 Hi everyone, I'm I'm so glad to be here at a little bit con if this is my fourth I think I've only missed one a Huge thanks to Rodolfo who opened us up with such passion and enthusiasm. I understood about half of it because Because he speaks very fast in Spanish and my Spanish is still at the duo lingo level two Standards right so I'm not going to be doing my presentation today in Spanish maybe in two years Maybe in two years every every now and then I try and practice a bit with duo lingo and you know it pops up a little nice reassuring messages like More Americans are studying foreign languages on duo lingo as then in the public schools in America Great statistic, right? It would be true if only two people were using duo lingo Because they don't really teach foreign languages But you know, we're trying trying there Spanish will be my fourth language and I hope I can I can get it to the level where I can order food in a Restaurant without embarrassing myself. That's where we are at the moment. So not ready to do Bitcoin quite yet I'm really excited to be here and I would like to talk about About a topic that keeps coming up with Bitcoin and that is black markets Black markets, you see the thing is Bitcoin is used for black markets. You've heard that. Yes it's used for black markets and Of course, it's also used for some white markets too in Argentina. It's used for some blue markets That's what they've renamed their black markets because it's such a big part of the economy They wanted to sound a bit more palatable, but really Bitcoin is color blinds when it comes to markets It doesn't distinguish between black and white markets or blue or gray Or any of the other colors of the rainbow markets, right? It just serves markets So the real question is What is the difference between a white market and a black market and is the color a good metric a good way for us to Understand the functioning of markets. I think it's a very poor metric I think that calling a market a white market or a black market doesn't tell us much About what that market does and how well it works now The people who use terms like that would really like you to think that there are a whole set of Associations that go along with that color White markets good black markets bad White markets legal black markets illegal White markets functioning black markets not functioning white markets fair Black markets unfair white market safe black market unsafe white market moral black market immoral Bullshit not a single one of those statements is true White markets and black markets differ in one and only one essential component White markets are licensed black markets are Unlicensed that's it black markets can be moral safe just fair and efficient and Simultaneously white markets can be immoral unfair unjust and inefficient We all know this implicitly we know it The taxi cartel is a white market uber is a black market. I won't take a bloody taxi Because I've been to 53 countries and I've been robbed by taxi drivers in 52 The airport is here. My hotel is here. Let's go That way on Triple tariff with seven extras that I just invented this has happened to me in every country in the world Why because it's a regulated licensed guild a cartel. It's an inefficient broken market full of corruption and uber works it's efficient. It's fair. It's Transparent, but it's the black market We don't call it the black market because if it's run by a multinational corporation with nice graphics and The stock market index we don't really want to call it the black market, but it is if it's not licensed Right outside this place there are little electric scooters with lime colors really cute. Have you tried those? There's so much fun You can go 15 miles per hour on the sidewalk or on the street I'm sure one of the two is illegal, but I'm not sure which one you have to wear a helmet I didn't I'm sorry. That was probably illegal and the actual service itself is not licensed. So that's a black market in North Korea. You can only have one of six haircuts if you're a male Which means that this is a black market too because it's not one of the approved Haircuts Okay, calling it a haircut. It's just the result of hair loss But still I'd like to pretend for a few more years while I can But the bottom line is that there's nothing essentially moral about White markets and there's nothing essentially immoral about black markets General dynamics selling 500 pound cluster bombs to the Saudis is the whitest of white markets It is not only legal It is strongly encouraged and I pay for some of that with my taxpayer money Is it moral? Hell no it isn't Right the person selling bananas on the streets without a merchants license is the black market. Is it moral? Hell? Yes, it is Using Bitcoin to escape a collapsing currency in Venezuela Is highly illegal and is the black market is it moral? It's a human right It's not just moral it is the obligation of a parent to protect the safety of their children That is protected under the UN Convention for Human Rights It is illegal with heavy penalties All of the rest of the things the Maduro is doing white markets everywhere Perfectly legal fully licensed completely broken So the difference between white and black markets is an issue of licensing And what is the natural state of markets the gray the big gray in between? Gray markets Don't emerge. They simply exist meaning that in the absence of any other form of markets All markets are just gray. How do white markets emerge? You have a gray market in place and someone gives it a license now It's a white market. You have a gray market in place. Someone makes it illegal now It's a black market, but markets just emerge they emerge any time to individuals Without coercion of their own free will decides to transact in a commercial manner Agree on a price that they find commonly beneficial and They transact and that's a market. That's it. It doesn't have a color. It didn't require permission It doesn't need a license. It is a natural human activity that occurs everywhere every time throughout history But we want to invent these new terms in order to somehow provide color to these markets Legitimacy to some illegitimacy to others What is the trajectory of every white market? Every white market starts off as a gray market, then it gets licensed and initially