 I'm so glad to be back here especially speaking about Bitcoin to a very warm crowd and thank you so much for coming today So did everybody enjoy lunch? Feeling a bit sleepy All right, we're gonna make this fun I hope we're gonna make this fun and just wake everybody up and get back to business So let me start with a quick question. How many people in this audience are familiar with Bitcoin? okay, I Think I saw three hands not go up How many people in this audience have Bitcoin or have used Bitcoin? Fantastic and those of you who didn't raise your hand now find one of the other people who did raise their hand and have them show You how to use Bitcoin come to me after the talk I would be delighted to not only show you how to use it But also to give you a small amount of Bitcoin so you can try it out not a whole Bitcoin. No a fraction a few millibits But you can try it out and see how it works. I think it's important to experience Bitcoin Today I want to talk about the history of money So a lot of people ask me that I could talk about the latest things in Bitcoin But really what I want to talk about is ancient history I want to provide a historical context for money and talk about why Bitcoin is important in this historical context So first a little pop quiz for the audience if you think of money as technology as Technological system that human civilization has invented how old is this technology? Any ideas how old is the money technology? Lots of different different answers here. It's always surprising to me that people will say, you know, it's 400 years old a thousand years old two thousand years old In fact, we we don't really know how old money is and part of the reason we don't know what how old money is is Because we have yet to discover civilization old enough that didn't have money So we know it's as old as civilization and one thing that surprises people is that money is older than writing And the way we know this is because when we look at archaeological discoveries of writing We find hieroglyphics and we find Cuneiform and we look at all of these ancient forms of writing. Guess what they're writing about Money they're writing the ledgers all of the ancient writing. We find the first forms of writing are ledgers They are writing about money because money is older than writing Is money older than the wheel? I don't know but we do know that wheels Were used as money So they might be as old as wheels perhaps the first wheel was sold for money or was used as a form of money itself Archaeological sites going back into the Stone Age Show us the presence of money in the form of shells and feathers and beads Used by Stone Age people in fact We can teach primates how to use money If you have and they've done several studies where they teach monkeys chimpanzees how to use money They teach them that a specific type of stone can be exchanged for bananas And then they tried to see what the monkeys will do with this new information and they very quickly invent armed robbery Because they figure out that if you beat up the other money and take monkey and take its stones You can exchange them for bananas Surprisingly the second thing they invent is prostitution They figure out that sexual favors can be exchanged for stones which can be used for bananas What does that tell you about the nature of money? I think the important insight into the nature of money is that money is a form of communication At its very basic level money isn't value money represents an abstraction of value It's a way of communicating value It's a language and Therefore money is as old as language because the ability to communicate value is as old as language And money in many ways has these characteristics That make it a linguistic construct So it's a form of communication We use money to communicate value to each other to express to each other how much we value a product a service a gesture We use it as the basis of social interaction because by communicating value to each other we create social bonds So money is also a very important social construct So this is an ancient technology and yet Ironically, it's one of the technologies that is least studied from a historical and technology perspective We look at Bitcoin today and it represents an invention a new form of doing money and Think about for a moment how often the technology of money has been transformed by invention How many different forms of money? We've had At a very basic level the way to communicate value is to exchange things that we consider equal value Here's a goat. I will take 20 bananas for my goat That's not really money because it's a barter transaction But it's the first form of communication about value And then we start seeing abstract forms of money So that's the first major technological evolution is to start exchanging something that you can't eat a feather a bead String with knots on it a colorful Something that can be used for aesthetic purposes and then money takes this abstract for us and first major Transformational technology moments for money when money stopped being about the tangible consumption of intrinsic value But became something that referred to value as an abstraction Very quickly one of the most popular forms of these abstractions was to use precious metals To express value precious metals combine some of the most important characteristics of money being hard to find