Money, we use it every day,
We worry about getting more of it,
we worry about running out of it,
But how often have you asked yourself, what is it?
What is money?
My name is David Foox,
I was born in South Africa, grew up in New Zealand,
and finally settled in New York City,
I became an attorney, but after years of practicing law,
I realized my heart was elsewhere,
So I started painting, became an artist,
and eventually found my way into filmmaking,
I produced a documentary called Love Child, about video game addiction,
and in the course of meeting people in the gaming and technology world,
I discovered the world of Bitcoin,
Why are banks so inefficient?
Why are credit cards so expensive to use?
And why does the world have hundreds of different
national currencies instead of just one?
There's a technology called Bitcoin
that answers those questions,
and it changed the way I look at money
and the world we live in,
Bitcoin is a brand new form of digital currency,
It's similar to traditional currency,
like the dollar or the euro,
but instead of being issued by a central bank
and printed on sheets of paper,
it's completely digital,
Bitcoins are created by a simple piece
of open-source software originally released
in 2009, that uses a series of rules
and mathematical algorithms to generate
digital units of money called Bitcoins,
Right now, there is a vast network
of computers around the world simultaneously
running Bitcoin software, creating new Bitcoins
and trading Bitcoins across the network,
Each Bitcoin is unique, and cannot be copied or destroyed,
And many Bitcoin users believe it's better
than the money we've used for thousands of years,
I went to lunch with a buddy, and he was like, "Hey man, let me tell you
about this nerd money," "Oh my God, cool," And that's how I got into it,
And I was fascinated, He didn't say anything about it,
I pretty much went down the deep dive
and researched it myself,
Within about two to four weeks,
I was sold that this was the next
revolution in our world,
We finally needed a financial revolution
and Bitcoin was definitely it,
My name's Nolan Bushnell,
I'm probably best known for founding Atari
and then Chuck E, Cheese and automobile navigation
and some of that crazy stuff,
I believe that Bitcoin has an interesting
opportunity to be the Internet currency,
It's not just money, it's not just politics,
it's not just technology,
Bitcoin is cash for the Internet,
As a security professional, I set out to try
to prove it wrong and try to debunk
whatever this Satoshi Nakamoto guy had created,
sitting at the dining-room table in my condo
working away at this Bitcoin thing,
Once I fully understood how Bitcoin worked,
it hit me like a ton of bricks,
This is actually the most brilliant thing
that I'd ever laid my eyes upon,
First time I read about Bitcoin,
I thought it was nerd money,
I laughed at it and I walked away,
Second time, about six months later,
I read the Satoshi Nakamoto paper,
it blew my mind, I got hooked,
I spent months reading everything I could about Bitcoin,
and almost immediately after that,
switched my focus full time to this,
In 2008, a person using the name
Satoshi Nakamoto released a report on the Internet
popularly referred to as the Bitcoin White Paper,
In it, he described a new software protocol
of his own invention in which a digital currency
called Bitcoin could be generated and kept secure
by a peer-to-peer network of computers,
According to Satoshi, Bitcoin could be a cheaper
alternative to the cost in bureaucracy
of existing banks and financial institutions,
On January 2nd, 2009, Satoshi Nakamoto
released his free open-source Bitcoin software
on the Internet, inviting anyone to use it,
Bitcoin was created under a pseudonym,
The person goes by the name of Satoshi Nakamoto,
but the public doesn't know who that individual is, nor do I,
We don't know if he's just one person
or multiple person,
I tend to believe it's just one person,
It has been one of the biggest mysteries
raging across the Internet and business world,
Who is Satoshi Nakamoto?
An Australian tech entrepreneur
named Craig Wright revealing to BBC
that he created the cryptocurrency,
The true identity of Satoshi Nakamoto
has never been proven,
Various journalists, bloggers, and news outlets
have tried to identify the person, or group of people,
who invented Bitcoin under that name,
but so far, none of these reports is conclusive,
I'm not Satoshi Nakamoto,
The real Satoshi, whoever he is,
may choose to remain anonymous forever,
I mean, we all are Satoshi, And you can never necessarily prove
that I'm not Satoshi unless you know who Satoshi is,
Satoshi Nakamoto was the first person to create Bitcoin
and create the very first block, the genesis block,
Satoshi took technologies from different parts
of a computer science space and connected them
together in an amazing way,
But none of the cryptography was new,
The computer science language wasn't new, the networking wasn't new,
He just connected everything, He solved the puzzle,
The earliest adopters of Bitcoin
were attracted to it not because of its inventor,
but because of the innovative technology underlying the software,
About 1880, Thomas Edison brought people into the light out of gas lighting,
He didn't do it by inventing the light bulb, he did it by building the infrastructure,
That's someone that was heralded as a quack and a lunatic before he figured this stuff out,
and now he's changed the world,
The Wright brothers, right,
no one can ever fly, that's impossible,
Well, they figured it out,
If you just think, in two lifetimes,
we've gone from recording sound
to introducing light, to cars, airplanes,
putting the man on the moon, computers, the Internet,
Why is it so unrealistic to think
that we can't reshape the world of finance? It's about time,
Bitcoin relies on very complicated
cryptographic mathematics, but the principles
behind it are actually fairly simple,
First, Bitcoins have value because they are scarce,
Only 21 million Bitcoins will ever be in circulation,
So like gold or diamonds, Bitcoin derives its value from scarcity,
Second, Bitcoins can be transmitted digitally
over the Internet from one individual
to another from anywhere in the world,
It's a technology protocol,
There's no third party, there's no intermediary,
It's a relationship between you and your money, and no one else,
Neither of us need to trust each other and we don't have any access to each other's data,
and there's no central entity that has access to that data,
Yeah, it's like trying to explain the Internet
-in 1994 -Yeah,
And the one thing that kind of everyone
gravitated to was email,
It takes a week to deliver you a message,
now I've got the ability to send
a message instantaneously,
The mail system worked, this was just a lot better,
An email's significantly better than a letter,
It's just quicker, faster, easier, cheaper,
Bitcoin's like email for money versus the bank
being like the post office for money,
Bitcoin is the transfer of value
between people using blockchain,
Bitcoin is the money, if you will,
blockchain is the log,
Each transaction is recorded
onto a digital ledger called the blockchain,
and that ledger cannot be altered or erased,
So once a transaction is made, it's permanent,
Each new Bitcoin user is issued a digital
Bitcoin wallet with a unique identifying code,
One individual can send Bitcoins to another
individual instantly with a click of button,
and that change of ownership is simply recorded onto the end of the blockchain,
In fact, every Bitcoin transaction ever made
is on the blockchain right now,
The Internet we use today is the Internet of information,
The blockchain is the Internet of value,
You can't actually fake Bitcoin
because every Bitcoin transaction
is transparent on the blockchain,
It's like a giant Excel file that runs
on the Internet that's hosted by no one,
and it's just showing who has what,
And if I am that line item on the Excel file
and it says I own $1,000, I can transfer some of that to you and it's updated
on that public Excel file and anyone can say,
okay, does he have that money?
