Video - Bitcoin Elements of Trust Unleashing Creativity - Berlin March 2016

In this talk, Andreas looks at the inner structure of bitcoin and how high-level financial and trust applications are composed from smaller elements. Using analogies from Lego blocks to a chef creating new recipes, this talk highlights the connection between creativity and the flexibility offered by fine-grained components.

TRANSCRIPT

ANDREAS ANTONOPOULOS: I didn’t bring any slides but it’s important to have visual aids, right? So, I brought some beer, it aids me so –

Thank you. It’s really amazing to be in Berlin and thank you so much for coming. This is a packed space, it’s very exciting. I apologize I took a year of German in college I got a C and I can barely order in a restaurant let alone deliver a Bitcoin presentation in German so, here we are. Your English is better than my German. Your Greek is better than my German probably.

So, how many people in this room have Bitcoin? Okay. And for the three of you who don’t find one of the other people and ask them to help you experience Bitcoin. Tonight is as good a time as any. One of the hardest things with Bitcoin is getting some in the first place. It takes a lot of work. And one of the things I’ll be talking about today is why it takes a lot of work. If you don’t have Bitcoin ask someone to help you set up a wallet on your phone and then give you some Bitcoin. If you can’t find anyone to give you some Bitcoin I’ll give you some Bitcoin because after all I am the only Greek in the room and since I didn’t come for a bailout might as well give out some Bitcoin. I’m going to bailout Germany tonight in Bitcoin. How’s that for a change?

The title of this talk is My Thoughts on the Future of Money which is the exact same title as the other seven cities I’m doing on this tour which is shortcut for I won’t decide what the talk will be about until the day of the talk so Thoughts on the Future of Money covers every possible eventuality. But what I’m going to talk about today is the chemistry of money and specifically the chemistry of Bitcoin.

I want to talk about one of the aspects of Bitcoin that makes it so exciting and so interesting that yet most of us don’t even notice it’s there until we study Bitcoin for one or two years. Bitcoin is a bit like an onion you have to unwrap it and as you unwrap it you just find one more layer. I started five years ago I’m still unwrapping and I’m finding more and more things that surprise me every day about Bitcoin.

So, one of the things that surprise me about Bitcoin is that when I first encountered it it looked like a relatively familiar banking system I went to, you know, well-known sites like Blockchain (0:03:13) transactions and I clicked on the transaction and it say sender and receiver and account and I was like okay, this is pretty familiar banking. Great. And then I thought let me look at the source code and see how this works. So, I’m a programmer, I am a computer scientist I figured I’ll read the source code and I’ll try to understand how the system does these things and I went through the source code and if you search for sender and receiver and balance and account you won’t find anything because none of those things actually exist in Bitcoin and that really surprised me. Because when I looked at the source codes none of the things that I expected to find there were actually there. You’d expect that a banking system as it appeared to be has been designed to do certain things in a very specific way and Bitcoin isn’t like that. It’s not like that at all.

How many of you have looked into the source code at all or understand the technical underpinnings? Right, a few people in this room. So you go digging in there and there’s no balance and there’s UTXO and there’s no senders. There’s inputs and they don’t really correspond to senders and then a transaction has output which don’t really correspond to receivers and you realize that suddenly what you’re looking at is almost this quantum or atomic nature of Bitcoin. In chemistry, you know, we have elements like copper and steel and – iron, well, steel isn’t an element (0:04:54) copper and iron and helium and whatever and chemistry gives you this enormous complexity of things that you can combine to make interesting things like, you know, people (0:05:08) and toasters but when you dig into the chemistry you realize copper isn’t a thing. Copper is a pattern of protons and neutrons or electrons. There is no copper. Copper is just protons and one proton is just the same as another proton and if you break it up that proton can just as happily be part of helium it doesn’t care. There’s nothing about that specific proton that makes it part of copper, right?

Chemistry is one layer but underneath that is atomic physics and that layer is very simple. It’s very simple it has a handful of elements. And these handful of, you know, just a few elements make up all of the chemistry we know 100-some elements in nature that all have unique and different properties that are completely different. Some of them are liquid, some of them are metals, some of them are gases they behave differently, some are acidic, some are not but none of that is in their basic make up, these are just patterns.

