 Good morning everyone. I don't think everybody woke up yet Good morning Bit better. Okay, so I have to say I was promised a room with a view and So far everywhere. I've looked all I can see is mountains. So what's up with that? That was a joke told to me by New Zealand journalist yesterday during an interview for radio New Zealand who is a Quite a quite an interesting conversation So I'm really just amazing to be here today Really excited to be here. Thank you all for coming and thank you to Fran and his team for putting on this show It's not easy to pull a conference off. It's especially not easy to pull a conference off when everybody has to travel 6,000 miles just to get here. So just amazing job. Thank you all What I wanted to talk about today is a new topic. I've been working on about money as a content type and The idea I want to express is that Bitcoin has introduced a fundamental transformation in how money is going to be viewed in the future By making money completely independent of the underlying transport medium and Turning it into a standalone Content type. What do I mean by that? Bitcoin transaction is a signed data structure That can be executed anywhere in the world Now a lot of people think that a Bitcoin transaction has to be transmitted on the Bitcoin network and That's not true. The Bitcoin transaction has to reach the miners and Be included in a block, but it doesn't need to be transmitted over the Bitcoin network There's nothing special about the Bitcoin network. It just forwards transactions and blocks It can be transmitted over any form of communication medium and One of the magic things about Bitcoin is that because the transaction doesn't incorporate security mechanisms itself because the security is in the proof of work that the miners do and The digital signature that's on the transaction is put on there by the end user with keys they store There's nothing sensitive in a Bitcoin transaction Let me explain what I mean by that if I go to a merchant today using a point-of-sale system or credit card What I am transmitting to the merchants via a long series of intermediaries is the credit card number expiry date CCv2 code on the back of my credit card. I'm actually transmitting the secret keys I'm transmitting the access codes to my account now that information is sensitive if that information is captured My accounts can be compromised. I can be charged again and again either by the merchant or one of the intermediaries or any hacker Who's taken any of this information from any of the intermediaries? So that information needs to be very carefully protected if you think about it from the moment The credit card comes out of my pocket Until the money is in the merchants account It is transported across the network in a series of virtual armored cars There's encryption from the point of sale to the merchants back-end from the merchant back-end encryption through to visa for batch processing and from visa encryption through to the originating bank and to the destination bank Encrypting this token at every step of the way because it is the secret key if that encryption fails at any point in the chain the security of your credit card is compromised and That credit card is also stored at many of the points of transit it's stored for historical purposes which Is a terrible idea because that creates a centralized treasure trove a Stash for hackers to attack and we've seen this happen again and again in the US targets home depot to a very very large Retailers have had incidents where they had 50 to 60 million credit cards stolen JP Morgan Chase had 75 million accounts compromised recently all of these things are not happening because these companies are Delinquents in protecting credit cards There are really two types of companies out there those that have Failed to take the necessary action to secure the credit cards that you entrusted them with and Those that will soon fail to take the necessary security action to protect the credit cards You've entrusted with them You've either been hacked or you will be hacked those are the two categories Nobody is immune to this no one Can invent a way to protect millions of secure access tokens from Motivated attackers it's impossible to do we don't know how to do it There is no information security trick that can protect for all possible types of attacks Credit cards are broken by design because the token itself is the secret key and if you transmit that token you expose your entire account to risk Bitcoin is fundamentally different what I'm transmitting is not the key, but simply a signed message It is an authorization and that authorization has two external references One to where the money is coming from by referencing an unspent output on the blockchain and One reference to where I want to send the money By creating a new encumbrance and new limitation on who can spend the money usually a public key Or Bitcoin address and that transaction contains no sense of data If you steal the information in the transaction All you know is which address the money came from and which address the monies go into and how much that's it The signature reveals nothing the addresses reveal nothing. There's no identifiers You can't modify that transaction because every part of it is included in the signature You can't do anything other than replay it in which case if it didn't go through the first time You're helping the person who signed it to propagate it more effectively into the network You could take the transaction you can print it out You can post it on a billboard. You can shout it from the rooftops a Bitcoin transaction can be transmitted over a completely unsecured Wi-Fi By smoke signal by light signal with carrier pigeons Doesn't matter nothing in that message can be compromised But most people don't realize what it means to convert money into a content time We've taken the transaction, which is just 250 bytes We've separated from the transport medium, so it doesn't depend on any underlying security We've made it stand alone so that it can be independently verified by any node that has a full copy of the blockchain in independently verified as spendable authentic and Properly signed by any system that has a full copy of the blockchain in fact Even by systems that only have a partial copy of the blockchain and That transaction can be verified in seconds and all it has to do is reach one node in the network That can talk to miners. That's it once it's injected into the Bitcoin network and once it propagates You can be almost certain that that transaction will be included eventually and Will become valid if I look at a transaction I can calculate if it has sufficient fees and then I can make certain assumptions about how miners are going to treat that Transaction because I know the rules by which they operate when I could sense this network And therefore I know that once this is propagated enough This transaction will appear in a block near you soon, right? And there's nothing magical in the transaction So let's think about this for a second. How can you encode? 