This whole concept of programmable trust
is a huge, huge deal for the Internet,
Satoshi had solved this problem with distributed consensus,
Unlike writing a check, we don't need a bank to verify a Bitcoin transaction,
because each Bitcoin transaction is automatically
verified by the Bitcoin network,
It's a technique called distributed consensus,
Basically, the network of Bitcoin computers
across the world looks at every transaction
and comes to an agreement of who transacted what and when it happened,
Then that transaction is recorded
to the end of the blockchain ledger,
This model of organization is a brand new thing,
It hasn't existed in human civilization before,
It's really just a special type of database
that allows you to basically store any type
of arbitrary data in a distributed fashion,
And you can basically ensure the integrity
of that data because you have millions
of computers running around the world
looking at that data and verifying it
and all agreeing by consensus that that data is true,
Everything can be cryptographically proven
to be correct, and there's no way to shred it,
Bitcoin is a new form of digital money,
It's an alternative to government issued money,
also known as Fiat currency, like the US dollar,
the euro, or the Chinese yuan,
But Fiat currency is far from perfect,
A long time ago before there were banks,
it was a person-to-person exchange,
As trade expanded across towns and even oceans,
physical security of money became a really
serious issue, and so we invented banks,
Banks were a technical solution
to a problem of theft and security,
so we established a network of these banks
that we placed around the world,
That whole system relied on these banks
trusting each other, and then those banks
in turn trusting individual trading partners,
So if I wanted to trade with you,
I had to not only have a bank that trusted me,
you had to have a bank that trusted me
and then the banks had to trust each other,
The entire system is built on trust,
There's a lot of waste and inefficiency
that emerges from that system,
Bitcoin is essentially returning back to our roots,
which is to enable a platform that allows
individuals to be able to transact directly
with their neighbor, except now their neighbor
can be in China,
Well, now shall we see how we make money?
This is our mainframe room with presses printing various denominations of bills,
Now the result is valuable green paper, which people refer to as money,
If it's only green paper, what makes it so valuable?
We have faith in our government and the government says it's worth something,
And so that's what dollars are backed by,
Fiat currencies in general are inflationary,
All of the proponents of Bitcoin feel
that it's inherently better than government-backed
currencies because its monetary policy
is written in code, It cannot change,
There's 21 million Bitcoins that will be released
over time, unlike any government-backed currency
which the monetary policy change is based on
who's in power, and the governments can create
inflation as much as they want,
Fiat money is great, but we live in a digital age,
You should be able to send money from here
to Japan without an archaic system,
Bitcoin was really the first to suggest
that we could do large scale peer-to-peer commerce,
economics, politics, governance in a way
that, you know, is incentive-compatible,
Most people are completely oblivious
about how money is created,
A lot of people actually still think that money
is backed by something, like the Fiat money
that people use is backed by something,
which is simply not true,
Money hasn't been backed by anything since the '70s,
It's really like based on a leap of faith,
We are trusting that our government
will do a good job in controlling the supply of money,
Satoshi released Bitcoin in the wake
of the US economic crisis of 2008,
a crisis which led to the worst recession
in nearly a century,
Congress has hammered out the most far-reaching
rescue package of America's financial system
since FDR's the New Deal,
They're gonna destroy our currency,
that's what's gonna happen,
That crisis taught us several things,
One, the world is incredibly interconnected
in ways that we didn't fully appreciate,
Two, the world was over-leveraged in ways
that were underappreciated,
And three, central authorities are not
as trustworthy as maybe we all thought,
And so Bitcoin is in many ways a reaction
to the colossal failure by the incumbent system,
I have 20,000 Republic dataries,
Republic credits?
Republic credits are no good out here,
I need something more real,
I don't have anything else, but credits will do fine,
No, they won't,
A lot of the people who were interested
in Bitcoin were people who were coming
from either the financial sector,
or that had a lot of financial knowledge,
and they saw Bitcoin as a hedge
to a global financial crisis,
much like the gold bugs see precious metals as a hedge,
Satoshi's Bitcoin protocol allows
for anyone with enough computing power
to generate new Bitcoins by performing
complex calculations using Bitcoin software,
This process of creating Bitcoins is called mining,
And some of the first Bitcoin enthusiasts
were drawn to the currency by the prospect
of amassing a fortune from the comfort of their own homes,
People wanna know, how can I trust
the security of Bitcoin? It's because of the miners,
These are the guys that are telling everybody
else whether your transaction or you sending
Bitcoin is legitimate or not,
And these guys can prove that with math,
So that is why Bitcoin is secure
because it's using something called
elliptic curve algorithm,
Over time, it will get more and more difficult
as the mathematical algorithms
become more difficult to calculate,
And the way that that network was built
is through a financial incentive,
They said run the Bitcoin software,
and become a miner,
You're gonna earn Bitcoin in exchange for contributing,
call it compute to the network,
So I got in initially mining,
and then that kinda spun up to a whole part
where I tapped out all the power at my house,
And my wife was like, all right dude,
you need to get these things out of my place,
My family are coal miners, I'm from West Virginia,
These guys are getting paid in scrip, a currency that was owned by the coal company,
And my grandfather was one of the key people who helped disrupt that process,
He was involved in an altercation called the Matewan Massacre,
and that resulted in 11 people who were dead
after a shootout when the coal companies
themselves were trying to kick people out of their own houses,
The US dollar is effectively a note that's pledged by the full faith and credit
of the US federal government, The scrip currency created value because the coal company said,
well, as long as we're in business, this will be valuable,
Bitcoin itself, it's not connected to a Fiat currency,
It is not connected to any currency in the world
that is backed by any sovereign nation,
In order for Bitcoin to have value,
it had to have users, people who were interested
in actually making transactions with Bitcoin
instead of traditional currency,
And the first group of people who took interest
were already using digital currency,
it just happened to be in an economy
not quite of this world,
People playing video games today,
things like World of Warcraft and EverQuest,
and what eventually became Second Life,
I think the people in these sort of
persistent worlds have a desire to buy
and sell the digital assets that they're creating,
And this is before any game company
in the world was doing this,
or had a microtransaction business model,
Virtual world gamers were already
trading in-game assets with each other,
It began as a barter system and soon people
were spending real money to buy in-game currency,
Linden Dollars, the currency of the game Second Life,
could be bought with real US dollars,
Magic: The Gathering online digital cards
could be purchased online with real money,
It's no coincidence that the first major
Bitcoin exchange site was an evolution of this idea,
Mt, Gox, which originally stood for
Magic: The Gathering Online eXchange,
was launched in 2010 and it soon became
the most popular site for buying and selling
Bitcoins from around the world,
and so, Bitcoin had its first user base,
But how did it go from gamer currency
to something people would use on a wider scale?
It didn't take long before word spread
in the worlds of computing and finance
that this currency has some unique advantages,
No one is sitting at home thinking,
oh, I wish I could buy coffee easier,
And I don't even think if you could buy it with Bitcoin, I would,
Why won't I just use cash or my credit and get the points? Why would I?
So what if I said, hey,
you could use a check-like system
and it would settle instantly,
and nobody would forge it,
and nobody would put an extra zero
on the end of your check,
Then people start to think, oh, okay, I see it,
On this check, you do a few things,
One is that you write who you're going to pay to,
Bitcoin has that exact thing,
So you have essentially a payout address,
you're paying to something,
You have an amount, so you're going to fill in
the amount of how much you're gonna send,
Bitcoin has an amount,
And the last thing you do is you sign it
with your physical signature,
And Bitcoin doesn't use physical signatures,
except Bitcoin uses digital signatures,
Whereas credit cards, for example, you don't give money to anyone
where you're paying with your credit card,
What you're giving to people is access to your funds,
You're giving them your credit card number,
the security number, the expiration date,
and you're opening your books and you're saying, come take money out of my account,
and don't take too much and don't give my information to anyone else,
So Bitcoin is the complete opposite of that,
You don't have to give any private information,
you're just giving it,
So, it's really just like cash for the Internet,
You have the responsibility now to control your money,
You are your own bank, but you have to be responsible for that,
Because my company works in Bitcoin, we also get paid in Bitcoin,
So in my everyday life, I use it to feed myself, to pay for bills, I pay my employees,
A lot of my life revolves around it,
There's a lot of places that accept Bitcoin as a payment,
where you can go to a bar, pay in Bitcoin,
go to a burger place, grab lunch, eat sushi,
go on a date, all paying with Bitcoin,
That instinctive experience of ease of use,
of being able to transfer money quickly
anywhere in the world with few restrictions,
and then while you're having that experience,
having your deposited check held for five business days,
and finding your bank closed at 4 p,m, on a Friday
will tend to form a really nice juxtaposition
of old versus new,
You start wondering, why do banks work
as if they're still stuck in the 1950s?