scarce easily transportable more for example than a giant rock or a whole barrel of feathers or other forms of money Easy to divide you can cut gold coin into pieces and subdivide the pieces and Universally valued for aesthetic purposes. That's the major second transformation in technology and it took thousands of years Hundreds of thousands of years before we saw the introduction of precious metals Which is the beginning of the agrarian civilizations in the fertile? Crescent area in the Middle East We start seeing precious metals the Babylonians the Egyptians the Romans the Greeks developed these precious metals to major technological revolutions and then nothing for a few thousand years and then someone came up with this brilliant idea which was Well if I deposit my gold with someone trustworthy Then they can give me a piece of paper that says that I have my gold in this trustworthy vault And I could then really start trading the paper instead of the gold It's easier to carry and as long as I still trust that my money is in the vault then I've got a new form of money Now with every technological revolution in money there comes Skepticism and I think this is the moment of the greatest amount of skepticism in human civilization For a lot of people this new invention of money as paper was somewhat controversial You think people are freaking out about Bitcoin? Imagine how much they freaked out when you told them that now instead of trading in gold they would trade in pieces of paper For a lot of people this was unthinkable. I mean after all clearly this thing does not have any value It took about 400 years for paper as money to accept to become accepted broadly and Trust me it was a big aberration Then about 60 years ago we saw a new form of money In the form of plastic cards. In fact the first cards were paper again and then In the United States diner's club was the first to create a credit card, which was a form of traveler's check and then people Took that and they said this isn't money Why don't you give me some of the good old paper money that I know and That was another big transformation in money and now we have Bitcoin and Bitcoin is in my mind A pretty radical transformation is as radical as the change from precious metals to paper money Perhaps even more radical. So what is Bitcoin? This is the fundamental issue in Describing Bitcoin is that if you use references to our existing experience that experience is based on thousands of years of Understanding what money is in a very physical form and now we try to explain a form of money that is completely abstract There is a token that represents acceptance in a network a network centric form of money But it doesn't even begin to describe what this thing is And so one of the fundamental Misunderstandings that I get when I try to describe Bitcoin is that people think it's simply a payment system That Bitcoin is simply a form of digitization of money It's like it's digital money. Great. Well, that's kind of pointless because we already have digital money All of you use digital money every day long before Bitcoin came along you have bank accounts those bank accounts have digital ledgers You use those bank accounts to send payments electronically. That's digital money Bitcoin isn't just digital money Because Bitcoin is a fundamental Transformation of the technology of money and it's difficult to grasp because it is so different from everything we know before So I'll take a different stab at it. I want to talk about network architecture for a second Because Bitcoin is not happening in a vacuum It's happening at a moment in history where we are seeing a transformation of many fundamental social institutions and that transformation is the great network-centric era For centuries social institutions were organized around hierarchical organizations institutions democracy banking education All of our social interactions were organized around appeal to authority in these hierarchies these bureaucracies of people and And something happened with the invention of the internet We started seeing more and more of these social institutions changing from systems that were closed not transparent Unaccountable hierarchical complex with their own rules into platforms We start seeing the introduction of systems that have interfaces API's that we can access where information can flow in and out of the organization And so we go from institutions to platforms and then we start seeing an even more important transformation when we go from platforms to protocols and The interesting thing about the change between a platform and a protocol is when you have a protocol There is no central appeal TCP IP doesn't work in reference to a service provider TCP IP works without context everywhere in the world You don't have to sign up for an account to use TCP IP You just have to use the language and once you go from a platform to a language is opens up all of these possibilities Bitcoin is the first network-centric protocol based form of money And what that means is that it exists without reference to an institutional or platform context I'll get back to that in a second. This is a really important point So we say that Bitcoin is peer-to-peer money What does that mean peer-to-peer money? It refers to an architecture Architecture used in terms of computer science or networking or distributed systems to describe