 Good morning. That was a fun video, wasn't it? My last tar I sold for Bitcoin about a month ago. That was an interesting experience. It's a whole new world. So how many of you here have Bitcoin at the moment? And of those who don't, how many of you have heard of Bitcoin? Anybody who has not heard of Bitcoin? Oh, this is going to be a lot easier than I thought. So, Bitcoin is internet money, but it's a lot more than that. And I think for this audience in particular, for people who are here to make a fair... I think I want to talk about Bitcoin from the perspective of the mis-mis, the weirdos, the freaks, the people who refuse to think the way everybody else thinks, the people who see a half-working elegant technology and don't look at the half-working they look at the elegant side. And they recognize innovation. And they recognize innovation not just a few months or a few years before others, but sometimes a decade before others recognize innovation. And that's the kind of people who go to make a fair. And I think that's going to be a great place to start talking about Bitcoin. Bitcoin is unexpected. Bitcoin is not money as we know it. Bitcoin should not have happened. Bitcoin really has no possibility of success. It can't possibly work. It's one of those things that does not work in theory, but it works in practice. Like Wikipedia, like Linux, like the internet. Weird ideas made by people with ponytails and neckbeards, weirdos, nobody really trusts. And Bitcoin succeeds because it works, because as a technology it's an elegant. Let's talk about that spirit of the misfit. Walking into an industry and saying, you know what, we're about to change everything. And being laughed out of the room. And then keeping on and going on until in fact they change everything. And this happens in technology all the time. We just forget about it. We ignore it. We rewrite the history. It all looks glowing. In this video we just watched about the early automobile. Do you know what the media said about the early automobile? They ridiculed cars. They mocked cars. Cars were slower than horses. Cars broke down all the time. Cars needed expensive gasoline that you couldn't find anywhere. And they required enormous amounts of infrastructure to work. And so the media focused on the part of the story that sold the most papers. Car accidents, pedestrians mangled by cars. And for more than two decades from the first cars, the story was that of infernal, disgusting, dirty, noisy machines... that were far inferior to horses, that couldn't go anywhere, that only weirdos would use... and that most of the time killed the occupants and everyone who came anywhere near them. This hysteria got so bad that in 1896 in the UK they passed a law called the Red Flag Act. And the Red Flag Act was a law that required that any operator of a vehicle had three crew members on staff. A driver, an engineer, and a flag man. The driver would operate the vehicle, the engineer would supervise that operation, think railroads, right? And the flag man would carry a red flag and run 100 yards ahead of the car to warn pedestrians... of the imminent arrival of an infernal death machine that was going to mow them down. Guess what happened to the UK? They lost the automobile industry race. Because they saw that technology and instead of seeing potential, they allowed fear to define their reaction. And so they created an environment where a car could not do the things that a car could do. Because if you make a car go as slow as the pedestrian who's running ahead of it with a red flag, you lose all of the advantage of a car. If a car requires a three-person crew to operate, you lose the advantages of a car. So they tried to take the car and understand it from the perspective of railroads and horses, and they failed. And they lost the race. And what you didn't see on this video was that, actually, until that time they were winning. The first really practical cars were built in England. Because they'd already won the race for the Industrial Revolution with a steam engine. At that time England was a powerhouse of industrial innovation. And they were winning until they decided that this dirty machine should be confined to a very limited space in a set of rules. And they killed the goose. No more golden eggs for that. So that is instructive because this happens again and again in technology. When electricity was first domesticated and people started electrifying their homes, do you think the media went out and said, This is brilliant. Edison's a genius. This is going to change the world. No? What they said was that this was dangerous technology that would burn down people's homes. And they ran story after story after story about people getting electrocuted. About homes burning down. And of course you couldn't really use electricity because it required a complete overhaul of your house. So you had to put wires in your house. You know, the wires would burn it down. And you would have to buy special devices to connect to these wires just before your house burned down. And only the rich could afford it. So clearly this was a technology that was really just an affectation of the rich. It was just a plain thing with no practical value. The mayor of Paris during the Paris fair in 1896, I believe, said, After the fair is over, this fad of electricity will be forgotten. As quickly as the lights turn off. Famous last words are very common in technology. Words that in retrospect look ridiculous. Like the head