 Hello, welcome everybody. Thanks for coming. It's really a pleasure to see that so many have attended. The Barcelona Bitcoin Community is proud to announce you Andreas Antonopoulos, the author of Mastering Bitcoin. Everybody who don't know this book and who want to learn something about Bitcoin, that's the Bible of Bitcoin. He's a network and security expert, developer, entrepreneur, co-host of Let's Talk Bitcoin and probably the most wanted speaker for Bitcoin conferences. So we are very happy that he could come to Barcelona to our meetup here. Now I don't want to waste your time anymore and give the microphone to Thomas. Thank you Manfred. Welcome everyone. I'm going to be very short as well. Welcome to the FABLA Barcelona, which is located at the Institute for Advanced Architecture of Catalonia. It's not by chance that Andreas is here. He's actually opening, I would say it's the very first time that we're going to have a conference about Bitcoin at this institute that is looking into the future of architecture, the future of cities through the use of technology. Part of that is what we have a FABLA as a distributed manufacturing facility. So with that, I think that you are waiting for Andreas and thank you for joining us. The stage is yours, the people is yours. Thank you. Thank you so much for having me here. It's been quite amazing. I'm doing a European tour, which involves visiting seven different speaking events in 12 days. I'm a bit jet-lacked. And the title for each of these talks is Thoughts on the Future of Money, which basically means I didn't want to commit to a topic until the last minute, because I have several different topics to talk about. So I gave myself some room to pick at the last moment based on the audience. What I want to talk about today is about the concepts of neutrality, decentralization, and privacy, and what makes Bitcoin so special. You'll hear me talk a lot about Bitcoin. When I use the word Bitcoin, I'm not talking about the currency. I'm talking about a broader concept, which is the concept of completely decentralized, network-based, flat networks for providing trusted applications. And if you happen to have a completely decentralized, flat network that can provide trust applications, the most logical first application is currency. But currency is just the first app. We are restructuring society by rebuilding institutions. Traditionally, institutions in this world have been hierarchical. This was an invention of industrialization, an 18th-century concept, to allow people to organize and communicate at a larger scale. It was very effective at breaking the monopolies of kings and feudal systems. It's now run its course. Sometimes people ask me what my political positions are, and it's very difficult to explain, but one word captures it. I think I'm a disruptarian. What that means is that every 30 or 40 years, at least, things that have settled need to be disrupted. As they settle, power accumulates, they become centralized, and with centralized power, corruption happens. This is the new concept. My ancestors, I come from Greece, figured out that corruption happens in systems of power. Absolute power produces absolute corruption, and there is no more absolute power than the power of money. We live in a world where banking was a great liberator after the 15th century, an invention that moved finance from the realm of kings to the realm of everyday people. That system liberated billions of people, then it got concentrated, acquired power, and led to corruption. What we're left with today is not a liberating system, and it's time to disrupt it. Bitcoin is one of the things that will greatly disrupt centralization of power. Why is that? One of the things that interests me as a computer scientist working in distributed systems is the architecture of systems. Architecture is a great topic for this city. The architecture of systems is what ultimately produces the outcomes. I've worked with a lot of bankers. They're nice people. They try to feed their family, pay their mortgage, keep a steady job. Among them, there are a few sociopaths who inevitably rise to the highest positions of power, because sociopathy is an advantage in hierarchical systems. But most of the problems with traditional concentration of power and money has nothing to do with the people being evil. It has to do with the fact that these institutions, through their shape, through their architecture, produce outcomes that are not good. They produce outcomes that are not egalitarian. They produce outcomes that are restrictive. They start to express nativism, nationalism, tribalism, class structure. All of these things make the world a smaller place. Over the last 15 years, we've seen the internet become an enormous power for the decentralization of communications. It has been a very liberating force. But if you look at economic inclusion and how banking works, we haven't expanded access. In fact, we're now regressing. Economic inclusion is reducing. The reason it's reducing is because these isolated structures of finance, their very architecture, raises walls. National borders, class structures, and differences in how your money and your commerce is treated. We live in a world that is increasingly global and interconnected. Even an emergent global culture through the internet. Yet our financial systems are parochial, insular, and separated. If you look at it from a network perspective, there are systems of money for transmitting small amounts. Systems of money for transmitting large amounts. Systems of money for consumer payments. Systems of money for business-to-business payments. All of these are separated geographically based on borders, legal jurisdictions, and nation states. What this structure produces is separation. It means that as people, we are less and less free to transact with the rest of the world. Geopolitics is affecting finance in a great way, because the combination of state and money produces toxic results. We're about to disrupt all that. What Bitcoin's architecture gives us is a new way of organizing the world. Exactly the same way that the internet flattened access to communication, made every system that connects to it an equal peer. If I have an IP address, my packets are treated no differently than the packets of anybody else on the network. For the most part, that gives voice to everyone. It gives everyone the power of the printing press on a global scale. Bitcoin will do the same by giving everyone the power of banking on a global scale. Think of it like desktop banking, the way desktop printing, desktop publishing, and websites changed