 prolific public speaker and a community builder got into Bitcoin and the reason why many of us understand it. He took a break from writing his fourth book, Mastering Ethereum, to be here with us tonight. When he's not writing, he's traveling the world, working to bring education about Bitcoin and open blockchains to communities everywhere. His Patreon supporters make that work possible, and they've made this event tonight possible as well. Most importantly, our next speaker is the kind of person who would actually organize and host an event like this. One that benefits a local community instead of himself. Please help me welcome Andreas M. Antonopoulos. Thank you so much, thank you. I can't see any of you. It's all one big black thing, but I'm just so thrilled to be here and thank you all for coming out. Thanks for making it, and thank you to all the volunteers. It was a really touching moment this morning. We did the soundcheck and practice run, and then watching 25 people who all volunteered, running around, scurrying, and getting all of the things that we had planned and trained for for a month and a half all came together, and you made it. So here we are. Thank you. They put some yellow tape here so that I don't fall into the mote of lights in the front. Makes it difficult because I tend to pace. I want to talk about the three components of this incredible space that we all work, live, and breathe every single day. This isn't just a technology, it's not just an economy, it's not just a community. It's all three. It's really this multifaceted thing where technology, community, and economy feed off each other. They come in these crashing waves that sweep us off our feet and make us feel small, sometimes elated, and sometimes terrified. You get all of these waves of memes, craziness, and fomo, and fear of missing out, and huddle, and biddle, and all of these great community expressions that we see. The last six months have been weird for all of us. We watched this incredible run-up in the price, and it dominated the conversation. If you've been in this space for a while, this isn't new to you. You've seen this happen. This is maybe the sixth, seventh, maybe eighth big bubble-like behavior, where you see this massive increase in price. We've seen it before. I remember, at some point in October, I started getting calls from journalists, and they asked me to comment on this, and they would ask in a very kind of cagey way. So what do you think? Could this possibly maybe be a bubble? I was like, of course it's a bubble. We're living in the era of the everything bubble. But really, it's not the Bitcoin bubble you should be worried about that everybody is very aware of. I'd be more worried about the subprime auto loan bubble, the stock bubble, the bond bubble, the real estate bubble, the student loan bubble, the debt bubble, the foreign exchange bubble, the fang bubble, the tech bubble, the everything bubble. Yes, Bitcoin is a bubble, the most obvious of the bubbles right now. And 24 hours later, someone made a video with me in a Darth Vader mask, said Andreas went over to the dark side. He's calling it a bubble. I told you so. All I said was be careful, and obviously some people were not careful. Price dominated everything. I think many of you have probably had this experience. You come into this space, you don't know what's going on. It's all very, very weird and complicated and difficult to understand. You find someone who can explain some detail to you, and you start barely understanding some of the things around you, and then you suddenly realize that even though you are quite aware you don't know what the hell is going on in this Bitcoin space, or in the related space, the entire cryptocurrency space, to everyone you know, you're the expert. And they come to you and they go, you know about Bitcoin. Should I invest in iota? Or you know about Bitcoin, is this a good time to get in? And maybe you told them when the price was, I don't know, 200, and they ignored you because they thought it was silly internet money. But the morning that it hits 19,000, they call you up and they go, is this a good time to get in? And depending on whether they're a good friend, in which case you say hell no, wait, or they're that douchebag who bullied you in high school, in which case you're like, yeah, now's the time to get in, Chad. You wouldn't do that, of course. Everyone in this theater is wonderful. We wouldn't do that. But the best part, after you told them to get in at 200 and they ignored you and they called you up at 19,000, in January and February, you start getting the calls. I know you've had them where someone calls you up and they go, I saw on CNBC that Bitcoin crashed. It's destroyed, it's gone, it's down in the doldrums, it's a mess. Are you okay? Now, let's not minimize the fact that a lot of people who did get in at 19,000, probably in a very ill-advised way, are hurting. And that's not funny. That's bad investment conditions, and you should be very, very careful. These things are extremely volatile, but it is extremely ironic when people call you up and they go, are you okay? Because we heard it crashed a year ago. We were just over a thousand. So price-wise, we're up a cool 800%. So your answer should probably be, you're in S&P index funds. Are you okay? Because the day I start hearing