first-mover advantage. If you think Bitcoin companies will get a banking license, play nice with regulators, and do something mild… just to jump on some kind of retail shopping
environment, you are missing the point. Bitcoin is about the other six billion.
Bitcoin is about the unbanked and borderless. Bitcoin is disruption on a scale that most
people haven’t even begun to imagine. If you are a startup, understand that not having
a banking license is an advantage in Bitcoin. Bitcoin solves a primary consumer problem in finance. How many consumers have [said], “I’m with Lloyds
bank, but I’m thinking about switching to Barclays… because they have a robust KYC program.” [Laughter] “I’m worried I might
accidentally money-launder.” “I want some nice protection from their
compliance department.” [Laughter] Consumers care about identity theft, which
is a plague upon the [financial] industry. It has become a plague because personally identifiable
information must be collected by every intermediary, on every transaction, and then hoarded [long-term],
creating giant honeypots that attract hackers like flies. You can’t protect that information, if you are realistic
about it. No one can protect all that information. The banks can’t protect that information,
the retailers can’t protect that information, the credit card companies can’t protect that information,
[and even] the NSA can’t protect that information. The U.S. government was unable to protect the
background [check] data for security clearances. [All their prior history of] drug addictions,
criminal convictions, and sexual perversions, of every single person in the U.S.
government who got a clearance. They couldn’t protect that information. You think you can protect my Social Security number,
or my date of birth? Don’t fool yourself. The only way to protect personally identifiable
information, is to not collect it. Guess what? Bitcoin — by design, from day one — solves identity
theft by basing trust on verifiable mathematics, on programmable money, on automated escrow
without intermediaries, [where] identity is not required. [Just there], you have one of the biggest breakthroughs
in payment systems we’ve seen in the last fifty years. What do [they] do in response to that?
Try to ram KYC on top of Bitcoin and say, “Let’s collect information on everybody
who is using bitcoin on an exchange.” Guess what [will] happen then, if you have a
completely open and decentralized network? It is like [trying to] check for tickets on only two
of the one hundred doors at Wembley Stadium, wondering why people who don’t have tickets
are using the other ninety-eight doors. If you [force] KYC on the exchanges, you will
end up surveilling “the innocent” and the idiots. Those are the only people who
will still be using exchanges, now you have a giant honeypot of surveillance
information on the innocent and the idiots. You have endangered the private information of every
single customer, while achieving absolutely nothing… in terms of preventing criminal activity. Bitcoin [will] not be leashed. You can’t go beyond
Bitcoin to “unleash the power of the blockchain.” The blockchain itself is boring technology; it is a ledger,
a slow database. It’s Quicken, only slow and distributed. What is really interesting about the blockchain is the
possibility of completely decentralized consensus, a system that does not require intermediaries,
that does not require trusted third parties, where there are only two parties in a transaction
(the sender and recipient), no counter-parties. Transactions are verifiable on their
own, without appealing to authority. That is the revolutionary power of Bitcoin; that is
the disruptive innovation. Banking changed in 2008. If you think the end result [of banking] will be
everyone running banking [apps] on their smartphone, you are missing the point. A decade from now, a ten-year-old will be able to run the
[equivalent of the] SWIFT network on their smartphone. They will be a bank, a brokerage
house, [through] their smartphone. By the time they are allowed to open
a bank account at the age of sixteen, they have spent five or six years using bitcoin
on a day-to-day basis as their currency. In a global connected world, credit cards don’t
work for minors. They will be using bitcoin [first]. In fact, we’re already seeing this! By the time they get a bank [account],
they have six years of experience with bitcoin. Try explaining to them what “three to five business days
to clear a check” means. Try explaining what a check is. Try explaining why they have to pay you £5 to keep
their account. Try explaining what an overdraft fee is. While you’re at it, you might as well
sell them a landline and a fax machine; they [will be] just as likely to get one of those
as they are to open a bank account. Blockchain technology [will] be very useful for banks
to disintermediate the clearing houses and settlement, which offer centralized control over
transaction, equity, and securities clearing. [Blockchains may] reduce the cost of doing those things,
change the financial equation for settlement… and clearing on a global basis. But that is not revolutionary or disruptive. Bitcoin [will] bring banking to feature phones over SMS. Today, there are more people with feature phones and
SMS, than people who have access to clean water. Every single one of these text-messaging phones
can become a loan origination station, a Bloomberg terminal, a SWIFT terminal, a banking
system that serves other phones connected to it. There are six billion people out there who have no
access to international credit, liquidity, and equities. [These people don’t have] the ability to move
money between currencies or across borders, to do import and export. Those are restricted capabilities of the privileged few. Bitcoin can deliver banking services not by
“banking the unbanked,” but by de-banking all of us. Bitcoin can do that under the title “Bitcoin” or
whatever other name we want to plaster on. The underlying invention, of a completely
decentralized protocol for money, is here. It happened in 2008 and it is not going anywhere. When you see that next article in the financial
newspapers, telling you Bitcoin died because… the price crashed (“Is this the end of Bitcoin?!”),
go to Bitcoin Obituaries and add [that article]… to the other 150 obituaries
written for Bitcoin since 2010. One thing Bitcoin [always] does: it refuses to die.
