M.J. asks, "Does price matter?" "If bitcoin does not greatly increase in
value relative to goods and services, as well as fiat currencies, can it still disrupt banking, prevent governments from stealing their
citizens' savings through currency debasement, reduce corruption, and / or prevent unnecessary
warfare funded by money printing?" Yes, I think cryptocurrencies can disrupt a whole deal
of centralised banking and financial institutions… by the mere fact that they exist as an exit
system, as a safety valve, as a safe haven. It is not the increase in value that will allow bitcoin
to do these things, rather it is the other way around. If bitcoin is used to escape from oppressive
governments, disrupt cartels and monopolistic banking, allow people to have more freedom of
transaction where they actually need it, prevent their governments from stealing their money
through inflation and currency debasement, then that will lead to a greater value of that
cryptocurrency, because it is serving a useful purpose. It's not value that makes it useful; it is utility that
makes it valuable. So it's the other way around. Bitcoin will increase in value if it is useful;
it doesn't need to increase in value in order to be useful.
That's confusing cause and effect. [AUDIENCE] You spoke a little bit about the tools that
are needed, or the tools that will change in the space, over the coming years, so can you talk about
what additional tools you feel are really necessary… for the space to continue to progress? [ANDREAS] [I am asked] that question a lot. What people
want me to say is that we really need a combination of…
Artificial intelligence, quantum computing, and IOT,
that will enable us to use prediction markets… and bring forth the geek rapture
or something like that. [Laughter] Unfortunately, the answer is rather boring. What we need in order to make it easier
for more people to use [cryptocurrencies]… to promote broader adoption of this technology,
to make it a real [option] for people who need it… [Don't] try to sell it to those who don't,
but for the people who really need it. We need wallets that are easy to use,
to understand, and secure by design. I remember a time when there was only one Android
wallet, written by a German guy called Andreas. Not me, [Andreas Schildbach]. [I also remember when there was]
one exchange, back in 2013. There was one wallet for Android
called the Bitcoin Wallet. [Laughter] It didn't need to be more fancy than that,
[as there was] not much competition out there. Wallets are absolutely necessary. Exchanges
and ATMs, ATMs more so than exchanges. ATMs in multiple languages. My mission at the moment is in education. One of the
things that we're missing is [multi-lingual resources].
Bitcoin today is primarily an English-language
phenomenon, and that is a huge drawback. The places where bitcoin is needed are Spanish,
Chinese, and Russian-speaking countries. Many other languages, but certainly
not only or predominantly English. [We need translation of] education material,
the interfaces for wallets, exchanges, and ATMs. Throughout the U.S. Southwest, in every single bottega
and convenience store, there should be a bitcoin ATM… that doesn't have a word of English on it, just in Spanish,
and one big button that says, "Send money to Mexico." Facilitate the remittance market, where they get charged
ridiculous amounts by Wells Fargo, Western Union, and MoneyGram, all of these exploitative companies,
to send money home to their families. That is just an example. These are boring
infrastructure projects. They are not "cool." They have no IOT, artificial intelligence,
or quantum anything in them.
They require a lot of focus on user experience.
They need product managers and designers… who think carefully about the
experience of using that product. That is something most computer geeks are not
good at, especially the ones who work on protocols. The first group of people who got Bitcoin to where
it is today, are [weirdly] entirely unequipped to… get Bitcoin where it needs to go in the next stage. We need to be nicer to the people with purple hair
who know how to design a fucking user interface.
[Laughter] Get them to join our industry. [Applause] Recognize that it is not just about the protocol. So, infrastructure: wallets, exchanges,
and ATMs. Basic boring stuff. Education at all levels, from the very basic things. I have seventy-four of my videos translated
[from English] into Spanish by volunteers. If you speak [or write in] Spanish, go to [my
YouTube channel] and help me do more. These are really important projects, I think. [AUDIENCE] I started a company to do non-custodial
stuff for merchants, so they accept payments [directly]. I find that in the Bitcoin friendly space we have here,
people skew either towards HODLers, for investment, and the crypto commerce people, which I skew towards. I find myself going up against the HODLers, who own all
this bitcoin and could very easily be spending a little bit, and make the whole space a lot more open.
What do you say, if anything, to [make] them be
a little more open about spending their bitcoin, on commerce, to move the space further? [ANDREAS] I don't say anything to them. The market is telling you that the current preference for
this technology, [here] and in other developed countries, is as a political store-of-value hedge against
inflation and other geopolitical effects. That is what the market is telling you. You are in the business of [facilitating] commerce, but the market is telling you that it isn't
a useful system of commerce right now. The reasons it isn't a very useful system
of commerce come down to two things: first, we already have useful systems of
commerce like credit cards and PayPal.
All of these [services for] commerce are very easy
to use, and most of us [here] have access to them; in order for Bitcoin to be better than [them], it has to be
significantly better to justify the steep learning curve, the difficulty in [establishing] security, and all
the other things we don't [want] to worry about. I could tell you all day that it is [a good system of
commerce], but the market is telling you it isn't.