of IBM once said, I foresee a need for no more than five computers worldwide. Like the people who said that the telephone will never succeed. Well guess what people are saying about Bitcoin? They're telling you that it is a technology that is weird and complicated. A technology that caters to misfits, drug dealers, degenerates, pornographers, terrorists, thieves, swindlers. I don't see any of those people in this room, but we better be careful just in case they show up. Of course they're wrong. Bitcoin is none of those things. Bitcoin is simply a technology. And as a technology, it is often... The first use it finds is often in the hands of criminals. The first cars were used as getaway vehicles. The first telephones were used to plot conspiracy. The first telegrams were used to run long-distance mail fraud schemes. And Ponzi schemes and first forms of electricity were used to run medical hoaxes and scam people. These things always happen with any technology. And so they happened with Bitcoin too. Why do you think criminals use technology like that? Well we could be moralistic about it, we could look at the actual reasons. Criminals use the most cutting-edge technology They operate in an environment of very high profit margins and very high risk. And in that environment, competition is fierce. And using the latest technology, if you're already taking enormous risks, isn't that big a deal. But if you win, it gives you an enormous advantage. And so throughout history, the most amazing technology is adopted by criminals first. I don't think that's necessarily what we want to put on the Bitcoin marketing plan. But it's interesting to look at what criminals do, and how that ends up being mainstream technology a decade later. There's a certain dynamic there. Bitcoin has already way past its early stage, and is no longer the purview of criminals. In fact, arguably it really wasn't in the first place, even despite what the media said. Now Bitcoin is hitting the mainstream and things are changing very rapidly. So I want to talk about Bitcoin as a technology, because something very exciting is happening. Something that's going to shake up the financial and banking system as much as cars shook up the horse industry, as much as oil shook up the whaling industry, as much as electricity shook up the wood stove industry. Banking is about to be disrupted. Arguably it's already being disrupted. In fact, by the time they figure out how serious this disruption is, the game's already over. That's usually the case. When you look at established trends industries, they see a new disruptive technology, but at first they ignore it because it can't possibly pose a threat. Because from the benefit of incumbency, from the high perch of an established monopolistic business, these threads look like children playing around. To JPMorgan Chase, Bitcoin is like a lemonade stand trying to take on Walmart. If they continue to do that, then they go into the next phase where they start mocking the technology, where they suddenly see it everywhere and they start making jokes about it. So, just like with the automobile, the first people who bought cars were mocked. Were mocked because they were shown always on their knees with a spanner trying to fix their machine that had broken down again. That was the image of an automobile owner in the first years. So, while they mock it, Bitcoin continues to grow and improve. After a while, you see a change. At first, some of the incumbents in the industry say, Hey, maybe we need to experiment with this. Maybe we need to start looking at this. And then there's a stampede because suddenly they realize this is going to change our industry forever. By that time, it's too late. By that time, your Kodak, going from number one in the world to within three years losing a $12 billion industry right out under their feet to a company they've never heard of before. A company that didn't even make cameras. Do you know who destroyed Kodak? A little Finnish company they never heard of called Nokia. A company that didn't make cameras until they did. And within three years, they made half a billion cameras and destroyed Kodak. Tower Records dominated the music industry. And then within four years, they disappeared. Why? Because MP3 gave people choice. IBM used to be the most unshakable company in computers. They guaranteed quality. In fact, buying anything but IBM was a sure sign that you're a loser. And then Linux happened. And Linux shook IBM to its core because it subverted the very basic idea that in order to deliver quality of engineering and in order to deliver the best computers possible for the serious work of banking and engineering and government operations, you needed IBM. You needed a closed, controlled, carefully organized system built by serious PhD engineers. Now, if you looked back in 1992 when Linus Torvald said, I'm going to build an operating system in my door room because I can't afford to buy an operating system, that idea seemed completely preposterous. Operating systems were enormous edifices of complexity that it took thousands of engineers to build. And Linus Torvald started simple. It started building an operating system. Six years later, Linux had started dominating the computing industry and some microsystems were beginning to feel the pain. Eight years later, some microsystems were heading to bankruptcy. HP was getting bought. Their computer division was shutting down and IBM stepped out of the personal computing