Video - Andreas Antonopoulos All About Bitcoin
Andreas Antonopoulos presentation over SKYPE, at the March 25th Bitcoin/Cryptocurrency Workshop at LaGuardia Community College, in New York City. This 25-minute video talks about Bitcoin beginning and posible Bitcoin future in both industry and economy.
Antonopoulos: Well, thank you very much for having me today. My name is Andreas Antonopoulos, I'm the author of mastering Bitcoin and I've been in the area of Bitcoin now for just over three years on a full-time basis. I first discovered Bitcoin in 2011. And my first reaction to Bitcoin when I discovered it was, huh, nerd money and I proceeded to ignore it for six months which is -- I'm sure a reaction that many in this room have also had.
It's -- it's really easy to dismiss Bitcoin at first glance, especially, if it's associated with an activity that you perhaps find unsavoury on a personal basis but shortly after that event about six months later I decided to -- I came across Bitcoin again and I decided to read the paper by Satoshi Nakamoto.
If you haven't read this paper, I would recommend you read it. If you have even a basic level of technical knowledge you will be able to understand it. It's written in surprisingly plain English, it is remarkably easy to understand and it's also a beautifully written scientific paper, it's just nine pages long and within those nine pages it outlines exactly how Bitcoin works and in fact predicts many of the characteristics and features of Bitcoin as it evolved more than five years later.
So, that was my second interaction with Bitcoin, I decided to read the paper and when I read the paper I suddenly realized that this was a lot more than just the currency.
My first impression was that Bitcoin was some form of perhaps an alternative to a World of Warcraft gold or some kind of poker sites digital money or something like that and -- and really I didn't see the -- the potential.
When I read the paper what I realized was that this was a technology platform that allowed us to do things that had never been done before specifically in -- in terms of distributed systems to achieve a two-party transaction that's verified by a completely decentralized consensus network and if that sounded like a load of gibberish to you at first glance, give me an hour and I'll explain it in a bit more detail. The bottom line is that Bitcoin is a platform and to look at it as money for the internet or the equivalent of World of Warcraft gold, this is some of its most important characteristics.
I often say that I consider Bitcoin to be the internet of money and currency is just the first app of this new internet of money. If you think of it as a platform that can support a variety of applications, then the Bitcoin currency is just the first app on the Bitcoin network. What's really exciting about Bitcoin is that it enables for the first time, the transfer of value between two parties without a third party in the middle, you see the tricky thing about World of Warcraft gold is -- is not the gold that's fairly well established as a form of value and, you know, you can trade it, you can buy it and lots of people earn a living farming it in games, in fact it's a fairly well-established area of commerce.
The downside of any such currency is the World of Warcraft company that happens to control everything about that currency and that just makes it yet another digital currency. What's interesting about Bitcoin is there is no company, there is no service, there is no issuer and there is no clearinghouse.
All of these functions are replaced by a completely distributed network that allows two parties to interact directly with each other while having the security of their transaction guaranteed by a very large decentralized network that takes no signs that is neutral to the source and destination of the transaction that verifies the transaction without consideration of the amount or the source or destination and that is truly remarkable because that removes the power which sits at the center of most financial systems.
When people hear about Bitcoin being a digital currency, the initial reaction from any is well, yes, so what? And that's a normal reaction because, in fact, all currency is a digital. Nowadays, every single currency in the world is digital in whole or in part at least, in fact, if the digital part of the US dollar stopped working people would discover very quickly that the green pieces of cotton that they swap with each other would suffer a tremendous drop in value.
The ability of those green pieces of cotton to retain their value is largely based on the extremely large network of digital currency interactions that happen both between the government or the states and the issuer and the people as well as commercial transactions and international transactions. So, Bitcoin is a digital currency but so what, all currencies are digital and Bitcoin is a new currency that lives on the internet.
Well, so what? PayPal already does that and Bitcoin can be used to do shopping and buy things from Dell but so can Visa, MasterCard and PayPal, what's the point of having another one and those are all very valid questions because they all miss the fundamental reality of what Bitcoin is. See the problem with PayPal, Visa and MasterCard is not the currency or the payments network those are fairly efficient. The problem is the PayPal, the visa and the MasterCard component, in fact, the companies that act as clearing houses because what they can do is exert power over transactions and they can exert power that is beyond the reach of law in many cases and that's create some rather disturbing phenomenon, especially, now that we're seeing global currency wars break out between Russia and the US, China and the US and many other countries.
We see that control over currency is being used increasingly as a geopolitical weapon. Let me give you a brief example something that certainly affected me in my decisions and my interest in Bitcoin.
Perhaps, you remember that almost a decade ago -- the -- almost a decade ago, the US government decided that WikiLeaks represented a risk for state secrets and what was interesting about that particular case is that instead of suing WikiLeaks or taking WikiLeaks to court, filing an injunction or trying to pass some law that banned what they did, they found themselves in a rather interesting conundrum. You see there's this pesky part of the law which is the first amendment and that part of the law says that publishing is a -- is a fundamental right -- I apologize my phone is ringing nonstop here. Publishing is a fundamental right that is available not just to US citizens but to all people and in fact the government is prohibited from prior restraint of publishing.