about your investment on TV, you won't be okay. Nobody will be okay. And so you see, even my talk here dominated my price. Not something you hear me talk about a lot, but it's apropos, it's the times we're in. And then suddenly, the price tanks, the meet-ups start getting roomy again. The phone calls stop. Some people start laughing at you again, because they're like, I told you it was crazy magic internet money that would crash. And the cycle repeats. Do you guys like farmer's markets? Anybody here like farmer's markets? If you go to a farmer's market this weekend, they're going to have two things. Rhubarb and pumpkins, because it's winter. And you're not going to find a great array of beautiful, organic vegetables. Those come from Mexico at this time of the year. The farmers, the local farmer's market, all they can deliver at this time of year is rhubarb. And in a great analogy to the economic situation we're in, if you went to the farmer's market right now and noticed it's not very popular, and there aren't too many people there, you might go, huh, farming is dead. I knew it. I saw it on CNBC. They're about to start planting. And we are too. We're about to start planting. What happens right after one of these great explosions in price and interest and the fear of missing out and the crazy rush to the exchanges is nothing else can get done. Nobody can get anything done because of all of the distraction of trying to deal with a 95% influx of newbies, where everyone you meet is brand new. And they have questions like, can't anyone guess by just trying all private keys? Or what happens when the last Bitcoin is mine? Not bad questions, the same questions we all had in the beginning. But nothing else can happen. If you're running an exchange or a customer-facing operation and you're signing up 150,000 new customers who don't know what the hell they're doing a week, you do not have time to do anything. It's all operations, it's firefighting every step of the way. Coinbase, for example, implemented SegWit in February. That's not a coincidence. Because right until the end of December and into early January, they had no time to do anything else. I don't know this by talking to them. I'm just guessing. We could all see what was happening. It was absolutely insane. This was repeated across the entire industry. Anybody who was involved in a business or running anything from a meet-up to a training session, to trying to write the next book, and getting 15 requests from journalists every single day about, oh my God, is this a bubble? Or is this a bubble? Everyone was just overwhelmed. And that's not a good time to get anything done. Hover's time is the craziest time. Now, that's the time when we start planting the seeds. Community and technology lag economy. And right now, let's be honest, economy isn't about having a lot of economic activity based on the import-export business, or doing remittances, or creating new crazy applications and doing micropayments. Ninety-nine percent of the interest in economy is pure speculation, and just chasing the next opportunity. That's okay. We have to go through that phase. But it is very distracting. And now we can start the real work. In a group like Bob, Bitcoin and the Open Blockchain, and any of the other big meet-up and community groups, you're going to have this influx of people who are excited about the price, and the only reason they came is because of the price. Let's be absolutely honest. They're not interested in the principles of debanking all of us, banking the next six billion, freeing the world from the terrifying oppression of central banks, returning to the gold standard, or whatever else you might have as one of your guiding principles. They certainly don't give a damn about decentralization, concentration of power, reinventing systems, creating more human-accessible, global, peer-to-peer open markets. They care about whether we're going to the moon. But once they've been burned, they're not going to sell most of their cryptocurrencies immediately. They're just going to let it sit for a while and try to figure out what to do next. Here's the interesting thing. 95% of the people who came into our industry during this big, big boom have never done a single cryptocurrency transaction. Their only experience with cryptocurrency is doing an ACH or wire transfer into a custodial exchange that printed a number on their screen that told them that they have... what they don't actually have, which is cryptocurrency. And they haven't learned the most important rule. And that rule is, your keys, your coins. Not your keys, not your coins. Who's going to teach them that? Who's going to teach them that? You are. Bob is. They have everything to learn. Right now, they know nothing. All they know is they didn't buy a Lambo. They're still trying to figure out how to tell their significant other that they're down 60% on the investment they weren't supposed to make. Now's the opportunity to teach all of the basics, to educate, to support, and also to expand that vision. They came for the price, make them stay for the principles, which means they need to understand why we do this. And the best way to understand why we do this is for every single one of you who have a deeper reason for doing this to express that with authenticity, with passion, with enthusiasm, and