 Please welcome to the stage one of the most well-known and well-respected figures in cryptocurrencies. The author of Mastering Bitcoin and the Internet of Money, Andreis Antonopoulos. Hello, everyone. How are you doing? So I'm the Bitcoin guy, but I'm not here to talk just about Bitcoin. I'm here to talk about the context in which Bitcoin matters and in which blockchain as a technology will have an impact on our society. When I start these talks, I'm often met with blank stares of incomprehension. Because technologies like Bitcoin are not just disruptive, they're radically disruptive. They challenge our very notions of what money is, how trust works, and how these things can scale in the world. So that's what I want to talk about today, not the architecture of the Bitcoin technology or the blockchain technology, the architecture of society, and how the two relate. You've heard a lot of discussion about exponential innovation. There's one fundamental problem with exponential innovation, and that's that humans don't do exponentials. We don't. We're linear creatures. Even more so, we're beginning to see the impact of exponential innovation on our social institutions that definitely don't do exponentials. So what are the social institutions that I'm talking about? We operate society on structures that were primarily born in the industrial revolution. The most powerful of those structures is the hierarchical bureaucracy. The hierarchical bureaucracy is this idea that if you want to coordinate large numbers of people at scale... across a city, across an area, across a state, across a nation, or even across a federal nation system like the European Union or the United States, the only way to do that at scale is to have a hierarchy, a triangle, a pyramid shape, where you have layers and layers of oversight and decision-making, usually concentrating to someone on the top. That structure repeats in every aspect of our social institutions, our schools, our businesses, our governments. Those structures are now failing to scale, and they're failing to scale dramatically. We are living in a world where we can't trust news, where young people don't have jobs, where they can't trust institutions like banks, where they feel betrayed by governments, disenfranchised by fake democracy. All of those things have one thing in common. The common institutions of society are failing to scale. We operate on the internet as one global society without borders, and all of our institutions do not. They fail to address the big problems of our era. How do you deal with the globalization of information... when that's handled by institutions that are local? How do you deal with law? It's a funny question which comes up very often, especially when I start talking about Bitcoin. People say things like, what if someone does something illegal with Bitcoin? The obvious answer is really simple. Illegal where? Illegal in what jurisdiction? Like, for example, selling Bibles. Someone might do that with Bitcoin. Very illegal in North Korea. Selling drugs. Legal in some places, illegal in others. The problem is the word legal implies a jurisdiction... and that jurisdiction is failing to scale. It's failing to address the global needs. The first problem is architecture. We have institutions that are hierarchical and bureaucratic. Don't get me wrong, these institutions didn't fail in the beginning. In the beginning, these institutions actually allowed humanity to scale tremendously... and gave billions of people freedom and raised them out of poverty. These institutions did a lot for us, but now they can no longer achieve their goals... as they fail to scale. Architecture is at the core of that problem. I look at that as a computer engineer. I look at architecture and I think, how do the bits fit together? Based on that architecture, what emergent properties do you see? Let's look at the architecture of social institutions and think a bit for a second... about what that architecture does. You may squirm a bit at this point. What happens when you build a hierarchy? Decisions and information flow upwards. You collect information at the bottom and gradually refine it until it reaches the top. One fundamental problem with an architecture like that is bandwidth. I'm speaking strictly as an engineer. A corporation, a large institution, a government... The fundamental problem it has is, as you concentrate information and decision-making at the top... you can no longer achieve the number of decisions per minute, if you like, as a metric... that you need in order to address the torrent of information that's coming up. Eventually, you have to filter more and more information because you can't absorb it all. The decision-making gets poorer and poorer over time as the information gets filtered. This is why these institutions are failing, because the people who are making the decisions... are far enough removed from the source of information, but also far enough removed from the impact of their decisions. If you think of it in terms of representative democracy, it's not representative. That's the problem. We see this in large corporations that fail to innovate... for the same exact reason, non-scalable architecture. In companies, you see people trying to change that, to implement flatter org charts... so you can have more lateral movement of information. At the same time, we see that in society. People are trying to devolve power to local areas. We're seeing, just in the news recently, declaration of independence by the Catalan state. These are all symptoms of the fact that if the organization fails to scale, it will be fragmented. It will be disbanded, and you'll see that kind of devolution happening. Scale, bandwidth, architecture, interesting