Beyond Price: Bitcoin’s Impact on the Future

I'm really excited to be here, among other things
because this is probably one of the most beautiful places on the planet.
I travel continuously and visit various parts of the world, but seriously: Seventeen Mile Drive is
simply breathtaking in its beauty. Sometimes I feel we spend too much time in the tent /
in the room, instead of out there looking at the ocean. So I'll try and keep this relatively short and talk to you
about the thing that derailed my life five years ago. Five years ago, I heard about
Bitcoin for the second time. The first time I heard about Bitcoin was
somewhere in 2012. I'm not exactly sure when. I read an article about how gambling sites
were using this digital currency.

I'd been interested in cryptography and its application
in digital currencies since the mid '90s. But I drifted away from that space. [Then] I heard about this Bitcoin thing and thought,
"Eh.. gamblers. Nerd money. Not interesting." That's the reaction pretty much everyone has. In fact Satoshi Nakamoto — the creator of Bitcoin —
when announcing Bitcoin, was extremely skeptical of their own creation. They weren't quite sure
this was going to work, or that there was anything there. Pretty much everyone from that point on started off with: "That's not going to work. That can't possibly work." That was my reaction too.
Fortunately, the second time I came across Bitcoin (which I remember quite clearly) towards the end of 2012, the person who talked about it had introduced a link to the white paper that explained how it worked.

My background is in computer science. I have a master's degree in distributed systems, which
happened to prime me perfectly to read and understand this paper. I started reading it thinking, 'Oh, let's see
what this is about.' At about page three, I froze. I thought, "This is not what I thought [it was]."
I keep reading. By the end of that white paper, my life had been firmly derailed completely.
What I grasped at that moment was that this was an extremely significant invention.

In computer science and distributed systems, we study
certain classes of problems that are hard to solve. One of those is called the Byzantine Generals' Problem. It's a description of a certain type of problem that occurs
in distributed systems when you're trying to coordinate between parties who don't trust each other on a network
or communication medium that they don't trust. How do you coordinate if you can't trust
that the messages will be delivered? As with many problems in computer science, it is
described with a story: you have a city under siege. It is surrounded by four generals.

These generals
(the Byzantine generals if you like) can't communicate, because in order to communicate with each other they
have to send runners or messengers through the valley where the city is.
If they do that, the messages get compromised, so they can't tell if their message has been received. They can't coordinate. What they're trying to do is
coordinate for a specific thing – when to attack the city. If only one of them attacks, they lose.
All four have to attack at the same time, but they can't communicate that [to] each other
because obviously the city in the middle would know. It's not a problem you can solve with encryption,
because it's a coordination problem. In distributed systems, it's about
achieving state synchronization. This problem [affects] many areas of computer science and distributed systems. It has to do with, for example,
database replication and concurrency controls. All kinds of synchronization [activities] in
distributed systems. It is a critically important problem, because in the absence of a solution, the only way to coordinate is via central authority.

One of the things I understood by paying attention to
digital currencies for (at that point) almost two decades was that the biggest problem digital,
private currencies had was a central coordinator. They had either an issuer or a central clearinghouse that
was responsible for ensuring the money wasn't forged, but also that a transaction which had occurred
was properly cleared and [could not be spent twice]. In a digital domain, where you can copy digital
information, the fundamental problem is: how do you create scarcity? 'Scarcity' meaning something that is rare and cannot be copied.

In terms of digital currencies,
the reason you need scarcity is because if I pull a $50 bill out of my pocket and spend it,
I can't just photocopy that and spend it again. But if it is a digital files, a copy is perfect,
so I can spend it again. The only way to solve this was to have a central authority. Lots of people tried that. They built servers and systems that, every day,
would batch clear all of the transactions. One of the first interesting applications of this
was a company called DigiCash in the mid '90s. They created one of the first digital currencies.
Guess what happened? If you suddenly announced to the world, "Hey, you know that thing [under] the
exclusive purview of sovereign entities, that is the basis of control and power for every nation-state out there? I'm going to do it in my company! For free! We're going to run a completely parallel
digital currency that's outside the system." Well, what happens next is the nation-state comes along
and says, "Hmm..

That's cute." [stomps] And they shut down the central system.
If you have a central point of failure, it's going to be squashed, sued, bought,
denied service, shut down, etc. and this kept happening to digital currencies.
Back to 2012: I'm reading this paper and I think, "This person has solved Byzantine fault tolerance. They've solved the Byzantine Generals' Problem." There are other solutions out there, but they're not efficient. This is actually a practical solution. With this solution, we can have a digital
currency without a central point [of failure]. With a digital currency without a central point, there's nothing to shut down.