to do that face-to-face as part of a local community. Now is the most important moment for a local community. Now is when we help educate people on why we do this, why we care so much about this, and dispel all of the weird rumors and myths that they hear and help focus their education on the things that matter. Somewhere in there may be a partner for you for your next startup, a graphic designer who can help you make a user experience or user interface for a wallet that doesn't suck, a marketing person who can sell this without resorting to a little gold coin as their only graphic. Somewhere out there is a developer who wants to follow the same vision that you have. Somewhere out there is an operations manager who can help you actually turn this into a viable business. They're going to be at your local meet-up. So we got the wave of the economy. Now we need to build community. And at the same time, right now, people are investing in startups. They're building new protocols. And they're planting the seeds in the technology space for the next great wave of adoption so we can be ready, so we can deliver a better experience to the next round of people who are going to join, so we can deliver more applications that are more meaningful and change people's lives. So we can make this easier to use, more secure, easier to use more securely. And this applies to all of the cryptocurrencies and all of the assets out there. We are right at the beginning. We are at the pre-DNS age of the internet. We all love this stuff, and we're all into it. And we will be willing to learn the hard stuff and overlook the collugy interfaces and the terrible nonsensical stuff that happens in our industry. I mean, really, it is horrible. Right? This is not the cryptocurrency technology that is going to become mainstream. It cannot be. It's too clunky. It's too complicated. It's too difficult to understand. It's not intuitive, and you can make simple mistakes that wipe out your holdings. We need to fix all of that. For every one of those problems is a potential billion-dollar industry. That's how you can tell the difference between an entrepreneur and someone who only looks at the doom and gloom side. In 2007, hundreds of journalists were writing article after article after article about how the internet would fail, because no one could find anything. Barry Page and Sergey Brin looked at that and said, How about we solve that problem instead of saying it's going to end the internet? Right now, right in this room, in fact, I know for a fact, there are several people I know in this room who are working on making sure that the next application... the next great lightning wallet, the next great big block Bitcoin Cash application, the next Ethereum smart contract, it doesn't matter. Build it. Make it better. It's too important to lose focus over petty disagreements and minor issues. I don't care what you build. Build something. Make something better. If you're not a developer, send a help desk request, fix a minor documentation problem, create a video, paint a painting, do a poster, get up in front of your local meet-up, and describe your experience so that others can be helped. Everyone has a role to play, and that's what community is about. Everybody thinks the cryptocurrency market just died in January. They look at the empty field, and they think nothing is happening. Yet that field is planted, and we're waiting for one good rain in a few days of sunshine. We're going to do this all over again, and it's going to be even crazier the next time. We'll be better prepared with better applications, better education, better technology, and stronger community. Thank you very much. I hope you're all as excited as I am. The next part of this is one of my favorite parts of the evening, which is the completely out-of-control, random Q&A session. We have microphones in the center section, where you see the light over there. If you want to ask a question, you go to that microphone, ask me a question. We've got about 10 or 15 minutes to go through as many questions as you want. So why not behind that microphone, where you see the light there? Good evening, Mr. Andreas. How are you doing? Good evening, indistinct black blob in the background. Very nice to meet you. I can't see anything. Go ahead. It's nice to speak to you again. My question was, what are your thoughts about proof of work versus proof of stake? That's a great question. One of the historical facts that's really quite interesting is that proof of work was invented after proof of stake. It was invented by Satoshi Nakamoto because proof of stake systems hadn't been able to work before. I don't know if they'll work now. I'm actually optimistic. I think proof of stake systems are possibly an interesting way of doing consensus algorithms. There are many, many smart people working on this kind of technology. If you're involved in technology, one of the things you learn is that if you use words like never, you're more likely to end up on one of those historic lists of quotes of idiots who said things couldn't be done. Like, lighter than air, heavier than air, flight is impossible. After the Paris fair, electrification will die as the fad it is. One telephone should be enough for each city. One computer should be enough for each country. Other great quotes like that, which