communications. It's desktop banking, individually controlled banking. With all of the power of the largest bank in the world, that's what creates disruption. Imagine a world where every person has the ability to not only execute transactions, but create complex financial systems and instruments without asking for anybody's permission. Simply by connecting to the network, they can start a new application. Centralized systems can't do that. In a centralized system, the further out you are, the less control you have. The further in you go into the system and up the hierarchy, the more controlled, the more limited the access is. But not with Bitcoin. With systems like Bitcoin, every node on the network has equal access to all of the financial services. In a centralized system, if you want to build a new application, two things have to happen. First, you have to ask for permission. Then permission is only granted if that application can apply to very large populations and be profitable. On the internet or on Bitcoin, all that is needed to start an application is two nodes, two people, two systems. They can start communicating, construct their own protocols, their own systems. That application with only two people using it is just as valid as every other application on the network. When you look at the internet, the fundamental misunderstanding is that people think that the power of the internet comes from the ability to transmit information fast. But the real power of the internet comes from net neutrality. Net neutrality is the concept that the internet does not discriminate based on source, destination, or content. Bitcoin is the first financial network that exhibits neutrality. When you do a Bitcoin transaction, the network doesn't care about the source, the destination, the amount, or what type of financial application it is supporting. Simply, did you pay a sufficient fee to use the network resources? If you did, your application is valuable. We have an interesting conversation happening in Bitcoin right now. Perhaps some of you have heard the term spam transactions. Have you heard that? What is a spam transaction? What does it mean for a transaction to be spam? I think that term is meaningless. To decide which transactions are spam and which are not, you are making a top-down judgment. You are imposing in the architecture the choices of which applications are legitimate. To who? Legitimate to the end user? There is no such thing as a spam transaction simply because if a transaction carries enough fee, that means that the sender of that transaction felt it was valuable enough to transmit. Therefore, it is a legitimate transaction. This replaces the concept of controlling content by making decisions about what is good, what is bad, what is legitimate, what is illegitimate, what is a valuable application, what is not a valuable application with a simple market mechanism. If your transaction is valuable and you paid a tiny fee because of the democratization of finance, then your transaction is valuable and is not spam. Starting in the 1970s, we have seen the world begin to adopt digital currencies. When people call Bitcoin a digital currency, they are missing the point. The euro is a digital currency. The US dollar is a digital currency. Less than 8% of these currencies exist in physical form. The rest is bits on ledgers. The fundamental difference is that these ledgers are controlled by centralized organizations. Whereas in Bitcoin, they are not. You have a decentralized network, an open network. Bitcoin is not a digital currency. It is a cryptocurrency. It is a network-centric money. I really like the idea of a network-centric money. In my opinion, the word Bitcoin is a terrible name. It just sucks. If you are a designer, think about it for a second. Bits, which either means small or it means the person who just said that is a geek, none of which is appealing to general population. Coin, a physical token of money, used to describe the least physical form of money we have ever designed. If I could rename it, I would rename it TrustNet, because that is what Bitcoin is. It is a network that allows you to replace trust in institutions, trust in hierarchies, with trust on the network. The network acting as a massively diffuse arbiter of truth, resolving any disagreements about transactions and security, in a way where no one has control. Starting in the 1970s, our currencies began to be digital. This is not the same digital as Bitcoin. This started a dream for governments. A dream of being able, one day, to control every financial transaction of every human being on the planet, in a way that everything was visible to the power structures, where privacy dies. The ability to make a transaction immediately puts you under the lens of systems that surveil you. We have been creating a system of global financial surveillance, a system of totalitarian financial surveillance throughout the world. That system, which requires identification, credit-checking, and limited access, is responsible for the fact that economic inclusion is regressing. It is responsible for the fact that 2.5 billion people have absolutely no access to banking. That is just the heads of household, not counting their families. That is not counting people who have limited access to banking and a single currency within a single border. If you count all of them, you are starting to go into the high billions. It is difficult to really estimate what economic exclusion means. I will give you a simple calculation. As a member of the privileged elite of the developed world, I have the ability to open a brokerage account in 24 hours electronically. Within 24 hours, I can be trading in yen on the Tokyo stock market. I can be sending and receiving money anywhere in the world, without any limits. All I have to do is sacrifice my privacy and my freedom. While I can do all of those things, and they are very powerful, there are some things I can't do. I am not talking about buying drugs. That is not really interesting. I am talking about simple things, like donating to an activist organization like WikiLeaks. A few years ago, WikiLeaks was completely cut off from the world financial systems, simply with extra judicial pressure applied on five major payment providers. Visa, MasterCard, the banking transfer system, PayPal, etc. Without any legal process, without any conviction, and perhaps without any crime, other than revealing the truth of crime, WikiLeaks was cut off from the world financial system. This is happening not just to activist organizations, but to entire countries. Just like that, the dream of nation-states to