 Thank you very much Jürgen for the introduction and thanks to everyone at buy an LB and all the organizers and sponsors for having me here It is a pleasure to be back again. I hope we make it an annual tradition that the beginning of June every year I come here. It's a nice It's a nice time to be in Munich and hopefully an annual tradition for Liverpool to win the Champions League every year before I come here as well but on to Well more or less depending on your perspective important things the issue of Bitcoin and central banking First of all, I want to thank Professor Paul yet for an excellent presentation and I found a lot of value from it and a lot of which I agree and a lot of which I Wanted to talk about that. I don't need to talk about now because he's covered it so I'm going to build on your presentation and Engage with some of the excellent points that you raised The the the key point that I wanted to discuss today is the idea that Bitcoin Currently serves as the only working alternative to central banks It's the only thing that you can use other than central banks if you want For the two main functions of central banking So what central banks do today? Primarily they do a lot of things but the two core functions of central banking are the settlement and clearance of payments internationally as well as the setting of monetary policy and these are two things that the vast majority of people and particularly economists understand as just a natural Function of the state. Why do we need the state? We need the state because of the roads and the children and the clearance of settlement of banking You know those are the important things that we need government for so it's it's quite This is why Bitcoin is such a life-changing thing because those things You know you can't send money outside of Germany without the central bank How else can we do this and Bitcoin offers us an alternative up until 2008? This was true. If you wanted to send money from Germany to China There was no legal way of doing it other than going through the central bank Today we have an alternative you can send a billion dollars from Germany to China and the central bank won't even know if it was you What if it was from Germany or if it ended up in China? In fact, you can carry a billion dollars with you as you cross the border by just remembering 12 words So this is a massive undermining of the authority of central banks in the fact of sending and receiving money and Bitcoin achieves that really through the introduction of technology instead of having You know structures built by people where we have actual intermediaries and individuals who perform the function of the central bank and Manually essentially we just have cryptography Do that in other words the central bank looks at your profile and decides nope You're not the right you don't have the right reason to send money To China so they can block your payment Bitcoin doesn't do that. It's perfectly automated So if you have the private key to send the transaction It will be sent and there's no force that can stop cryptography from allowing that to be sent So this is the first way in which I think it competes with central banks in the second which is perhaps more important Is in the it's in the monetary policy in the production of the money and this was always Since 1914 arguably since the abandonment of the gold standard This was also considered the natural function of government and now we have a free market alternative It's out there. You can just buy Bitcoin and you can hold on to it And you can use it as a store of value and not have to resort to your government's store of value so those two things being the two core functions of central banking means that essentially Bitcoin is a very subversive and a technology because it undermines the effect of central banks and You know, it's been operating for ten years. The key thing to keep in mind is that for ten years it hasn't Failed once it hasn't had been hacked once it has not been No single fraudulent transaction has received one confirmation which is quite an astonishing record and it hasn't been shut down it hasn't been closed down and It's allowing us on top of these two functions The most interesting thing about Bitcoin I think is that it is the hardest form of money that we've ever invented in that With every other form of money the supply of the money is responsive to demand So more people want to use gold as money or the Deutsch mark as money or the Swiss Frank as money That just leads to an increase in demand for it Which one way or the other will result in an increase in the supply gold miners will mine more copper miners will mine more copper The Swiss central bank will start buying bonds of other governments in order to essentially increase its supply and prevent its Currency from appreciating too much So anything that gets chosen as a store of value Offers the people who have the capability of producing it the incentive of producing more to it Bitcoin is the first technology that breaks that cycle and it's actually astonishing if you think about it tomorrow if the entire planet Is using Bitcoin we will still only produce 1,800 new Bitcoins if only seven people are using Bitcoin We'll also have 1,800 Bitcoin the supplies completely a responsive to demand And so effectively this allows you to Store your wealth in something that cannot be inflated by its producers. It's it's through hard money It's even harder than gold because gold miners can make more gold But eventually Bitcoin miners won't be able to make more Bitcoin And so no matter how much the supply the demand increases the supplies is responsive and this forms a very significant Incentive for people to get into Bitcoin because it makes the price It gives the price a very strong positive feedback loop and that Leads to massive increases in the incentive for people to get in and that's why Bitcoin is appreciated so much over the years so this is real competition for the central banks and I would argue this is the most advanced Technology for money if you want to think of money as the prime function of money or the prime determinant of the success of money What it what made gold money rather than copper or silver or anything else is the hardness of producing gold gold is the best thing That resists the ability of others to produce more of it And so if that is true then Bitcoin also falls within that Is even harder and so it's likely to be an It's a better if you think of money as a store of value as a technology for transferring value into the future The more resistant to inflation that technology is then the more advanced it is In terms of as an engineer you can think of it as an engine the more efficient the engine is the more better It is it transferring value into the future. And so in that sense I think Bitcoin is the most advanced in this regard and the problem for central banks and this is where I Pick up where professor toilet the polyeth