Bitcoin has this fundamental atomic structure, this elemental structure and the elements of Bitcoin are the components of a transaction and the elements of the scripting language and those elements have nothing to do with traditional banking. You don’t see anything about accounts and balances and senders and receivers. Those elements are looking for fundamental mathematical properties and cryptographic properties whether a hash is equal to another hash, whether an elliptic curve signature matches another elliptic curve signature, manipulations of numbers etc. etc. and what you see on the surface, the transactions are just constructs. They’re a specific way of massing up these elements to create something that kind of looks like a bank which is great because if you’re new to Bitcoin and someone tells you “Well, there’s an account and a sender and a receiver” you’re like “Oh okay, I understand this.” And you have a wallet but your wallet doesn’t have coins, it has keys and those keys can be copied and now you’re like “Wow.” Your wallet can be copied and now you’re losing me this doesn’t quite matched my experience. And things get complicated because Bitcoin isn’t what you think it is. It’s a platform. It’s not a payment network, it’s not a currency, it’s not a banking system. It’s a platform that guarantees certain trust function. Now, if you happen to have a platform that guarantees certain trust functions one very useful application for that is to build a currency and a payment network but you can build more things.

When I was a child my favorite toy was Lego and the reason my favorite toy was Lego was not because what is on the box because when I took a Lego set I did not build what is on the box. If the box had a red fire truck I would build a dragon or a hippopotamus-giraffe or something that didn’t exist or some strange idea that I had and so that’s what I liked about it. I could take these basic building blocks and I could build whatever I want. Now, what this does is it changes the perspective of how you look at things because from an abstract perspective Lego is messy and the thing I build didn’t quite look like a fire truck or a spaceship and if someone had given me a toy that was a fire truck like a plastic injected smooth edge completed red fire truck it would be the perfect fire truck but it could only ever be a fire truck and 20 minutes after I started playing with it I am bored because my perfect rounded fire truck that is only a fire truck is a perfect fire truck but can never be a hippopotamus-giraffe or tomato or spaceship but Lego allows me to do that.

As I grow older I started getting into cooking as a hobby. What I loved about cooking is that it is the perfect combination of art and science because if you fundamentally understand how the ingredients work and how they behave and how their chemistry changes when they’re combined or when you add a catalyst like salt or when you apply heat to them then you can create, you can create anything imaginable and do then you can create this idea of what you want to make when you’re cooking and as long as you understand how the ingredients work you can execute and deliver that thing you wanted to create. And Bitcoin encompasses that elemental nature. It doesn’t give you a final result. It gives you a set of ingredients and a recipe. It gives you a set of legal blocks and a photo on the box that looks like a red fire truck. And when we present that to the world and the financial companies look at that they say “Well, your fire truck has sharp edges and it’s made of silly little blocks” or you take the ingredients and you put them together and you make a burger and in Bitcoin we take the ingredients, we put them together and we make a banking payment system and the banks come and look at that and it’s as if they’re saying to us “Your burger is okay but in McDonald’s we can make it in 45 seconds and we can sell a billion of them.” So why do you need a chef, ingredients, a recipe if you can just churn out a billion of them. And they’re missing the point. And the point is not generating a billion copies of the same inferior product. The point is not getting the injection molded plastic red truck that I’m going to be bored of in five seconds. The point is unleashing my creativity by giving me the tool and the elements I need to build something unique, to build something you and I can guarantee you my little red fire truck or the burger I just built I didn’t do it, I didn’t build the burger as fast as McDonald’s or as cheap as McDonald’s and my little red fire truck isn’t as smooth as a Chinese copy but I can also make albondigas with red tomato sauce and I can also make a hippopotamus-giraffe and you can’t do that with a prefabricated toy and you can’t do that in my McDonald’s kitchen. I’ve unleashed my creativity.

