 What do you call it when a bunch of companies collude to set prices, fix markets, close-off competition, capture regulators, and bribe politicians? We call it a cartel, right? Like the oil cartel. Have you heard that term before? Who here has heard the term banking cartel? Oh, we don't hear that term. We don't talk about the banking cartel. We don't talk about the information cartel. How many of you here in Seattle work for one of the information cartel companies? Uh-huh. Big smile on the box. Cartels are most insidious when we don't talk about them, when they hide in the shadows but in plain view. The banking system, payments, finance, are the biggest cartel in the world. Nobody calls them a cartel because they're the biggest cartel in the world. They own all of the media, newspapers, channels, politicians, and laws. That makes it very easy for them to get away with crimes. In fact, mega-crimes. Just after the crisis in 2008, instead of some bankers going to jail, what happened was that they set up an additional layer of crime... through a series of fraudulent foreclosures, robo-signing. Do you remember that crisis? One of the lead companies in that space, the biggest robo-signer of all, was run by a guy called Steve Neuchan. Anybody know what that guy does today? He's the Treasury Secretary. Apparently, he can do that job without running it from a jail cell. He copped a deal, didn't have to accept any wrongdoing, and then quickly got a cozy job, where now he has the ultimate level of protection, which is qualified immunity. That's how cartels work, because first they capture the market, then they capture the regulator, who is always about consumer protection. The regulator is there to protect against evil things happening, like money laundering, if you don't have a banking license. If you don't have a banking license, no money laundering for you. But if you do have a banking license, we have to protect the system. They'll be fine. Usually, the fine will be less than what you made actually money laundering. You'll get away with it. Of course, we don't want to see any financing of terrorists, except for the ones we do through the State Department, the CIA, or the banks, in which case those are good people. We have the regulators, and they're captured. What that kind of situation does is it encourages behaviors that are fundamentally parasitic. When capitalism fails in this particular mode, when you end up with full-blown crony capitalism, also known as kleptocracy, which is from the Greek word klepto, which means thief, and kratos, which means authority, so the thieves are in power, literally that's kleptocracy. What happens when you have a kleptocracy is that the most parasitic behaviors get rewarded. It's actually not about competing. When you run business at that scale, it's not about competing. What it is about is finding the biggest pipe of money, the biggest flow of money in the economy, straddling that pipe, sticking a straw on it, and sucking as much of that money out as you can. You can establish yourself as a parasitic leech on a flow of money, which pretty much describes the entire banking, financial, and payment system. The idea is you find a job that requires an intermediary. The reason it requires an intermediary is because you've made sure that you've bought some lawyers and some congresspeople to write a law that makes it require an intermediary, specifically you. Then you stick a straw into that flow of money, and you start extracting rents. It's called rent-seeking behavior. You take half a percentage point here, half a percentage point there. We have this wonderful thing called fractional reserve banking. If you try to describe to a five-year-old, they'd probably turn around and say, hang on, that sounds like a fraud. They would be right. But of course, there's a big difference between a fraud and something that's legal. That depends on which politicians you can buy to make sure you make it legal. We have these parasitic companies, and they sit on top of these flows of money, and they extract rent. They create this rent-seeking behavior. In doing so, they disrupt competition. They make sure that no one can compete. They disrupt competition by buying competitors, by suing competitors, or even better, by making sure that competitors can't keep up with regulation by capturing regulators, and making sure that the competition is kept at bay. In doing that, they build a cartel. They make sure nobody calls it a cartel. Instead, we call it the shining example of American capitalism. The end result of this would be appalling in its own self. Obviously, this is not a good model to run an economy. It's not a competitive model to run an economy. But who does it really hurt? Does it really matter if a bunch of people get obscenely rich without having to compete with others? Does it really matter? Well, to most people in a semi-functioning, thriving economy, it doesn't matter. That's the magic, because until money breaks, part of the benefit of freedom, the premium of liberty, is the ability to not give a shit about how any of it works. You don't need to worry about these details. You live in a free country. You're free to instead pay attention to Sunday football, enjoy your life, and have another hot dog. When money stops working, suddenly all of it comes crashing back, and you have to start learning some new vocabulary. Suddenly, at some point at the end of 2008, we all have to start learning new vocabulary. Grandma, what is a credit default swap? I don't know. Let's ask Uncle John. He has a degree in finance. He doesn't know either. Half the people in the business didn't know what a credit default swap was, or how it worked, and what was behind it. Suddenly, everybody needs to know what a credit default swap is, because apparently it chewed a giant hole right in the middle of the economy. When money stops working, everything stops working, and suddenly you're on a crash course to learn about whose fault