left off the problem with central banks is that the problem the central banks face is that Bitcoin is not easy to shut down and in fact, I have written in my forthcoming book I write about I have a section on how Bitcoin can be killed and I argue that if we face restrictions if we if governments will impose restrictions on central banks That would arguably be bullish for Bitcoin because when your government tells you you can't use your bank account to buy These magical digital money that is in the internet, you know the initial risk the initial reaction is going to be Yes, fewer people are going to buy people are going to want to sell the price is going to crash But the long run implication is that they need to impose more strict controls on your bank account in Order to stop people from doing those things and that's just going to drive the point home to people That your bank account money is not yours You can't buy things unless you get the approval of your bank and your central bank and wouldn't it be nice If you had some kind of technology where you could buy and hold and send money around the world without having to get permission From your adult supervisors at the central bank it would and guess what? There is something for that and it's called Bitcoin. So government's going around banning Bitcoin, you know is Is not just going to be as ineffective as them trying to ban anything else, you know Governments have banned drugs for so long and you can pretty much buy drugs in any city where they are illegal So but and there's far less of an incentive the far less of a monetary incentive with drugs and it's far harder to fight You think about it. You need to grow marijuana under the Sun You need to process it in a physical facility. You need to ship it across national borders You need to distribute it to dealers and then have them spread it around and you can still get it in pretty much any city So Bitcoin on the other hand you need to just have a machine that can send one or two megabytes of data and You can operate it from anywhere that has an internet connection and you can basically that that's all that's needed So the the kind of measures that would be needed to try and fight Bitcoin will make the drug war look like kids play It would turn any modern society into something like a dystopia like North Korea And I just don't see that kind of first of all it won't succeed Because it's just going to incentivize people to go around it and secondly I don't think that the world today is ready for this kind of Totalitarian control and so it's far trickier than central bankers just thinking well, you know If it gets too big we'll just pass a law and say it's illegal I don't think that that's the case and so the competition is real and I'm I think you know some of the most some of the best Problems with Bitcoin were outlined by Professor Paul yet But I'll address the issue of scaling and transaction costs because this is the key point on the topic of my book the Bitcoin standard And it is I make the argument based on the argument based on the points that you make in terms of Bitcoin scaling Yeah, 300 500 even if we scale Bitcoin 100 times what it is it's still not big enough to handle Germany's transactions and also the finality of the transaction and the fact that Vulnerability and the keys to storage all of these things lead me to conclude that Bitcoin is far more suited for being a Settlement layer for transactions rather than the consumer payment layer So Bitcoin transactions need at least ten and need around ten minutes to get one confirmation Which is completely unsuitable for Making payments commercially you don't go to the supermarket and wait Let you know wait until the block we get several confirmations before they give you the food That's completely unworkable. So it's not it can't compete with your visa because it has a longer time But it's also incomparable to your visa because it offers final settlement rub within a few hours with I mean Nothing is final and nothing has certainty in life But the certainty of a Bitcoin transaction that has received several blocks confirmation is enormously high and so you're able to When you compare Bitcoin to credit card transactions is clearly inferior, but that's not what it's for That's like comparing a you know concord jet to a bicycle They do different things obviously the concord jet is going to be terrible for getting your groceries doesn't mean it's useless It's still a very powerful tool And I think that's really the power of understanding what Bitcoin can do if you compare it to payments Settlement payments between banks and central banks around the world these take a lot more time and they cost a lot to complete So if you think that the German and the Chinese central banks could settle on a transaction with Bitcoin that would be far cheaper and far Faster than that and so for me potentially the subtitle of my book is Bitcoin is as the Decentralized alternative to central banking and I see this really as bitcoins main value proposition We're not going to get a world that's fully disintermediated We're not going to get rid of banks the functions of banking the functions of financial intermediation have existed under any monetary system And they will exist under Bitcoin people will still want to keep their money in as institution that is Professionally say good at it if we lived in a world in which everyone kept all of their money under their mattress It would be a world in which everybody is Constantly in fear of being stolen. It's just makes economic sense for the same reason that we have specialization and everything That we have specialization in the safe keeping of money and it's a normal job that has existed forever and similarly with Capital markets and investments all of these things can continue to exist but Where Bitcoin can really offer the value I feel I think is that Instead we're not going to have a complete disintermediation But if you look at the current global monetary and central banking system It is on to ultimately a system that is centered around one single Central command node, which is this US Federal Reserve So ultimately any transaction in the world can be blocked by the US Federal Reserve and all of the world's currencies are Either the US dollar or backed by the US dollar and the US has an enormous influence on it So ultimately sending the money from Germany to China one way or the other goes through the US The US can interrupt these kinds of payments. So what Bitcoin allows us? I think the real value is that instead of having a global monetary system Headed by one government and one institution with one chairman at the top We could have that top most centralized layer of the global monetary system Be made up of tens of thousands of nodes that run Bitcoin around the world none of them able to disrupt Bitcoin none of them able to Influence the monetary policy and none of them able to Prevent anyone from making their