With Bitcoin if you look just some of the elements you’re beginning to see people realize that this is a set of ingredients and you have one recipe but you can make a different recipe and so people are now trying to recombine these ingredients and they say “Well, if I have atomic transactions and input versus output sums and digital signatures I can build a project that does kickstart projects where you have a single transaction that can be funded my multi-people but only if all of the amount is funded is it a valid transaction, right? That’s the same elements I used to make a payment to you for a dollar over Bitcoin but you could recombine them differently and now you’ve got a crowd funding platform. And then somebody else says “Well, if we use two of two signatures, multisignature with transaction time logs we can do a payment channel that charges for video streaming by the second” and that’s a new recipe that no one had come up with before. And we can take that and then we introduce this new thing which is hashlock time contracts and we can make multi-payment channels connected together and then we’ve got Lightning network and that’s a new recipe that no one has ever seen before. And so while the banks are saying “Your truck has sharp corners and your burger is too expensive and it took more than 45 seconds” and what they’re saying is “Your transaction fees are too high and you’re too slow and you can’t possibly scale” they’re missing the point. And the point is that we’re not trying to sell a billion burgers in 45 seconds each. We’re trying to unleash the creativity of an entire generation. We’re building a system on top of which a thousand applications that require trust can be built. And when you have the ingredients, when you have these basic elements what recipe you build is entirely up to you because when they built this little red fire truck, they create an entire factory that can only do little red fire trucks and I am sure they will tell you “Listen, our statistic say that 95% of children want a little red fire truck. We have tested this with the focus groups and the marketing teams, we can produce them by the millions they only cost three cents.” They have very small amount of led paint and poisonous toxic carcinogenic, hydrocarbons, not a problem and we can this very cheaply and very profitably but they can’t build anything else with that factory. And when you build a kitchen like McDonald’s you can churn out burgers every 45 seconds but you can’t make albondigas. You can’t make something else. You are streamlined to do one thing and one thing only and as long as that serves your profit line it’s okay because I’m sure your focus group tested it to make sure that that’s what everybody wanted and that is a terrible way to build an economy. And that is a way to build the financial system. And that is a terrible way to build the payment network. Because effectively what the banks are saying to us is “We focus tested this and what people want is the ability instead of swiping their Visa card they can wave it over the reader saving almost two seconds and reducing their effort by at least four calories.” I mean we could deal with the four billion people who have no access to banking or clean water, we could deal with the fact that our world is a fragmented mess where the vast majority of humanity has no access to financial services or we could reduce the shoppers’ effort and make a swipe card in a float card. We could face the fact that the reason more than four billion people are unbanked is because we require everyone to be identified on every side of every transaction so that we can build a totalitarian surveillance system that the Nazi (0:18:10) would be jealous of to monitor every financial transaction from every corner of the planet because we have persuaded ourselves that our bourgeois sense of security will be protected not by solving poverty and not by reducing perhaps the bombing of other countries but instead by watching everyone all the time when they buy a burger, just in case. And we subject ourselves to this mechanism that has now streamlined itself and like the factory that can only produce little red fire trucks this a system that can only deliver privileged financial services for a tiny elite, sliver of the population worldwide with totalitarian surveillance tied up in regulations of each country with barriers on the borders not permitting international trade. A financial system where the government can apply pressure to stop you trading with WikiLeaks because they don’t like them while you can still send donations to the Ku Klux Klan and that’s not a joke, that’s exactly what happened. They have build a system that can only do one thing – enslave us. That can only do one thing – impoverish us. And that system removes freedom in the most efficient possible way to deliver profits and that system is broken and it doesn’t scale. But if that’s what you’re trying to do it’s the most efficient system you’ve ever seen and by comparison the crazy little mishmash system that we’ve built with Bitcoin, well, that’s wrong and it’s slow and it can’t scale and it’s inefficient and it’s not as serious and sophisticated as the international banking system but it delivers freedom and it allows us to unleash creativity. Thank you.

So, before we go into questions could we go through the RSVP list and see who’s RSVPed first and give them a copy of the book.

MAN #1: Yeah.

ANDREAS ANTONOPOULOS: I think that’s the fairest way to do it like first come, first serve.

MAN #1: That sounds great, yeah.

ANDREAS ANTONOPOULOS: Okay, great.

MAN #1: I was thinking before how to do it this is –

ANDREAS ANTONOPOULOS: We need a method. Otherwise at the end of the night we still have the books –

MAN #1: And we should also say that it is – I would say directed at a technical audience –

ANDREAS ANTONOPOULOS: Yeah.

MAN #1: – although it’s quite accessible so if you are not interested –

ANDREAS ANTONOPOULOS: If you’re not a developer this is probably not the right book for you and you can read it for free, it’s available online. It’s also available in 12 different languages translated for free.

MAN #1: Although to be honest we don’t have – we have – we can go by alphabet or you can choose three randomly because we don’t have the RSVP date here. So, A.K. Hart. (0:21:38) and Stefan but not Stefan Leichter (0:21:56) the other Stefan.