you can find. I'm not going to ever say you can't do something. I am actually hopeful and optimistic, and I'd like to see what people come up with. I think there is a fundamental qualitative difference between proof of stake and proof of work. There is something very special about having an extrinsic investment in energy that you absolutely can't get back. It creates a thermodynamic guarantee of immutability based on the physics of expended energy. It makes that game theory very painful if you get it wrong. That has some drawbacks, it does. A lot of people can point to it and say it's expensive. Compared to what? I think we should add up all of the armored cars, lit offices, printed money, bank vaults, and all of the other waste that goes into fiat. There may be truth to the idea that we can only afford one proof-of-work network, just one. I think proof-of-stake becomes more powerful and stronger if you can check-point it every now and then into a truly immutable proof-of-work chain. If the only proof-of-work chain we can afford is Bitcoin, that's a damn good differentiator. Thank you, sir. Good evening, Mr. Antonopoulos. To follow up his proof-of-work question, is ASIC resistance futile? Or are we at the mercy of Bitmain and do we all have to buy an ant miner to have a say in the network? ASIC resistance is futile. Not only is it futile, I think it's not desirable. One of the challenges of going to supposedly ASIC hard algorithms or resetting the proof-of-work is that not only do you make it possible for people to recruit botnets by hacking other people's computers and use them to mine, and if it's GPU mining, they'll recruit and hack gamers' computers and use those. Not only does it have that really bad side effect, but at the same time, in the end, you can build an ASIC for anything, and it will always be better than a general purpose computing system, no matter what you do. If you need a lot of RAM, you'll add a lot of RAM. If we reset the proof-of-work algorithm to dethrone the current leader of that system, well, then we've created a level playing field into which any company that happens to have a couple of billion dollars in spare cash, the operational experience, all of the fabs ready to go, and all of the staffing and warehouses ready to fill with the new proof-of-work algorithm will dominate the space. We're actually going to make it even more centralized, because that first mover advantage is going to be enormous, especially for a company that has been obsolete and rebuilding their ASICs on average between every three and six months. If you think about it, these companies are ASIC replacement machines, ASIC replacement pipelines, and they're very efficient at it, so you just pull their timeline forward by three months. Rather, what I'm interested in is what happens when we reach the limits of Moore's law in terms of density, and we're there now. We're looking at 10 nanometer chips being developed, and that creates a level of competition that's interesting, because there are no 10x, 100x, or 1,000x improvements to get. The shelf life of one of these ASIC machines is now going to be two to three years. It's still going to be profitable, and that completely changes all of the economics of the market. It's going to take a few years for that to play out, but I think we have just achieved peak centralization in mining, and it's going to get decentralized from here. So let's see. Thank you. I could be wrong. So one of the things that we're always talking about is adoption, and you talked about the software tonight. A lot of people show concern over the transaction fees, but I'm actually curious about the tax side of things and the regulation, and that actually being a higher percentage of a transaction if we're having to consider that to be the way that the tax code is written currently. So what do you see as the roadmap for regulation to change in order for cryptocurrency to be able to actually be used the way that we would like it to be used? I'm not very optimistic about how that's going to play out in the United States, at least. I don't think it's an accident that the reporting requirements of capital gains for even tiny transactions are such that it makes it a nightmare to do your taxes properly and to be lawful in terms of paying your taxes. I know I have to do it. I do it, and it's a huge reporting burden. When you have to do a 300-page tax return in order to report $35 in gains, something is fucked up with the system. What I can tell you is that my accountant, who happens to be in the audience today, is going to make more money than the IRS is on capital gains this year for the work of reporting, and that is backwards. That is messed up. And what is that going to do? Is that going to stop Bitcoin in the United States, or is that going to stop the United States in Bitcoin? You can get your country out of Bitcoin, but you can't get Bitcoin out of your country. Guess who doesn't report capital gains? Money launderers. Guess who doesn't report capital gains? Criminals. Guess who doesn't report capital gains? Well, Congress people, as we recently found out. So when there's a policy in place that's designed in such a way that it penalizes people who are trying to do the right thing and the people who are going to break the law anyway and avoid taxes altogether are still going