payments. So they would be effectively Forced to be free market banks and any bank that wants to impose any of these kind of inflationary or censorship restrictions on its customers would effectively Would effectively you lose out in terms of competition. So for me, I think the distributed nature of Bitcoin the Relatively low cost of getting an an institution getting Building the infrastructure that is needed to perform final clearance of Bitcoin Allows us to instead of having one centralized single point of failure at the top of the monetary system through which everything has to flow It could allow us to have that top layer be far more decentralized Where tens of thousands of people can get to play central bank? But none of them can get to play central bank in a bad way They get to play central banks in the in a market serving way where if you clear your customers Payments at a low cost they come back and you beat out other competitors. So I think this is ultimately What I feel is the main value proposition of Bitcoin and I agree with With what professor Paul yet said on many of the limitations that are involved here and Just the other one in terms of in terms of the What that was the point that I Wanted to mention the the the issue with the Your your point yes your point on gold. I think it's very well taken I think in fact if you wanted to undermine Bitcoin the most effective way for governments to undermine Bitcoin Would be to go back on a gold standard that I think would seriously undermine the demand for Bitcoin and would seriously Undermine even the drive that people who are working on Bitcoin even have I would not be interested in Bitcoin If we had a gold standard, I don't think Satoshi Nakamoto would have ever thought about inventing this thing if we had a gold standard There's you know the the functions that exist what what money allowed us to do under a gold standard What banking allowed us to do was you know each person was able to access a form of money that was hard relatively and You know if you think about banking 100 years ago or 120 years ago the notion that all of Your transactions on all of your wealth and all of your income needs to be reported To your bank and to your accountant to your government so that you can have all these things this stuff did not exist 120 years ago and I think there's very good reasons for it It was much more of a free market society in the road and it was considered absolutely insane the idea that the state could have complete control over everybody's transactions and I believe we will come to a day in which is this is going to be viewed as Insane as having a ministry of truth that decides who gets to say what and you know before you write anything or publish anything We need to run it by the sensors the world there were parts of the world that had this at some point And I think central banks are absolutely no different They're a form of censorship and the information that they censor is just economic value humans Are just communicating economic value to one another and central banks sit in this position where they get to decide for you Whether you can say this to this other person or send this to that other person. So if we undermine that Sorry, if we go back towards that if we have a system that functions toward more like that I think it would severely undermine the case for Bitcoin and that really would be that the interesting market test Would the market really value Bitcoin if the alternative was a gold standard? I don't have a clear answer to that But I think the the interesting thing is we're Under no threat of finding out anytime soon because I don't think anyone is going to the gold standard anytime soon So while I agree that the gold standard would do this the reality is we live in a world in which Ideas about gold standard and hard money and financial freedoms that I just mentioned right now are Completely outside of the mainstream completely outside of the realm of what is politically possible you know Recently there was some mention that maybe Trump might hire someone who mentioned something about gold and you could see how much in the Institution, you know Larry Summers is dragged out to write an op-ed in the Wall Street journal about how dangerous that woman is This is how serious they are about not allowing something like gold So I think we're going to continue in this kind of monetary system that is restrictive and that will You know head towards more and more inflationary kind of policies And that's what's going to continue to demand drive demand for Bitcoin because it is the only real workable attempt in that regard. So as as the As the demand continues to increase over time Ultimately bitcoins value proposition might just be that it Allows you to perform the functions of central bank much cheaper than gold does and so the the problem with gold Ultimately comes down to the fact that you know if you wanted to set up a gold central bank for clearance The movement of physical gold around the world is quite expensive moving. It is insecure. It requires a lot of cost and insurance and Therefore naturally gold tends to be centralized, you know the emergence of central banks wasn't You know some kind of top-down conspiracy There was a real need for payment clearance to be settled in a certain place because that just makes it makes it cheaper So in other words a network of 10 banks that had to move gold around them are not going to be as efficient as 10 small banks that had one central clearing house where they kept all of the gold and different safes and then didn't have to Move it out. So this natural trend towards centralization and gold is what ultimately makes it vulnerable for capture by government And is what ultimately led to a world in which governments today own about a sixth or a seventh of the world's gold supply Because you know when governments captured the gold it wasn't you know, they Essentially took it from the central banks where it was already there You know, I know the story in the US. They took the gold from the central banks And if you had gold you just got paper dollars instead of it So there was no need to go home to home and you know search people and look for gold everywhere In order to be able to confiscate it because it was naturally Centralized because of the high cost of its clearance Bitcoin. I think is a little bit different It's a far lower cost and so it has a far better chance of resisting capture and centralization from Governments and that's really why it is I think very powerful. That's why it's very interesting And that's why I think all of the wishful thinking about it going away or it being banned is I think wishful thinking as long as we continue to be in this kind of monetary system What would cause Bitcoin to go away would be what would undermine the incentive for people to want Bitcoin in the first place And I don't think that's likely anytime soon. I think that's it for me. Thank you very much