250 bytes and transmit them across the network Someone recently asked me and I get this question a lot Kent tyrannical governments ban or block the transmission of Bitcoin transactions and The answer is no, but I don't think people quite understand why the answer is no So I'll give you a couple of theoretical examples to show what I mean My first ridiculous example is the encoding of Bitcoin transactions as Emoticons or smileys in skype skype has a hundred twenty eight character emoji alphabet Which allows you to send various frowny smiley faces thumbs up thumbs down sunny days beating hearts Birthday cakes, you know all of those kinds of things Now let's look at that from an information content perspective. That's a character set, right? So if I'm a computer scientist, I look at that and I think okay. I now have a base 128 encoding I Have a hundred twenty eight characters. That's a base one hundred and twenty eight encoding That's a really efficient encoding scheme, right? Bitcoin addresses a base 58 and you can fit 256 bits in just 33 characters a Base 128 encoding would allow me to send a 250 by transaction in just over 15 characters 15 smileys a Bitcoin transaction is 15 smileys I Can literally Mathematically I can write a little script. It's two lines of Python probably If you're really efficient is probably one line no libraries needed where I can take The hexadecimal representation of a Bitcoin transaction 250 bytes and encode it in 15 of one of the hundred twenty eight possible emoticons I can then type that into a Skype window anywhere in the world and as long as the recipient who receives that String of 15 smileys types it into a decoder script and then simply injects it into the Bitcoin network That transaction will go through The recipient could be a robot the recipient could be an automated listening station That is designed to take 15 characters smileys on Skype and Transmit them on to the Bitcoin network now explain to me how anyone can make that stop Other than by shutting down Skype and if they shut down Skype I'll use Facebook and if they shut down Facebook I'll use Craigslist and if they shut down Craigslist I'll put my transaction in a trip advisor review and if they shut down trip advisor I'll post it as a comment in the history of a Wikipedia article and if they shut that down I'll post it as the background of a JPEG image in my holiday snapshots Money is now Completely disconnected information content There is absolutely nothing you can do to stop information from traveling from anywhere in the world To anywhere in the world when you have an abundance of fully interconnected Multimedia communication mechanisms as we do today But let's say we didn't have the internet So I came out with an even more ridiculous hair braid scheme Which is the transmission of Bitcoin transactions over short wave Frequency hopping burst radio So this is if you want to go completely guerrilla style the second world war in occupied France the allies dropped Thousands of shortwave radios complete kits little parachutes from airplanes so that Partisans on the ground Could hide these in barns in tree hollows in abandoned building under bridges and Use them to communicate with various allied command centers around Europe From right under the nose of the occupying Nazi force and And One of the things about shortwave radio is that not only do you have enormous range? but you can also you know in certain frequencies bounce off the stratosphere and At the time they use this for voice communication or coded Numbers communication right so Morse code and various one-time pad encryption schemes So I'm going to make it really really simple Nowadays I can go out and get a kit that allows me to connect a very simplistic shortwave radio transmitter to my laptop via USB Now all I need is an antenna now the nice thing about that is that in shortwave radio An antenna consists of a sufficiently long piece of metal a Railway line a clothes line a Broken-down electricity line a fence line a Razor wire fence Which I notice in New Zealand you have lots of right? It's right around those fuzzy white things that are everywhere So now the transmission of a Bitcoin transaction involves plugging in the laptop Attaching it to a fence post pressing enter and transmitting a burst transaction for 25 seconds and As long as there's a receiving station somewhere within the surrounding thousand miles That is connected to the Bitcoin network and you can hide the receiving station anywhere you want to can it's a passive listener It can't be triangulated It can inject the transaction into the network. So now if I'm a gorilla and I want to buy something I construct the transaction offline and when I'm ready run out into the middle of the field Clamp my transmitter onto a clothesline press enter transmit for 25 seconds pack up my gear and disappear into the forest How the hell do you stop that? You don't that's the simple answer you don't But that's just the beginning because once you realize that money has become a content type Transactions have been disconnected from the medium some really important secondary characteristics emerge You see the thing is The medium is the message as someone famous once said and the primary reason the medium is the message is because the medium constraints transforms and In many cases distorts the message When your medium is TV your message is 18 minutes long Interrupted by advertising slots that is your message There is no other format you can fit there, right? so you make a message that fits that medium and You start Assigning the value of your message Based on the mistaken assumption that it is equivalent to the cost of production so TV for example imposes a certain cost to producing video and People who are in that business make the mistaken assumption That the cost of producing TV is The same as the value of that show the more you spend on it the more