it was. There are two alternative histories. In one of these histories, there were some oopsies, some things happened, some people made some mistakes, some bad mistakes, but they're just people trying to do their job. In the end, it was mostly the fault of greedy homeowners who didn't read the fine print carefully enough to realize that they were buying a ballooning interest rate and had the audacity to want to own a home. Because of these greedy people, the real estate market had an oopsie. But don't worry, because the irresponsible people had their homes taken away from them, the banks got some cash infusions, which we don't want to talk about too much, but everything was fixed and we passed some laws, and it's not going to happen again. Really, it was just a blip. In the next ten years, we just rebuilt everything, and everybody is happy. Now we have a roaring economy that's working great. That's story number one. Story number two, which may be familiar to more of you who are probably more in the middle class, is they robbed us blind. They stripped mine the entire economy. They had an orgy of fraud in which they knew exactly what they were doing, because there are mountains and mountains and mountains of evidence. The least competent RICO lawyer could use to unravel the entire thing, and send 500 people to jail for 25 years. All of that was ignored because we had to save the system, otherwise the system would crush us all. We dumped more than $10 trillion in an orgy of quantitative easing into the banks, which they did not use to stimulate any part of the economy, but instead to blow another giant bubble into real estate, a giant bubble into the stock market, a giant bubble into bonds, into student loans, into subprime auto, into every part of the economy. While at the same time, they made sure that those cops out there beat the shit out of anyone who had the audacity to go out and protest as part of Occupy Wall Street, and that didn't work. They turned protest into a crime, and in that orgy of crime, they didn't just damage the economy, they raped the rule of law in this country, and destroyed the justice system so they could get away with it. We come full circle today, 10 years later, and where are we? $10 trillion in debt, 10 more giant bubbles, and it's going to happen again, because a system like that is fragile, because a system like that is corrupt. It's not just corrupt, but it's architected in such a way as to reward and encourage that kind of behavior. In a system of incentives, if when you commit a crime, the penalty is less than the profits you made committing the crime, that is legal immunity. That is a very, very loud signal in a system of capitalism that says, do it again, only this time, leverage more. We could probably squeeze out another 10 years. A lot of solutions have been proposed to this, because the problem with destroying institutions within a society is that many people who are then functionally destroyed, whose livelihood gets destroyed, rage, and that rage gets misdirected. It's the old adage of the really rich guy having 99 cookies, the middle class having one cookie, and the rich guy going, watch it, that brown guy is going to take your cookie. That's the oldest trick in the game. I'll just give you one little piece of information. One of the houses stolen by Steve Mnuchin's robo-signing firm belonged to the guy, and I won't name him because they don't deserve to be named, who sent 17 bombs to Democratic Congress people just about a couple of weeks ago. That guy got robo-closed by Steve Mnuchin and decided to turn his rage against immigrants, gays, and Democrats for, I don't know what. But the point being is that when you have that kind of destruction in a society, when you destroy the institutions of the rule of law and you create rage among people, they don't know where to turn. And what you have is violence and extremism, bigotry, hatred, and a desperate desire to find someone to blame. And of course, you can't really blame those guys because they're behind very tall walls, and they have very good security. And guillotines are out of fashion, so they tried that in France, but can't do it again because we're now a civilized country. So what do you do? Protest, okay? Well, that ends in an orgy of violence by a militarized police, which is doing exactly what police have always done. You can't do that. Occupy, that was tried, again, orgy of violence. Apathy, a lot of young voters tried apathy. They're like, I don't give a shit, these old people fucked it up, I'm just going to go and play my game and ignore all of this. That doesn't work out very well. Trying to become part of the parasitic class by somehow scrambling and clawing your way to just escape the middle class. Well, the problem is there's a tide of shit coming up behind you, and it's moving faster than you are. The middle class is actually sliding backwards so fast that while you're trying to scramble out of it, you're really backsliding, so that doesn't work. How do we fix this problem? The first thing we need to do is identify why this keeps happening. And in my opinion, looking at this from a technology perspective, I think it's a problem of architecture. And the architecture that that's the core of this problem is an architecture of hierarchy and centralization. Centralization is responsible for this. Parasitic behavior gets rewarded because there are giant centralized flows of money that someone can go and tap in. Because we've taken the traditional model of commerce, where you visit your local butcher and you interact with them, and you get something, and you give something, and you trade with other people around you in your community. A system of peer-to-peer commerce, if you like. And we've converted into a system that I call a peer-to-corporation-to-corporation-to-corporation-to-corporation-to-peer system whereby when I pay my butcher, Visa, Chase, and three other banks get involved, and they all stick a little