create a totalitarian financial system that started in the 70s died. On January 3, 2009, with the invention of Bitcoin and the mining of the Genesis Block. Bitcoin is censorship-resistant. You may have heard this term. You cannot control where money is transmitted in Bitcoin. It is not attached to identities or geography. In Bitcoin, surveillance of everyone is not possible. In fact, it is going to get much harder, because privacy is increasing on Bitcoin. Censorship-resistance is an artifact created by neutrality. The architecture of a flat network without borders, the architecture of neutrality that doesn't describe any meaning to source destination value, is what creates censorship-resistance. Privacy is very important. It is a term that often has very deep political meaning. I like to juxtapose it to another term, that of secrecy. What is the difference between privacy and secrecy? Ultimately, and practically in today's vocabulary, privacy is the right of billions of individuals to not be surveilled. Secrecy is the power of the very few to escape accountability, to have no transparency. We live in a world where every individual transaction you do through the financial system is catalogued, analyzed, transmitted to intelligence services all around the world that collaborate. Yet, we have no idea what our governments do with money. The financial systems of the powerful are completely opaque. Our transactions are completely visible through this system of surveillance. This world is upside down, and Bitcoin writes it. Privacy is a human right, and secrecy is a privilege of power. We need to be in a world where we have complete, ultimate, strong privacy for the billions of people. That is a human right, a cornerstone of the freedoms of expression, association, political speech. All of the other freedoms are very much attached to privacy. We need to live in a world where secrecy is fickle and easily pierced, where power has to face accountability. Because they are under the spotlight of transparency. We need to flip the system upside down. One of my favorite words is a French word, surveillance. It is the opposite of surveillance. Surveillance means to look from above. Surveillance means to look from below. In their dream of nation-states of controlling all of our financial futures, they made one major miscalculation. It is a hell of a lot harder for a few hundred thousand people to watch seven and a half billion. But what do you think happens when seven and a half billion of us stare back? When the panopticon turns around, our communication systems are private, and secrecy is an illusion that can't be sustained. When crimes committed in the names of states and powerful corporations are vulnerable to hackers, whistleblowers, and leakers, when everything eventually comes out, we have a great advantage. The natural balance of the system is one in which individuals can have privacy, but the powerful cannot have secrecy anymore. Bitcoin is one of the first steps in that. The ability to transact across borders means that we will now be able to extend financial services to billions of people who have no access, not through complicated technology necessarily. I speak sometimes to various regional banks, the ones that are not afraid of Bitcoin. They tell me things like 80% of our population is 100 miles from the nearest bank branch, and we can't serve them. In one case, they said 100 miles by canoe. I'll let you guess which country that was. Yet, even in the remotest places on earth, there is a cell phone tower. Even in the poorest places on earth now, we see a little solar panel on a little hut that feeds a Nokia 1000 phone. The most produced device in the history of manufacturing, billions of them have shipped. We can turn every one of those into not a bank account, but a bank. Two weeks ago, President Obama at South by Southwest did a presentation, and he talked about our privacy. He said, if we can't unlock the phones, that means that everyone has a Swiss bank account in their pocket. That's not entirely accurate. I don't have a Swiss bank account in my pocket. I have a Swiss bank with the ability to generate two billion addresses of a single seed and use a different address for every transaction. That bank is completely encrypted, so even if you do unlock the phone, I still have access to my bank. That represents the cognitive dissonance between the powers of centralized secrecy and the power of privacy as a human right, that we now have within our grasp. If you think this is going to be easy, or that it's going to be without struggle, you're very mistaken. If you read anything about Bitcoin, you will see the very same things that they said about the Internet in the early 90s. It is a haven of pedophiles, terrorists, drug dealers, and criminals. How many of you in this room have Bitcoin? How many of you in this room are terrorists, pedophiles, drug dealers, or criminals? The thing about Bitcoin is, while they push this story, every now and then, someone who's never heard of Bitcoin notices two important things. One, it's still not dead. Which is always surprising, because every two or three months there's an article that says it's dead. That's great marketing. Every time someone hears it's dead, three months later they hear it's still not dead. They think, huh, this thing really tends to survive. I call Bitcoin the internet of money, but perhaps we should call it the zombie of currencies. It is the currency that is the undead. The issue here is that we're now creating a system that is threatening the largest industry in the world. That is finance. They are going to object. They are going to push back. They are going to use the most common and effective emotional tactic there is, which is fear. They will treat you in such a way as if you are idiots, and try to persuade you that this is something to fear. When people hear that message, maybe the next day they come to one of these meet-ups. They meet a dentist who owns Bitcoin, an architect who owns Bitcoin, a taxi driver who uses Bitcoin to send money back to their family. Normal people who use Bitcoin to give themselves financial power and financial freedom. Every time that message is broken by cognitive dissonance, Bitcoin wins. All Bitcoin really has to do is survive. So far, it is doing pretty well. Even if Bitcoin was attacked, there are 750 alternative currencies built on the same design, many of which are far stealthier, far more robust, at least at the scale they are now. Who knows? Bitcoin will get more robust, or something else will replace it. In fact, it is ironic, because in the new network-centric