Video - Bitcoin and the Coming Infrastructure Inversion

A talk by Andreas M. Antonopoulos about how new technologies are initially built on old infrastructures until an "infrastructure inversion" happens and they replace the old infrastructure. Comparisons to the automobile, electricity and internet explain the concept and predict a similar future for bitcoin and financial infrastructure.


ANDREAS ANTONOPOULOS: So what I would like to talk about today is a concept that I called Infrastructure Inversion. What I’m going to talk about is how things change when infrastructure that is new is laid on top of infrastructure that is old and how that creates a conflict. Bitcoin is new, Bitcoin is different. And when I say the term Bitcoin I am speaking a bit more broadly. What I’m talking about is decentralized network-centric platforms of trust for doing currency and payments and other applications of trust. It could be Bitcoin, it could be other things but I’ll just use the term Bitcoin to cover that whole category that has now been created and it’s new and we’re trying to somehow squeeze it on top of the existing banking system and the result is messy, right? Not only is it messy but it’s also an opportunity for those who support the traditional banking system to go “See? See? It’s not working. It’s slow it doesn’t work so well.” And this isn’t new. This is a phenomenon that happens every time you have a new technology that is disruptive that in the first few years of its adoption has to be carried by the existing technology that it is disrupting. So let’s look historically at how these things play out. Now when you read about it 20, 30, 40 years in the future it’s all very smooth, right? It’s obvious because hindsight provides clarity. So for example, automobiles, great invention and of course when automobiles were invented everyone in the world went “Yay, we don’t need horses anymore,” right? That’s not exactly what happened. Instead they said “That’s crazy. Those noisy, disgusting machines that are probably going to kill us all will never work and why would anyone other than stupid rich people playing with this crazy, noisy toys want to use one of these horrible machines when we have perfectly good horses.” That’s actually what happens in history when you introduce a disruptive technology. We need meet resistance. Resistance is the first reaction and the ones who succeed are the ones who continue even though the rest of society tells them they’re crazy to pursue this crazy idea – automobiles, electrification, the internet, Bitcoin. Every time crazy pioneers who were made fun of by everybody else in the society for their crazy ideas persisted until everybody could see that what they were doing was correct.

So, looking at that history one of the really interesting things to me is the fact that in the beginning the disruptive technology has to live in a world created for the technology it’s replacing. So when you first ride your band new automobile in a city you are riding on roads designed and used by horses with infrastructure designed and used for horses there are no light signals, there are no road rules, there are no paved roads, right? You are in horse society and you are the crazy one driving one of these vehicles. Well, there’s a few things about horse that cars don’t have, right? These early cars were forward wheel drive, right? So it’s just two wheels turning, right? Horses four-foot drive vehicles which give them a lot of flexibility they also have balance. So if you have a road that is designed for horses and it’s not paved, the vast majority of roads were not paved some of them had cobblestones but the vast majority were not paved and they were also not dry, they were usually covered in mud and well, horse poop because that’s what horses do, and so this is the environment that the automobile had to prove itself in. It didn’t start out with “Yes great, we have now invented an automobile. Allow me to demonstrate on the auto barn, right?” No. Instead the crazy rich people who are experimenting with this technology were driving their cars in these roads with deep rots where the horses had been, in roads not designed for automobiles in mud and what happened the cars got stuck because they didn’t have balance and four feet so everybody went “Huh, this is never going to work. Look you can’t even get out of the mud. And also, where are you going to get gasoline?” There’s no gasoline station, right? There’s one gasoline station. What happen if you run out of gasoline before you get there? I mean if your horse gets hungry you can at least go a few more miles but you’re new crazy car idea runs out of gasoline that’s it. You’re stuck. You are already stuck because of the mud but now you’re really stuck. You’re out of gasoline. This is never going to work.

So, the infrastructure at first is the infrastructure of the technology you’re replacing and then of course, eventually what happens is you build infrastructure for this new technology and something really interesting happens because when you pave roads and make them suitable for vehicles the old technology, horses, are very comfortable on these new roads, right? If you want to do a nice tour of Zurich on horseback I’m sure perfectly comfortable. Horses are very comfortable on asphalt as are skateboards, segways, motorcycles and bicycles, technologies that didn’t exist. In fact in order for those technologies to exist you first had to put out the infrastructure for automobiles. Flat, paved roads not only allow the automobile to exist allow the horse to comfortably exist and open the door for new technologies and now you have people riding segways and scooters and skateboards and rollerblades and trams and all of the other things that are moving around on our streets. Now, that’s an infrastructure inversion. You start with the new technology living on the old infrastructure and then it flips. You build the infrastructure and then the old technology rides on top of the infrastructure designed for the new technology. Let’s look at a couple more examples like that.

So, one of the great things about history is that some of the most confident sayings are often then ridiculed for centuries because they are so ridiculous. Like for example, when electrification was introduced during the Paris Fair and the mayor of Paris at the time said “Electricity is a fad and as soon as we close the Paris Fair and take down the Eiffel Tower electricity will vanish in history.” (0:08:07) two counts. Eiffel Tower is still standing, electrification won.