business. And now, 80% of the cell phones on the planet run Android, which by the way is Linux. And the servers they connect to run Linux. The banks we use run Linux. And the entertainment systems we use run Linux. And the cars we drive run Linux. You can always tell if it's not running Linux. So blue screen that greets you and says, Sorry, crashed. Wrong choice of operating system. You get into a plane, the entertainment system boots up. It's running Linux. If you said to an IBM engineer 15 years ago, you were about to be destroyed by an operating system built by Finnish students in their door. They would have lied to you. And so here we are today. And Bitcoin is taking on the entire banking system, the most powerful industry in the world. And guess what? Bitcoin is going to win. And it's going to win for a very simple reason. It's not just going to win because it's better. It's not just going to win because the banking system is run by gangsters and crooks. And some of the most immoral empty suits in the world. It's not just going to win because the banking system has spent the last 50 years delivering to consumer innovations, ATMs and credit cards, and then spent the rest of the time trying to figure out how to fleece you. It's going to win because it's open. And in a world of tinkers, and in a world of experimenters, and in a world of makers, open wins. And the reason it wins is because it allows innovation to flourish at the edges. It makes me what I mean by that. Every single financial system in the world has a security and trust model that requires excluding bad actors. I can't connect to the Visa network and program it because doing so would endanger the security of the Visa network. I can't connect to the SWIFT network, the Worldwide Interbank Fund Transfer, the Wire Transfer network, because doing so would endanger the security of that network. All of these networks are designed to be closed because their primary security relies on access control, on very carefully venting every single person who has access and touches the code, and on very carefully venting all of the applications that run on that system. Because if they allow one bad actor into the heart of the system, that security is gone. That one bad actor can take over and do whatever they want. Of course, in 2008, we discovered that the bad actors owned the bank, and they did take over, and they destroyed millions of homeowners and millions of retirees and millions of savers all around the world with their greed. But Bitcoin is different, and the reason it's different is not because we've suddenly found the most honest people in the world, or because there are no crooks in Bitcoin, or because the network doesn't get attacked. Bitcoin is different because there are plenty of crooks in Bitcoin, and the network gets attacked all the time. But it doesn't depend on access control to remain secure. It depends on a simple mathematical formula of incentives and rewards. In order to participate in the Bitcoin network and secure the network as a miner, which is a special function in Bitcoin, you have to use a lot of computing power and spend a lot of electricity. If you win that competition, you get Bitcoin as a reward. And that simple equation creates a system of incentives where it's far better to play with the rules than against the rules. It's game theory. It's like a giant game of Sudoku. Now, if you look at that as a computer scientist or even more as a banker, you say, well, that can't possibly work. What do you mean it's a giant game of Sudoku when everybody's competing against each other? That's not the basis of a security system. That would bring chaos. It's kind of like saying, what do you mean it's an encyclopedia that anyone can edit? That would bring chaos. Said encyclopedia Britannica. If you're under 40, you've never heard of it. Bitcoin is a completely open network. Anyone can connect to it. You can write an application right now and connect to the Bitcoin network and teach it to do something in you. You can write a new financial service. You can write a new financial instrument. But when you do so, you don't have to identify yourself to the network. You don't have to get permission from anyone. You don't have to be vended. You don't have to be secured. And the network doesn't fear you because its security doesn't depend on keeping bad actors out. In fact, Bitcoin works fine with plenty of bad actors right in the core of the system. There is no core in the system. There is no center. It's a completely decentralized system. And so what happens when you create a network where open access to financial services is possible for the first time in history where anyone can connect and write an application? Bitcoin is a currency. And that's a really important thing to realize. Currency is an app that runs on the Bitcoin network. Bitcoin is the internet of money and currency is just the first app. And today, there are a thousand companies writing the next app. And those companies are hiring tens of thousands of people in one of the most vibrant industries we have seen in the last two decades. In 2014, Bitcoin is receiving more than $250 million of investment. And the startup company is within it. And what's remarkable about that is that that is faster than the rate of investment on the internet in 1995. We are ahead of the curve. Bitcoin is growing faster than Twitter did in the first three years. Bitcoin is growing faster than Facebook grew in the first few