Why do I have to jump through hoops to access my own money?
Why am I paying fees for someone to hold onto my money?
And why are you closed on a Saturday in the year of the Internet?
The traditional banking system's gotten really good at making us
not really care a whole lot about our fees,
Like they hide them, or, you know, it's just a dollar,
it's just 50 cents, you know, it's just 2%,
How do you feel about those fees?
I think I'm getting ripped off,
Overdraft fees and there's a fee
to keep a savings account,
You're putting yourself on a debit card
or a credit card, but they wanna charge you
$5 to use your card when you do it,
It's my money and they're taking a little bit out of it for themselves,
but they didn't really earn it, I earned that money and it's my hard working money
and I'm paying for something for a product, but you're gonna take a little bit of it
for yourself when it shouldn't really go to you,
That's how I feel,
ATM fees, and transfer fees, and overdraft fees,
and all of these fees that are associated
with handling your own money, right,
you could do most of what you do
with that bank account with Bitcoin and do it for free,
Bitcoin is a purely digital cash,
It's a way of one person sending money
to another person for any purpose
without any opportunity for censorship or limitation,
also without any opportunity to become
a middleman and take a cut of that transaction,
It can't be true, How can you transfer something from A to B
without having a middleman C?
Once you start to realize the power of Bitcoin,
you realize why everybody is so passionate,
Think about how many people clip a fee
or grab a piece of the business,
from stock transfers to real estate,
to any other thing where you store value,
I heard somebody that tweeted out or said,
hey middleman, look out, technology is coming for you,
The traditional banking system in the US is fairly convenient and secure,
but consumers still spend billions of dollars
annually to pay for the massive bureaucratic system,
including billions of dollars in overdraft fees alone,
Billions more are lost to credit card fraud,
What if all of these inefficiencies
could be eliminated?
Credit cards were created in 1950,
and credit card technology has hardly
really been built on or further innovated
since really its inception,
Credit card companies are highly
susceptible to hacks,
It's costing our economy billions of dollars in loss today,
The huge benefit is, especially for small business,
transaction fees,
If you're in a restaurant,
transaction fees typically around 20 or 40 cents,
That's huge for a nickel and dime business,
Restaurants, it's a very small profit margin,
So when you have 40 cents of it or 20 cents
of it as a transaction fee, that's huge,
Most people don't know that every time you go to a store or restaurant
and use your credit card instead of cash,
the merchant has to pay the credit card company
a transaction fee, usually around 2% or more,
So why is no one complaining?
Because credit card companies have lobbyists
who have helped to enact no surcharge laws
across the United States,
These laws prohibit merchants from charging
for credit card usage, which means the fees
remain secret and the credit card companies
get richer and richer,
I've recently ran a business
and I'm thinking that we paid,
depending on the transaction,
we paid somewhere between 3 and 5%,
They used to charge me I think, uh 20 cents
per swipe, plus 2,25%, That's a hefty fee,
I don't think it's fair that they're making
the restaurant pay money on the money they're making,
It's almost like a tax, but they're not really,,,
They shouldn't be taxing people, They're not the government,
They shouldn't be allowed to do that,
Whenever you reduce friction,
all of a sudden, new businesses respond,
It just happens as the night, the day,
Things that are idiot-proof are much more safe
than things that can be messed with by idiots,
The whole world and pretty much every product
and service in use today is built
around a centralized architecture,
Maybe you've got a bank that has got
a centralized ledger and they own
and manage and control the ledger,
and this is a decentralized system,
meaning no one owns or controls or runs it,
You can't shut Bitcoin off,
You can't shut it down,
The only way to turn Bitcoin off
is to shut off the Internet forever,
You think about Facebook, you got all your pictures
and you got all your social history there,
what if Facebook is shut off?
What if they close their doors?
If those platforms are re-architected
in a decentralized fashion,
they essentially will run forever,
and therefore, you have no risk of your data being lost,
Sometimes the power goes out in one region,
If your data centers are in that region
and the power goes out,
you actually lose access to those resources,
For critical resources, like money,
having some sort of centralized infrastructure
is actually a very dangerous thing,
The ability to create resilient distributed
systems can actually solve many problems,
not just with money,
A great example is Uber,
It's this company which has come out of nowhere,
adopted a decentralized model and it works like crazy,
We don't actually need third parties anymore,
We'd prefer to trust in math than trust in
some third party, some company,
The printing press decentralized
the manufacturing of books,
It was one of the main catalysts
in the industrial revolution,
Before, you had to actually copy word by word,
letter by letter these books, and it took a long,
long time in the monasteries to do that,
And so books were highly expensive, highly centralized tools,
but the Gutenberg press had largely decentralized that,
We saw centralizing of that industry with the industrial revolution,
You had the printing presses and, you know, it centralized
into newspapers, et cetera,
and then the Internet comes along
and the pendulum swings the other way,
and it decentralizes again,
If you asked me back in the '90s,
do you think you're ever going to see
CNN have a website, I'd be doubtful,
If you asked me, do you think CNN will be showing tweets on TV, I'd be doubtful,
But if you asked me, do you ever think CNN will be showing tweets on TV instead of reporting,
because the tweets are the reporting , I would have laughed,
Information wants to diffuse, it wants to spread out,
it wants to make itself available,
You can see this trend all the way back
through kings and fiefdoms, and all the way back
to society prior to that,
Power, once it aggregates, it slowly dissolves,
Unlike gold or silver, you won't be able
to confiscate it,
You know, gold or silver, well, I mean, we saw how
that worked out for the Incas and the Mayas,
Like, they just got killed and their gold and silver
was taken and shipped back to Europe,
But with Bitcoins, you actually have to get
the cooperation of the individual
in order to solve the math problem
to move those Bitcoins,
Because Bitcoin operates independently
and without government interference,
some of the early champions of Bitcoin
see it not just as a currency,
but as a means of social and political change,
Bitcoin is the subversion of the authority of currency,
Bitcoin is the idea that currency doesn't derive
its value because it has the face of a queen on it,
It doesn't derive its value because it's printed
by an organization run by the banks, the Federal Reserve,
It doesn't derive its value because a government
says it has value,
Bitcoin is just the most recent disruptive
technology following a long line of disruptive
technologies that came before it,
The steam locomotive was a disruptive technology,
and all the train tracks that came before it,
it allowed you to move goods in a relatively
short period of time from one location on the continent to another,
The telephone is a disruptive technology, allowing seamless communication,
instant communication over vast distances,
Radio was disruptive, the Internet was disruptive,
Bitcoin and this digital currency paradigm
is something that's largely subversive to our man-made laws,
Governments will be the ones that have to adjust,
not Bitcoin, not the technology,
All disruptive really means is that it changed society, it changed the status quo,
it changed the way that things were being done,
Unlike a credit card transaction,
it is possible to transact in Bitcoins
without revealing your name and identity,
People believe that you should have privacy in your home,
You know, we all have curtains on our windows
and locks on our doors and no one thinks
that that's weird or wrong,
But for some reason when it comes to money,
people assume that you should not have privacy anymore,
and that the government should be able to
look into everything you do,
even without accusing you of a crime,
And that's wrong, but people tolerate it because that's how it's always been,
Bitcoin is finally taking privacy back for people,
In the current banking and financial system,
those of us that are just individuals,
we have nearly no privacy,
The banks and credit cards know every transaction that we make,
On the other hand, you don't get to know
what your bank is doing with your money,
Now obviously, you know, some establishments
may be threatened by this, but equally,
some establishments are threatened by free speech,
You know, some establishments are threatened by the idea
that people may choose to transact
the way they wish to,
Because Bitcoin is anonymous
and because you can send it to anyone
around the world for very cheap,
people have been using it to go onto the deep web,
and they also use it on Silk Road,
and Black Market Reloaded, and Agora Markets
to buy things like marijuana, heroin,
drugs, or even prescription drugs,
Things that they don't have access to normally,
and perhaps they want to buy from a trusted source online,
Silk Road, a dark website
akin to Amazon or eBay with buyers,
sellers, user and product reviews,
except the product in Silk Road's case is usually drugs,
and the currency, as with most things on the dark web, is Bitcoin,
Every transaction's recorded in the public log online, but names of buyers
and sellers are never revealed,
That's why some call it the wild,
wild west for criminals,
Bitcoin permitted Silk Road to happen
because Bitcoin is a private financial system,
I think things like Silk Road are totally legitimate,
Free individuals should be able to do
whatever they want with their own body,
and if that means drinking a beer
or snorting a line of coke,
it's no one's business, but the person doing it,
Before Bitcoin was around,
people would buy these illegal effects
with regular currency, which is untraceable,
Silk Road takes a violent drug industry,
because it's a black market,
and turns it into a civilized market
where people can log on to a website and buy a drug,
They know exactly what they are going to get because it's all there,
There are user reviews and seller reviews,
and it's peaceful,
Among the earliest users of Bitcoin were speculative traders,
The price of a Bitcoin began at a few pennies back in 2010,
but the cost kept increasing and eager traders
wanted to get in on the investment,
Early buyers were making a fortune on the growth,
You can look at Bitcoin as an investment, but if anything's a speculative vehicle,
it's at the top of the risk pyramid,
Still, the vast majority of Bitcoin
enthusiasts I spoke to were not looking
to make a quick buck,
They were looking toward the future,
How could Bitcoin technology be used
to improve our daily lives?