Now think about the time that electrification was happening there was no infrastructure and so how do you put electricity in a home? First of all the only reason you would put electricity in the home is because you’re one of these crazy rich people probably one of the same people who went and bought an automobile and you are now putting basically the same thing that’s in lightning in your walls which is surely a crazy idea that will result in your house burning down and that’s what the newspapers wrote. They wrote about every house that burned down and how these crazy people were putting electricity in their homes. What was the infrastructure at the time? You had infrastructure for gas. In fact gas lighting in major cities was pretty common. There were pipes that could deliver gas primarily to street lights but also for home lights as well as heating and you couldn’t use that infrastructure for electricity. You couldn’t use it to distribute electricity to homes. So at first the only use for electricity was really for factories because that’s where you could make the most use of electricity. In the past in a factory what you would have is you would have one motor in one corner of the factory, a very large motor that then distribute motive power through a series of belts and pulleys throughout the factory to run all of the other equipments, right? And that was usually driven by gas so it was basically a gas turbine. Electricity allowed you to distribute electricity directly to all of the devices and have electric motors so factories were the obvious things. But why would you put it in your home? There was no infrastructure. And also why would you use electricity since you already had light and you already had heating from gas and it worked fine, right? And the infrastructure for gas wasn’t useful for electricity so if you wanted to do this you would have to build new infrastructure. And then you get the other aspect of this infrastructure inversion which is that those invested in the status quo points to your new electricity projects and they say “There’s not enough distribution network to create customers and there’s not enough customers to require distribution network. This is never going to happen” which is exactly what they said about cars. There is not enough gasoline stations to fill your car and there’s not enough customers to require gasoline station. This will never happen. And then electrification starts happening and people discover that once you put down electricity infrastructure not only can you use that to do the new electricity capabilities, you can also use it to do the old application so you can do light and heating and you can do them more effectively in some cases with electricity but now you could do new things. You could do fans and you can do air-conditioning and you can do motors and you can do mixers and you can do hairdryers and generally speaking houses don’t burn down because of electricity too often, right? So again, you get this infrastructure inversion. For the first few years you have to run on the old infrastructure, it’s almost impossible. You could theoretically attach a gas generator in your house feed it with a gas and generate electricity locally but that wasn’t very efficient. Then you build infrastructure for the new technology and that infrastructure enables the old technology quite comfortably lighting, heating, or horses in the case of roads but it also opens the door for new applications that you couldn’t do before and the world changes.

My third example is a bit more technical and this is where you start seeing the audience separate into those who are over 35 and those who are under 35. Tell me if you can recognize this sound – toot, toot, (0:12:35). The people under 35 are looking at me like I am crazy and the people over 35 are going “That’s a modem. I used to have one of those. That’s how we connected to the internet.” So, modem, and this is where we go into ancient history, is a modulator-demodulator. It’s a device that speaks data over telephone line. And here’s the thing, if you think about it a telephone line is like a dirt road and you’re trying to drive a car over it. A telephone line is a system to designed to carry human voice. If you are my age when telephone lines were still analog and I was a teenager at the time and we still had pulse styling systems. We used to sometimes try to play music to our friends over the phone line and if you’ve ever tried this you will discover it doesn’t really work. And the reason for that is because the frequencies that a telephone line allows are very, very narrow, right? So what happens is the telephone network is designed to do one thing and only one thing. It’s highly specialized. Just like the gas network that delivers gas to houses is only designed to deliver gas not gas or water or electricity or oil, just gas and it’s specialized. The telephone system was designed to deliver just voice and human voice is very specific. Our main frequency is one kilohertz and then we go a bit below that and a bit above that and there’s a few people who can go quite a bit beyond that and teenagers can go to frequencies that I can’t even hear anymore. That’s because of the specialized use of voice and because of the difficulties of transmitting voice especially over great distances engineers narrowed the range. If you allow the full range you get voice but you also get (0:14:57) (hissing) electrical interference at very high frequency and you also get (0:15:02) (buzzing) electrical interference from motors at very low frequencies. So what do you do if you have a phone line that’s doing that? You put a filter that chops out the lows and you put a filter that chops out the highs and now it’s clearner. But now the voice starts sounding weirder and weirder because it’s being compressed.

Now, this is a very difficult road to write data over, right? Because when you’re transmitting data you want to get lot of information in a very narrow frequency band so this whistling sound that you hear with the modem is basically two modems trying to test on this specific connection how much room do we have, right? And basically what the modem is doing is it’s going hello, hello, hello, hello, hello and the other modem is going I heard the first three. the last one didn’t come through, right? And then the opposite going low frequency hello, hello, hello, hello. I heard the first three but the last one didn’t come through. Okay, great. So now we know we have six bands of frequency to work with now I’m going to start changing between those bands very quickly let’s see how much of this you can understand (0:16:18) and that’s changing frequencies very quickly between two bands and the other modem goes (0:16:25) I heard all of that, great. And now we can transmit data.