the licensing is Probably sold to you as a way to enforce some kind of standard of good behavioral quality After all you would want your doctors to be licensed that they always go back to that one You would want your doctors to be licensed in some states in the United States 10,000 or more professions require professional license in Louisiana The amount of hours you need to do to become a cosmetician that does nails Exceeds by four times the number of hours you need to become an emergency medical technician who works in an ambulance And if you try to do nails without a license, you will be arrested because you are operating in the black market or Red or teal or French manicure or sparkly which one you choose is up to you but you certainly don't have the requisite licensed and gradually guilds form and Guilds are professional associations whose primary purpose is to make sure there isn't any competition to keep out Those who would deem themselves to be professionals and try to immerse into the market like the taxi cartel Right, so these licenses gradually become guilds where it's just a matter of can you afford to buy into it? The quality standards the certification the regulation the rules all of that gradually Disappears into the background the regulator stop doing those things and they focus primarily on enforcing the rules People forget why those rules exist and it simply becomes a professional guild if you can afford to buy the necessary license essentially to bribe the government to allow you to work then you are part of the white market and All white markets devolve into that state and over years maybe decades maybe centuries you arrive at absurd Situations of concentration of wealth and power where as a random example You might have seven families controlling every business in a country The fundamental difference between markets white or black Should not be the measure of how well they're licensed We should care about whether they are fair whether they are open and whether they are free in fact if they are open and free Fairness arises as a result of the open and free nature of these markets if you don't like it you can trade elsewhere and competition ensures fairness But here's the other little subtle thing which is that absent a license without a white market The government the state withdraws the services of justice from the market This is critical to understand because until now the monopoly on the delivery of justice services Existed primarily in the government sphere governments provide justice as a service J. A. A. S. Let's use a tech term and Their justice as a service API is only available for a certain fee to certain people Yes, and it's usually broken and it takes seven years to fulfill a request But nevertheless they do offer justice as a service But if you step outside of the white market now that justice as a service is removed and you get exposed to the full risks of Operating in a market where you have no justice you have no recourse You have no ability to settle disputes and where violence becomes the solution Ironically sometimes that happens even in white markets I walk out of the airport in Chile straight into a line of taxi drivers who see me looking at my phone and they go over Sorry, and what do I do then do I go to a cop? Stand next to the police officer going No, because every country I've been to the cops are working with the taxi drivers to beat up the Uber drivers and their passengers Because not only have they removed justice as a service They're now delivering injustice as a service as part of a competitive blockade So you don't go to the cops because that's too dangerous Okay, so I don't get my Uber ride. What's the big deal? But think about all of the markets in which justice has been removed as a service where you cannot enforce property rights Where when you go to the arboreto in order to change your currency into another currency you may get counterfeit money What do you do call the police? No, you don't call the police. You can't call the police that service has been removed And you can go to more funny situations Like the experience most high school students have the first time they go try and buy Marijuana from some dude on the street And what they do is they get a bag of oregano And they don't know any difference. So they're like I don't think I should smoke this Smells like a salad Now what do I do? Do I call the cops I can't call the cops Excuse me, sir The illegal drugs I just bought are not correct Ironically, some people do that they go to the police and say this cocaine isn't good And they soon discover that that's a bit of a problem Again, that's a little funny story and you think well, they deserve what they get after all the breaking the law So they should be punished now think about the immigrant cleaner who had their passport taken from them by the coyote Who traveled them across the border who is now holding their passport hostage? And they are terrified to go to the police and they live in a locked compound with bars on the windows And they cannot Exercise any of their human rights because they're kept as virtual slaves within an industrialized society And that happens today in the United States by the hundreds of thousands of people Slavery is on the uptick all around the world. Why? Because the act of being an illegal human being I don't even know what the fuck that means Has resulted in the removal of justice as a service from an entire category of people and Apply that to sex workers who are engaging in acts of consensual sex or prostitution and things like that Or even just people stripping or making funny movies They no longer have justice as a service as a result violence abuse rape domestic abuse Massive problems in any illegal industry and those black markets that do emerge Where the need is great for the existence of a market where the amount of demand is going to cause the Emergence of supply whether that's capital flight from Argentina whether it's recreational drugs Whether it's whatever else you might want to find in a market If there is no white market the black market exists, but it charges a massive risk premium sprinkled with a heavy dose of violence and till now Justice could only be provided by government services. You cannot enforce property rights without a court or can you? Huh