the relationship between participants in a system The architecture of Bitcoin is peer-to-peer because every participant in the network Speaks the Bitcoin protocol on an equal level. There are no special Bitcoin Nodes all nodes are the same Peer-to-peer means that when you do a transaction every peer treats it the same It has no context inside the peers system other than that that it gets from the network An interesting issue in distributed systems is this issue of context and state Right if you log on to Facebook and you have an account with Facebook You're not using a protocol all of the state is controlled by Facebook You have a login session and all of the data is held by them We call that architecture client server and Bitcoin is different because it's peer-to-peer just like email or TCP IP So one of the interesting things that happens with money is that we are reluctant to discuss money in fact It is shocking that in almost all countries Money is not part of the education system five-year-olds have Great questions about money and most parents find it almost impossible to answer these questions What is money mommy? How does money work? Why do we not have more of it? Why can't everyone have more of it? And you don't say Susie go back to your room and study inflation Like a good girl and don't come back until you understand the answer to that question We don't discuss money It's interesting that when you use the technology as a foundation of Every aspect of social interaction almost and yet it is a completely taboo subject We all pretend that we don't particularly care about money at least not intrinsically we have higher goals and aspirations We use it in everyday experience, but we don't really talk about it It's a dirty topic. I think the architecture has something to do with it you see Before Bitcoin the previous iteration of money the fourth-grade iteration of money when money started being issued in exchange for precious metals stored in a vault What that represented is a form of debt And that's a really important concept to understand because it colors our discussion How many of you have money in a bank? None of you have money in a bank Do you store physical? Money in a safe deposit box. Maybe then you could say you have money in the bank. Oh a few people say that The rest of you have loaned your money to a bank and For the privilege of loaning your money to the bank you will be paid the amazing interest sum of 0.0001 Percent per year and your bank will take that money turn around and loan it to the people standing next to you for 2499% APR This is a client server relationship because that money only exists as a form of debt and ledger that you do not control a Ledger that is stored by a server and you are simply a client In fact, you have no control over that at all You don't even have basic interfaces to that money unless that interface is mediated by the server That's what a client server architecture does we have another term in distributed systems that describes a particular form of client server architecture where the secondary party only has a Copy a weak copy that isn't really meaningful. We call that a master slave architecture and if you think of the previous situation of money as a master slave architecture You have to ask an uncomfortable question Who is the slave? Because in a system of debt one of the two parties Is always the slave you are the client you are not the server and the server doesn't really serve you they serve themselves Because they are the master and that is the architecture of money We live in that is the architecture of money We use an eyes civilization an architecture of money where you have no control an architecture of money where every Interaction is mediated by a third party a third party that has absolute control over that money and Today if you go to the ATM machine and you put into your card The bank may decide to give you your money and One day as the people of Cyprus Greece, Venezuela Argentina, Bolivia, Brazil and a list of hundreds of countries over the last several Decades and even centuries have discovered one day you go to the bank and the bank does not want to give you the money Because they don't have to and that's the essence of a master slave relationship Bitcoin is fundamentally different because in Bitcoin you don't owe anyone anything and no one owes you anything It is not a system based on debt. It is a system based on ownership of this abstract token absolute ownership We have an expression in the United States, which is Possession is nine tenths of the law. Have you heard that expression in Bitcoin possession is ten tenths of the law If you control the Bitcoin keys, it's your Bitcoin. If you don't control the Bitcoin keys It's not your Bitcoin You are back to a master slave relationship with the bank Bitcoin represents a fundamental transformation of money and invention that changes the oldest technology We have in civilization that changes it radically and disruptively by changing the fundamental architecture Into one where every participant is equal where a transaction has no state or context other than obeying the consensus rules of the network than no one controls where your money is yours and You control it absolutely through the application of digital signatures and no one can censor it No one can seize it. No one can freeze it No one can tell you