This is an insane way to do data transmission, right? You basically got two devices that are singing to each other over very narrow channel trying to somehow squeeze through this little straw as much datas possible and then we upgraded them and they got better and better at doing this and the phone companies hated it, right? That’s not what we design the network for. This is a pristine state-of-the-art voice communication network. What the hell are you people doing? In fact in the country where I grew up on Athens if you try to make a long-distance call with the modem what you would hear is (0:17:09) click. What? What just happened? Oh, they cut off lines if they detect a modem because we’re competing against the phone company.

I don’t like banks shutting down accounts of Bitcoin companies, right? Or basically exactly the same. And what did they say at the time? they said “We could deploy data connections – fiber, coaxial cables, direct data connections at high bandwidth. Oh, first of all no one needs high bandwidth because what are they going to do? Transmit voice? We already have a voice network, it’s fantastic. We don’t need these new things. And secondly, you don’t have enough users to deploy co-ax and you don’t have enough co-ax to build a user base. This is never going to happen, right? The same exact idea. And then we had one of most spectacular examples of infrastructure inversion I’ve ever seen and that I recalled from history when first the internet was not wanted and carried over phone lines reluctantly. Then the internet was carried over phone lines by phone companies becoming internet service providers. Then gradually their backbones become data oriented. Then their entire network becomes digital. Then their entire network starts running over the internet. Then they start running all of their phone lines on top of the internet. So today, every single phone call you do anywhere in the world is carried over the internet with a few exceptions at the edges in some developing countries, a complete infrastructure inversion. Turns out it’s very difficult to push data through a narrow phone line designed for voice. But if you flip the equation putting voice over a data connection is trivially easy. What’s the difference? One is extremely specialized, it has already chosen the application for you; the application is voice. Data is the exception that you’re trying to squeeze through. The other one is very generic. Data means anything and voice is just one of the applications carried comfortably. I think the ultimate irony of the phone companies was a special thing called comfort noise generation. If you’re a phone engineer you know what I’m talking about. This is the most ironic thing ever. So after years and years of people my age being used to their phone lines sound like (0:19:51) (buzzing) all the time, right? When we started having cellular telephony and digital phone lines that were perfect they had no noise. So the moment the other person stop talking what you would have was complete silence and so you’re like “Oh, okay. I guess they hang up.” They didn’t hang up, they’re still there. There’s just none of the (0:20:15) (buzzing). So then the phone companies invent the most brilliant technology ever which is comfort noise generation which is a device that sits on your end of the phone and it looks to see if the connection is still open and if it is it whispers in your ear (0:20:29) (buzzing) just to make you feel comfortable that the other person is still there. It actually generates high frequency noise on purpose artificially on your end, noise that isn’t on the system just so that you don’t think the other has hung up, right? And the very same company that said we will never be able to do quality voice over the internet and we don’t want the internet on our phone lines are now injecting noise in order to simulate the terrible performance of the previous network because now we’re delivering CD quality or better sound across continents. Complete infrastructure inversion and then we get to Bitcoin.

Now we have a decentralized trust platform that can do settlement of transactions on a global basis without intermediaries. But in order to get into the system or get out of the system because we still have to live in the old system, we have to go through exchanges. We have to go through bank accounts, we have to do IBAN transfers, we have to use credit cards, right? And so what we’re doing is we’re riding the automobile on the money roads of banking, right? The Bitcoin, the supercar, the Formula One of finance, right, is riding along on the muddy roads of 1970s mainframe based banking and it’s a bumpy road. And the banks pointed to this and gulped “It’s not working. Look, you have to do all of the regulation that we have to do. You have to do all of the identity that we have to do. You have to slow everything down to the speed of traditional banking. This is never going to work.” Not only that but you don’t have enough users to build infrastructure and you don’t have enough infrastructure to attract new users. So this is clearly never going to work. But what we do have just like with all electricity and the automobile and the internet is we have a new technology that has within it the promise of a thousand other applications they haven’t even imagine and this is my prediction. We’re going to see over the next 15–20 years a great infrastructure inversion that will happen in finance. What will happen is the banks will resist then the banks will adopt then the banks will run their systems alongside Blockchain and Bitcoin systems and finally they will run all of traditional banking as an application on top of a decentralized trusted ledger because wallet is very hard to do a decentralized trusted ledger that’s connected to all of these legacy banking systems simulating legacy banking on top of a decentralized ledger on top of Bitcoin an open, global Blockchain is trivial. All you have to do is take all of its capabilities and slow them down. I can create an application that takes your Bitcoin transaction and makes it clear in three to five business days for a cost of $5.00 and I’ve implemented traditional banking. It’s kind of like the comfort noise generation. For those of us who are still accustomed to banking of a previous generation who are like “I don’t like all of these fast finance it makes me uncomfortable. I want to sit at my kitchen table every Sunday and balance my checkbook” right, “and make sure none of my checks bounces.” Right? I don’t like all of these electronic instantaneous global transfer it scares me. Who knows.” So we can slow it down. What we’re going to see is this infrastructure inversion will allow us not only to comfortably run the traditional banking applications on top of a distributed global ledger an open Blockchain-like Bitcoins the open Blockchain. Probably Bitcoin’s open Blockchain but then we open the door or other applications, for applications we’ve never seen before. And these will appear to traditional banking like a segway or skateboard appears to someone who is absolutely determined to continue the tradition of horse carriage riding in the City of Zurich. And these applications will look the same as someone who is still trying to do gas lighting in their traditional Victorian house and these applications will look as alien as someone who’s still trying to do comfort noise in a CD or better quality voice communication over the internet that is capable of so much more. Enabling the future on your legacy system is very difficult. And while you’re trying to do that everyone’s pointing at the future and going “Huh, look, it doesn’t work” until you fled the infrastructure and then simulating the past on the network of the future becomes extremely easy. So, what we’re part of now is the very early stages as we look at the future of money and the first stages of the greatest infrastructure inversion the world has ever seen. Thank you.