In the analog world when you walk down kind of the promenade and you see
someone telling a joke or juggling, or singing and dancing,
whatever it might be, you got the ability
to throw out quarter and a half, right?
And this is an analog sort of behavior
that human beings have been actively
participating in for thousands of years,
But you can't do that online,
The idea that I can go to YouTube and watch a video,
and if I like the content that person has created,
I can say here's nickel, or I could pay for a penny a minute,
Or if I like, you know, this blog post that this journalist
has written, you know, they could put in a paywall
where I can read half the article,
and, you know, for 10 cents, I unlock the rest of it,
You can actually send people
a nickel, or a quarter, or a dime,
Where using traditional financial networks
like a credit card and that, because of fees and charges,
it doesn't really make sense to charge
less than a few dollars for something,
That micropayment idea is really
an important one for the entertainment field
or the content creators because when you hear
a song that you really like,
it's very easy to give applause,
So your applause can be 25 cents or 50 cents, or what have you,
Right now we have ads, right? So when you are experiencing someone's creativity,
you first have to watch an advertisement before you can do that,
and that's how these people get paid, Why can't we connect to each other?
What I would like to do is have it
so that I can send a first class email, and it's 25 cents,
and if you open it and read it, you get the 25 cents,
Look at what happened with the music industry, right,
You had vinyl go away, which was around
for a very long time, I think 10-plus years,
And that got pushed out by cassettes,
and then CDs had a nice run,
And then what happened to CDs?
People didn't wanna buy an album for $15
when they like one song on the album,
Apple comes out with iTunes,
You can buy a song for 99 cents, Brilliant, right?
Deliver the content in the way the consumer
wants to use it, and you'll see adoption,
The same way that, you know, various small communications
have enabled things like Uber and Google Maps
that we maybe never would have seen
in the early days of the Internet,
these microtransactions where you can
do much smaller financial transactions
than the existing financial networks allow
are going to create applications
that we can't even envision today,
One of the most promising applications
of microtransactions is charitable giving,
With Bitcoin, a charity can crowdsource
its funds from a wide array of small donors
and it can transmit those funds to anywhere in the world at minimal cost,
The BitGive Foundation is a nonprofit,
It's actually the first 501
IRS approved nonprofit in Bitcoin,
It's a Bitcoin-based foundation,
And what we do is support charities all around the world,
a global mission of public health
and environmental causes,
What Unsung does is it connects restaurants,
or grocers, or catering services,
or just people who have excess food,
and they can just go into the app
and put in how much food they have available,
and our volunteer drivers can just go pick
that food up and take it directly to the homeless,
or to a homeless shelter, or a women's shelter,
or anybody really that's in need,
People on Unsung compete against each other
to like do the most good,
Everyone has a Bitcoin address on it,
You can actually tip the people
that are performing the best,
So it's actually, you can send them money directly,
Currency is a form of human expression,
and people who are laughing about that concept
today, you know, will be surprised by what comes out of this cauldron,
I've said often, Justin Bieber coin at this point
would be worth more than about 30 national
currencies if it launched tomorrow,
I don't assign value, you don't assign value,
kings and queens don't assign value, users do,
And if they find that currency useful,
you will have a little village in Papua New Guinea
electronically trading on their Nokia phones
Justin Bieber coin, and they will have no idea who Justin Bieber is,
They'll know it's used to buy things
and you can buy things with it, Well, guess what?
There are villages in Africa right now
who know nothing about who Queen Elizabeth is,
but they know that the money that has
her face on it works,
There's really no difference between Justin Bieber
and the queen,
One thing about the Bitcoin community
specifically is that they comprise largely
the smartest people in the world,
Before I got into Bitcoin, I was a digital forensic investigator,
I conducted cybersecurity investigations
for whoever got hacked,
I left a very well paying job to take a huge risk
and start my own Bitcoin security consultancy,
Bitcoin has passion in abundance, I've never seen
a group of more talented engineers,
mathematicians, entrepreneurs, CEOs,
Everything from anarchists to libertarians
to software developers to economists
to politicians, accountants, lawyers, Wall Street bankers,
You have a lot of forward-looking thinkers, a lot of people who are thinking
not two years from now, not even five years from now,
They're thinking 10, 20 years from now,
I started off as a studio art major
at Wellesley College,
When I first heard about Bitcoin,
I thought it was a company doing innovative things,
And as I read more, I was like,
wow, I really want to understand
more about how this works,
It's my senior year now,
I've switched to computer science,
The biggest thing about the Bitcoin community
is that it sees the potential for massive change
in a very positive way for society
over a long period of time,
That core ethos holds the Bitcoin community
together in a way that no other community
I've ever seen does,
I was a child actor,
I was essentially doing commercials
and a few movies from when I was nine years old
until I went to college around 18,
I had some bit parts in Addams Family Values and Casper,
I've decided to scalp you,
And burn your village to the ground,
It wasn't a career path for me but it was a lot of fun as a kid,
I grew up as an actor, It sure would be a shame if I accidentally
told my dad about you taking me boxing,
It would be a shame if I threw you out that window also,
I decided to stop acting around 14, 15,
and that's because I wanted to be an entrepreneur,
When people ask me, they're like, oh, what do you do? I say I have a Bitcoin company,
They're like, oh, are you the CEO of Bitcoin? I'm like, no,
I say, that's like saying are you the CEO of the Internet?
We had this movement, uncoordinated, decentralized
people working in their own self-interest
and it's really kind of congealed this community,
Bitcoin is definitely an industry
that knows how to party, knows how to have fun,
A lot of us that have been around
since those early days, we don't know each other,
we're friends, we like to have fun with each other,
'Cause if you're not having fun, why do it?