what to do or what not to do with your money. It is a system of money that is simultaneously Absolutely transnational and borderless And we've never had a system of money like that. It is a system of money that transmits at the speed of light That anyone in the world can participate with a device as simple as a text messaging phone and This represents a technological innovation that is terrifying to a lot of people because it is such a fundamental transformation of money And what they will tell you is that they're worried They're very worried. They're worried that criminals will use Bitcoin But the truth is That they're far more terrified that all of the rest of us will thank you You want to throw the first mic or no, I'm not good at throwing I'm better at coding go ahead If I could throw I'd be on the basketball team and not the computer programming team first of all, thank you I've a question. You were talking about scarcity and also about Sorry, what's called again the intrinsic value? Yes, if you look at the The definition of sound more money according to Aristotle is He said that while he described gold basically as you just did And he said that the intrinsic value of gold was it's thirsty. Do you believe that the same thing goes for Bitcoin? So as a Greek I think I can say this safely Aristotle said many smart things and Aristotle also said many absolutely Idiotic things which in the context of the time were fine, but in retrospect. We know better and understand more about the world around us Scarcity isn't intrinsic value. Scarcity is a completely different attribute of money And in fact intrinsic value is a very slippery concept We haven't had money with intrinsic value since our money was bananas because you can eat them And in fact unless you have scarcity even the things that you might assume having intrinsic value do not have Intrinsic value in the most important aspects of life like water Have intrinsic value only when they are scarce So scarcity affects intrinsic value, but is not intrinsic value in this country as also in my country we use fresh water to flush our toilets and That shows you exactly how much value fresh water has Intrinsically here because of a lack of scarcity You know, I know that the Netherlands has a much bigger problem with keeping the water out than having enough But there are plenty of places where that's not the case Intrinsic value is not really a property of currency or money in fact currency that has intrinsic value is not very good Currency because then you might eat it instead It creates a market distortion because if you could eat your currency at some point if the value of currency goes low enough Everybody starts eating it instead of using it although you can assign an intrinsic value to money My favorite example was a farmer in Zimbabwe who was asked by the BBC When they were carrying a wheelbarrow full of hundred trillion dollar Zimbabwe notes stacked up and they asked them Can't you use it as fuel and they said no not really because goat shit burns better And that was the moment that the currency's Intrinsic value had degraded to the point that it was below par with goat shit now I have news for you. There are at least 50 currencies in the world today that have an intrinsic value less than goat shit And that is the world in which we're introducing Introducing Bitcoin a more interesting concept. I think one that we should explore more is intrinsic utility Something that is useful as a currency and I think that Bitcoin represents a moment of immense Intrinsic utility it is useful It is software money money as a content type money as a service Programmable money that can be programmed to do amazing things and that provides intrinsic utility Utility that makes it much more than just money for the internet, but instead turns it into the internet of money So intrinsic utility I think is a more useful concept Hi, I'm dressed My voice as many people do it's that New Yorker again Okay, so The banks are now getting into blockchain. You have nine banks creating a consortium Apparently so like they're competing with blockchain, etc. So Just what are your thoughts on this is it is it competition? Where's it going your thoughts? Thanks How many of you here are familiar with the concept of an internet or have an internet at work? So an internet is the internal company network where all of the information that is out of date about the company is posted and Where you can't use most of the interesting applications on the internet, but they force you to use it anyway so The problem with an internet is that eventually you want to make it more useful And then you try to find a way to connect it to the rest of the internet's around and to do that You use an internet And I think what we're going to discover is that This approach of trying to take oh, let's see Well, we told the world that we wanted to disrupt our business in fact we said we wanted to disrupt our business from the inside out because that sounds good on a marketing brochure and Then we discovered Bitcoin, but that's too disruptive to revolutionary. We want something more corporate like the word Revolutionize which means the exact opposite of revolutionary It means to strip something of anything that is disruptive turn it into a safe mild bland Alternative that kind of fits the marketing brochure and then try to pretend that is