ANDREAS ANTONOPOULOS: There’s two and one of them was private enough not to give his last so there we go.

MAN #1: Yeah.

ANDREAS ANTONOPOULOS: If you happened to have a copy of the book I would be delighted to sign it. So, after we do the Q&A I’m going to finish my beer we can do a book signing and I’d be delighted to hang out to – if you want to take a photo or talk to me or whatever I’ll hang out with everybody. But first how about we do some questions, yeah?

MAN #1: Absolutely. We can do as many questions as you are up for.

ANDREAS ANTONOPOULOS: Okay.

MAN #1: I’m sure there’s going to be lots of questions.

ANDREAS ANTONOPOULOS: Great, sir?

MAN #1: Just so – because of a recording let’s use a mic.

ANDREAS ANTONOPOULOS: (0:22:39) video let’s a microphone to everyone.

MAN #2: Okay, yeah, yeah. So, for financial transactions there’s all kinds of amazing things you can do with Bitcoin if you don’t need a trusted entity because trust is just generated by – I mean guaranteed by the protocol, right? But then you get into public, I mean my personal interest is public policy questions –

ANDREAS ANTONOPOULOS: Yes.

MAN #2: – with the Bitcoin algorithms. And then a lot of the questions are subjective, right? I mean how would you split taxes in an equitable way and all of those things. Is there any possible way to get this kind of thing using the building blocks that you described Bitcoin has?

ANDREAS ANTONOPOULOS: I have no idea. Maybe. I am constantly surprised at what people come up with. If any of you’re a technical and you read how Lightning networks work you will be amazed at the complexity but also sheer genius of combining those elements in that particular way. So, this is like is there any way we can build a recipe that makes a dish that taste like this. Probably. And really the question is more about do you really need to do that on Bitcoin directly or could you build a system next to or above Bitcoin that still links into the security mechanism and trust provided by Bitcoin, neutral, mathematical, decentralized but is more focused on the needs of what you’re trying to do and that may also be (0:24:17) approach. Yes, who else has a question?

MAN #3: Maybe this fits really good, this question after. I am (0:24:29) I am the lead depth (0:24:33) development for the Ethereum project, I’m building this browser and –

ANDREAS ANTONOPOULOS: For which project?

MAN #3: The Ethereum project.

ANDREAS ANTONOPOULOS: I’ve heard of it.

MAN #3: Yes, I guess so. When you’re describing this building blocks which is a – it’s a really nice way of describing it because actually internally works different than it does from the outside like you say. I would like to hear your opinion about Ethereum in general because the Bitcoin building blocks it’s rather like you have Lego with three pieces only while having a smart contract language where you can build whatever you want you basically have an unlimited amount of building blocks.

ANDREAS ANTONOPOULOS: Yes.

MAN #3: And therefore like doing things like (0:25:18) the previous question I said – oh, ask was exactly is rather simple to do because you can build whatever you want. You can build whatever distribution system and smart contract you want.

ANDREAS ANTONOPOULOS: Yeah.

MAN #3: So I would like to hear your opinion about Ethereum smart contract in general and like the future where the Blockchain is moving, right?

ANDREAS ANTONOPOULOS: Okay. I’m a fan of Ethereum. I was involved in Ethereum from before Ethereum launched because Vitalik was kind enough to share the whitepaper with me for comment before he published it and I’ve been involved and fascinated from the very first day and when he sent me the paper I called him up to ask him and to talk to him about all the ways I thought this wouldn’t work. Skepticism is (0:26:06) healthy and he persuaded me that in fact he had really good answers to those things.