world, currencies occupy evolutionary niches. They evolve like species based on the stimulus they have from their environment. Bitcoin is a dynamic system with software developers that can change it. The question is, in which direction will Bitcoin evolve? Which environmental niche will it attempt to fit in? How will that be affected by the actions of the powerful? Here is one of the problems they have. If they attack Bitcoin, it evolves to defend itself against predators, just like any species. If they attack Bitcoin's anonymity, it evolves to become more anonymous. If they attack its resilience, it evolves to become more decentralized. In the end, despite all the messages of fear, Bitcoin is the cuddly little bear of currencies. You do not want to kick it, because as an evolution, if you stomp on the little gecko, it will evolve until it is a Komodo dragon, and then you can't stomp on it. Sometimes people ask me, do you think governments will ban Bitcoin? Do you think they will try to regulate it out of existence? Do you think they will attack it with denial of service attacks? The answer is really simple, because in network-centric systems, systems that are dynamic and adaptable, systems that exhibit anti-fragility, attacks cause the system to adapt, evolve, and become resistant. Think about this for just a second. I have been involved in the Internet since 1989. I remember very clearly, in the early days, when lots of articles were written about how the Internet was not resilient, could not scale to do voice, was not secure. I remember times when denial of service attacks would take down Yahoo, Alta Vista, and even Google for hours, sometimes days. What happened between then and now? How many times have you seen Google go down in the last five years? The question is, have people stopped attacking Google? Quite the opposite. Google can now sustain gigabits of denial of service anywhere in the world, and dynamically reroute. The same applies for all Internet applications. The attacks didn't stop. The system became immune. Like a human immune system, if you are exposed to a virus and it doesn't kill you, you evolve resistance. The next time you are exposed to the virus, it does nothing to you. Will governments try to ban, regulate, attack Bitcoin? They already are. They have been, almost since the beginning. Bitcoin keeps getting stronger. It is a system that is under constant denial of service attack, on the Internet, being attacked by hackers, agents, and other systems, 24 hours a day. In security, we have a funny term, which is a honeypot. A honeypot is a system designed to attract hackers. What bigger honeypot could you have than a financial network that has $6 billion on it? If you hack Bitcoin, there is a $6 billion reward for you finding a way to hack it. No one has collected that reward yet. It is not because they haven't been trying. They have been trying non-stop. Systems like Bitcoin are resilient. Remember that what we are doing here is not a currency. It is a reworking of the societal systems of organizations that have failed us. The 18th century system of hierarchies that does not scale to a global interconnected world, is being replaced by network-centric, flat architectures. Whether that is the Internet or any of the applications running on top of it, or Bitcoin itself. Currency is just the first app. When you have a network that can provide you with neutral trust, you can build myriads of applications on top. You don't even have to ask for permission. Bitcoin is much more than currency. When I say that Bitcoin is the Internet of money, the emphasis is not on money. The emphasis is on the Internet. Welcome to the future of money. We will do a few questions and answers, but first I wanted to talk very quickly about some logistics. If you brought with you a copy of the book, I will be delighted to sign that copy for you. Please see me after this talk. I will sit next to a table and sign books. However, this book is open-source. Everything I do is open-source. I use a very aptly-named license called the Creative Commons, which couldn't be better expressed than in a place like FabLab. Which is a Creative Commons. All of the work I do is free, by attribution, share-alike license. Anyone in the world can read my book, sell my book, share my book, translate it, mash it up, turn it into a course, a video, or a rap music song. All of the above have already happened, which is astonishing. Starting about eight months ago, we embarked on a project of great significance, which was the translation of Mastering Bitcoin as a resource for the community, for developers around the world, from any nationality to learn how to wield this tool of power and use it to build applications. Groups of volunteers, very often just a single volunteer with a desire to learn about Bitcoin by translating my book, have done me the honour of translating it into twelve languages so far. All of those translations are available for free online. You can download this book in Spanish. The translation was completed in October of 2015, as well as Hungarian, French, Russian, Japanese, Korean, and soon Chinese and Catalan. The Catalan translation is nearing 50%, and volunteers are working on it in order to bring this into the Catalan language. For me, that is the most important thing that we need to consider with Bitcoin, which is the power of knowledge. Bringing that knowledge to as many people as possible is how we create success in changing the world. I was just the first to write a book in this space, but all of you can also participate in sharing the knowledge of Bitcoin. This isn't my greatest contribution to the space. I think the simple act of discussing Bitcoin with every taxi driver I've ever met, with every person in the street I've ever met, with everyone I've shared a drink at a bar, and on the spot within the first ten minutes, helping them install a wallet, get a Bitcoin address, and giving them one or two dollars in Bitcoin, so they can try it from themselves. That's something everyone in this room can do. Arguably, when I started, giving everyone one or two dollars in Bitcoin meant giving them a Bitcoin. I have now given away more Bitcoin than I will ever earn in my life, and I continue to do it to this day. I invite all of you to look at this as a community. Bitcoin is not just a community of technologists, it is a community of artists, architects, hackers, makers, singers, and all aspects of culture, because that's what it means to have community. Again, I think nothing could express that better than our current location at FabLab. Thank you very much. We'll take some questions