years. And the reason for that is because every misfit, weirdo, freak, programmer from anywhere in the world can now connect to Bitcoin without asking anyone's permission and take their weirdo misfit idea and build a new financial service, a new banking application, a new shopping application, a new escrow application. And that's exactly what people are doing. They're building things that are innovative and new and brilliant, never seen in banking before. Things that wouldn't get past the first planning meeting in your average bank, because they'd get shot down. And so when you have these two environments running side by side, a banking environment where everything requires permission and permission is most certainly not granted. And a system which is completely open where innovation can happen at the edge without permission. Guess who wins? Guess where all of the exciting things happen? Guess where all of the innovation happens? And this is innovation that serves consumers. No one is sitting on Bitcoin and trying to find a way how to frontrun the high-frequency training algorithms that they can squeeze in three micro cents about four micro seconds faster than the other giant bank that's playing with all those. No one's trying to find a way to screw you out of your overdraft facility. An innovation that was pioneered by one of the big banks in, I think it was 2007, where they realized that if you were close to your overdraft limit, if instead of running the big transaction first, they flipped the order of the transactions and ran a lot of the small ones, you'd pay a $25 fee for every one of them, and they can maximize their fees. That's the kind of innovation they were focused on. So they innovated. They innovated more and more ways to screw their customers. And on Bitcoin, nobody's doing that kind of innovation. And the reason they're not doing that kind of innovation is because at Bitcoin, you can't force someone to take your app. If you bank with a big bank, it's their network. It's their policy. You're using their debit card and playing by their rules. And if you don't like it, you can go elsewhere and discover that they're all the same. On Bitcoin, it's an opt-in system. You choose to use it. You choose what apps you're going to run. You choose who you're going to interact with. And you choose the rules of the game by which you're going to interact. And if you don't like an app, you don't download it. And if you love an app, you download it and you tell all your friends about it. And that's why Bitcoin is going to win. Because it delivers innovation that consumers want and consumers need. And there's another reason. Because there's a massive imbalance that most people here don't notice. Every person in this room has access to a bank account without currency controls. A bank account from which they can buy and sell any currency in the world. A bank account from which they can wire money anywhere in the world. A bank account from which they can access international markets like the Tokyo Stock Exchange or the German Stock Exchange. A market from which they can access credit and liquidity, auto loans and mortgages. A bank account which is powerful. And that power is available to about a billion people on this planet. A billion people who have access to full-fledged, international, high-liquidity banking facilities. There's two billion people who have no bank accounts at all. And there's another four billion people who have very, very limited access to banking. Banking without international currencies, banking without international markets, banking without liquidity. So Bitcoin isn't about the one billion. Bitcoin is all about the other six and a half million. The people who currently are cut off from international banking. What do you think happens when you suddenly are able to turn a simple text messaging phone in the middle of our rural area in Nigeria connected to a solar panel into a bank terminal, into a Western Union remittances terminal, into an international loan origination system, into a stock market, into an IPO engine. At first off, but given a few years. We've seen what happens with the development of cell phone technology, which was deployed in Africa faster than any other technology ever in the history of humanity. You see small villages where they have no running water, where they have wood fires to cook with. There's no electricity. There's one little solar panel on the top of a mud hat, hot, and that solar panel is not there for a light. It's there to charge a Nokia 1000 feature phone. Because that phone gives them weather reports, and it gives them grain prices in the local market, and it connects them to the world. Now, what happens when that phone becomes a bank? Because with Bitcoin, it can be a bank. What happens when you connect six and a half billion people to a global economy without any barriers of access? Bitcoin is not a currency. Bitcoin is the internet of money. And as a technology, it can bring economic inclusion and empowerment to billions of people in the world. I'll give you one example of a specific application that is going to fundamentally change lives of more than a billion people in the next five to ten years. Every day, an immigrant somewhere caches their paycheck and stands in line to wire 50% of that paycheck back to their own country to feed an extended family. Here in the US, 60 million people have no bank accounts, and yet they cash their paychecks and send them abroad. Overall, in