People sometimes say that we're the early adopters,
No, we're not the early adopters,
we're the lunatic fringe,
The early adopters come later,
Welcome to the lunatic fringe,
When we have a borderless digital money supply
that doesn't recognize geopolitical boundaries,
I think there will be a sort of social
cultural collaboration and freedom
that we haven't seen before,
It's just a completely revolutionary new financial system,
It's going to make things more fair,
It's going to enable more peer-to-peer systems to be built,
It'll be a more transparent economy,
More incorruptible as well,
If some form of structure can take
away your property or your wealth,
you're gonna be stranded,
Being financially independent and not being subject
to third parties' power is one of the most
freeing things in the world,
The ability to keep property and keep wealth
is a huge step in your freedom,
This is something that hasn't changed much
in the last hundred years,
In the Bitcoin world, we're taking this
big quantum leap and moving ahead
several orders of magnitude and freedom,
It removes borders from financial transactions,
very similar to how the Internet erased borders
from conversations and from communications,
It's the future because it's just better,
It's faster and easier to send money
and store money with Bitcoin than it is
with traditional finance,
without anyone getting involved,
without any bank fees or wait times
or any censorship of the transaction whatsoever,
We would've never been able to imagine
social networking taking over our lives
and changing the way we fundamentally
communicate with another individual,
And we wouldn't have imagined how Twitter
could essentially start a whole movement
of people in the Middle East,
We just would not have imagined that the Internet
was capable of doing that, and yet it was,
Freedom usually wins,
I-- I would say always wins but there are too many
examples of really bad guys messing it up,
Mt, Gox unexpectedly shut down today,
owing hundreds of millions of pounds
and prompting the sharp fall in the value of the currency,
Currency community was shaken
by the shuttering of Mt, Gox,
The firm froze withdrawals in early 2014,
It said there was a bug in the software
underpinning Bitcoins that allowed hackers
to pilfer them,
So what's happened today is Mt, Gox,
which is the most famous as the oldest,
the original Bitcoin exchange,
has disappeared from the Internet,
And that means 744,000 Bitcoins are missing,
unaccounted for, and people might have lost
what they thought was worth about 400 million dollars,
Bitcoin, it's the first time we've had Internet money,
And therefore, you've given hackers a greater
incentive than they've ever had in history
to, you know, find holes in your security,
Mt, Gox had become the most popular
platform for buying and selling Bitcoins
and it sold over half a billion dollars
worth of Bitcoins to users across the globe,
The problem was that Mt, Gox was structured
in such a way that they held their customers'
Bitcoin wallets and the private keys
to access them within their central database
and didn't take enough precautions
to safeguard those keys,
So when hackers attacked their systems,
they were able to steal thousands of Bitcoins
valued at hundreds of millions of dollars,
The biggest thing you learn quickly
in the exchange business, people don't like it
when you mess with their money, You start to really realize that when you see
that picket of people outside Japan Mt, Gox office, trying to kill the dude
that they think ripped them off,
If the owner of the company had actually recruited the right sort of people,
put in place the right corporate governance and managed the business
in a way it should have been as a business that was processing
500 million dollars a month of transactions, it could have easily been avoided,
It was ultimately negligence and, you know, incompetence,
Charlie Shrem was one of the early
success stories of the Bitcoin arena,
He founded a Bitcoin exchange platform
in 2011 called BitInstant and went on to receive
a 1,5 million dollar investment
from the Winklevoss twins in 2012,
The Winklevoss twins, Look at them, They're like two genetically enhanced Ken dolls,
Do you know how much Bitcoin they're worth?
BitInstant was one of the easiest ways
to get US dollar into Bitcoin,
and he ran that service for a long time,
I was running this thing out of my basement,
and it was a free-for-all company that was growing too quickly,
I was processing millions, tens of millions of dollars,
being the only employee of the company,
and I couldn't control it all,
By 2014, he was arrested
on federal money laundering charges,
Charlie Shrem, 24 years old, arrested today
and charged with engaging in money laundering
with a user at Silk Road,
you recall that Silk Road
was that infamous black market drug website
often referred to as essentially the eBay for drugs,
I'm not gonna sit here and say I didn't
do something wrong,
I did, I committed a crime,
I took money from people that they
wanted to buy drugs on the Internet
instead of buying on the streets,
and I didn't stop them,
He was a very big person in the media about two years ago,
So when I first got into it, he was a huge deal,
Uh, and then there was sort of his downfall,
And my sentencing is tomorrow, I pled guilty to aiding and abetting
and unlicensed money transmitting business,
I hope the judge decides to give me
a non-incarceration sentence,
I've definitely suffered for my crimes,
I've been under house arrest for a year
with an ankle bracelet on,
I have lost my freedom, family life,
disowned from my family,
I just completely lost everything,
I am someone who was tasked of being a guardian
for Bitcoin almost directly from Satoshi in the really early days,
He's going to be going away for a while,
I tried my hardest to stay on the right side
of the law, and I failed myself,
I'm the first real, like Bitcoin felon,
None of these problems are as big
in the Bitcoin community as they are
in the traditional banking and financial sector,
The drug trade in the United States is estimated
to be 300 billion-plus dollars per year,
and yet the Department of Justice
sees as only 1,5 billion at most,
Current regulation of the banking and financial
system hardly exerts a credit card fee
on the drug trade in the US,
In October 2013, the FBI shut down the Silk Road website,
Its founder, Ross Ulbricht, known under the pseudonym,
the Dread Pirate Roberts,
was convicted to life in prison,
Subsequent black market websites have also been
systematically shut down by law enforcement,
and their administrators brought to justice,
There's been a lot of misinformation
and communication issues around what Bitcoin really is,
and the media has created a lot of hype
out of some of these scandals,
from Silk Road to Mt, Gox,
Those are the controversies,
It happens with any new industry,
porn, sex, drugs,
Krusty, are you broke?
Yeah, all it takes is some bad luck at the ponies,
worse luck in the Bitcoin market,
Hackers stole over five million dollars
in Bitcoins from a Slovenia-based Bitcoin exchange,
Man, if you're not safe to keep your money
in a Slovenian Bitcoin exchange,,,
It was a bad thing for Bitcoin
because of all the media attention,
And they were talking that Bitcoin got hacked,
They didn't say hackers attacked,
And because Bitcoin is so new and innovative,
not a lot of people truly understand it,
We have three major enemies to Bitcoin:
banks, governments, and media, and these are all actually intertwined,
So if we don't do anything collectively as an industry to combat a lot of these myths
and this constant highlighting on these two major issues,
Mt, Gox, Mt, Gox, Mt, Gox, Mt, Gox,
scam, scam, scam, scam, Silk Road, Silk Road, Silk Road,
And we're ignoring all of the amazing
infrastructure being built in this industry
because none of us are coming together
to tell the world what's going on,
Mt, Gox, Silk Road and other scandals
solidified the public view that Bitcoin
was seedy and illicit,
Most banks refused to do business with Bitcoin companies,
Pretty much everyone you talk to here has probably had a bank out closed on them,
If you have the name bit or coin in your name,
the banking industry is pretty much discriminating
against you and they won't service you,
I think we're really tracking very closely
along with Gartner's hype cycle,
There is a lot of hype very early on in any technology,
Right now I think we're in the trough of disillusionment,
And then as soon as we emerge from the trough of disillusionment,
the world starts to get a little bit better,
These problems have occurred in Bitcoin
because they already occur in the traditional
banking and financial system,
But the difference with Bitcoin
is we are finding solutions, technological solutions,
to prevent these same kinds of failures
within Bitcoin from occurring in the future,
Bitcoin is the first opportunity we've ever had
to catch the actual big fish involved in crime,
When Mt, Gox claimed they lost all their Bitcoin,
users of Mt, Gox pooled together the knowledge
that they had about transactions from-- to Mt, Gox
and from Mt, Gox,
They found 200,000 Bitcoins they asserted
were in-- still in the control of Mt, Gox,
Only then did Mt, Gox say, oh,
we actually do have control of this 200,000 Bitcoins,
There's a difference between the protocol
and a company that uses the protocol,
It's sort of like back in the early '90s,
Hotmail got hacks, right,
but we didn't lose faith in the email protocol underneath, right?