straw in that flow so that by the time it reaches my butcher, a lot less money has arrived in their place. I mean, how can you make a system like that work? It's absurd. You'd have to create a sense of apathy combined with the extreme convenience of waving a piece of plastic, and at the same time create some kind of dark cloud over cash, terrorists, and pretend that cash is something that we should get rid of because people use it to evade taxes. Of course, the people who evade taxes use corporations and very expensive lawyers to do that and actually get away with it, but the butcher might evade some taxes if we use cash, so we'll eradicate cash. That hierarchy is not just poisonous for the system of commerce that we have. It's not just our banking system that becomes a haven for parasites because the very architecture itself concentrates power and creates a reward system for parasitic behavior. This is now happening with information cartels. Let's take everybody's identity, put it in a big pot, put Mark Zuckerberg on top, and oh, oops, we fucked up our electoral system. But we got cap videos, but hey, democracy is dying, but we got cap videos, so that's okay. Is it? And so the information cartels, the payment cartels, the electoral system that's so centralized that the Secretary of State of Georgia can run in his own election and then steal it at the same time because we have electronic voting machines that make it so quick that you can count the votes incorrectly in an hour instead of counting them correctly over three days. So we have convenience because now you can tap on the screen and you tap and vote and the system changes your vote to something else and it's counted instantly. Convenience, and democracy dies a little. We have the liberty to ignore most of these remote side effects, these negatives that arise out of centralization, because in this country we have an incredible amount of economic momentum and a dirty deal with the Saudis to sell oil only for dollars that ensures that we will continue to have low interest rates and the rest of the world will buy treasuries, and we can maintain a lifestyle of convenience. That illusion that this will continue to work like this allows us to accept this behavior, not try too hard to change it. We're not in a panic, it's not an emergency. It was in 2008, but that got fixed, don't worry. It's not going to happen again in 2019, don't worry. And it won't happen three times bigger because we didn't actually fix anything and the same symptoms still exist, don't worry. Well, while you're not worrying, someone in Argentina is worrying because their currency just crashed 45% this year because they're experiencing that in an accelerated fashion in an environment where they can simply outsource their debt to the rest of the world in exchange for oil and war. So they actually suffer the consequences immediately and it's happening in Venezuela and it's happening in Brazil again, and it's happening in Turkey, and it's happening in Ukraine, and it's happening in dozens of other countries. And until now, in all of these countries, the problem was that when your esteemed leader tells you that the reason your currency is crashing and your economy is dying is not the systemic corruption throughout the entire system, the parasitic behavior of hierarchies sucking off the middle class and feasting on the carcass of the economy. It's actually the foreigners in Bolivia next door who are sabotaging or some other external threat. Well, not only is it your patriotic duty to use the currency, but it's also your patriotic duty to not leave the country, which of course, refugees do all the time because they're not so patriotic. And so, there's no exit. Because until 2008, there wasn't really an alternative. Holding dollars, for example, as a foreign currency, or hoarding gold, or putting it under your mattress, that's very easy for a government to stop, to break down, to censor. And they can do that by confiscating your gold and raiding your house. And if you are seen exchanging hard currency like foreign currency with others, you'll get shot. You won't just have a misdemeanor fine. And so, these countries can take entire populations with them hostage on these hyperinflation orgies, but then something happened in 2008. And that something is Bitcoin. And what happened was, for the first time ever, we had an option. And that option isn't just a separate currency. It isn't just a currency that can't be confiscated, that can easily be transmitted across border. A lifeboat currency that can be used. So, the people sometimes don't even need to exit the country. They can simply exit the economy virtually by trading in another currency right where they are and creating a parallel microeconomy, a little lifeboat in their community, which becomes connected to other little lifeboats that can have life continue past the crisis. They don't all have to go down with a sinking boat of state to be patriotic. And that's what's happening today in Venezuela, in Argentina, in Turkey. And before that, in Cyprus and other places, it's happening again and again as people discover they have some other options. And of course, today, not many people can do that. And it requires a level of literacy and numeracy and technological confidence that's not available to the masses. But think about what happens in 20 years when some pot dictator decides to take an entire economy hostage and 20, 25% of the population goes, see ya, I'm taking my money out now. And taking your money out isn't the act of investment. Like we see here in the United States, people say, let's invest in Bitcoin as if it's some kind of stock, let's buy low, sell high, let's make lots of money, get rich quick. The act of exit is to say, I will take my productive capital, my labor, my services, my products, and I will only make them available for this currency so that I am not only simultaneously entering a new economy and trading with other people who