the world, $515 billion are transmitted every year in the form of remittances, former remittances from first-world countries to five major destinations, Mexico, India, the Philippines, Indonesia, and China. And these five destinations in some of these places are remittances for 20, 30, or 40% of the local economy. And sitting on top of that flow of $500 billion are companies like Western Union, and they take a 15% cut of every single one of these transactions out of the pockets of the poorest people in the world. Now, imagine what happens when one day one of these immigrants figures out that they can do the same thing with Bitcoin, not for 15%, not for 10%, not for 5%, but for 5 cents, not a percentage, a flat fee. What happens when they can do that? Because they can right now. We've seen a company start up that is handling remittances between the US and the Philippines. They're doing a few million dollars right now, but they're going to start growing, and there's $500 billion sitting behind that dam. And when you're an immigrant and you can change your financial future by not paying 15% to send money home, imagine what happens if every month, instead of sending 80 bucks home, you send 100 bucks home. That makes a difference. There's a billion people right now who have access to the internet and feature phones who could use Bitcoin as an international wire transfer service. So, to sum up, Bitcoin is the most exciting technology I have seen. I was around in 1989 on the internet as a young kid, and I saw that, and I knew it was going to change the world. Long before, most people figured it out. And I told everyone around me, we're going to be shopping on this. We're going to do banking on this thing. And people's reaction was quite predictable. Yeah, Andreas, go do your homework. Clean up your room. And when I first saw Linux, I thought, man, this is going to change operating systems forever. IBM is going down. And everybody laughed at me. And when I saw the first web browser and the first website, and I thought, every single company in America is going to have a website within a decade. And everybody laughed at me. Well, let me tell you something. I don't know what's going to happen with Bitcoin, but I do know that the underlying invention, a system of digital currencies that has no banks, no governments, no central control, and is available for anyone to use without asking permission, it will change the world. Three minutes. I'd be happy to take questions from the audience. So anybody who has a question, just shout it out. How I got started with Bitcoin? How Bitcoin got started? It goes back to the 70s, really. And in the 70s, a bunch of research was invented, a new form of cryptography called asymmetric cryptography that allows you to have cryptography without sharing a secret. Diffie Hellman, Rivas Chimera and Edelman, they invented in the late 70s a series of technologies that allow you to do encryption and digital signatures. Digital signatures were a very interesting thing, and they allowed, for the first time, the concept of creating digital money. Because if you have digital signatures, then you can take a token, any kind of token, a number, and you can digitally sign it and say, this is special, this is being issued by essential authority or something like that, and it means money. So the idea of if we have digital signatures and we have digital tokens and we can build digital money, this would be pretty powerful technology and several attempts were made to create that. The big problem with having digital money is that as you know, making a copy of something digital is not only possible and easy, the copy is a perfect copy of the original. There's no distinguishing one copy for another. So the problem with having digital money is that if you are given a digital dollar mill and you can make two of them, that represents a slight wrinkle in the overall scheme. So the way that was solved, and that's called the double spend problem, the way that was solved was to have a central clearing house, a system by which people could check if that dollar had been spent before and not allow it to be spent again. And the problem with that is that you have to put all of your trust in a central clearing house and that central clearing house goes down, you have no network. And so digital money has been a topic of research for the last 35 years. Until 2008, no one had figured out how to break this challenge, how to solve the problem of creating a trusted clearing house without giving someone that trust. Essentially it boils down to how do you build trust in a network of people who don't know each other without giving back control to someone in a central position. The reason you don't want to do that is because if you give power to someone, it corrupts them. And power for money corrupts faster than any power there is. And if you give people power for money, they steal it. Again and again and again. This is a story as old as history itself. The Greeks figured this out 3,000 years ago. Lehman Brothers figured it out in 2008. So in 2008, a researcher published a paper called a peer-to-peer digital cash system, Bitcoin. And that paper said here's a new way of doing it which involves competition. And the competition ensures that no one is a clearing house, but at the same time everyone is a clearing house. And if you structure that competition in a specific way, just through simple mathematics you can scale and become robust. And no one can