revolutionary It's like the difference between Che Guevara and a Che Guevara t-shirt being worn by a hipster in Brooklyn So what did they do they look at Bitcoin and they say let's see. It's an open decentralized Borderless transparent and peer-to-peer currency Fantastic, could we have that without the open borderless decentralized peer-to-peer and Transparent and instead add a nice dose of heavy control and turn it into a client-servo model. Oh, sorry I meant a master slave model Blockchains are going to Decrease the cost of operating clearing houses within the world stock exchanges and banking systems They will replace single point of failure clearing houses and payment networks like Swift and DTCC and all of the other Stock market back ends in the world and they're going to reduce the cost of investment banking whoo-hoo That's not going to change the world and it really is a minor and boring application But I can see why it's better than what they have today To me the equivalent is really simple when the internet came out. What did the world's phone companies do? They designed color fax machines Take the fax machine add color. Look is just like the internet. All right next question Hi, Andreas. Thank you very much for that talk What what in your opinion are the biggest threats or problems at the moment in the Bitcoin ecosystem? The biggest threats or problems there are many threats. I think You know Bitcoin is very much an experimental technology. It's an instance I think it's important to separate the design pattern from the particular implementation. We're running right now I can give you a prediction over the next 50 years the design pattern of Open decentralized digital currencies based on blockchain technology will completely transform the world Whether it will use the exact same technology we use in Bitcoin today Whether Bitcoin will continue to evolve as it has for the last six years very rapidly and be able to Address all of the difficulties get better user interface design better security Scale to much higher levels and all of those things. I don't know I think most likely whatever we end up with will still be called Bitcoin even though it may bear very little Resemblance in its underlying engineering to what we have today But it will still be an open decentralized peer-to-peer platform for money Not because that's an efficient way of doing money It's because it's a free way of doing money and sometimes efficiency is something you sacrifice For freedom Bitcoin is not Efficient if you want efficient you use a system where one person is in control and that is very very efficient Democracy isn't very efficient either, but it sure as hell better than the alternative All right, let's take maybe one or two more questions okay talking about public and private I think You that the internet is considered as a common good and Do you see the bit coin as a? Public good as a private good as a common good of a or a new term and How can we use it for? public calls Well, I think that's a really good question. I think the blockchain is a public good It is a societal construct that is not controlled by any one individual that is ruled entirely by a set of common principles and laws called the consensus mechanism and The rules of consensus define what happens on the blockchain Interestingly enough, I think the blockchain will create a completely new form of common good that we've never seen before If you accept the idea that Bitcoin or something very much like it will continue to exist We arrive at a place where for the first time in history We have a shared historical record that does not decay in time and cannot be changed Immutable history forever We have an expression which is You know put it in stone You heard that expression It's an expression we use to describe the most immutable form of recording We can imagine which is to carve something in stone 20 years from now. We will say oh It's as good as done. It's like I put it on the blockchain Because we will have a much better form of an immutable history So that becomes a public good and it becomes a public good that has a scale in time that we've never seen as a Civilization and if you think of what happens if the Bitcoin lasts ten years and the blockchain last ten years That's astonishing, but what if it lasts a hundred years? What if it lasts a thousand years? What happens if two thousand years from now you can go back and do blockchain archeology and study the transactions between Satoshi Nakamoto and how Finney or study the 2020 presidential campaign based on blockchain transactions This is a very important historical artifact that we're now creating as a civilization. So yes, it is a public good You talked about the properties of good money and in the light of the news I saw tomorrow about BitPay blacklisting a transaction I would ask you if you have worries about the fungibility of Bitcoin due to the trackable nature Yes, I think fungibility is one of the things that Bitcoin can definitely improve and I think over time we're going to see some improvements to that but there's already quite a few Proposals on different ways to increase fungibility and anonymity if we want to preserve this blockchain technology as A good that is resistant to censorship and surveillance and control that really transforms our monetary system Makes it global makes it transparent Makes it possible