What if we use a very large number? That we multiplied against another very large number on an elliptic curve And what if that crazy idea would allow me to enforce global property rights? What if I could use a smart contract in order to create a matching service between buyers and sellers that ensures? There is no forgery no fraud What if I could use a smart contract to escrow the money in the process of a buy of any product? And now I can ensure that I don't get cheated What if I could use a smart contract in order to do reputation services just like uber does that gives me a great degree of Comfort, but without uber without the centralized company What if I could get justice as a service from a network and That's what happens and now the world has changed because now it's not a distinction between The licensed market where you have some justice and the unlicensed market where you have no justice Bitcoin doesn't care. Ethereum doesn't care blockchains. Don't see colors They also don't see borders and they don't see people They only see rules and they can deliver justice as a service no matter what color your market is white black gray Bitcoin blockchains Ethereum all of these different tech technologies serve Markets they serve markets wherever there is supply and demand. They serve markets globally Without distinction for borders Because here's another little secret that you don't remember which is that justice as a service only applies within a specific geography The Chilean justice provider only works within the borders of Chile Now what can you do with that information as an individual not much? What can multinational companies do with that information? Oh, they can screw you in a hundred and ninety four different countries And unless it's in the one you're in you don't really have much recourse But then again, they also bought all your legislators. So you don't have any recourse in that one either But blockchain justice is a service works globally because it doesn't care whether you're inside or outside that border And there's this other little thing which we often forget which is when people say but that product is illegal To which your first question should be illegal where? Legal and illegal are geography bound terms illegal where? Illegal here. What if I'm not here? What if I'm in that country? Is it legal there? What's legal here? What's legal there? These are highly relative notions and They imply a strong morality component that you may not share Is it legal to buy a Bible? Not in Saudi Arabia. It's not It's also illegal to drive in Saudi Arabia unless you have both of the licensing requirements as a driver a driver's license and a penis Well until recently because they fixed that one so now you can drive theoretically without one But you might get beaten up by the cops Because they're protecting their morality not my morality Is it legal to buy certain? Substances is it legal to buy bombs to bomb another country again? Legality is bound by geography blockchains are not So with a blockchain you can enforce justice across borders You can enforce justice across the world and you can enforce justice whether you consider the market within the narrow scope of your own country white or black gray or blue Blockchains serve justice and as a result they can deliver Free and open markets Worldwide that are fair. Does that mean you can use blockchains for the black market? Hell. Yes, it does because there's a demand for that and make better white markets Yes, and everything in between. Yes It's not about white. It's not about black. It's about free Open and fair. Thank you Hello, hello Really great to be able to see you all live. Thank you after all these years My question is about how will you be able to enforce justice as a service? from a blockchain service doing that is The recent monopoly on force that also on regular justice like a Judge is also a monopoly on currently on the state Well, again, the word enforcement contains the word force But does it have to and how much of our current commercial transactions really require that level of recourse? where you have force Force is a commodity that you can Apply to a certain degree But once you try to apply it to too many people on too many things for too many reasons Then you have to pay the people to apply the force and fortunately by that time We have messed your currency up so well that you can't pay the enforcers Venezuela for example, I watched this great video the other day which showed some of the Enforces of Maduro smiling in front of the cameras holding the privileges of their position, which were two toilet paper rolls That's how far low their payments for the enforcement services become how far away from the moment when they go this is so not worth it right and so Enforcement and force is always an aspect of human condition and it's always an aspect of human society Well, we're talking about here is being able to enforce justice through rules That can be agreed on by everyone in a consensus system without violence This is the non-violent mechanism for enforcement and it's primarily financial enforcement And it works primarily through a series of incentives and financial punishments game theory and what we found through markets and game theory in general is that Those mechanisms work better because they don't expect people to be good they only expect people to act in their self-interest and If everybody acts in their self-interest in a system of rules that punish good Punish bad behavior and reward good behavior Then good behavior emerges naturally from the system. I don't know how well it's gonna work Let's build some things and test them out. I certainly know that one of the beautiful things about operating on digital platforms like the internet and one of the reasons why people Arguably want to do things like run drug markets on the internet is because you can't get stabbed over TCP IP Okay, next question. I think there was one in the back, right? Oh No, okay over there this gentleman Okay, so I'm gonna ask a question anyone with a microphone go a Question here. Yes. Okay. All right I Want to ask you about black markets wet markets and banks. Yes, you know, we have so many problems with banks the risking and the whole thing Let me know what do you think about that because it's a it's