cheat. Because as the system gets bigger and bigger, the amount of computing required to cheat is enormous. The electricity that that costs is enormous. And if you can instead use that to get reward by the system, instead of cheating which loses you all your money, then you rather play honest by the rules. And that sounds crazy. There's an 8 billion dollar economy running on it that has been constantly attacked for the last five years. And I guess it works. So not so crazy after all. So that started with that paper in 2008. And the system itself is a peer-to-peer technology which is an open source software application based on a set of simple protocol rules and simple mathematical equations and algorithms. No one controls it. Everyone can see exactly how it works. And yeah, it's here. I don't know what it means to temper expectations when it comes to adoption. I think people are going to be surprised and will continue to be surprised by how fast that point spreads. There's... First of all, I'm surprised through every technology I've seen mature rapidly. Every time I've seen kind of earth-shattering and moral-changing technology and that started with my first computer, my first PC, my first internet connection, first website, and then Linux and then Bitpoint. To me, those were a series of six epiphanies and every time I had this it's going to be an amazing moment and then I thought it's going to take decades. And the biggest mistake I made every time was underestimating how fast a useful technology spreads. I didn't expect computers to spread this fast. I didn't expect the internet to spread this fast. I didn't expect Linux to spread this fast. Every time I was surprised not by how broad it was, but by how fast the technology accelerated once it reached the level of awareness and consciousness. We have already crossed the tipping point for Bitpoint. Bitcoin is working at a scale no one imagined possible. It is now a global transnational currency and it's very basic. It is the most useful form of money for the internet invented. It's safe, it's fast, and it's cheap. It's transnational. It doesn't give a shit about borders. It just moves. It has a lot of capacity and flexibility. I think while in the developing world it's going to have the most earth-shattering impact and implications because it simultaneously takes money out of the hands of some of the most corrupt governments in the world and at the same time it connects everybody in one global currency that they can use for trade with the rest of the world. There's a lot of impact there, but that's not where it's going to go fastest. I think you're going to be surprised at how fast it's going to accelerate even in the developing world because the developing world is also much bigger than we realize here. The US is 5% of the world population and the US has the world reserve currency and that's a position one currency has. There's 193 other currencies. Of those probably a hundred worth nothing. They're dirt and they're incredibly corrupt and very difficult to trade, etc. But there's another hundred in between that are these countries that are semi-developed or developed enough in terms of infrastructure literacy, numeracy, technology capability but at the same time have really difficult currency situations and very bad governments. I'll give you just a few examples. Buenos Aires, Argentina. I visited there in November of 2013. This is a country that in the last 15 years has had two major currency crises and it is on the precipice of a major pump default that will completely trash the currency for the third time and in that country they have lost everything for an entire generation now almost three times. Every single time that happens the government is able to shock the shutters if you like coordinate the country from a currency perspective and take the entire population of Argentina hostage and force them to continue to use a currency even as it turns to dust in their hands. What happens when they no longer have the ability to do that? So Argentina is one currency crisis away from a mass Bitcoin adoption event and it's not going to be adopted by 100% of the population it's going to be adopted by maybe 1% of the population but 1% of the population of Argentina is going to bring maybe $2 billion into the economy and is going to create a high enough density of users of Bitcoin in places like Buenos Aires that is going to change that economy dramatically and then people look at that and they copy that example what happens where the government goes in and confiscates money from people's bank accounts they're going to opt out from that system and this is going to continue happening in small places all around the world so I think we're all going to be surprised by how fast Bitcoin takes off in the developed world it's going to take off primarily for shopping and e-commerce and getting around difficult forms of finance and capital flows but there's also this fast in between where we are and where Zimbabwe is, for example and there's 100 currencies in there that benefit from Bitcoin I think we're going to be surprised again, the big difference the internet took 15 years to bloom into its full mainstream adoption and it's still accelerating by the way but those 15 years also involved putting down infrastructure copper wires, fiber optics data centers cell phone infrastructure and modems, PCs that were barely ahead of that game and spreading at the same time with Bitcoin all you need to do is