now. Hi, Andreas. Hello. Hello. As a potentially comparable technology, but non-blockchain, so a decentralized internet, do you have any thoughts about Madesafe and the Safe Network? You know, I think, so for those of you who don't know, Madesafe is a system that's designed to create peer-to-peer cloud computing. The idea being that resources that you have on your computer, disk computing, networking capabilities, can be shared. And while sharing is something that we may be naturally inclined to do, there are quite a few barriers, and the idea being that if you create a system of incentives in the form of a currency for sharing disk space on your laptop, or computing, or other resources, then we will encourage more sharing. And the interesting thing is that you don't encourage sharing because people profit from it. But because the ability for me to share disk and earn currency then gives me the ability to buy disk computing and networking resources from others in a way that creates the sharing economy. I think some of the first applications we're going to see are going to be related to personal computing and personal clouds. So I think it's a very interesting experiment. I have no idea if it will work. And I certainly don't advise in treating Bitcoin or any of the other systems that are evolving around them as speculative investments unless you really know what you're doing, because we are so early stage in this technology that the one characteristic we all share across the entire industry is crazy volatility. And so if you treat it as an investment, you'd better have very great courage or a lot of money. As they say, what's the best way to gain $1 million? Start with $2 million and trade like crazy. And that's how speculative investment works. So yes, very interested in the technology, very interested in the projects. We'll see how it goes. Yes. Thank you, Andreas, for coming over. And I really like your speech and all your confidence that you do. I really would like to ask about the power of mining centralization in, let's say, a couple of countries. What do you think? And although Bitcoin looks like antifragile, how do you foresee that we are going to pass or go through that mining centralization power? That's a very good question. So for those of you who are technically minded or have been following the Bitcoin space, one of the characteristics of Bitcoin from the first white paper by Satoshi Nakamoto was the idea that Bitcoin decentralizes power by giving one CPU, one vote. The idea being that by contributing processing power to the network, you become part of the decision-making process. Something interesting happened, though, because the incentives once it started taking off were so powerful that people started investing in more complicated computing. And soon it wasn't CPUs, but GPUs, graphical processing units that were used to mine Bitcoin. And that represented a 100 times improvement in the ability to mine. Think of it as one GPU, 100 votes. And very soon, from GPUs, we went to FPGAs, field-programmable gate arrays, which are systems of silicone where you can encode an algorithm and run it really fast. And then we went to A6, application-specific integrated circuits, which are basically mining chips designed to do nothing but mining. In each one of these steps, we saw somewhere between 100 and 10,000-fold increase in performance over the previous generation. And that is the primary reason why it caused enormous centralization in mining. However, that game is now over. If you were a miner who migrated to A6, then migrating to a system that was printed with a silicone fabrication system at 24 nanometers gave you an advantage of 10,000 times over the previous generation. And you could buy those chips by making a very big order with a semiconductor factory, which means that only very few could put up the necessary capital. And if you could then take that down to 22 nanometers using a more specialized silicone fabrication system, you could get another massive improvement. So we saw mining hardware evolving every three to six months. Literally, if you set up a warehouse full of mining equipment, it had a shelf life of less than six months. In six months, it went from the most powerful, most profitable system of mining to being unprofitable for the level of electricity it consumed. And so that created even more centralization, because now the ability to put down more capital every three to six months to get rapid delivery to be closely connected to silicone fabrication centralized mining. And it centralized mining a lot in China, primarily because that's where the silicone fabrication is. And there's also some great opportunities for cheap energy. I don't think that was the vision of Satoshi. Now, I will caution you one thing. A lot of the concern about Chinese mining, in my opinion, is blatantly racist. If mining had centralized in Sweden, we wouldn't be getting so upset, right? So just keep that in mind, because Chinese mining represents excellence in engineering, concentration of resources in engineering, and so far the ability to deliver massive amounts of security and trust for the Bitcoin network at very low cost because of the cost of electricity. That is something we all benefit from. But here's where it gets interesting. As of six months ago, we started seeing the fabrication of ASICs at 16 nanometers. 16 nanometer technology is the cutting edge of computer processing. It's what you see in your latest Apple hardware device. And the exponential growth of performance now hits a wall because there is nothing better than 16 nanometer technology. In computer terms, we have this law called Moore's Law. And Moore's Law, posited by Gordon Moore, the founder of Intel in the 70s, is the idea that every two years approximately computer capacity doubles. And we've been running ahead of Moore's Law, and in fact it's been doubling in less than 18 months. That sounds really fast, doesn't it? Unless of course you've spent the last five years doing a thousand times faster every six months, and suddenly you're down to twice as fast in two years. That's a wall of performance. That means that once you put those 16 nanometer things on the shelf, they're going to sit there for two years, and you don't have the ability to upgrade them. And that now means that the advantage shifts from the economic power of those connected to silicon fabrication to the ability to deliver these devices as consumer devices. Because with the centralization of mining comes one big disadvantage. If you have a thousand terror hashes in a warehouse, what happens when the warehouse burns down? What