valuable it is So you can imagine their horror when something like YouTube comes along and drops the cost of production to zero Now what do you think is the immediate assumption that people make in that industry if the cost is zero Then the content is worthless right and that is a fundamental misunderstanding of what happens when you separate the content from the message From the medium when you separate the message from the medium Because what it does is it shifts your perception of value from the cost of production to the value It has to the consumer when they consume it Let me go to an even older example When the cost of printing is Astronomical and the means of printing are available only to a select few the only thing you print is Gutenberg Bibles the medium defines the range of expression of the message and constrains it only to the most grandiose and Important messages that society has it limits the range of expression By imposing enormous cost of production What do you think Gutenberg would have thought of? Twitter Which takes the cost of production to zero makes it available universally ubiquitously and for free and So you go from printing the Gutenberg Bible to responding to a tweet With one of my favorite expressions, which is the three-character opinion SMH Which means shaking my head. So when professor Bitcoin says Bitcoin is going to zero I can express my entire range of opinion and thoughtful analysis as Three characters, and I have expressed my opinion to the world Now if you look at that from an ejected perspective Surely that message is worthless and So you make the mistaken assumption that if the cost of production is zero and the message appears trivial on its face Then the entire combination of medium plus messages must be worthless Must be trivial must have no value and that's a mistake that people have made at every turn in history So when Twitter first came out people assumed that it would only be used for the trivial and Yet a year ago. I was watching CNN International covering the Egyptian Revolution and They're live streaming tweets From Egyptian revolutionaries on the streets of Cairo giving live reports about what is happening minute by minute and CNN anchors are doing nothing. They're pointing at the screen Showing the tweet look. Oh, we have another tweet and and here's another tweet from someone We don't know and here's another tweet. They've been reduced to the role of a TV Show model going and this wonderful refrigerator will be yours If you win the prize behind door number one, which you know, I find extremely gratifying to watch one of these Talking heads like Anderson Cooper basically reduced to reading tweets off a screen Because they mocked it Because they made the mistaken assumption that if the cost of production is zero then the value of the message is zero They confuse the medium for the message They made the mistaken assumption that their control over the medium was the source of quality and long after quality disappeared they clung to control and thought that control was the only way to achieve quality and if you remove control You remove quality and that is stinky Unabashed elitism at its absolute worst. It assumes that the gatekeepers are the source of quality And all they are is gatekeepers They assume that the fact that they have the expensive medium means that the message is worth listening to and The moment you tear that message away from the medium and you open it up to an entire range of expression Yes, it will express the most trivial messages of your culture including SMH But it will also express the most interesting messages of your culture eventually today in US schools Children read the Federalist Papers, which are letters of correspondence exchange between Thomas Jefferson John Adams Benjamin Franklin and many of the other founding fathers In a hundred years People will be reading the Federalist tweets of the Cairo revolution That's not an insane idea That is the path of human civilization. We've seen this happen again and again So now they mock Twitter as trivial because they don't understand the distinction between message and medium But TV was much mocked as a trivial pastime Because it obscured the art of Cinematography and cinematography was a trivial pastime because it cheapened and vulgarized the art of the theater and The theater was a vulgar and cheap pastime of Victorians because it trivialized the great Dramatic plays of the Romans in the ancient Greeks and you keep going down this path and you eventually arrive at Aristotle saying That philosophy is dead Because nowadays the kids all want to watch dramatic presentations instead of reading their philosophy books He probably complained about the long hair, too every generation mistakes the medium for value and Consider the next iteration of the medium that widens access that opens availability That broadens the range of expression. They consider that medium trivial vulgar Cheapening the message what they don't understand is when you cheapen the medium You release the message and you elevate it and you are able to now express a broad range of messages And yes, the first ones will be trivial and the reason they'll be trivial is because the previous medium didn't allow that expression It didn't have within it the ability to have that expression. So yes, the you will have the smh But you'll also have live tweets from the Cairo revolution And by the time they figure that out the new medium is The quality message and we can turn around and call the next one vulgar and cheap Money is a content type and we just wrenched it free from the medium and the medium Has been a series of interconnected networks that segregate money by size and recipient We have payment networks for small money. We have payment networks for large money We have payment networks for fast money We have payment networks for slow money payment networks for businesses to pay businesses Payment networks for governments the big governments payment networks for consumers to pay businesses and payment networks for consumers to pay consumers Oh wait, we don't have those we don't have payment networks for consumers to pay consumers We don't have payment networks to do small payments Because the medium does not allow that range of expression because I cannot send you 20 cents across the world from one individual to another individual Because the medium constrains the message because the cost of production Does not allow me to express that range of transactional