There's nothing wrong with the email protocol,
It really is about improving the best practices
that people use to secure Bitcoins,
After the Mt, Gox failure, so Bitcoin exchange
was hacked and a lot of money was lost,
um, the concept of multi-signature wallets
became extremely popular,
People started adopting best practices,
people were much more aware of security,
and as a result, the entire system of Bitcoin was safer,
Multi-signature essentially eliminates single points of failure and it splits
the risk up amongst multiple parties who are signing a transaction,
It's kind of like, you think about if you wanna launch a nuclear missile,
you got two keys that both need to be inserted
and they both need to be turned at the same time,
All these big hacks, right, Target and Chase
and all these huge institutions that are spending
millions and millions of dollars
trying to secure the databases, but the truth is,
if they hold them all in one place,
you only have to hack one place,
The better model is decentralizing security,
Ultimately, Bitcoin gives us tools
that allows us to create systems that are more
secure than the current banking infrastructure,
The problem is just that not all of them
have been implemented yet,
I don't think we should view Bitcoin
as this big four-eyed monster with seven arms
and two eyeballs on its neck,
Keeping an open mind is something that's been
really important throughout history in general,
People are often adverse to change
and that's understandable,
but I think when we hear about scary things like Bitcoin,
just remember to take a deep breath
and really thing about where this technology is coming from,
For many Bitcoin developers,
Bitcoin is not only a currency,
but a platform upon which to build new
and more complex applications,
And the crucial element underlying Bitcoin
that allows for that innovation is the blockchain,
The technology gave us for the first time
a way to agree on a record,
And Bitcoin uses that to transfer value around,
but we can use this for all sorts of things,
It doesn't just have to be about Bitcoin,
It can be anything that anybody
wants to publicly store,
Think of public records, think of the legal system,
music, content, books, licensing,
There's all these sorts of things
that blockchain technology can be used for,
Anything you burn or put on the blockchain
can never be changed for any reason, no matter the expense,
Blockchain technology developers
are working on ways to link all kinds
of data to the blockchain,
Anything from concert tickets to the deed
to your house could be registered,
providing a permanent and incorruptible
record of ownership,
Let's say that I buy a ticket to a Taylor Swift concert, and for whatever reason,
I can't go to the show and so I'm gonna go sell my ticket,
And I have this PDF ticket on my computer and I go to Craigslist,
Now let's say that I sell to four different
people because I'm a bad person,
So now one of those people are gonna be able to
get into the show, and the other three
will be scammed, they won't be able to get in,
And so we have to rely on these third party
systems to kind of be the source of truth,
So instead of having a third party organization,
that's all guaranteed by cryptography
and by distributed data,
My bicycle got stolen and I had a friend
who called me and said, oh my gosh,
your bike is two houses down,
But I get there and I see that is definitely my bike,
And then the problem arose,
how do I prove this is my bike?
But with blockchain technology,
we can actually tokenize the ownership of that bicycle,
and then I can prove that I own it,
And then if I sell it to you,
I can transfer that token and you can prove
that you own it and we can track it
all the way down the blockchain,
If I went and bought a Louis Vuitton bag,
that Louis Vuitton bag could come with a token
that is my certificate of authenticity,
And when I go sell that or a bottle of wine
or a piece of art,
when I go sell that to someone,
I'm transferring with that certificate
of authenticity essentially using a transparent
system like the blockchain,
I think what will happen is the companies
that do not adopt the technology will find themselves
in stiff competition with those who do adopt it,
I like to take Kodak as an example,
They used to be the biggest producers
of handheld cameras, film cameras,
and when the digital camera revolution came around, they took a hard hit because of it,
So I think it's gonna be the same in the banking sector and all industries,
We'll eventually be dealing with some kind of cryptocurrency or some kind of crypto technology,
We're trying to release the power
of the blockchain,
It's blank paper,
It-- it's featureless,
But the people building applications
can draw on it whatever they want,
There's no boundaries, there's no fences, there's no rules,
Banks and other large financial institutions
will increasingly embrace blockchain technology
for the exchange of all sorts of assets,
stocks, bonds, title to traditional assets,
Blockchain technology is a tool
for secure and efficient verification,
and this could be very useful for banks
who spend billions on transactions
and verification each year,
With Bitcoin and blockchain,
we no longer need intermediaries,
Two banks can send transaction directly
from one to another,
Anything that has a middleman can be rewritten
to be without a middleman using blockchain technology,
Right now we rely on realtors when selling property
from person A to person B,
That transaction can be distilled
into what's called a smart contract,
Any kind of legal transaction
for which you currently need an attorney
can happen on blockchain, and it will happen
within a couple of seconds at most,
A smart contract is essentially
a transaction written in software,
It could simplify transactions between two people,
but it can also make a transaction
between two machines,
Many developers are working on technologies
for advancing the Internet of things,
which is the interconnection between machines
and objects such as your phone and your stereo,
or your fridge and your microwave oven,
The possibilities are limitless,
I can rely on cryptography and an open network
to be able to have two devices interact
with each other in a safe and secure way,
That is the real future of the blockchain,
The great thing about the blockchain is
at its core, in essence, it's an anti-corruption tool,
Here you have a technology that for the first time
can provide for a global, decentralized,
distributed, cryptographically secure,
verifiable and auditable elections,
Each ballot cast in an election
could be registered to the blockchain,
recording your vote securely and permanently,
You vote, you see your vote in the blockchain,
You know that it's been counted and counted properly,
The whole incorruptible and transparent nature
of Bitcoin means you could integrate transparent
accounting systems, not only into governments, but into big companies as well,
All Bitcoin transactions are permanently traceable,
so you could follow the money as it goes
from the taxpayer to the government
and find out where each dollar is actually being spent,
And with that accounting system run on the Bitcoin blockchain,
you'd be able to trace every cent of your taxes,
People could see Department of Roads
spent $100 on 10 hammers,
This could be considered suspicious or not,
The user can click, it's not suspicious,
Who it goes to, why it goes to them,
how it gets paid, how choices are made,
the very idea of democracy improves once you have the blockchain,
We all know that if there's one class
of people that we cannot trust, it's bureaucrats,
Nobody's life, liberty or property is safe
-when congress is in session,
We can actually detect why problems exist
and either fix the problems
or hold the parties accountable who failed
to do what they were supposed to do,
In countries where people own land but they don't have a deed for it
and then, you know, their government will come and reclaim the land from them
and tell them they don't have paperwork,
there are now companies that are developing technologies
where you can actually timestamp a deed
to your land onto the blockchain,
allowing you to have an incorruptible record, proof of ownership,
And that is especially interesting in developing countries
with unstable governments
and unstable economies and currencies,
Hyperinflation is an economic phenomenon
in which a country's currency rapidly loses its value
due to oversupply in other factors,
The value of the national currency plummets while prices soar,
So if a citizen simply hold their money
in cash or bank accounts,
their savings would plummet in value,
In these cases, Bitcoin can provide a more secure way