happens when you lose electricity to the warehouse? What happens when you lose cooling to the warehouse? What happens when you have a problem with your investors? The centralization now makes you vulnerable to losing everything. Compare that to the possibility of having a mining chip that's part of a toaster or a water heater that's plugged into your kitchen wall. But if you have, instead of one system that produces a thousand terror hashes, you have a million systems producing one millionth of that, they're less vulnerable to disruption. Because if the power goes out in a whole city, it only affects a small percentage of the devices out there. And it may be unprofitable for now for us in the developing world, but in some places in the world it's going to become profitable to mine on the latest chips using solar energy and hydroelectric power and renewable sources that are less expensive. Which means that, in my opinion, mining centralization reached its peak in 2015. We're going to see now, it's probably going to continue the wave for another year or so. And in July 22nd, 2016, we have an important event. The reward for Bitcoin blocks is divided by two, half the amount of reward. I think what that will do is it will ensure that anyone who is not mining on the very latest 16nm chips becomes unprofitable, and then we have a level playing field. So, I'm not really worried about that. First of all, because we still have great security, and mining centralization hasn't led to any of the nightmare scenarios that we have imagined in Bitcoin. And secondly, because I think it was an artifact of the race of technology to Moore's law, and now we're done. So again, that was a long explanation. I apologize because it's a very technical topic. Thank you for the question. Hey. So, we have a question from the internet from people online. We have 90 friends online. And Cisco from the Netherlands asked it, will mass adoption happen this year or any soon? This is his question. Well, that's an easy question. Will mass adoption of Bitcoin happen soon or this year? No. That was easy. Do you want me to elaborate? I'll elaborate a bit on that. First of all, we have to recognize reality. Bitcoin today is a technologically advanced system that is pursued by those who have literacy, numeracy, capital, and freedom. And that means that it is highly concentrated. It's not only concentrated primarily in the developing world, but it has a very problematic demographic, which is it's all white men, or at least 95%. And that is going to change, and it has to change. And the reason it's going to change is because of mass adoption. Because, trust me, when I joined the internet in 1989, it was also all white men. And today, the number one demographic on the internet is a 23-year-old Han Chinese female. That is the majority of the internet population. And it will be like that for Bitcoin when mass adoption happens. But for the internet, it took 25 years. And it took the laying out of massive infrastructure. Now, Bitcoin already has the internet, which is why it's going to be a bit easier. So I think we can do it in 20. We're in year seven. I think we're making a very good run of it, but it's not going to happen next year. We need patience. Thank you, Andreas, for the inspiring talk. What do you have to say about other coins coming up? You think we'll have a sea of coins each with its function? Ether is really popular now. Smart contracts. Will other coins come up? How do you see it happening? Yes, they will. And this is something fundamental to understand about the new world of digital currencies, or cryptocurrencies of network-centric currencies, is that we try to apply to them the ideas of the past. And we have all lived our entire lives in a system that delineates currencies by nationality, and allows them to be centralized, and also to compete in a zero-sum game. One currency wins only if another currency loses. What better example for that than the fact that right now, 24 central banks have set their interest rates to zero or negative in order to create a race of devaluation of their currency so they can erase their debt. They're racing against each other to the bottom. And that is exactly the result you have in a closed system with strict borders. But that's not what happens with Bitcoin. The important thing to realize is that money is not its physical form. Money is a form of language. Money is the language that we use to express value to each other. Money emerges in societies, regardless of its physical form. It even emerges in primate societies. You can teach monkeys how to use money. They will adopt it and teach it to their offspring. They will also invent new financial things like prostitution and robbery. You beat the other monkey, you take its pebbles, and you get bananas. Money emerges among kindergarten children, even if they don't understand money. They trade tokens of money, colored blocks, rubber bands, and Pokemon cards. Money is a lubricant for social interaction. If you have a language with which you express value, you can express appreciation, belonging, and lubricate social connections. If you look at money as a language, we need to rethink this idea that this is a competition for who becomes the one global winner. English is a very popular language. Did you all stop learning your local language because of that? Or did you learn two, three, and four? In the world, we have thousands of languages. Though we may see some power in some of the major languages, people can adapt in a way that they can use multiple languages. The language connects them to their culture. When money becomes a language as Bitcoin has, the idea that it will be replaced, or that we are looking to see which one is going to be the winner, is as ridiculous as asking if English or Spanish will become the one global language, or Mandarin. The bottom line is that we will have thousands of coins. Then we will have tens of thousands of coins. Most of them will have no economic value, but they will have cultural significance. They will have value of loyalty. They will be representing fans or creative appreciation. Some of them will be very large and have economic value. If you have a system like that, what emerges, and what we see in statistics and mathematics again and again, is a power-lower Pareto distribution. Just like you have 20 languages that are the world's most popular, but then you have a long tale of thousands of languages behind them, 20 artists who are some of the world's most popular and hundreds of thousands of artists behind them. Currencies will evolve in that way. We may have 20 currencies