So, what we’re going to do for the next part of tonight is I’ll be happy to take some questions which will probably go for, you know, two to three hours. Then after that if you happened to have brought a book I would be delighted to sign it for you but we have three books that we’re going to give out with a drawing, a random selection. And finally after all of that we’ll shut it down and I’ll be happy to talk to you all preferably in the area that serves beer and we can continue this on a social level. So Lucas, do you want Q&A first or drawing for the books? Q&A. All right, who has a question? Let’s get a microphone to you. I am very easy-going. Don’t be shy. Please ask any question.

MAN #1: Yes. So, basically Bitcoin is like a guillotine. So, you mentioned it and it goes down on the head and it cuts it off.


MAN #1: It’s like a guillotine. Every time you mentioned Bitcoin basically the other party you’re trying to sell the technology to shuts off.


MAN #1: The experience that when you deliver Blockchain technology (0:27:51) together to (0:27:53) then you mentioned about Bitcoin the counterparties (0:27:56) usually had issue of listening to the advantages of the technology.


MAN #1: And so, how do we go wrong there? What’s you take on that?

ANDREAS ANTONOPOULOS: Well, I mean the reason is because there has been a very strong campaign to ensure that Bitcoin is associated with negative things and this is not a coincidence. This is exactly the response you see to any disruptive technology so you have two things. First of all you have a technology that is different enough that is difficult to understand. And then you have that technology offending some of the well-entrenched issues. I can guarantee you that the stable and horse carriage association of Switzerland was none too happy about this new automobile idea and I’m sure they talked to a lot of journalists about how these devices would kill people on the streets and made too much noise and broke down and were unreliable. Now if you think that’s a joke you should go look out the red flag act that was passed in the United Kingdom in 1896 that required every automobile greater than a certain length to have an operator, an engineer and a conductor and they had to have a flag person running ahead of the automobile waving a red flag to warn all of the innocent terrified pedestrians that an infernal death machine was barreling down the road trying to kill them. This law passed in England and it slowed down the development of automobiles fatally for England. These things happen again and again and again and again. The initial response you get is part fear of change, part engineered fear because of interest.

And Bitcoin just like the internet, look at all of the articles that were written in 1992, ’93, 9’4 about the internet. The internet is a den of thieves and pedophiles and criminals and terrorists and if you let your children get onto the internet they will surely be destroyed and no one uses it except for criminals and weird scientists but we already knew they were weird anyway and it has no practical use because we have fax machines and post offices that worked perfectly fine, thank you very much. And in any case the phone companies were building a much better version which is the internet only without any of the open, borderless, content-creating innovation and freedom that the internet is just closed-curated, editorially controlled, safe PG-13 appropriate for all audiences and all rank and in the end those things failed and they failed because what was exciting about the internet was that it was open and decentralized and borderless and in the end yes, criminals used the internet, of course they did just like they use automobiles and electricity and phone and shoes to run away from robberies. And the bottom line is you don’t make transportation policy or shoe policy or telephone policy or internet policy or financial policy based on the narrow use a criminal will apply to a technology. You look at the bigger picture as to what happens if you give the tools of financial freedom to seven and a half billion people. Now that’s terrifying to some. I don’t care. I’m not going to try to sell this because this Bitcoin is useful because it solves real problems for real people. So if you want to just wrap it up in a nice little Blockchain shell and put a ball around it and say don’t worry this is just like Bitcoin only safe and, you know, not going to be used by criminals. Of course it is going to be used by criminals you know why? Because criminals run the banks. Because criminals run governments. They are some of the biggest criminals out there and eventually they’re going to be using Bitcoin technology too. So, I’m not worried about trying to market this. What I’m worried about is how do we make it useful to as many people as possible and the rest is it will be simply be washed away in history and one day our children will hear this completely fabricated story and the fabricated story will be “… and Satoshi Nakamoto invented the Blockchain and the world rejoiced and was never the same again” just like we do the story. If you go into an American school and you ask them how was the automobile invented or who invented electricity? Edison came with the idea, tried it once, everybody hailed him as a hero it was a stunning success and the world moved on. Ford created automobiles for everyone, everyone was happy. Of course neither of those people actually created the thing and they were ridiculed for decades and some of the inventors of these technologies died poor and ridiculed and destroyed. We rewrite the history later. So I’m not worried about perception. That’s a very long answer to your question but there you go.