If there's nothing to shut down… Oh dear, this might actually work.
[At that moment], my life was completely derailed. The next four months are a bit hazy.
When I was younger, I had this problem. I [would become] obsessed about technologies.
This had happened to me five times before, where I would get so caught up with excitement, enthusiasm, passion, and focus on a specific problem that I would lose the world. Or the world would lose me,
if you want to look at it from an ego perspective.

I would disappear off into my corner. It happened to me
at 11 years old [when] I got my first computer. I started to learn how to program, programming blew my mind, and I disappeared for six months. I emerged a year later and I could program in assembly (asm) and BASIC. I could do electronics, things like that. Then I got my first
personal computer, and disappeared for six months. Then I got my first modem, and I disappeared for a full
year and a half. I almost dropped out of school, failed. In 1989, I got access to an internet account; not strictly legally, because I was 15 [year old] and they don't give academic access, to what was
then called ARPANET, to 15 year olds. Let's say this archaeology professor at a university
wasn't quite using their account, and it was there. The statute of limitation
has elapsed on that one, fortunately…

I lost myself because, for the first time ever, I could
communicate with brilliant people around the world on this internet thing. They taught me UNIX, all kinds of
things about computer systems, architecture, TCP/IP. I lost myself for a year and a half. Every time this
happened, I would try to tell everyone around me: "Listen, this is the greatest thing that's ever happened.
It's going to change the world!" Imagine a 15-year-old in Greece, a country that
barely has tone dialing on its phone system, saying: "Listen to me! Everyone will be online!" The response
was, "Okay.

Clean your room. Do your homework… and stop playing on that bloody computer!" When this happened to me with Bitcoin, at this point I
had the experience, the degree, and the confidence. I decided I wasn't gonna listen to anyone who told me otherwise. But I did lose myself. Four months went by. I dropped all of my work.
I stopped consulting, I stopped eating. All I did was read code and write, [for] eighteen hours [every day] until I dropped.

Then I got up the next day, …and did it again. I lost 26 pounds.
My family staged an intervention. They brought me these protein shakes
that you have to drink if you are a cancer patient. Because they were worried. [But] I came out of that
with a new career, a new passion, a new mission, to explain to the world what this
strange technology was going to do. At first glance, you may think this is an investment
opportunity. It's not. That's not what is special about [it]. If you looked at the early internet and [decided], "We can
make money trading Yahoo!," you missed the point. We can change history.
We can change humanity with these technologies. These technologies offer an opportunity of
empowerment for individuals all around the world, an opportunity for connection, just like
the internet did for communication. These new technologies — cryptocurrencies, digital
currencies based on open public blockchains — give us an opportunity to create a fully interconnected
global economy that is completely peer-to-peer, completely flat, that discards
many of the trappings of the past.

Some of you probably work in some of those trappings
of the past. You may be feeling a bit uncomfortable, because banking has a few centuries of
operating without much competition. It has never faced competition from the internet.
[But] the internet is coming. It's called Bitcoin. It's just the first one and it's going to
take [the financial world] by storm. It's going to disrupt it more radically than most
industries have ever been disrupted by the internet. What is this technology? What is it all about?
Fundamentally, it's about building a platform where you can create transactions and record 'facts'
without having to trust any central party, without even having to trust
the other party you're transacting with. On the same level, peer-to-peer, equal basis
as everybody else [in the system]. You shift trust from being
something you give to institutions — [hierarchical], bureaucratic governance systems —
to a network-based platform that has trust as one of its emergent properties.

Just like the internet has communication
as one of its emergent properties. Once you do that, you don't need the hierarchy
[or] the bureaucracy. You don't need the institution. Institutions replaced by networks. You may have heard that happen before,
you may have seen that happen before. We're all experiencing this great transformation
that is happening because of the internet where year by year, decade by decade, we're watching great
institutions of the past being replaced by flat networks. These flat networks deliver
more efficiently, more equally, in a more open and accessible manner, the same thing
that the institutions delivered, but much more. We've seen this happen to the august institutions
of journalism, the newspapers, the TV stations, the movie companies, the music companies. One by one, they have faced
this incredible force of disintermediation where it is no longer profitable or even tenable to be
the gatekeeper, the intermediary, the proxy for others. Because 'others' can find each other
themselves, without your help. What happens when that is translated into finance,
when that is translated into governance? What happens when we start considering rebuilding
social institutions and democratic institutions based on networked, market-based governance models,
using this technology? It is truly transformative.

If all you are looking at is the price of bitcoin,
the opportunity to invest, the crazy messages coming from the media from every side,
you will be missing the fundamental point. The fundamental point being: this is a new platform for trust that is global, open, completely borderless and egalitarian.
This platform transforms not just finance. Currency is only the first application on this
internet of money. It is not just money for the internet. It is a full-blown platform for trust.
[But] what do you hear in the media? "Drug dealers / criminals / pornographers
are using this technology!" If you've been around the internet for a while,
you've probably heard this before. I remember it clearly, in the beginning of
the 90s, when all you would hear is that the internet is about fraudsters, thieves, pornographers,
and criminals. It was all scare tactics, all the time. Yet it didn't matter because, eventually, all of us
[started to use] it, and we didn't use it to commit crimes.