Believe the market. If the market is telling you
that Bitcoin is not sufficiently better than Visa… for an American to use [when buying] a cup of
coffee, that is because it isn't. That is okay. There are four billion people in the world
who don't even have access to that. They will do something much more
important than buying a cup of coffee; they [will] buy some freedom with it, in a country
where they can't even imagine that happening. Bitcoin encourages holding, or "hoarding" as it
is called by mainstream American economists; "savings" as it is called by rational people… [Laughter] [Subconsciously], people recognise that the published
inflation rate today is not the real inflation rate.
The published inflation rate today is about 2.8%,
excluding housing, energy, food, and healthcare. [Laughter] As long as you don't eat,
breathe, or get sick, the rate is 2.8%. People [subconsciously] feel that there is inflation
in many parts of our lives, much greater than that. When they feel that, they take preventive measures. They look at various places they could invest their
money, and consider bitcoin as one of them.
The reason you're not able to [make] e-commerce work,
is because it is not right time [yet]. The technology is not ready for it and already serving
a goal the market considers more important. That doesn't mean bitcoin can only be store-of-value,
it just means it is more useful as a store-of-value… here than it is elsewhere. In the future, it may play other roles in different
demographics and economic environments. Right now, that is where we are.
As an entrepreneur, listen to the market. It is okay if it is not the right time yet. Find something
else to do within this space, for which it is the right time. The next question comes from Daniel,
about real-world bitcoin uses for the unbanked. Daniel asks, "Why are as many as four billion
people unbanked around the world?" "Is it mainly a matter of cost-effectiveness
for banks to have branches in rural areas?" "Are there so many people who don't have a
valid form of identity to submit to the bank, or is it a matter of people not trusting the
current financial system?" All of the above.
It is [lack of] identity [documents] and access to
banking infrastructure, of literacy and numeracy, and it is distrust of the financial system
[due to] corruption in the government and banks. Theft from banking institutions, and all other
kinds of things like that, occur around the world. It's shocking how many people don't have
the ability to open a bank account world-wide. It's a very large number. Even if they do,
the kind of banking they get is very restricted. Even though the numbers are between 2.5 billion and
4 billion people who have zero access to banking, and are cash-based entirely, there is also another
2 billion people who have severely restricted access. They have access to perhaps one currency, with very few choices, and can't change
currencies or trade internationally. They are under currency controls, can't
send and receive money from other countries; they may be restricted in how much
money they can deposit and withdraw, where they can use their money, for what
So it is not really their money. This great sum of people, who are either
unbanked completely or under-banked, is one of the things that I think we may be able to solve
with bitcoin and other cryptocurrencies in the long run. Honestly, I was hoping we would see more,
better solutions for the unbanked sooner. Though in areas of great need, such as Venezuela,
we are seeing greater adoption of cryptocurrencies. It is working a bit. Daniel asks, "Do you know of any particular case in
which bitcoin is helping out, like M-Pesa in Kenya?" The answer is, not yet.
There are several reasons for that. We see [bitcoin helping] in Venezuela, but it is only
for a very small percentage of the population. M-Pesa has been touted as a huge success of mobile
money, but don't forget it is still very strictly controlled.
It is very difficult to move money in
and out of M-Pesa to other countries. From what I understand, there are currency
controls on that too. It is not an open system. It is a controlled, single provider, closed system.
You still need an account with a central organisation. The reason bitcoin isn't able to help out
with these particular use cases yet, is because bitcoin isn't ready to help out. We don't yet have the scalability to have broad adoption. We don't have micropayments [small
enough], with transaction fees low enough, for people who live on one or two
dollars a day to use a system like this. We also don't have easy-to-use technology
for the most basic of smartphones securely. These are barriers of maturity. Bitcoin simply
isn't ready yet. That doesn't mean we can't get there. There are many promising [developments]
that are gradually evolving to get us there: hardware wallets, better smartphone
operating systems and software wallets; Schnorr signatures and the Lightning Network
that will allow for smaller payments and fees, and scale to [accomodate] many millions
more transactions into the blockchain.
All of these things need to be mature before
we can see adoption in other countries. In my opinion, this is very much like the early days of
cellphones, when they were the size of a suitcase… and cost $25,000 dollars. They [would not have] affected communications
in Kenya because people couldn't afford that. That doesn't mean you can't see where this technology
is progressing, to smaller and cheaper [devices]. It [becomes] cheaper to run. Eventually, we see
the proliferation of cell phones in countries… where there were no landlines, no infrastructure
to support fixed telephony. I think similar things will happen to Bitcoin, but
it might take ten to fifteen years. We will see. I'm still very optimistic, I think that is absolutely
the [primary] application for cryptocurrencies. which is giving people the freedom
to transact internationally, without access to a bank account or prior verification
by fulfilling some arbitrary requirements. Basically, giving them financial freedom..