to store or transfer wealth,
What happened in Zimbabwe was they kept printing
and printing until the money got
to this one hundred trillion dollar note,
and it was still not worth enough
to buy them a loaf of bread,
In Buenos Aires, every couple of years,
the government just prints money out of thin air
and people are unable to store their value in any way,
They need to have some sort of alternative
because if they keep their money in the bank,
two years later, that money could be worth
half of what it was before,
We live in a country where we got banks,
we've got pieces of plastic in our pockets
that make buying things relatively convenient, We've got rule of law,
in theory they're there to protect us,
If something goes wrong, we got faith in the commercial system,
And of the 200 currencies in the world, we actually have one
that we would all like more of, But when you start looking at the rest of the world,
you'll start to understand why Bitcoin's appealing,
And so the countries where I think Bitcoin
has the greatest potential, call it this year,
would be places like Argentina and Venezuela,
Bitcoin creates opportunity for exit,
That is, people who are dissatisfied
with the monetary system in their own countries can exit,
They can leave and use Bitcoin,
Not leave physically, but leave the intellectual space
of money and value transfer,
Now, they may take more risk in doing so,
but there may be a great deal of reward,
For these guys, it's not necessarily ideological,
it's just practical,
They can't get their money out of their country
if there's capital controls,
Their money from one month to another
can be worth next to nothing,
So for them, it's a question of survival,
it's a question of preserving their wealth,
My family came to the US from Russia
a few years before communism and Russia fell
and they basically took what they could with them
to come to America,
The US financial crisis was followed closely
by a worldwide recession,
In the nation of Greece, this recession spurred
a government debt crisis, leading to capital controls
and nationwide bank closures,
Quietly over the past week,
Greeks have withdrawn more than one
and a half billion euros,
At the ATMs, people couldn't take out more
than 60 euro per day, and then they ran
out of 10 euro bills,
so it was 50 euro per day,
But I think if you're in a neighboring state,
a state that also has a debt problem,
say Portugal or Ireland,
you're thinking, hey, maybe I should diversify my investment,
maybe I should stay away from treasury or things like that and I should consider Bitcoin,
This is a sign of the apocalypse,
Give me some of that crazy digital Internet money,
The Greece crisis where the Greek government
imposed capital controls,
I think was a wake-up call for a lot of Europeans
to realize that suddenly, their bank accounts can be frozen,
There is a middleman between them and their money,
The government can just simply tell the bank
that no, you can't have access to your money,
I think this was a really great wake-up call
for countries like France, Italy,
Portugal, which are facing economic situations
that are not so different from that of Greece,
And these citizens realize that,
okay, this happened in Greece, it can happen here,
It was too late for the Greeks to get into Bitcoin
because the capital controls came in too fast,
but it's not too late for us,
We're seeing what's happening in Greece,
Europe and Spain aren't far behind,
And if those people need to leave a bad situation
to come to a freer world, it will be very difficult
to do unless you have a medium of exchange
to take your hard earned capital with you,
and Bitcoin, I believe right now, is the best way
for a person to do that,
In June, 2016, Great Britain shocked
the world when its citizens voted to leave the EU,
I think this will be the most consequential thing
post-war that we will have seen potentially,
Of course, the pound has cratered,
falling to its lowest level in over 30 years,
Lots of shock on the markets,
It's been absolute carnage this morning,
There's been low liquidity, but there has been a high of trading volumes in most assets,
A lot of wealth has been destroyed as equities have dropped globally,
And probably the most extreme moves have been in currency markets,
The value of the British pound
crashed overnight, and in the same period,
the value of Bitcoin climbed,
With so much uncertainty in government-backed currencies,
it's no wonder that people are looking for alternatives,
And Great Britain may not be alone,
What if the exit-fever spreads to places
like the Netherlands, Finland,
Hungary, Austria, or even France?
Even in the US, overseas currency exchange
is a daily necessity for millions,
As a nation of immigrants, many people send
portions of their paychecks overseas to support
relatives in their native countries,
These transfers are called remittances,
and the number one company that handles them
is Western Union, which handles a fifth
of worldwide money transfers,
sending nearly 100 billion dollars annually,
There are places in Central Valley
here in California where fruit pickers are bussed
every Friday to a giant department store
owned by the fruit company where they get
to get their paycheck in one line,
send most of their paycheck back to Mexico
in a second line, and get soap and basics
and fruits and some food in the third line,
Right now if you wanna send money across a border, it can take days,
It can be extremely expensive,
Western Union on average charges 10%,
But the people that actually are sending smaller
amounts of money are being charged,
in some cases, 20 or 30 %,
If I'm a nurse here in the US,
I need to get money back to my family in the Philippines,
how do I not loose 15% in that transaction?
There is no banking infrastructure there,
there's no accounts they can sell their Bitcoins and withdraw money to,
It needs to really happen in physical locations,
Once you have sort of Bitcoin ATMs
on both sides of a border, the savings are so significant
that I can see everyone saying, oh, do it this way, do it this way,
And I can see that happening in a very,
very short period of time,
And it's not because they care about Bitcoin
or blockchain tech,
They care about saving 20 bucks,
In today's economy, people work from all
around the world and you want to crowdsource labor
and talent and technology from all different places
around the world, But you can't pay them,
It's really challenging to pay lots of people in different countries today,
If I want to go and do work for clients in, say, you know, South Africa,
it's a real head scratch just trying to figure out how on earth are they gonna go pay me?
You know, they have so many barriers between them and me,
One of the biggest problems right now is under-banks people
who can't have access to our financial system,
The World Bank did a study and they found
that over 74% of the world's population
does not have access to basic financial services,
In many countries, they don't have a lot of the traditional infrastructure
that we're used to here in the United States, like credit cards and basic banking,
I heard it said the other day that it's expensive to be poor, and it really is,
Half the world's people don't have access
to formal financial services, and that prevents them
from improving their lives, educating their children, getting good, healthy food,
It's extremely tough to get a bank account in the Philippines,
Bitcoin provides that opportunity to have
a bank account on your mobile device
where countries like these have actually
pretty decently high rates of smartphone penetration,
In a lot of these sort of developing nations,
they've got the ability to roll out the latest
and greatest which is blockchain tech
and their entire population can be banked overnight
by having nothing more than a phone,
There are more people with text messaging cellphones
than access to safe drinking water,
And in terms of total manufacturing,
I think more cellphones have now been made
than humans currently alive,
There are places where the nearest bank branch
is a 100 miles upstream by canoe,
and yet there's a solar powered cellphone tower
microwave uplinked right there and people
in that village have text messaging phones,
usually a Nokia 1000,
like the most popular phone in the world,
Make Bitcoin usable on those devices
and we can see some immediate applications,
We're all connected through the Internet
and now Bitcoin allows our transfer value
to be connected,
From here to China to the middle of Africa,
with some of you guys just an SMS phone,
you can be sending value,
In our increasingly global economy,
wouldn't we benefit from a worldwide currency?