engineering problems... There's one other small problem with these social institutions. A problem that was identified a while ago by a guy called Cicero. He said, absolute power corrupts absolutely. The problem of a hierarchy is, it's not just decisions and information that flow up, it's power. As the hierarchy becomes entrenched, the people at the top get more and more powerful... just at the same time that they're getting more and more detached from the people they're applying power to. Problem two, corruption. Corruption gets worse as the scale of the organization gets bigger. Again, because of that distance. Then you have the other slight problem. Yes, good people can rise through this hierarchy, and they will be tempted and corrupted by the power. The only ones rising, in fact, rising much faster than them, are sociopaths. Because power and hierarchy attracts sociopaths. It's not a coincidence that many CEOs exhibit narcissistic tendencies and sociopathic tendencies. Because the job attracts that. I'm sure the CEOs in this room are a complete exception to that. You see this in government, you see this in municipalities, you see this in even small business. Nothing bigger than a tyrant who has a tiny bit of power over other people and relishes that power. Hierarchies are failing to scale to meet our needs, they're failing to absorb information, they're failing to process decisions fast enough, and worst of all, eventually they turn bad. They become corrupted. At that point, the decision-making is only to further one goal, and that is power itself. Power becomes the end, not the means. We see this again in institutions. The bigger they get, the more you see that problem. See what's happening in the European community right now, the European Union. I'm Greek. I have a bit of a problem with what happened recently. That's exactly the kind of situation where you have a super-state that is now making decisions... that are quite happy to toss two or three countries to the side in order to protect the banks of some European countries. Our institutions are failing to scale. What does this have to do with Bitcoin or blockchain? What does this have to do with any of these technologies? Let me pause for a second and ask, who in this audience has done a transaction with Bitcoin or cryptocurrency? Has experienced this technology? Less than 10% of the audience. Great. Early-stage adopters. Fantastic. By the way, if you're interested in trying something like that, come see me after the talk. I will set you up with your first wallet, and I will help you get some Bitcoin. I'll give you Bitcoin, not a whole Bitcoin. I can't afford that anymore. But what does this have to do with Bitcoin? You hear about Bitcoin, and what you hear from the media is that this is a currency that exists on the internet. Kind of money for the internet. To put it better, I would just say what you hear from the media is that this is geek money primarily designed for drug dealers. And that's okay. The internet was primarily designed for pornographers. We all enjoy it anyway. That media narrative only plays out for as long as you are not familiar with the technology. Eventually you start meeting dentists and taxi drivers and hairdressers who use Bitcoin. You're like, not a drug dealer, not a drug dealer, not a drug dealer. By the third time you're like, huh, that narrative isn't congruent with what I heard. The other thing you'll hear is that the really important thing isn't Bitcoin. It's blockchain, which is the technology behind Bitcoin, which is a nice attempt at whitewashing the whole thing so that the banks can play nice with it, embrace, extend, adopt, and extinguish before it gets too powerful to stop. Blockchain isn't the technology behind Bitcoin. It's one of the technologies. It's actually the database, the artifact, the ledger that is produced. But here's the really interesting thing. How is it produced? And the way it is produced in Bitcoin and the thousand other cryptocurrencies and blockchains that use a similar recipe is on a completely flat, peer-to-peer, non-hierarchical network where nobody knows anybody else, where nobody trusts anybody else. We are able to engineer the emergence of an artifact, a ledger, that records transactions that everyone can trust, that no one has the power to change, to modify after the fact, and that removes trust from the person to a mathematical construct that is neutral. That process is called consensus. It is the fundamental invention behind Bitcoin and all of the other digital currencies is a way to achieve trust at massive scale on a completely flat network that allows us to achieve such a level of trust that then we can conduct transactions worth billions of dollars without even knowing who the other party is. And behind that is this idea that we can do something unique. We can start using networks as a model for governance that scales for our new exponential innovation world. Here's the problem with networks. We can scale information. We can scale communication. But until 2009, we had no idea how to scale trust and decision-making. The really big invention that Bitcoin brings to the table is a way to scale trust globally, just like you scale information. Once you crack that, you suddenly notice currency is the obvious app. Payments is the obvious app. The reason it is the obvious app is because if you can engineer scale and trust at the same time, then by implementing that as a currency and payment system, you now have something that has never existed before. A completely open network where people can transact value across the world that is open to anyone for participation, cannot be censored by anyone, cannot be controlled by anyone, cannot be stopped by