It is a relentless anomaly, an incubator for black swans. It refuses to die because there is no center.
There is nothing to co-opt, nothing to stamp down. There is nothing to shut down, filter, or control,
because it is completely decentralized. It takes a while to understand that. If you want to be involved in one of the most disruptive
[movements], one of the most exciting spaces, [with] one of the most amazing inventions in
computer science over the last several decades, the key focus is decentralisation. Don’t make the mistake of ignoring
the disruptive potential of Bitcoin, to get some watered down, smooth jazz, soft version
that feels comfortable at the executive boardroom. When faced with strategic disruption of
that scale, there are two places you can be: Blockbuster or Netflix, Blackberry or Apple.
Or you can be Kodak. [That ended well]. That is why Bitcoin is the important thing,
not the blockchain. Thank you. [Applause] [ORGANISER] Andreas, your Greek name
leads me to make the first reference today, to the Greek economy. I noticed in the last few days,
on Google Trends, that from inside Greece… there have been a lot of people
researching cryptocurrencies. How could bitcoin make a difference in a
situation like Greece is in at the moment? [ANDREAS] It can’t, not today. Greece is not ready
for bitcoin, and bitcoin isn’t ready for Greece. Greece isn’t ready for bitcoin because
[they have problems with] liquidity. If you have cash, you don’t need bitcoin [as much].
If you don’t have cash, [it is harder to] get bitcoin. The problem isn’t solved by switching currencies,
certainly not by adopting a cryptocurrency through… a national initiative, which would be an utter disaster. That is worse than the euro. Bitcoin is about
independent choice, having a safe haven… outside of the current currency control systems. People are interested in bitcoin under these times of
crisis, because with bitcoin there can be no bail-ins. There can be no bank holidays, no seizures,
no freezes, no account limits, no currency controls. Bitcoin allows any individual to send money anywhere
in the world, and it is completely uncensorable. In a world where we see these crises, Bitcoin
shows us a vision of a potential safe haven. It will not happen today, any more than you could
disrupt the media and entertainment industry… in the early 1990s [with] the internet,
because it was too early [then]. But those of us who have the vision can see it coming. One day, perhaps in ten years, we will
see massive disruption from [Bitcoin]. [ORGANISER] Are there any governments today who are
seriously thinking about bitcoin and the blockchain, maybe as ways of making tax collection more efficient? Are there any governments
we need to pay attention to? [ANDREAS] Not really, because governments
are not the [creators] of currency anymore. Bitcoin launched an era of non-national currencies. In retrospect, national currencies and central banking
occupy a very short period [of human] history. There were really no national currencies
or banking before the last century. Maybe there won’t be any after
a few decades, after this century. But you must think of Bitcoin in non-national terms.
It is not [one of these] flag currencies. It doesn’t belong to any one nation.
It is the first truly transnational currency. [ORGANISER] Thank you, Andreas.
[ANDREAS] Thank you. [Applause]

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