Even if something is published the bar that is set to punish that kind of behaviour, the behaviour of speech when it offends other interests or rights is extremely high. So, instead what the US government did and we've seen this happen in many countries, it's not just the US that does this obviously but it was a particularly egregious example, is they applied pressure to Visa, MasterCard, PayPal, the Swift wire transfer network and various banks and they basically froze WikiLeaks out of the banking system. They made it so that consumers could not send money to WikiLeaks not because WikiLeaks had been convicted of a crime, not because they had been a decision in a court against WikiLeaks but because simply the financial services companies that were involved in transmitting the payments could be intimidated enough to stop making those payments.
At that point in time, something else was happening you could use your visa card to send a donation to the Ku Klux Klan of Alabama, you could use your visa card to send a donation to the neo-Nazi party of Athens, Greece. In fact, you could -- continue to use your visa and MasterCard to pay for a lot of different activities that many would find odious and in many countries were, in fact, illegal but not WikiLeaks.
So, here we have a content-based restriction on speech implemented through control of the financial system. Now, this is where Bitcoin is different and one of the most interesting things about Bitcoin in my view is that it doesn't allow a third party to have control over transactions in that way because transactions are not processed by a party that can be sued, have it server seized or pressured extra judicially to create black list or white lists -- lists of forms of payment that are permitted and forms of payment that are forbidden.
All of these things are not possible with Bitcoin, because transactions are implemented by the network and not by a company that acts as a clearinghouse. So, Bitcoin, essentially creates an environment where while it is a digital currency and while it is a network, the fundamental function of the clearing house, which is the organization that records transactions is not done by any single party, in fact, that function is distributed across the network.
In -- in Bitcoin, terms you will often hear the term blockchain and blockchain is a decentralized ledger. Decentralized ledger is basically a list of transactions that allows you to view who's made the transaction on the network and ledgers are nothing new. In fact, ledgers are probably the first use of writing that we've seen in archaeology, if you look at stone tablets discovered from antiquity or papyrus, you'll find that the first samples ever discovered were ledgers, ledgers of how many goats were owed by one person to another or how many -- how many pots of wine were being sold by one King to another. Ledger is, in fact, are very old forms of technology.
What's really interesting about Bitcoin and the blockchain is that it implements the first decentralized ledger. See, the powerful thing about a ledger is not the ledger itself but who gets to write on the ledger, who gets to create the authority to record that says that I own you know one part of wine or one goat or that I have given something to someone else and records that on the ledger. It's not the ledger that give power, it's the ledger writer that has the power and in Bitcoin writing on the ledger is the function that is decentralized across the entire network.
So, the ledger itself is not stored on any single computer, it's simultaneously stored on every system that runs a Bitcoin node using a protocol very similar to BitTorrent which you may be familiar from file sharing systems. It distributes this lighter across all of the computers that are participating in the Bitcoin network but then the really exciting technology is the ability to distribute control over who gets to write to that ledger through a form of competition called mining and what Bitcoin does is it enables complete decentralization of mining and complete decentralization of control over that ledger, which means that when I do a transaction and I send Bitcoin from my own wallets to somebody else's wallet that transaction is signed by me transmitted to the network and then recorded on the global ledger, not by one person who's in charge or one computer system or one server but instead by a global competition that is not subject to the whims of control of any single individual organization, nation, government or hierarchy and that is really a currency for the internet age.
So, that is what distinguishes Bitcoin from everything that has come before. It's really difficult to grasp at first the implications of this technology because we've never actually seen a fully decentralized control system like this. But the closest we have come to it is understanding the internet itself and the Internet does for communications what Bitcoin does for money. It removes control over publishing from any single individual and allows anyone to be a publisher on a global scale without restrictions.
The internet doesn't violate borders, it simply doesn't know those borders are there. It allows instantaneous access from anyone to anyone anywhere on the globe and it doesn't discriminate between languages, origins, destinations, content whether you're sending video, audio or text. Bitcoin does the same thing for money. It doesn't violate borders.
It's simply doesn't know borders exists. It operates as a network protocol transmitting value from source address to destination address without knowing whether the source address is Jimmy the plumber or the Bundesbank, it doesn't know if the destination address is the Federal Reserve or Jimmy's wife and it doesn't know if or care if the amount that's being transmitted is a small amount or an enormous amount. It will transmit value simply from source to destination across borders without restrictions and at the same time it has no counterparty, it has no centralized control over that. So, that's what's really exciting about Bitcoin.
It combines with open source technology, an open programming environment where anyone can write an application launch it on the Bitcoin platform without asking permission from any incumbents, reinvent banking, reinvent other financial services and extend infrastructure in places in the world where today banking infrastructure cannot be deployed because of cost.
All of these things mean that Bitcoin is a lot more than just the latest iteration of currency. It is the first transnational, global instantaneous internet currency and those characteristics imply that it will have a long lasting impact and a pretty fundamental impact not just on banking and finance but on many aspects of today's digital life and with that I'd like to thank you all and take questions from the audience.