MAN #1: Thank you.


MAN #1: What a great book, great lecture. Thank you.


MAN #2: Hello (0:33:14)

ANDREAS ANTONOPOULOS: Oh, we have two microphones. Awesome.

MAN #2: Thanks for all these analogies, that was very interesting.


MAN #2: I just didn’t get one point. It is what is the infrastructure which will be needed for Bitcoin to become mainstream?

ANDREAS ANTONOPOULOS: Right. Well, you know, part of the infrastructure – the good news is we don’t have to do all of the heavy lifting of building new roads and building new internet because we already have the internet so that’s one big difference in this infrastructure inversion. The infrastructure we’re building or need to build within Bitcoin is access to financial capabilities and the liquidity to make those viable. That means having enough people who have access to wallets and wallets that are decentralized and easy to use and easy to secure it and easy to understand and education for developers who are writing this application and education for users and all of the things that need to smooth adoption. Right now Bitcoin is difficult to use, it’s difficult to secure, still the very early stages and that’s fine. As we educate more developers in more languages across the world and they build better applications suited to the local languages and more people get involved and start using Bitcoin as a means of exchange you build liquidity, liquidity allows more applications. Density of adoption allows more applications. The network effect kicks in and as each new person is added to a network the usefulness of the network increases exponentially because for the new person connecting to everybody else is useful. But for everybody else the fact that they now can connect to a new person is also useful and that’s the exponential effect of Metcalfe’s law is called the network effect. That’s what’s required here. We’re not going to need to build physical infrastructure. We’re going to need to build better and easier ways of getting on so that more people get on so that we have social infrastructure, economic infrastructure. This is an economic tool and therefore having a robust economy with economic activity is the infrastructure for Bitcoin. You will know when we have it. It’s a very simple, very simple test. The day when you ask someone how much is one Bitcoin and they say “Oh, what do you mean? It’s one Bitcoin. One Bitcoin is a thousand millibits. One hundred million Satoshis or one Bitcoin.” “No, no, but how much is it in dollars?” “Oh well, I mean a dollar is zero point-something Bitcoin but who cares.” That’s when you know we’ve made the economic inversion, the infrastructure inversion. Yes? Do you have a microphone? Okay, and if the next person wants to raise their hands so we can get a microphone for you in advance. Very good. Go ahead.

WOMAN: So, a key fulcrum to Blockchain technology’s decentralized the ledger and decentralized consensus and you talked about a future where this could be the economic standard, so to say, across the world and you mentioned seven and a half billion people. My question really is those people are not evenly distributed, right?


WOMAN: So hypothetically they could be a country which could dominate in terms of mining power and then it’s not so neutral anymore as a platform, right? So is there any way – you have any thoughts on that how we can overcome it because this will be one of the questions that governments across the world would ask trying to adopt this.

ANDREAS ANTONOPOULOS: Yes. Well, domination by a single country is extremely unlikely because the bottom line is – I mean you will see in the early stages especially because of certain conversions of characteristics like for example the availability of cheap and immediate geographic access to silicon fabrication is an advantage today and it’s an advantage because we’re moving from generation to generation of ASIC every three months. That era is over. We hit 60 nanometers, we’re not changing ASIC generations now for two years. That’s going to change the environment of mining dramatically. I’m not that worried about centralization in any single country, you know, countries would be worried about that? Well, you know, if you think about it today our currencies are run by proof-of-oil consensus algorithm, right? And there is a certain amount of concentration of the underlying proof-of-oil resource in some countries which some admittedly may have said leads to war. So that doesn’t change digital cryptocurrencies, decentralized currencies they still have people in them and these people still will engage in geo-political games. That doesn’t change but how decentralized things are changes the equation. It makes it less likely that you’re going to have such specific concentrations that are based on a resource that really can’t move because it’s been there for millions of years. So, I think we’re going to see a very different environment evolve. I don’t know what that environment will be yet. So, this is part of being part of history, you get to see it as it unfolds. Who’s got the next question? Yes?

MAN #3: So, I’d just – if I may I’d like to go back to the original question. You talked about status quo, fighting the new technology and this whole idea of co-opting and the banks being against Bitcoin. If you look back over, I don’t know let’s say the last six to nine months it seems like banks are going bananas for the Blockchain.


MAN #3: There’s (0:39:05) opening up laboratory, they’re coming with this and blight messages are running around and all of these other stuff (0:39:13) talk a little bit more about if you’re really sure that the banks won’t succeed in co-opting this technology bolting (0:39:21) the old system on top and then we all keep going like we are – or is it really going to open up to everyone.