are with me, I have exited, I have withdrawn my participation, my collaboration with the system that is broken. On that basis alone, this is a technology that is going to change the world. But that's not what it's all about. You hear this term and you would have heard it on this video and you'll hear it again and again when you talk about cryptocurrencies, when you talk about open blockchains with other people, they'll say, decentralization, decentralization. And to most people, that doesn't actually mean anything. It's a really vague word. It doesn't have any impact in their lives. So let's decipher that. What does decentralization mean? Decentralization means peer-to-peer. It means edge-to-edge. It means end-to-end. It means removing intermediaries. It means reconnecting with each other so that we can have transactions, interactions, but not just money, also trust, corporations, and other things that are enabled through smart contracts. And we can do these things without intermediaries. What is the role that intermediaries serve? In most cases and most markets, the fundamental purpose of an intermediary is two-fold. One, to provide a way for a buyer and a seller, or two parties engaged in any kind of trusted transaction to find each other. They create marketing conditions so people can find each other. That's what Uber does, because the drivers are out there. You're out there. What is Uber doing? They're helping you find each other. That's a good function, yes. But we could also do that with software. So why exactly in this day and age do we need to create these double-ended markets where people need to find each other? Well, the other reason is trust. Because I can't trust the driver unless there's some way of validating some kind of review or previous experience. And the driver can't trust me that I'm going to actually pay them. Trust. And trust until 2009 was a function that could only be done by intermediaries acting in a hierarchy of oversight. Meaning that I trust this intermediary, because this intermediary is overseen by another intermediary, who's overseen by another intermediary, and the theory goes eventually overseen by someone who is a representative of some elected body where I have some influence that represents the consent of the governed. The intermediary works for me through my representatives. The intermediary is trusted because they have oversight. In practice, that's not what happens. In practice, what happens is that the intermediary gets powerful enough to start buying the intermediaries around and above them, and then they get bigger and bigger and bigger, and they start sucking and extracting more and more rent out of the system until eventually they buy the people doing the oversight. Then the congressman works for them, and I'm not part of the system anymore. It's no longer peer-to-peer. It's peer-to-corporation-to-corporation-to-corporation-to-peer. And we're out. Somebody asked me recently at a talk, how do you pay the guy on the street with Bitcoin? Like, if a homeless person asks you for a donation, you can't pay them with Bitcoin. So actually, I can. Actually, I have. It takes 15 minutes because I have to teach him how to install a wallet and where to spend it, and how to find other people, and so it becomes an exercise of slightly patronizing education, of course. But it's sometimes worth it, and I'll also give them some cash because I'm not a monster. Because by the way, if you decide you're only going to tip or give money to homeless people in Bitcoin, you're a douchebag. I mean, it's really quite simple. So you can do that. So my question back to this person was, well, tell me, how do you pay the homeless person with a credit card? Because how many of you are actually carrying that much cash that you use for any other purpose other than tipping? We don't. What we've done is we've outsourced our commerce through these intermediaries, and I have a really simple question for you. In this room tonight, how many of you have a point of sale merchant system that can accept a credit card? I do. Two, three, four, five, six, seven, eight, nine out of three hundred and eighty people. Which means that none of you can take my credit card, which means that none of you can take a payment. You can use intermediaries. You're going to have to stack them all together and make a little pyramid of intermediaries. Well, I can put PayPal here, but PayPal will take it from Visa, and Visa will take it from your Chase Bank account. So it's Chase, Visa, PayPal, Chase, me. Wait, how did Chase get in there twice? Fuck. I should be in that business. They didn't actually do anything. What do they do? They moved bits on the internet. We've been moving bits on the internet for 25 years for free. How did they figure out that this cost 2% of my transaction? The invention of Bitcoin is about decentralization, because what it does is it removes intermediaries. And if you understand anything about the internet, all of the great things that the internet did come down to one word, disintermediation. I need to put a classified ad in a newspaper to sell my furniture to my neighbor. Oh no, I don't buy newspapers. Oops, they're gone. An industry that existed for hundreds of years now a hollow shell that does infotainment. And several other industries have gradually fallen to this powerful effect of disintermediation. And disintermediation is important because it allows you to do two things. It allows you to shorten the distance between buyers and sellers and remove all of the points of friction and control, which means lower cost, it means faster service, and it means a more direct interaction between the person providing the service and the person consuming it so that we can start behaving like human beings that interact with each other. If I buy something from someone directly, I know who they are. I don't need three intermediaries of trust in between. Not only does disintermediation remove these, but the other insidious