part of the control Well, I mean that's the final culmination of a white market when the rules that start off to be consumer protection Eventually become banker protection And as a result they become protection from competition which leads to a guild and once a guild gets powerful enough and organized enough We have a different word for it. It's called a cartel and we don't use the word cartel to refer to banks because they have such a big cartel But the problem is that banks no longer Serve many of the important Functions that you expect banks to serve they don't bank people in fact the number of people who is unbanked Is is not decreasing now that we're 25 years into the internet. They're not serving this I was doing a presentation at a conference a security conference that was full of bankers and I was describing how Bitcoin as a form of money can serve populations that are doing remittances to foreign countries but which don't have bank Accounts because they're not properly documented. They're illegal immigrants or migrants into a country And as a result, they can't open a bank account and right now they're paying enormous fees to be robbed by the gray market of Western Union and check caching services and things like that and during my presentation this lady in the back said but why should we give bank accounts to illegals and At least half of the people in the room were decent enough to go But the other half were really interested in the answer and I said no you shouldn't you shouldn't Don't we will Hey one more question. Hi Andreas Here. Hello. It's a pleasure to meet you. Thank you. And thank you for being a great teacher and inspiring everyone I think I speak for everyone My question is about blockchain not in general, but as an educator myself, you know I'm trying to battle every startup that says blockchain and it doesn't do blockchain Doesn't do the centralization this intermediation. It just does database. Yes. Yeah, what's our our recommendation? to us to Battle that movement, you know to call blockchain everything and do not do innovation and decentralization Well, you don't need to battle anything What you need to do is remove your attention and interest from these projects because they serve no purpose So you have to ask yourself when you hear this when someone says my project has Blockchain well actually nowadays what they usually say is we are introducing a revolutionary new system of blockchain plus artificial intelligence plus Internet of things that uses neural networks to woo. Give me money And at that point you stop listening or you ask Is it borderless is it open is it neutral is it global is it? Censorship resistant if it's not you don't need a blockchain Those are the features provided by open decentralized Blockchains so ask those ask the five pillars the five questions if it's none of those things then it's a database It's a centralized database. In fact what it is is a very inefficient very slow very expensive difficult to develop Database with a really shitty user interface And you know in the era of Microsoft databases and Oracle it takes a lot of effort to produce an even shittier interface So the bottom line is this is not a good technology solution for anything if you're not looking for those features And do you need to fight that market? No? No, don't fight it. Let them spend a hundred million dollars training developers consultants paying the development of this industry while producing bullshit and Then once that project fails and the developers in that project will look around and go well, what do we do now? Well, I heard about this other projects And I'd like to work on that and they go work on an open source real open Decentralized blockchain and I started saying this in 2013 that they will train the developers and then those developers will one day discover Bitcoin and all of the other open block chains and go these are much more interesting projects And then when I was visiting Singapore it happened for the first time. I sat down next to a kid who said to me I'm really excited. This is my first Bitcoin conference And I watched one of your videos, but you know, I've been working in blockchain for a year And I hadn't heard about Bitcoin until yesterday What Tell me for This I want to hear so I went to this presentation by Bank of America a year ago And then there's this whole presentation about the centralized ledger technology And eventually at some point in the slides they mentioned the b-word no not that b-word the other b-word blockchain And they told us this would be the greatest technology They managed to go through all 30 slides without mentioning the other b-word at all And then this person worked with hyper ledger and are three and all of these other technologies in the DLT space and They were interesting, but not that interesting and then one day they discovered Bitcoin. We're like, whoa This is where it came from this seems very weird and a bit exciting And we gained one more developer perfectly trained and ready to go They just need to re on relearn some of the basic concepts and they're good to go to build a nice open-source project Don't fight that market. Let them waste bank money on trying to co-opt embrace and distort the ideas of what we're building And then run straight into the wall of their own centralized sclerotic dinosaur organizations and then the project fails to deliver anything and it's chopped by the board of directors who are no Longer impressed by the word blockchain and the people take their Christmas bonus and on January They open a startup with the same money the bank just gave them in order to compete with the bank They pay for their own demise. Thank you Thank you so much, right? Okay, time is up. Stay it And yes, yeah, people who asked questions Please come and see me at the edge of the stage here I would like to give you a copy of my book the Internet Delta narrow is the Spanish edition of this book and I'm going to be signing books tomorrow after the fireside chat if you want to see me then I would be happy to sign a book for you Thank you so much and areas we want to sign you something else This is you as mr. Bitcoin Superman We will auction this off on the last day of the conference for a good cause Okay, my artist Lewis Ventura, please sign it with your private key my pleasure