ANDREAS ANTONOPOULOS: That’s a really good question. And if they could co-opt this technology they certainly would. But the problem is understanding exactly what’s the stake here and what the differentiation is. The thing that makes Bitcoin interesting is not the fact that you can use it to record transactions in a chain of blocks. That is not interesting, that is in fact stunningly boring from a database science perspective. What is interesting is being able to remove central control of third parties by decentralizing the security mechanism through a proof-of-work consensus algorithm. What that gives you is a set of capabilities, immutability, unforgeability, open access, permissionless innovation, borderless systems and censorship resistance and none of these are in anyway remotely interesting to banks and they don’t want any of them. So what they’re trying to do is say “We see what you have there, we would like the same only without the open borderless, permissionless innovation, decentralized control, open access and censorship resistance. Could we have one of those?” And that’s exactly like saying I like this internet thing you have there. I think the underlying technology is packet switching. And packet switching is fanta – forget the net neutrality, open, borderless publishing and freedom of expression blah, blah, blah, you know, that’s irrelevant. What we really want to do is use packet switching to transmit corporate produced content directly into the TVs of every household in a centralized top down (0:41:07) hierarchical way where we control the content and don’t worry it will all be suitable for your children produced by Disney and controlled forever by us. They failed to do that because that’s not what people wanted because what they saw in the internet was the possibility of taking control of the means of producing content in becoming consumers and producers of content of equalizing things and the ability to directly connect with people around the world was exciting. That’s what Blockchain doesn’t have the way they call it, right? So the thing you have to ask yourself is what are the seven and half billion people on this planet looking for in terms of economic inclusion? Are they looking for something that has identity and KYC and controls on the borders and regulations about the amounts and totalitarian surveillance and a very cozy relationship between regulators and state and money? Or are they looking for new way? And the answer is simple. Most of them are not part of that system because they haven’t been invited and they’ll never be invited because right now what we’re doing is restricting the number of people who can actually access that system. Economic inclusion is backtracking. So, what Bitcoin offers is not what the banks are co-opting. What they’re co-opting is a system that has nothing to do with what we’re building. This is a comparison between centralization and decentralization and they can’t co-opt decentralization because by co-opting decentralization they lose all the power. So, some banks will. Some banks will adopt decentralization as their go forward mantra and big chunks of the industry will be replaced by companies you’ve never heard of before which is why the top companies on the internet are not phone companies for the same exact reason. I’m not worried about banks co-opting Blockchains. They have bigger problems. They’ve got to figure out what the hell to do with interest rates. Oops. Who’s got the microphone? Yes, go ahead.

MAN #4: Thanks.

ANDREAS ANTONOPOULOS: And then the next person there. Thank you.

MAN #4: I’m a complete Bitcoin newbie so I apologize if my questions are silly but –

ANDREAS ANTONOPOULOS: No problem, please.

MAN #4: What are the most outlandish Bitcoin applications you’ve seen? Tonight you’re talking about reinventing the payment gateways and financial infrastructures but you mentioned that once this inversion is taking place this opens up new doors and new applications. So, some examples.