anyone. And that model is radically different than what we've had until now. What else can we do with it? And suddenly all of the ideas start bursting out. You have a structure that allows you to scale trust. You can use it for voting. You can use it to build massively decentralized corporations that have tens of thousands of directors participating in decision-making. You can have a company with a billion shareholders, none of whom are named or known. Or a company with a million directors, none of whom are named or known. You can have governance of fundamental properties, like the internet, without having to trust anyone who's participating because you have a structure that is neutral or mathematical that you can trust instead. What's really exciting, what's really interesting about this new technology, is not that someone can use it to buy drugs. It's not that it's going to make banking more efficient. It's that it gives us, for the very first time, just when we need it the most, the possibility to create global governance and global decision-making networks. And how does it do that? Fundamentally, the consensus algorithm that is used in these technologies in Bitcoin is a market-based game theoretical competition. Anybody can participate, but they have to commit energy or funds or something else. And they have to commit that as a guarantee that they're going to play fair and play by the rules. And if they do play fair and play by the rules, they get rewarded, which is why the asset that's part of it is important. And if they don't play by the rules, the entire network that is checking the rules, everyone who's on the network rejects their contribution. And all of the funds that they have staked, or the energy that they have staked, is lost. So it's a game. It's a game in which you have to put money where your mouth is to participate, but you don't get to choose the rules. The rules are set by the network, and you have to follow all the rules. Think of it as a mathematical constitution, the consensus rules that run. And how do you change that through overwhelming consensus? If you want to change the rules in one of these networks, you need 95% agreement. That's really hard to reach. It also means that it's really hard to take over the network. So we take two of the 20th century's most incredible systems of governance, networks and market forces, and we bring them together in a network that is flat, global, and open. Where you don't have to vet participants to see if you trust them a priori, you can give them access and trust the network. We'll keep them in check. This now gives us a glimpse of what we could do in the future. Governance has changed dramatically. Now, Anyku comes along and suggests, hey, let's implement a new form of government which will obsolete all existing forms of government and corporations and associations and all other social institutions. And by the way, it's not subject to any one specific jurisdiction other than the laws of mathematics, is in for a tough reception. When I have these conversations with regulators, the interesting thing is that they think I'm challenging or questioning their authority to regulate these systems. I acknowledge and accept their full authority to regulate these systems. They question their ability, their means, their levers to affect change in these systems. All the authority in the world, none of the influence, none of the power. No levers to pull, nothing to shut down. What do you ban? Let's ban prime numbers being tried before. A specific prime number that you cannot possess in the United States, at least I think also in Canada, because that prime number unlocks DVDs. They manage to ban a number. Good luck with that. From a regulatory perspective, that's a dead end. So now we're going to have a very tough conversation. And that tough conversation is going to require people to become accustomed to facing reality. We should not have a system that allows criminals to pay anyone they want. We now have a system that allows criminals to pay anyone they want. And all of us, and all of them, and everyone to pay anyone they want. We shouldn't have or allow a system that can transfer value or record information that no one can edit or alter. We now have such a system. Whether we should, whether we must, whether we can't, whether we won't, none of that matters. It is. Now let's talk about what we're going to do about that. And how we're going to adapt to a society that has the means to create these structures of global trust. And also has to deal with the repercussions of creating these structures of global trust. And I'll leave you with a final thought, which is going to throw another big wrench into that. Money has three fundamental properties, or uses. Store value, medium of exchange, unit of account. In the last 50 years, all of the governments in the world have added a fourth use, which is system of control. Using money, using the banking system as a fully deputized arm of law enforcement and surveillance in order to monitor and control money as it flows around the world. This dream started by Richard Nixon in the 70s. And it's reached now its apotheosis as countries do the unthinkable, like banning cash overnight. As if that's going to stop corruption and black money. That dream is over. That dream ended on January 3rd, 2009, with the first block of Bitcoin, the Genesis block, which contained a message within it, the Times of London, Chancellor of the Exchequer on the brink of second bailout of banks. And that message resonates with a whole lot of people nowadays. It was the secret message that told us why this was created. But we don't yet know what impact it's going to have. I think it's going to be big. Thank you very much.