We didn't use it to make pornography. We used it
to transmit and exchange a billion cat videos. Because they're cute and hilarious.
Because that's what most people do with technology. They project their own needs, their own
desires, their own motives onto society using technology as this empowering tool.
What do most of us care for? Feeding our families. Security. Education. Healthcare.
Sanitation. Building a future for our children. When you hear all of these scare stories about how
giving people access to money without impediments, allowing them to pay anyone anywhere without censorship or control, freeing them completely from the shackles of oppressive governments
and (quite honestly) banking corporations that in many countries are very hard to
distinguish from an organized crime syndicate… What happens when people
have control over their finance? The ability to transact freely with anyone in the world?
What do they buy? Do they buy weapons of mass destruction?
Or do they buy cat videos? They buy healthcare, they buy food, they buy education,
they buy security. They do what everyone does.

Within this technology, there is this enormous promise
of fundamentally transforming not just the internet, but the internet first, and then transforming some of the fundamental institutions in the world that have failed us. When I talk to audiences around the world about
this technology — especially in developed nations, places like this — there is a bit of confusion.
Why do I need a peer-to-peer digital currency? I have VISA. How is this different from PayPal?
What does it do for me? Does it make it easier to buy coffee at Starbucks? That's a fair question, because the only fundamental
difference of this technology from PayPal is the fact that it's all of that without the PayPal, without
the central company, without the central control.

That's meaningful if you can't trust the company. PayPal has service in 19 countries. Last I checked, there's 194. Banking is available to maybe 4 billion people. Two-and-a-half billion people around the world
have no access to financial services whatsoever. That's the World Bank statistic which
only counts heads of household, top earners. Their children, their spouses are a statistical irrelevance. If you add up all of the people who have
very limited access to financial services, they are the majority of this world. Bitcoin and these
new technologies are all about the other six billion. You have VISA? Good for you! [You're] part of the 5%
privileged overclass with financial comfort in this world. The rest of the world doesn't operate that way. You have stable currency? Fantastic. I can count sixteen of them. What about the other hundred and sixty currencies?
You have a government that isn't about to drag you out of your bed at night because you said the wrong thing or attended the wrong protest yet? Good for you! Fantastic.

What about all of those places
where that is a daily reality? We live in a world where access to financial services is
a fundamental barrier to economic development. We have constructed a system,
a closed system of controls. If you're in the industry,
you probably know all about this: Know-your-customer (KYC), anti-money laundering (AML), control of terrorist financing (CTF). You've heard those acronyms? What those acronyms do,
is they convict four billion people to poverty to maintain our own bourgeois illusion that somehow we
can stop crime from happening if we carefully control who has access to financial services.

In that delusion, we are willing to allow billions of people
to have no access to all of this, to the world economy. Bitcoin is the radical proposition that anyone anywhere
should have access to commerce, financial services. For many people in the world,
that is a terrifying proposition. For many governments in the world,
that is a terrifying proposition. I'm here to tell you that it's going to be okay. It really is.
Because, as I said before, if we give people the ability to do these things, they will use them to do good.
But I also have another message. Even if you're afraid, even if you think we
should not / must not do this, it is [already] done. This technology is a system
fundamentally based on mathematics. It is now known anyone anywhere in the world can go
download that first book on the left, [Mastering Bitcoin], which is for software engineers, for free.
It's open-source on Github. A fairly talented 14-year-old programmer could recreate
a global, unforgeable, fully fungible digital currency that's even better than most of what bitcoin does today
in a weekend, and then launch it on the world.

This is now the world we live in.
This has happened and there is no going back. We cannot unlearn this technology.
We cannot put it back in the bag. So now we have to consider, how do we live in a world where anyone anywhere can engage in commerce with anyone anywhere, and those transactions cannot
be censored, and that system cannot be shut down? Because it's completely flat, completely decentralized,
and can be communicated over any medium. This technology has taken money from its physical manifestation, or its centralized implementation as a digital abstract token, and it has
turned it into an internet content type. I can do a bitcoin transaction using the Bitcoin network,
but if that's not available, I can take that transaction, translate it into emojis, and then transmit that using Skype or Facebook, or put it in a Craigslist ad.

How do you stop that? You don't.
That is now the world we live in. I think it's a brave world.
I think it can be a wonderful world. But what I do know is that it will be a different world. The
ripples are spreading. Most people haven't yet noticed. You are among the tiny percentage of
people who are getting a heads-up now. What would you have done if you learned
about the internet in 1991 instead of 2001? How would it have changed your life, your career,
your company? I bring you this message. You now know. What will you do about it?
Thank you. [Applause].

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