ANDREAS ANTONOPOULOS: Mmm, it’s very, very difficult to see those because they depend on a number of different things. First you need the infrastructure but then you also need widespread adoption. So if you look back at the internets and you look at 1992 and you say what we’re going to see in the future, right? I mean video teleconferencing was obvious, that was part of Star Trek 20 years earlier. They could imagine that. What they couldn’t imagine was Wikipedia or Google search or social media. And the reason they couldn’t imagine that is because a lot of those things actually require a density of adoption to even be possible, right? You can’t do social media unless almost everyone you know is able to use it which means they already have internet preferably mobile internet. You can’t do Wikipedia unless there’s enough people who could go in there and continuously improve the product. You can’t do Google search until there’s enough pages that you can do cross correlation of deep linking. So all of these applications only emerge once you’ve set down certain prerequisites and those prerequisites and the applications that come out of them are invisible in the beginning. This happens with every type of new disruptive technology which is over the first decade or decades of their development. Most of what you see is skeuomorphic design – meaning that it is design that mimics the shadow of the past. So you go in places like New York and you introduce steel into construction and what do they use steel to do at first? They use it to build a brick building that looks exactly like all the other brick buildings only it’s a bit taller, right? They don’t say “You know, maybe instead of windows this large we can make the entire façade of the building glass.” That doesn’t even cross their mind. They spend the next two decades repeating the forms. In fact one of the most ironic thing is that you start seeing with modern construction techniques people put up houses and then they put Roman columns in front. And Roman columns have a very specific purpose – they’re to hold the roof up, they’re not decorative elements. But you don’t need them to hold the roof up anymore because you have steel beams or bricks or other techniques so the columns are now purely decorative. They serve no practical purpose. You’re just giving kind of a little hot tip to the past. For the first decade in Bitcoin the vast majority of what you’re going to see and the least interesting things are going to be well, here’s what we did with banking let’s take it a bit further. So we’re thinking about Ah, let’s, you know, retail commerce plus Bitcoin. Bitcoin retail commerce. Checking and savings. Let’s call destination addresses checking account, Bitcoin checking and savings, right? And so this is not innovative, it’s skeuomorphic and we’re going to see that happen for decades possibly. What’s going to start appearing once you lay down the ground to have enough people to do adoption is then you have interesting opportunities. The most interesting opportunities for me come from some of the narrow areas where Bitcoin can do things that are not possible today because of its different nature. Here is one that will – I’ll throw a few out there, okay. So, every single financial system we have assumes personhood. The entity that owns and controls money is either a person or an association of people through a corporation. That is it. You cannot have money without personhood because the legal jurisdiction that supports it requires personhood. Well, elliptic curve digital signatures don’t give a damn about personhood and that is the legal infrastructure on Bitcoin. So you can have ownership and control of money through the ownership and control of elliptic curve digital signatures without a person. That means that software agents and machines can directly own and control money without any human being involved at all. You could create an autonomous system of charity that trolls the web looks for hurricanes and then if it finds enough it starts a fundraiser, takes the money and then distributes it equally to charitable organizations or directly to the people who through the GPS on their phone showed that they are in the middle of the disaster and has no board of directors, no owners, no corporate structure whatsoever. It’s simply an automatic money controlling system. The most wild idea I had is what happens if you take self-driving cars. Uber and Bitcoin (0:48:23) together and you have the world’s first self-owning taxi – a taxi that effectively owns itself. It has paid for its own leash, its paid for its own maintenance, its own insurance, it collects money from passengers that ride in it that it provides ride for and then pays for gas automatically using Bitcoin and pays for its annual maintenance. Now if you think that could never happen – I’ve even constructed a scenario of exactly how it would happen. It wouldn’t start with autonomy. It would start with an elderly taxi driver who gradually turns himself into an entrepreneur and owns a fleet of taxis and then replaces their drivers with autonomous vehicles and then automates their accounting so that they have to do less and less and less work and then they die without heirs and nobody notices because the next morning the taxis go out and they continue doing what they’ve already been doing and then you have the first emancipated taxi that suddenly became its own autonomous entity. This is not completely outlandish. There are plenty of examples of – for example they found an elderly person in Japan who had dies in their apartment 17 years before they found the body because they had a pension coming in and direct debit of their electricity and utilities and the air-conditioning was turned off (0:49:51) and they died in their apartment without heirs, nobody notice, for 17years they just sat there and the apartment kept being rented and the rent kept getting paid and the electricity get paid and essentially the apartment emancipated itself. You could do this with a self-driving taxi. There’s some really weird things that happen when you remove personhood from the ownership of money and that’s just one example. The other really interesting area is the possibility of doing nanopayments – nanopayments both in terms of value and in terms of time granularity. With certain construct within Bitcoin called payment channels or Lightning network and things like that you can do payments for services that are billed for thousandths of a cent in increments of 200 milliseconds or less. So what could you possibly do with that I have no idea. I’m sure there are some very smart developers trying to think of something cool now. So again, you lay this infrastructure everybody has enough liquidity, people have easy access to it and then you start laying on top applications that were absolutely impossible to do before and that’s when we really an interesting world. So, yeah, that’s going to happen over the next 20 years. Okay, let’s take maybe two more questions.

MAN #5: Hello.


MAN #5: You mentioned earlier so assuming a widespread adoption of Bitcoin do you believe that we’re going to see similar like today different currencies in different regions of the world or do you believe that there will be just one Bitcoin assuming this takes over?

ANDREAS ANTONOPOULOS: Do you speak English? Do you speak German also?

MAN #5: Yeah.

ANDREAS ANTONOPOULOS: Did you abandon once you learn English?

MAN #5: No.


MAN #5: No, no, no. Sorry, sorry I think it was unclear. Do you assume there will be more than one Bitcoin?

ANDREAS ANTONOPOULOS: Yes. Well, then again to that question is the point is that you didn’t abandon German when you started learning English and the reason you didn’t abandon it is because while English has its usage in some places of the world to be the dominant language that doesn’t mean that it exist in exclusion of the other languages and in fact you have the ability to use multiple languages and what you do is you use languages that are appropriate for the context in which you are and that gives you cultural significance and use within the niche, right? And so when you think of money as something that is owned by the state and associate with the flag like for example Swiss Air, right? Remember when all of the airlines had flags on them? And each country only had one airline and it was the only one that was allowed to land in the main airport. Yes, okay, I’m over 40 but I remember it and that was an absurd idea, right? When you only had one phone company it was the national phone company and it was the only one allowed to install residential telephone lines within the homes of people resident in that country and the only one allowed to do long-distance calls. That thinking for currency still exist today and it is an absurd idea and it creates absurd consequences. The idea that for one currency to succeed the others have to lose or that there can be within a jurisdiction only one currency and if you had a currency of every jurisdiction then eventually it would become the only currency. If you think of instead a currency is a form of language, it’s a linguistic construct for expressing value there are languages that work in certain contexts, right? How many of you speak Greek? You’re wrong. All of you speak Greek. Have you ever heard of a gastroenterologist, an ophthalmologist, an orthopedic, right? You speak Greek because medicine is the context in which we all speak Greek, a bit of Greek and so we speak Greek. We also all speak Latin, right? And in some domain we all speak English because of computers and in some domains we speak German and in some domains we speak Spanish. The point I’m trying to make is that if you think of money as a language then the language you use depends on the context in which you’re using it and what the other person speaks. And so the money you use will depend on the context in which you’re using it and what money the other person accepts. With digital currencies it’s no longer a system where there have to be a certain number of winners and everybody else has to disappear or where the competition is like that. There are no monopolies. So, how many currencies will we have? In the old days we used to say how many newspapers does a city have? And you could answer with a simple number and say two or three. And then at some point blogging happen. Now how do you think the question how many bloggers can there be and can one blogger dominate all of the blogging within a country or topic or a language. You see it becomes an absurd question because everyone can be a blogger and everyone of us can be a bank and everyone of us can have a currency and therefore the concept of how many will there be? Well, all of them, right? Thousands, hundreds of thousands. How many of them will be important? Tens, hundreds. And will they displace one another? Or will one be the universal currency? There will no universal currency for the same reason there is no universal language because there is no universal culture and there is no universal context and there is no universal set of needs. So, these are really good questions that you’re asking because this is the question that comes up a lot again and again and again and it reflects this new way that we have to start thinking about, currency, which is completely separate from the way we thought before. Ironically the idea of national currency associated with a flag not only will that end up being something that doesn’t exist in the future but in the end it will be something that only existed for a very short period of time in history. It’s a relatively new invention and it will go away pretty soon. In the United States for example, Ben Franklin one of the founders of the country, his job was a commercial printer. His number one product was private currencies. He printed private currencies because in those days the idea of one currency across an entire federated nation was nonsense. It turns out they were right. It’s nonsense. If you turn a whole economic area into one currency “Oh boy, that could go wrong” said the Greek. All right, let’s take one more. who’s got – here.