The Economist magazine predicted this in 1988,
So if we have a new community,
that's the community that exist on the Internet,
the folks that can participate to exchange value
are only those folks with access
to the traditional banking system,
and that's not the majority,
Commerce opens up once other people can participate,
And think of a company like M-Pesa in Africa
who converted a mobile system into effectively
a payment system because of the demand side,
Kenyans lacked a stable currency
or any reliable way of transferring money
from person to person or city to city,
What they did have was a popular cellphone network,
So spontaneously, cellphone users started exchanging
cellphone minutes in place of currency,
And within a few years, they had leapfrogged
traditional banking systems in favor of digital currency,
You are nobody without your mobile phone in Kenya,
In fact, nearly every single adult
in the country has one,
But the most exciting development
in recent years is this, M-Pesa,
It enables a mobile phone
to work like a debit card,
During a transaction, money is deducted
from a prepaid account connected to a user's phone,
Individual users trade in cellphone minutes because it's not inflationary,
They don't trust their local currency, They solved the problem because the unbank
didn't have bank accounts, Now they can trade cellphone minutes
because it's a store of value
because they believe it has value
and everyone's willing to accept it,
Bitcoin could replace that on a global scale
and open up e-commerce market places to Africa
and open up remittance,
In the next few years, we're gonna have a couple
of billion people coming online
and I think Bitcoin technology gives
them the opportunity to bank
this currently under-banked population,
With all of the potential uses
for Bitcoin and blockchain technology,
it seemed like only a matter of time
before it would achieve mainstream acceptance,
But after years of hype, the mainstream public
did not adopt Bitcoin and the headlines
made its fate clear,
The Hong Kong based Bitfinex exchange
has revealed it was victim to a hacking attack,
Nearly 72 million dollars have gone missing in a Bitcoin heist,
According to Reuters, nearly 120,000 units
of the digital currency was stolen from Bitfinex, an exchange in Hong Kong,
When the DOJ calls someone up and says that's an illegal currency
and it's against the laws of the United States
if you do it again, we'll put you in jail, it's over,
There will be no real non-controlled currency
in the world,
But while the world scoffed,
Bitcoin just kept on growing and doors to the world
of mainstream business began to open,
A busy year for Bitcoin, VC Investments topped one billion dollars,
with NASDAQ, American Express, Visa all investing in Bitcoin startups,
It is getting a lot of attention, People are fascinated by anything
that makes new highs every day for weeks on end, which Bitcoin has done,
The amount of innovation that you're gonna see
come out of this sort of venture capitalists
flowing into the industry over the next one,
two or three years is going to be astounding,
You certainly got some serious backing,
I mean, Mark Andreessen backing your competitor,
Sir Richard Branson backing you,
you get the venture capitalist
that put the first round in at Snapchat,
Small bull case scenario is a $400 billion market cap, so,
- A $400 billion, with a B? -Yes,
We've got Zynga, Dish Network, Dell,
Overstock, these are all publicly traded companies that are accepting Bitcoin,
Microsoft, Dell, Newag, everyone takes Bitcoin,
We are building and investing in Bitcoin companies,
most active investor in the space,
so we've invested in 60 companies,
We've also launched a Bitcoin ETF-like vehicle
called the Bitcoin Investment Trust, and it's traded publicly,
Do you think this is a currency, a currency that's really gonna work eventually?
Well, I think it is working,
and there will be other currencies like it
that may be even better,
But in the meantime, there's a big industry around Bitcoin,
And what we're gonna see coming up
over the next couple of years,
and it's already starting,
is you're gonna see apps basically built
on top of this protocol that allow people
to interact with Bitcoin better,
You can see why all of the technologists
and these people that are really smart and dive
into it are so excited about it,
They're like, Jesus, this really can disrupt
the legacy financial system
because it is that much better,
No one's saying it's gonna replace this,
What's eventually gonna happen
is the legacy financial institutions
are going to replace their systems
with blockchain technology,
Bitcoin may not replace the dollar
in the near future, but banks and financial institutions
have already seen that blockchain technology
is the wave of the future,
And since they can't destroy Bitcoin,
they have to embrace it,
And so what I see for the near future
is small companies and all the entrepreneurs
out there proving the concept,
showing that it works,
ensuring that it's safe,
secure and easy to use,
and getting through all of the regulations,
Then the big legacy financial institutions
will start adopting it because the concept's proven
and in a decade, they'll start utilizing it,
In the long run, I truly believe that an open financial platform like Bitcoin
will take over most of the economy,
Large banks and financial institutions
who are moving millions if not billions
of dollars around the world every day,
and they have massive human processes
that are built around movement of money,
These systems are so inefficient
that by applying blockchain technology,
we can literally save the banks,
and ultimately the end customer,
billions and billions of dollars
in transaction fees and costs,
There is this great movement
in financial institutions
to research blockchain technology,
So you have a lot of great examples
such as Citigroup and Barclays
who have blockchain technology incubators
and they are realizing the potential
of this technology, and that's a great step forward,
The NASDAQ is embracing Bitcoin technology,
The exchange is test-driving Bitcoin based technology
in its pre-IPO private market of about 75 companies,
The NASDAQ essentially is working
on creating this kind of decentralized system,
So if it works, which middlemen are gonna lose?
Well, a lot of them,
You have governments who have started
to back this technology and who realize
that as nation states, they're competing
against each other to have these innovative
businesses on their territory,
And you also have financial institutions who are realizing, wait,
we cannot out-compete this new technology, It's just better,
So if we can't out-compete it, we need to integrate it,
We have a lot of work to do, but I think in 25 years, Bitcoin will be the backbone
of our financial systems,
The one and only thing needed
for Bitcoin to reach mainstream adoption is time,
Because with time, we're going to build better interfaces,
we're going to evolve the technology, we're going to help people understand it,
we're going to make it easier to use, easier to secure,
we're going so spread it to more devices, to more systems,
we're going to build more useful applications,
and then it will be adopted,
It's already being adopted, but I expect
we're gonna see that accelerate,
Right now, there's not a real killer
consumer application for Bitcoin,
It still needs to be shown as valuable
to the everyday consumer, It's gotta be simple enough
that kind of anyone's mom could use this
and not have to understand how it works
and be able to use it safely and securely,
A lot of people are focused on the technology
and how it works and what's gonna make it better,
but the average consumer and the average user
of Bitcoin in the future probably
won't know all that much, Right now, they don't understand
how credit cards work all that well,
But credit cards do work and they do use them,
They don't understand why rectangles of paper
or plastic have value, but they use them all the same,
In a not too distant future, they'll recognize that the payment system they're using
on their phone or some other device, even though it's Bitcoin backed,
is useful and they won't actually really distinguish it from all the others,
If you just look at how behavior changes,
it changes by generation,
Over time, we're gonna see people accepting
digital currencies as a mainstream form,
Despite all the advancements
since Satoshi first published his paper,
applications of Bitcoin technology are just beginning
to take shape,
Until Bitcoin, the only thing or entity
that could own and control money
was a human being or the legal fiction
of organized human beings or corporation,
With Bitcoin, a machine, a device,
a software agent, a non-human entity,
can own, manage and control Bitcoin,
With smart contract technology,
we could even allow machines to conduct
more complex operations and transactions on their own,
A machine could have ownership of itself,
could contract for its own resources
and I guess, livelihood,
and then could contract out to produce
different income streams,
In the future, a machine could
become autonomous and conduct its own business,
such as a car that could buy its own gas
or purchase replacement parts for itself,
You could even program a business
to be run entirely by software,
I don't know what happens when machines
can use wallets, and one theory is that they use
that to exterminate humankind because they haven't
kept up on the interest payments,
Another theory is that you can do some really
interesting things, including, among other things,
autonomous organizations or distributed
autonomous corporations,
This autonomous corporation
could be programmed to conduct transactions,
make business decisions and generate profits
without any humans involved,
In 2016, this concept became reality
when an autonomous corporation called the DAO
launched publicly, and within weeks,
it received over $150 million from individual
investors around the world,
One of the idea, for example, is a charity
that operates based on a mathematical
organizational charter and disperses funds
based on an algorithm and is not controlled
by anyone other than the people who fund it,
You have all these computers doing all
these mathematical calculations or the purpose
of verification, which is a good thing,
Why aren't we calculating a cure for cancer?
Why aren't we trying to figure out a new source of energy?
It took 20 years for Internet to spread all around the world,
It took five years for Facebook to reach one billion of people,
It took only two years for WhatsApp to reach one billion of people,
It's going to become faster and faster and faster the speed of change,
In ten years, we'll be living in completely different world,
Bitcoin or blockchain tech is the most
significant invention of my lifetime
and it's pretty simple to understand,
We live in a world where a lot of people
are disenfranchised because they don't have access
to basic financial services,
They're denied access to the financial system,
What this technology has done is it's democratized
the global financial system in a way
where every human being on the planet
now has equal access,
I mean, this is going to enhance and improve the lives
of billions, and in this case, the least fortunate
billions of people on the planet,
The complete story of Bitcoin
and blockchain technology is yet to be written,
We can only imagine what the future holds,