problem of intermediaries is control. Because they're not just going to take a cut of everything they do, they're now going to start telling you what you can and cannot sell, to whom you can and cannot sell, to which country you can and cannot send money. And that would be wonderful if they shared my moral principles and decided that, no, we really shouldn't be sending 40% of our budget to Lockheed Martin and General Fucking Dynamics, to bomb people around the world. Maybe we should do something else. But no, they don't have my moral principles or probably your moral principles. They think it's very wrong to send money to WikiLeaks that hasn't been convicted of doing anything wrong ever. But it's perfectly right to send a contribution to the Alabama chapter of the KKK, which is a fundamental problem in all of our platforms today. They have become gatekeepers as intermediaries. So the side effect is not just the 2% cost of every transaction. It's the fundamental erosion of democracy. It's the destruction of all of the other institutions that we used to have control over. We no longer have choice. We no longer have voice. And what is left when you have no choice and no voice? Exit. And we can do exit the hard way. And exit the hard way is trying to get with 50 other people into a tiny boat across the Mediterranean. A man-made crisis. But exit the slightly less hard way is saying, I'm opting out. I am leaving your centralized parasitical system. And I am choosing to use decentralized platforms. I'm using decentralized platforms for my money. I'm using decentralized platforms for my payments. But I'm also using decentralized platforms, perhaps in the future, for my speech, for my publishing, for my corporate organization, for all of the other interactions that require trust, where trust used to be a function of hierarchy, and it no longer is. Trust is now a protocol. And when we have the technological tools to take trusted institutions and convert them into a peer-to-peer protocol, we take back that control. We remove the intermediaries. We cut off the flows. If you want to stop a parasite, you have to stop feeding it first. And so that's what this is about. That's why decentralization matters. And the problem is that when I talk to audiences in Argentina, or I talk to audiences in Greece, or I talk to audiences in Cyprus, or many other places around the world where they're not part of the 5% population of this planet that has our advantages, they get it. They've already seen it happen two, three times in one generation. They've seen what happens when money fails. They've seen what happens when institutions get corrupted, eroded, and finally destroyed by these parasitic organizations. And these parasitic organizations keep arising because nothing has changed in the fundamental architecture. If the architecture is a pyramid, someone will climb to the top. Changing people at the top doesn't change the architecture. Corruption will flow upwards, and they will become corrupt, too. They're just doing their job. I've got plenty of bankers. They're nice people. They're just trying to pay their mortgage. They're debt slaves, too, most of them. They're just contributing to the inevitable, inexorable momentum of a machine that moves in one direction only without guidance for morality because it doesn't have morals. It's a corporation. It's not immoral. It's simply amoral. It doesn't have morals. How do we increase our profit margin this week? Well, we could sell facial recognition technology to law enforcement companies. After all, what are they going to do with it? Hey, didn't Oakland PD murder a whole bunch of their own fucking citizens even though they were unarmed? Yes, but if they violate the Constitution, they'll probably be in violation of our terms of service so we can shut them down. Who the hell do you think you're kidding? Really? And the people who make these decisions, they're not evil people, they're just moving inexorably. They have seen that this is a big pipe, a big pipe of money that wants to throw millions and then billions of dollars into facial recognition and surveillance and tasers and pepper spray and drones that bomb you with pepper spray from the sky with tasers and they're like money and they stick a straw in it because they're just making decisions on a local context. You cannot stop that by saying, be better, Amazon. Be better people. Don't be evil. What a great slogan. You can't fix it. We have to change the fundamental architecture and the fundamental architecture. The reason this can be done by large corporations is because of centralization, is because they have taken the convenience of the one click buy and the convenience of the profile share and all of the little micro violations of privacy and they have built a massive information cartel that delivers billions of dollars that allows them to centralize and become parasites. They're actually quite benevolent right now, but we know where this is going. This is not going to get better. It is not going to magically resolve our itself until we change the fundamental architecture. So that's the message. The message of the movie we just watched. The message that Bitcoin brings and the reason it's so, so strongly resisted is because it says, we don't need your permission. Your regulation isn't working. You can't scale to solve the problems of this planet because at a very fundamental level, your architecture is wrong and the architecture we want is peer-to-peer. It's flat. It's decentralized. It's end-to-end. It innovates at the edges without permission and innovations flow up and are part of everybody's experience. That's the architecture we want, peer-to-peer. That's why it matters. Not just in money, in corporate governance, in law, in voting, but first and most importantly, we have to starve the parasites. The first thing that needs to be broken is the cartel of money. The way we do that is by exiting and using peer-to-peer money. Thank you.