to do that, you have to question whether the purpose of that policy is to support an industry that is still trying to use 70s technology and treat us to a nine to five Monday to Friday business as usual bullshit system that they call banking. And I think that's the real reason why you're seeing these regulatory responses. It is a bailout for the banks again. And it's going to fail, but it's going to keep happening and it's going to keep escalating in many countries around the world. The good news is that in the countries where this matters the most, where the rule of law is weak, the government is corrupt and people are mostly unbanked, they don't give a shit. And they're going to use it anyway. So this is a losing battle. So if you thought this was going to be easy or if you thought governments weren't going to fight dirty, you might be surprised by this. But the bottom line is that no matter what they try to do, no matter how much regulation they try to impose, they cannot stop this technology. Thank you. This is the last question we can do. Okay. Hi, Andreas. My question is, so the Lightning Network is getting its legs underneath it right now. Second layer solution. So my it's kind of a two part question. One, do you think the Lightning Network is going well as of right now? And two, if we're going to need a third layer solution, what is that going to look like? What is your vision for a third layer on top of Lightning? What might that look like? I think the Lightning Network is going well. I think there's a general tendency to be impatient about technology, like hurry up and invent it for me. I've been waiting for two years. The truth is that these things are not easy. And in fact, the pace of development has been accelerating across the board there. I've been running Lightning nodes now for just over eight months, I think, and I've been running a production node on mainnet since the end of the year. And I think we're going to see more and more applications. We barely scratched the surface. I'm very excited about some of the new technologies that are being developed. Atomic multi-path routing, which allows you to use several small payment channels to make one aggregate payment that routes over many different paths, but is atomic, which means now you don't need to create a channel as big as the payment you want. You can instead create eight small ones and aggregate them to make a bigger payment. That will lead to more decentralization of the network, which is great. There's another technology that's coming along, which is payment channel factories, and various cut-through technologies that allow you to open a channel in the same transaction that you close a channel or to increase the funding in a channel without doing a new channel, without having to close it and open a new one. So basically cut through funding and top up a channel. These are really the third layer. But of course one of the things that people criticize about the Lightning Network might end up being one of its greatest strengths. The Lightning Network does not specify routing algorithms. Right now we have a very basic flood-based network, and the routing algorithm is fairly simple. It's called source-based routing, and that means that every node creates its own route to make a payment. The source makes the route, and that gives us a lot of privacy. It's not a very efficient way of routing. There's this other network that also decided not to embed the definition and specs for routing within the base protocol. I don't know if you've heard of it. The protocol is called TCPIP, and it tells you nothing about routing. There is not a single line of routing in the TCPIP protocol, and the first routing protocols for TCPIP for the internet sucked. But one of the interesting things is that on a network of networks, just like in the case of Lightning Network, a network of blockchains, routing is something that you can do at multiple layers with multiple different algorithms simultaneously. There are more than 25 algorithms that run on the internet today to do routing, local routing, area routing, long-range routing. Most of you have never heard of any of these protocols, and that technology continues to develop and evolve as we need to get to bigger scale. The decision not to put routing into TCPIP allowed routing to be developed independently and to progress much faster than the base protocol. That was the third layer. In Lightning Network, the routing protocols we have now are pretty basic, and if you think that's a weakness of Lightning, you haven't been paying attention. That's the third layer. I imagine many different routing protocols that can be used for Lightning. One of my ideas that I would love to see implemented is the route on metrics other than channel fees. For example, I would like to see the ability to route on the most private route, to be able to select privacy as the metric, to be able to select only through nodes that guarantee they don't keep logs of any of the transactions that flow through them. There are so many other ways we can do this. I'm very excited to see what the future is taking us. This is a massive, active research opportunity across major universities around the world that are going to reinvent routing for this new medium. I'm excited to see what comes next. Thank you, everyone, so much.