that have major economic value and fit in specific niches, smart contracts, micropayments, cross-border transactions, solid reserve, etc. Then we will have tens of thousands in what is called a long tale. One of the things we have to do is get rid of old thinking when it comes to looking at this medium. We don't yet understand exactly how it will evolve. There is a very simple reason for that. We have never done this before. This is the first time in history that we have seen this emergent phenomenon happen, and you are sitting on the front rows of history. Yes, Ether made safe. Bring it on. You have a follow-up? We will get back to you in a second. Hi, Andreas. I just wanted to ask you a question about your metaphor, your organic metaphor of the decentralized network developing a resistance to attack. It made me think of the TCPIP technology and how that was invented to be bomb-proof. It was like a mesh. You could blow a hole in the mesh and the information would go around the edge of the hole. Although you have characterised the confrontation between the old hierarchy that you described and the new decentralized world in a confrontational way, as a kind of confrontation, what do you think of the irony that that technology fell into public hands? Is it possible that there is a cooperative aspect to that confrontation as well? That the old hierarchy at a subconscious level will cooperate with this evolution? Some will. Some won't. Again, I will overuse this metaphor. If you look at what happened on the internet for the first decade or so, phone companies absolutely hated it. They wrote the propaganda for the media about how the internet could never replace phones, etc. Today, every single phone call we make, especially long-distance calls are carried over the internet. The vast majority of the phone networks, the same ones that resisted the internet running on top of them, now run on top of the internet. But what happened? Was it the largest telecommunication companies that adopted this first? No. It was actually the third tier of companies. The ones that could not compete with the large telecommunication companies, that could not compete with the capital, the access to legislatures and the marketing budget. They said, well, we can't play your game on your terms. But we have this internet thing, and we're going to use it to beat you out of the competition. What I predict we'll see is a bifurcation of the financial industry, and we're already seeing that. When we say banks, what do we mean? There are different types of banks. There are banks that deal primarily with consumers, that deal with checking and savings and payments for consumers. Most of the world's regional banks are that. They do loans, they do checking, they offer currency. They're not really bad. In many cases, they offer good services. I've had some conversations with very large banks from developing nations, and they do not fear Bitcoin. They see it as an opportunity to expand their services to populations that they can't reach today. Then there's the other kind of bank, the bank that really doesn't have customers. You'll notice that these banks are gradually dropping consumer accounts. They're focusing primarily on investments and large concentrations of wealth, and gaming the stock market and other international markets where they have significant advantage. What do these banks do? They don't fund consumers or loans, because consumers and loans are not profitable. They don't care about expanding their services. They fund oil companies to destroy the rainforest, they fund warmongers to create dictatorships, and they fund other large corporations to create advantages. Those banks are going to have a problem with Bitcoin. In fact, they do. You can see it in the way they speak about Bitcoin. To them, this is inconceivable. They are now going through what I call the five stages of grief. They started with denial, Bitcoin. Go play, you little hackers. Then they noticed it wasn't going away, so they started getting angry. Bitcoin criminals, pedophiles, terrorists. The world will end if we allow normal people to control their own money. Next comes bargaining. Hey, we don't like Bitcoin, but blockchain. That nice, open, decentralized, borderless, peer-to-peer, open innovation, open access system you built. We can build one that is not open, not decentralized, not borderless, not open innovation, and not open access. We control completely blockchain. They are missing the point. Those are not the features to avoid. Those are the features that make it powerful. They are bargaining. I can tell you, it is not going to work. Blockchains suck at doing the things the banks want to do. Blockchains in the use of Bitcoin with a decentralized consensus algorithm are inefficient. The inefficiency is the price you pay to get freedom. If you don't care about freedom, why take the inefficiency? Install a database. After bargaining comes depression. This will be a financial depression. More than 50% of the world is what they call the black market. More than 4 billion people are cut off. Which economy do you want to serve with your network-centric currency? The big one or the little one that is broken, corrupt, and dying? That in the end will be the depression stage, hopefully followed by acceptance. Some companies are going to do very well in playing in the game of network-centric currencies, using it to expand access and borders, trade internationally, and empower people. They will be the majority. The banking system is dinosaurs. They operate on 70s technology. The dinosaurs have enormous contempt and disdain for the furry mammals running around their ankles. They spend some time squashing these mammals that are insignificant. But there is a meteor in the sky. Once the dust settles, the mammals we win. This is a confrontational system, but not because we are confronting anyone. It is because we are creating opportunities that some do not want to see. When you reveal the truth at a time of universal lies, that is a revolutionary act. The revolution in it is not what you say, it is the fact that you go against the lies. Bitcoin is doing that on a global scale today, and many of the other technologies that go with that. I don't look for confrontation, I look for inspiration and positive energy that we can create as community. The banks are really irrelevant in this conversation. Let's take maybe one or two more questions. I would like to ask you about the scalability of Bitcoin. What options has Bitcoin right now and what are the advantages and disadvantages of each of the options? What is your opinion on which of those