download an app that's the infrastructure we don't need to play any cables we already got them so not only is it going to spread much faster but it's actually going to accelerate the spread of the internet itself because now an internet device has an added layer of utility being a bank and that layer of utility is self financing which means it will pay for the internet connection and that changes quite a few things on the internet too when you fund infrastructure let me take a couple more questions you guys have lost all the money are you saying so Bitcoin exchanges right, Bitcoin exchanges are kind of the most centralized aspect of Bitcoin think of them as the on-ramps and off-ramps into and out of the Bitcoin economy and when you're operating in an environment where you're frequently interacting with the rest of the economy the exchanges are rather important since October of last year I get paid in Bitcoin almost entirely and I do most of my spending in Bitcoin almost entirely so I have less and less and less interaction with exchanges and so also I don't really pay attention to the price of Bitcoin as much as I used to because I buy things in Bitcoin so exchanges are less important the more you operate within a Bitcoin economy one of the things that people don't realize is that Bitcoin is not simply absorbing the US economy and converting things so you could buy it with dollars now you can buy it with Bitcoin that's very very small what's much much bigger is the possibility of creating a completely new economy and the economic activity that happens within let me give you a parallel if I told you in 1997 if I asked you a question how many facts and telephone lines will the internet replace now you look back that question today and you think that's a ridiculous question that makes no sense whatsoever because the whole point of the internet isn't replacing faxes we're not enjoying the internet because now we can fax better but if you looked at the conversation that was happening then people were writing 30 page reports on whether AT&T's long distance business and the fax machine business were threatened primarily by the internet and counting how many offices and businesses were converting to email and whether that would threaten the post office looking at Bitcoin as whether it replaces e-commerce stores is missing the point we're building completely new economic activity here so what happens with these exchanges they're centralized they're the edges of the network and they're where Bitcoin touches traditional money the slowest parts of traditional money the most regulated parts of traditional money for regulators exchanges are the nail for which they have a really good hammer so they hammer on them because that's all they know they can't touch Bitcoin itself they can touch the exchanges for crooks the opportunity to find a centralized part of Bitcoin where people concentrate their money which isn't under the control of the distributed algorithm but is in the hands of one individual organization is a tremendous opportunity so the exchange failures you've seen are situations where people took their money off the Bitcoin network gave them to an exchange and gave them control over that money what happens when you give someone control over your money they steal it there's the oldest story in the book it's like here I've got a suitcase full of $100,000 which might hold this very early for a few minutes I'm just going to go get a cup of coffee you will be extremely surprised if you come back and that suitcase is still there that would be the exception most of the time it won't be there when you come back exchanges are like that if you give someone your Bitcoin keys and you say here's my Bitcoin can you hold on to it for a second don't be surprised if you come back it's not there excellent question so we're beginning to see decentralized exchanges are gradually growing they're not an easy problem to solve because you still need pools of liquidity and you still need ways to concentrate the non-Bitcoin currency so even if you have a distributed Bitcoin exchange you still need ways to exchange the non-Bitcoin and that stuff tends to be hard to transfer it tends to be hard to cross borders with it it tends to be very controlled it doesn't move very fast and it has a lot of fees all of the things that Bitcoin solves when you touch them with an exchange you end up reintroducing all of those problems so it's not easy to make decentralized exchanges if you want to get Bitcoin there are a couple of really good ways to get Bitcoin here's the number one way of getting Bitcoin if you're interested in this new currency this new economy figure out the tool that you have and start charging Bitcoin for it find a product that you already make or sell and start charging Bitcoin for it find the service that you already sell and start charging Bitcoin for it so the trick is not to buy Bitcoin earn Bitcoin through your work, through your labor through your sweat and tears and pain and passion and enthusiasm creativity and innovation and that is what is pouring into Bitcoin it's not venture capital money it's not investors it's the passion of people designing that they're going to put their labor into this new currency and not let anyone take a coin what will happen first will a country adopt Bitcoin or Bitcoin buy a country that very question assumes the supremacy of the nation's state I have views for you Bitcoin is the first post-national currency it's