Male: Okay, people will come up here. Andreas, I have the first question. When you describe the inability of countries to issue extrajudicial process to a choke point on a financial transaction. What would you say to the people who I -- the sceptics, who I face frequently who say, yeah, well, what about when it's not extrajudicial, what about when it is wanting to legitimately through the consensus of the electorate stop a certain organization from acquiring those funds, the rule of law, so to speak.
Antonopoulos: Well, in -- in cases where the rule of law is applied directly you can use many of the same techniques of law enforcement to judicial enforcement that are used in any other way, you know, we don't consider it weird that in order to stop cash transactions between individuals, we don't have tracking chips on every paper bill instead what we do is if you use that to commit a crime we punish that crime and we punish the individual involved.
So, if I were, for example, to use a digital currency instead of cash to fund an activity that was illegal then I can be taken to court and penalties could be applied against me. You see, the differences here is a distinction between the crime itself and the means by which the crime was committed or funded. We don't consider that when a crime is committed with cash that cash is the problem. We -- we think that when a crime is committed with cash, the crime is the problem and the crime is what is punished.
The idea that in order to stop crime, we need totalitarian surveillance of all forms of payment across the world without prior suspicion, without warrants, without judicial process is important to democratic nations and -- and so in fact I see that that has far more downsides than benefits but the truth is that where Bitcoin has been used for criminal activities, law enforcement has had no difficulty finding and punishing the perpetrators and, in fact, using the public ledger as a forensic proof of -- forensic evidence set against those people and then applying standard judicial practices.
Bitcoin doesn't make it easy to commit crime. In fact, it makes it easy to produce evidence of a crime where there is individualized suspicion. What it makes it difficult to do is totalitarian and holistic surveillance of all payments by all citizens whether suspected of a crime or not and I think that's a benefit. That's a good thing.
Male: Absolutely, would anyone like to come up and use the microphone and Peter, do people know how to ask questions online is there a little chat box there?
Peter: Yeah, *00:19:52
Male: Okay, we have -- Manny is coming up.
Manny: Okay. Thank you very much, Andreas, for such a wonderful presentation and my question has to do with some governments that are creating digital currency using the blockchain. What thoughts do you have on this?
Antonopoulos: Well, I haven't actually seen any governments, seriously consider creating digital currencies using blockchain technologies. It really depends on how they do so.
If a government decides to use the blockchain technology to create a digital currency that is decentralized, open source, open to innovation and allows for open and transparent control by all, then essentially, we've shifted the conversation and -- and we've moved governments into the playing field with digital currencies and I think that would be a good thing. Although, of course, if they do create such a currency then the question would be why use that one when Bitcoin offers the same only on a global basis? What is the advantage?
On the other hand, if that currency was minted by that government in a centralized fashion when -- if the ledger was controlled by that government in a centralized fashion then the use of a blockchain really doesn't make it any different than traditional digital currency and, in fact, it offers no advantage. It is simply a rehash of the traditional monetary system which gives full control to a nation states that can apply a monopoly of issuance and a monopoly of control on the transactions and in that case it's simply a much, much more limited version of Bitcoin. Let's call it the compuserve versus the internet and we all know how that one ends.
Male: Okay, thank you. Do we have somebody else because then I have a second question for you. Okay, oh I've got you right there. Come on in, Alex.
Alex: Hello, Andreas.
Antonopoulos: Hello, Alex.
Alex: What are, in your opinion, the two biggest challenges for a greater reduction of Bitcoin nowadays?
Antonopoulos: Well, I think that Bitcoin being such a fundamentally different technology from what we're traditionally used to take *00:22:27 and you know it's -- it's not unlike the early internet days when the technology was very difficult to use, it required a lot of weird words that most people didn't understand like www and HTTP // this that and the other.
All of that language was alien to most people and even more alien was the idea that this was an open network composed of computers that were not controlled by anyone that could talk to any other computer at any time without permission, that could publish independently without perceived authority and all of these concepts were extremely strange to people. So, it took two things to change that and it will take the same two things to get Bitcoin mainstream adoption. The first is to improve the user interfaces and user experience, increase the security and make it easier for people to use and the other is to wait long enough for society to gradually absorb this level of disruptive change by adapting to these concepts, by learning the new language of decentralized payment systems, by breaking down constraints of the old models and by changing the fundamental cognitive context.
All of us have grown up in a world where currencies existed purely as a monopoly of nation-states. I grew up in a world where airlines had flags on their tails and each airline belonged to one country and you know it took a while to realize that it didn't have to be that way. I grew up in a world where phone companies were owed entirely by the state and each country had its own flag phone company.
Well, I also grew up in a world, where the only currency allowed was the one created by the state and -- and now, we live in a new world and it's going to take some while to adjust to that but -- but it is something that has happened and it's a big enough change that it will take time for people to absorb.
Alex: Thank you very much, Mr. Antonopoulos.
Antonopoulos: Of course, Alex, thank you.