for the whole world to be part of it. We really need to address the issue of fungibility Blacklists are inherently evil. They cede control to the author of the blacklist and that control is Absolute. It's one of the fundamental problems. We have in our banking system today. Think about it this way. It's not 2015 we've had mainstream internet for 15 years Now if you look at the statistics of economic inclusion in the world, how many people have access to Financial services through this wonderful gift. We have in humanity, which is the internet Economic inclusion has decreased Why? Because we have found more ways to surveil control and play geopolitical games And now we cut off entire countries from the international financial system. That is not a healthy Way to approach life. And so I think the metric of economic inclusion is very much affected by fungibility and blacklists Are antithetical to democracy. They're antithetical to freedom of expression freedom of association freedom of speech Which as principles of the enlightenment is something that we should aspire to If your government is worried about their own citizens controlling their money The most important question you have to ask is what the hell is wrong with my government? Not what the hell is wrong with bitcoin One question. Okay last question Yeah, um this morning, mr. Middlecope was telling us that China and russia are Getting a lot of cold And that the states are more or less bypassed In this action Does it mean that the united states have seen the light now and go for bitcoin? I'm I wasn't quite sure I understood the question. I'm sorry. Could you could you they they're getting a lot of gold you said? Yeah, the amount of gold is going to China and to russia nowadays. Ah, yes. Yeah So and the states in the western world is more get more or less getting rid of gold Does it mean that they have seen the light and go for bitcoin? No, it doesn't mean they have seen the light It means that we are now living in a world where we're facing the most unprecedented currency And central banking crisis that we've seen since the introduction of central banking I mean a lot of people say, you know, what does it take for bitcoin to succeed? How do we make sure that bitcoin can't beat the banks or replace the banks or eradicate central banking Um, we don't need to do that bitcoin should not be aiming to conquer or co-opt or Force anyone to adopt anything bitcoin is opt-in and it's a choice We're not looking for governments to endorse or adopt bitcoin That makes no sense the idea of a national currency is as ridiculous and obsolete as the idea of a national airline Or a national phone company or king We need to get rid of these things The bottom line is that the banking system as we know it today does not need help To become obsolete. It's doing a very good job on its own When you have a giant centralized structure, the biggest risk it faces is that by its very nature centralization introduces fragility into the system The narrower the source of decisions the more likely those decisions are they're disconnected from reality And we've seen that central planning fails and yet we accept central planning and monetary policy as if somehow that is exempt from that rule Centralized systems are fragile and they fail on their own There is a reason why 21 central banks around the world have set their interest rates to zero for six years And cannot seem to get out of that trap They say that currencies require control in order to be stable And yet we have unstable currencies and central banks that have lost all control Even though supposedly they have the tools So the real question we should ask is not whether bitcoin will succeed But whether we face a really substantial risk of our traditional monetary policy tools Failing catastrophically all around the world I just hope that when that time comes bitcoin will be there to pick up the pieces as long with many other Digital currencies because the world has to continue to be able to transact And currency failure is a catastrophic event in any country. I've seen it in my own country in Greece I saw it wipe out my parents twice in a single generation and everybody around us And this has happened all across the world the natural state Of a state sponsored currency is collapsed statistically speaking There are only a few exceptions and they don't last very long. So really this is not about bitcoin winning Banks are losing on their own. They don't need any help Andreas, thank you so much I also really like the master slave analogy because we have now Blythe masters I think in charge of blockchain consortium, so Maybe it's coincidence or not. I don't know We have a few presents from you from Well, first of all the people in here know you like strobe waffles. So Guys from Arnhem. They're sitting in the front. They brought some stool waffles for you. Oh fantastic Thank you so much. Thank you And we also have the belgian bitcoin community here and the Whole basket. I'm not sure how are you going to in the united states? It's a considered polite to open your presence And eat one now i'm going to claim that that's the reason why i'm doing this It's been a while and then also from the belgian community We have here a nice basket of belgian beers and some some fruit. So on behalf of the belgian bitcoin, thank you Thank you. Thank you very much Andreas