going to change a lot more than bank Bitcoin enables for the first time the sovereignty of nations to be expressed by individuals that is an extremely powerful force Bitcoin enables people to interact regardless of nation and despite borders and that is an extremely powerful force so the question needs to be rephrased which is the first nation to adopt Bitcoin well, I have views for you Bitcoin is being adopted by the most popular nation sovereign on the planet Bitcoin is already being adopted by the most wealthy economy on the planet and that is not China and that is not the United States the internet is a sovereign entity an entity that crosses borders an entity that I belong to and so does an Egyptian blogger in the streets of Cairo and so does a young kid in Indonesia and the internet brings us together to collaborate based on common interests and common culture culture that transcends borders and now we have our own currency and that currency will actually make internet sovereignty more powerful that currency means that the internet has its own economy and that economy is already adopting Bitcoin faster than any nation state in the world and is going to build an economy that is more powerful than any nation state in the world and they can't shut down Bitcoin for exactly the same reason they shut down the internet so asking which country will take internet first is like asking how many fax machines the internet will replace it doesn't matter, by the time this plays out the concept of a national currency will be obsolete the concept of sovereignty through currency will be obsolete the concept of a traditional corporation registered in a specific locality is probably already obsolete the concept of a bank will be obsolete the concept of a checking account will be obsolete the concept of a wire transfer will be obsolete and we will be in a completely new environment where none of these concepts matter it's not that we will replace them it's that we will render them obsolete alright, let's leave that one oh you already asked the stability of Bitcoin as a currency stability is not the main characteristic of Bitcoin so think of the US dollar as the Titanic and then next to it is this little inflatable zodiac that's Bitcoin and we're on it and it's bouncing in the waves and it's going up and down and shaking all over the place but it can turn really fast and it can travel really fast and it didn't just hit an iceberg so while the Titanic is beautifully stable and majestic it's also sinking whereas the little Bitcoin zodiac is bouncing all over the place but it can out maneuver everything out there Bitcoin is not about stability especially when compared to traditional currencies Bitcoin's volatility is heading primarily in one direction and that's increased value and it's going to remain volatile probably for a decade very very volatile and that's because the liquidity pool of $8 million and $140 trillion world economy is like a kitty swimming pool next to the Pacific Ocean if you get the biggest person to jump into the Pacific Ocean they're not going to make a splash because the kitty pool, everyone gets wet so Bitcoin right now anytime something happens big splash big waves, lots of volatility everything sloshes around for a while but it's growing and as it grows it's going to get more stable and less volatile but stability is not a sign of health stability and lack of volatility is not a sign of a healthy economy in fact if anything right now for example if you look at the financial measures VIX which is the volatility index of the S&P 500 stock market it is at the lowest point it's being in I think 14 years now that means one of two things we have the healthiest economy of the last two decades or we're all about to go to hell in a hand basket I vote for the second right? something is very very very wrong when the stock market is soaring and stable as a rock and the economy is collapsing all around it and we all know that's the case volatility is not the same as instability economic systems that do not express movements that appear to be rock solid that are artificially kept that way are in fact extremely fragile Bitcoin is incredibly dynamic incredibly volatile but it's also anti-fragile it dynamically adjusts to shocks and that's why despite all of the claims the contrary and all of the obituaries written for Bitcoin every three months someone predicts with great glee lots of gloating lots of shabby frauda that Bitcoin is about to die I'm making a collection of those articles I'm going to keep them around I'm making a special website the decade from now put it alongside the quotes of the mayor of Paris who said that electricity was a passing fad Bitcoin isn't going anywhere volatility is nothing to be feared what you need to do is manage volatility so if you receive Bitcoin from someone and you intend to use that Bitcoin to spend on something in dollars then you exchange it as soon as you receive it a lot of merchants do that you have paid in Bitcoin convert it the same day and there are services that will do that for you and then volatility disappears you don't need to worry about it and to close on that particular question I asked someone in Argentina about that I said are you worried about Bitcoin volatility and he said Andreas we have peso volatility and peso volatility goes like this and Bitcoin volatility goes like that I'd rather be going that way I think that's all the time we had today again thank you so much for coming