expression But now we have separated the message from the medium We have created money as a content type and that money is now able at zero cost With zero production cost to express the entire range of transactional expression from the tiny to the enormous From the consumer to consumer to the government for government What happens next? The gatekeepers Tell you that this network is not serious the gatekeepers confuse their payment network cost for the value of their service The gatekeepers of the old payment networks will tell you that this new form of payment is vulgar and cheap And it is something that is only used for trivialities and all of the very very serious people Will remain on the solid quality payment networks of the past Because if they can control and restrict the range of expression They think that means it's quality and it's not it's just an inflated cost of production It's bare naked elitism at its worst They clung to the content to the they they cling to them Medium and failed to see that now the message can be transported over any medium at zero cost instantaneously So what is the first use of this new? Model, what is the first new use of this new messaging medium now? We can send trivial payments I get tips on Twitter Great, I mean that's a demonstration. I can make which clearly shows people the difference I can do something I could not do before But to most people that's trivial to most people The fact that I'm showing them the bottom of the range of expression Simply reinforces the idea that this is a cheap and vulgar medium Because what they fail to grasp is that this medium is not just for the trivial It spans the entire range of transactional expression from the trivial to the enormous So one day a country will pay its oil bill on the blockchain One day you might buy a multinational company on the blockchain One day you might sell an aircraft carrier Hopefully for scrap metal on the blockchain Because the blockchain can encompass the entire range from the 10 cent tweet to the hundred billion dollar debt settlement We just haven't noticed yet and it can do so without any constraint imposed by the underlying medium This isn't just a matter of the fact that the transaction as a content type can be transported over skype smiley's That's simply a symptom of the fact that we have released all of the constraints of the underlying transport medium We have made content king What happens is That when content starts off as the domain only of exclusivity and elitism and limited access It is used by grandmasters to create masterpieces The Gutenberg Bible the first photographs The landing on the moon televised for the first time The great movies of the past Masterpieces made by grandmasters and then the medium changes because the technology becomes more available and People start using it for a broader range of expression But the gatekeepers cling to the old ideas so they still try to do the grandiose with their medium They print hardback heavy cover leather-bound books Principia Mathematica and then the medium opens up again and things become soft cover and Photographs become available to the everyday person in 24 exposures and the gatekeepers of the past still cling to the past But now they can't really pretend it's grandiose. So they just do grandstanding They just say well, there is a certain je ne sais quoi to film There's a certain quality to vinyl that CDs will never capture a TV anchor really has authority Don't you remember Walter Cronkite a Newspaper is the source of Authoritative opinion and it really is worth the paper. It's printed on now. They're grandstanding the grandiosity is gone The quality is gone. Now. It's just a matter of clinging to the control and pretending that control is still quality and Finally in this grand arc of technology The technology reaches the final stage and in that final stage the only people who still believe its grand are grandparents and the grand arc of technology what started out as a Masterpiece is now only consumed by those in the last stages of their lives the first checks Written out We're used by Royalty to funds great ventures like the East India Company to open the spice roads and trade routes to the East and in those days Only Royals had checkbooks and today if you go into a supermarket and The grandmother bless her heart in front of you in the line opens up her purse and pulls out a checkbook 15 people in line are going to groan Audibly as they realize it's gonna take 15 minutes To write out that transaction and there's nothing left of the grandiosity of funding the East India Company When you're buying beans and toast with a checkbook in a supermarket It's the final stage and the only people watching Fox News now Our grandparents because we all get our news on the internet What was once trivial is now our source of Authoritative news and information and you can't explain that to the old guard And we read our books electronically While some people say well, there's something about the feel of paper Yes It's too heavy to carry 20 books in your bag, and I read 20 books in four or five weeks And so I need to carry that many there's nothing about the feel of paper You're clinging to the past So as We move into this world where money is a content type the gatekeepers of the old payment systems Will cling to the illusion The traditional banking is quality that the gatekeepers are the quality and the quality is inherent in the gatekeeping in The control in the censorship in the limitations, but that's not where the quality is and we're going to move on and Open up the range of expression that's possible with money to Unimaginable levels that have never happened before and they'll still cling to their ideas of grandiosity the great old banks with the vaulted ceilings and the chromed vaults that are empty Where you can get guided tours on Sundays to look at what banks once used to be like and You go into cities around the world and the great vaults of the great old banks are now bars Where you can get a cocktail mixed in the vault Because banks can't even afford to have those buildings anymore because they serve no purpose other than grandiosity and They'll still try to persuade you That through their control They protect you from evil from terrorists from money launderers What all they're doing is protecting their own incumbency from competition We have now separated The message from the medium money is now a content type and We're never going to go back. Thank you