options should the community adopt? That's a very good question, also a very easy one to answer. I did a talk in Prague, which is being videotaped, and will be videotaped. I'm over 40. Ignore that. Recorded, which is being recorded and will be brought back soon. The entire presentation was about scalability, and why scalability is something that doesn't get solved. It just gets pushed further out as we scale to different types of applications. What are we going to do? Are we going to do a segregated witness or raise the block limit? Or invertible bloom lookup tables or thin blocks or replace by fee? The answer is really simple, all of them. Then we will run into new scalability problems. The moment we create space with these capacity improvements, people will look at that space and think, I can do something I couldn't do before, and then that space will be gone. That story repeats. The internet is an example of a technology that failed to scale gracefully for 25 years. If Bitcoin manages to fail to scale gracefully for decades, we are in a very good place. We will do all of those things. The debate has now narrowed to the point of, which one do we do first? Is it this month, or next month, or this year, or next year? Which is really just an engineering issue. It is not worthy of all of the drama and recriminations that happen in this space. We will do that. I am very confident about scaling, because ultimately scaling is an engineering issue. Bitcoin has the capability to scale, not just that. We are seeing smart people working in the development space of Bitcoin, inventing new ways of improving scaling all the time. It is not just the five I mentioned. There are 20 proposals on how to continue to scale Bitcoin. Will it scale ultimately on its own without another layer? I don't know that. Maybe we will have to do more layers on top, as long as there is trustless and decentralized, I am okay with that. But it will scale. Maybe I think there are one or two questions more? Yes. Maybe we take one question from the live stream. Let's do one more question from the network. Maybe here is the last question from the audience. Hi, Andreas. Pick one from the live stream, please, and we will do that next. Thank you. I would like to know if you forecast a moment when there will be a passage between fiat currency and cryptocurrency in the world, that it's so fast that there will be bloods and revolutions, or will be smooth these passages between the two different systems? That's a great question. History doesn't do smooth. History does punctuated equilibrium, spurts of innovation, disruption, and chaos, followed by centuries of plateau, followed by spurts of innovation. I think it was Nicolas Negroponte from the MIT Media Club who said, the future is here today. It's just distributed unevenly. The passage from fiat to digital currencies or cryptocurrencies won't happen everywhere. It will happen in the places where the price of remaining with the currency is to lose the generational wealth of your children, where the penalty of pushing against your government is violence. This gives you a mechanism to opt out. Your government has taken you hostage together with the rest of the population in an economically disruptive spiral. I don't know what will happen, but I think in ten or fifteen years, we will see moments where governments will try to take their populations hostage. Very large numbers of that population will go, but I don't think so. Argentina, Cyprus, Greece, Spain, and many other countries have faced currency challenges and economic depression because of currency challenges. There is enormous interest in Bitcoin in Argentina, for example. In Venezuela, where they just arrested two miners to make an example of them after flooding the media with stories about how Bitcoin is for terrorists, criminals, pedophiles, drug dealers. The problem is that that message doesn't change the fact that Bitcoin doesn't have 550% inflation. When you are faced with that balance, sometimes you say, I'm going to get out. Today, a tiny portion of the population has the means, the education, the technical infrastructure, skills, and capital to escape that trap. One day, there will be a big chunk of the population, and then things will happen very rapidly. We will see that. I hope in my lifetime. We have a question from Dord. He makes several times this question. He wants to know your opinion about the centralised system on Bitcoin Network, requiring personal data for usage and thought of future of that. Yeah, I think most of my talk was about this, but I'll focus just on the revealing personal data part of it, because the revealing personal data is not simply a matter of a totalitarian financial surveillance system. It's also a market economy. We already have a system for micro-payments on the internet. If you want to buy any content that is effectively priced less than $5, the price you pay is a micro-violation of your privacy. That is the micro-payment system we have on the internet. You give your data to be consumed, analysed, statistically correlated, so that the messaging you receive is narrower and narrower and narrower, more and more conforming to the image of what Facebook thinks you want to hear, to what Amazon thinks you want to buy, etc. We pay micro-payments through micro-violations of privacy. Our private data is the price of entry into the micro-economy. We can do much better than that, because as we develop micro-payments on top of network-centric currencies, we can instead pay with currency. While retaining all of our privacy, Bitcoin doesn't require you to identify yourself. That is not a bug. That is a feature. In fact, Bitcoin makes it very difficult to overlay identity on top of it, the way the blockchains the banks want to build are, because that is not secure. When you concentrate on personally identifiable information, you get hacked. We have not yet found a way to secure data. Nobody can secure data. Citibank can't secure data. The large internet retailers can't secure data. NSA can't keep its data in-house. The idea that some Bitcoin startup is going to start doing know-your-customer identification and anti-money laundering, collecting all the privately identifiable information, that is both ridiculous and disastrous. What will happen is that information will leak, and you will lose your privacy once again. Bitcoin does not do identity because that is part of the design. It is actually a very powerful part of the design, because it is the foundation of us having privacy. Anonymity is just another word for human right. Great. Thank you very much for everything today.