MAN #6: Thanks for coming to Zurich.

ANDREAS ANTONOPOULOS: Thank you so much for having me.

MAN #6: If you could select one challenge in the Bitcoin world and (0:57:15) be solved today, which one would that be and why?

ANDREAS ANTONOPOULOS: You’re going to be surprised by my answer probably. User experience design is the challenge that I wish could be solved today. I wish we had a lot more user experience and user interface designers in this space. At the moment we have many incredibly talented engineers who are terrible at design and they make system that are completely impossible to understand. The primary role of the user experience design as I speak not as a designer but from my understanding is to create metaphors that allow you to associate the new thing with something that you already have a mental frame (0:58:05) and create expectations in your mind how this thing is going to behave and smooth the process of using it by having the thing behave the way you expect it to behave because of the metaphors that are being created. So having said all that you have a currency that is the most abstract currency that we have ever designed. What should we call it? Bitcoin because coin is the word that describes the least abstract currency ever designed, the most physical form of currency and coins behave in a very specific way. You hold them in your hand just like “Oh, that didn’t create the right expectation.” Well, let’s put the word bit in front because in half the languages it means small and the half of the languages it means I am a geek. That will alienate everybody else, right? Then let’s take the thing that hold all the keys that control the Bitcoin. I’m going to call it trustnet because that’s what it should have been called. Let’s take all of the keys that control it and let’s call that “No, keychain would be too obvious.” How about wallet? Because, of course, you can copy – oh no, you can’t copy a wallet but you can copy a keychain if we called it keychain it would actually make sense because if you give someone a copy of the key to your house they can get into your house. So if you copy a keychain they have access to everything you have or you can make a backup and give it to your neighbor if you trust them. Well, that makes far too much sense. Let’s call it a wallet because that’s where you store the actual coins which don’t exist in Bitcoin and the wallet is the place we don’t actually store the coin. See, this is the problem. So if I had like a magic wand and I could go back to 2009 I would find Satoshi Nakamoto and I would go (1:00:01) enigneerous and designous and boom he would become a user experience designer and we’d have better names for everything. The biggest challenge we have for adoption is that normal people cannot understand this stuff and they shouldn’t need to, right? You don’t expect normal people to understand it. In the early ‘90s I remember it was around 1995 there was a TV show called Good Morning America and you got five journalists sitting around on a couch and they’ve got this on YouTube if you want to watch it and it’s the pre-take before the show and they’re about to talk about the internet. So they’re getting prepared for the conversation and one of the journalists say “So, which one is the internet. Is that the @ sign?” “No, no, no. That’s e-mail.” “Also it’s the dot?” “No, no, no, no. The dot, that’s both e-mail and the internet it’s the www.” “But what about the slash, slash, colon thing?” “No, it’s not slash, slash, colon. It’s colon, slash, slash.” Right? And you can see how incredibly confused they are, right? That’s where we are in Bitcoin terms. and two things happen since then. One, we made things easier. And two, a whole generation of people grew up who learned this as a language from childhood and to them it’s no longer weird. Both of those things need to happen in Bitcoin. Our biggest challenge is not the block size limit or the adoption of new technologies or whether the banks will let us or not, we didn’t ask for that permission or whether governments will regulate this or how fast the technology is going? It’s going great. Our biggest challenge is how do you make this easier to use and easier to secure for people who are not me, for my mom. And when we solve that problem then we see some really big success. So I think that is the last question. Thank you all so much for coming.


Written by Andreas M. Antonopoulos on April 4, 2016.