You know there’s a balance to be struck between having pieces in your Lego set that do more interesting things and there are some things you really can’t do with a square piece that has four (0:26:28) on it, you just can’t. You can’t make a wheel out of it. You can’t make a head of a little person out of it. You can’t make a window out of it, a transparent thing out of it which is why in Lego you have those things specifically designed as the exception. But if you’ve ever gone to one of these exhibitions you’ve probably seen the make entire buildings, the Death Star, the Star Trek Enterprise, the Empire State Building out of just simply different colored four square blocks because at enough resolution you can do some quite amazing things even just with little square blocks. There’s a place for both and I think those two technologies work really well together. Bitcoin because it’s more limited, on purpose quite honestly, is designed to deliver a very solid, very wide foundation that has very, very robust security which is why even though Ethereum is one-sixth of the capitalization it’s one-two hundred and fifty thousandth of the security power in terms of the hashing power that goes behind it. For some things you need a very solid, wide foundation and some things you need a spike, right? You need something that is very focused and the two worked very good together. In fact I think Ethereum can use some of the underlying security in Bitcoin to become even more robust itself, we don’t know yet. I am interested in both and I am even more interested in the broader idea which is how do you use the technologies within both Ethereum and Bitcoin to do things like two-way pegged sidechains and dynamic decentralized exchanges between the two so that you can have an Ethereum contract that’s paid for in Bitcoin that controls Bitcoin wallet or something else so you can use everything for what it’s best for and they can work synergistically. The best part about Ethereum for me was that two years ago when we had a crisis in Bitcoin people were like “Empty (0:28:47) exploded. Oh, my God we’re going to lose all our money” so they sold Bitcoin and went into fiat and this year they’re like “Oh, Mike (0:28:59) blew everything up. Bitcoin’s dead again for the 112th time” and this time they didn’t go into fiat. A good third of them went into Ethereum and was like “Wow.” That’s like not getting off the bus but changing to another bus and the end result was when the prices of both went up more people from the outside joined both Bitcoin and Ethereum and the whole space got bigger.

Cryptocurrencies worked really well together, the barriers for liquidity are very low and they make great synergistic partners so I’m very excited about the development of other cryptocurrencies that are now robust enough to stand on their own and to provide, you know, partnership with Bitcoin and promote the entire space. They’re not competitive. They are addressing different needs which is why I think Ethereum is so successful is because it is sufficiently differentiated from Bitcoin to be focused on a different need. I’m invested a bit in Ethereum so I bought like a small amount of Ether but that’s just a unnecessary disclosure. Yeah? I’ll take another question here. Okay. So, let’s see we have about time for four more questions before the answers no longer make sense. Go.

MAN #4: Hi, Andreas. One of the themes, your talks that strike me the most is that you point out the ethical dimension of software engineering.

ANDREAS ANTONOPOULOS: The ethical dimension of software engineering?

MAN #4: There is an ethical dimension to software engineering – that there is an ethical dimension to software engineering.

ANDREAS ANTONOPOULOS: Yes, yes. Absolutely.

MAN #4: Could you expand a bit on that and could you give us maybe some examples of ethical Bitcoin software engineering and unethical software engineering according to you, if there is such a thing.

ANDREAS ANTONOPOULOS: One of the great influences I had is a book by Lawrence Lessig written in 1991 called Code and Other Laws of Cyberspace. And in it Lawrence Lessig said that when you build environments in virtual space that transcend borders the code that is written to control those spaces to decide who’s is what, who has what access, who sees which part of your feed, how widely the information is disseminated become laws of the jurisdiction of cyberspace, they effect the social interaction between people. And so as a coder what you’re doing is you’re setting down standards for societal interaction and you can create code that as a form of speech liberates billions of people and you can create codes that creates a totalitarian, dystopian, fascist nightmare. If you write code that supports surveillance in gross violation of the rights of others you are working for the wrong team, right? because you have it within your capability to write code for good and there’s so many ways to do that today. It’s no longer difficult. You can write code in the public domain and open source openly and in collaborative fashion with thousands of other people around the world. I am terrified of some of the laws that are being set and code by some of the social media services. I won’t mention any, I am not a member. Because what they do is they are beginning to shape social interaction in a way that is completely out of control. And so, code has an ethical responsibility because in the end code is speech and it is one of the most political forms of speech because it is hugely inspiring and empowering and choose what you say and code because one day your code maybe running on millions of systems and be used by billions of people and if you give them a bit of power then you’ve empowered billions and if you took away a bit of privacy then you’ve enslaved billions and there are very few domains in our world where an individual can have that kind of power. So, yes, I believe the ethical responsibilities you have as a coder are very high. Okay, microphone over here, please. You next. Okay.

MAN #5: Thanks a lot, Andreas. That was a great speech. What’s your opinion why Mr. Nakamoto haven’t explain what Bitcoin is for exactly and why do you think he decided not to reveal his identity?

ANDREAS ANTONOPOULOS: Well, in Greek mythology there’s a story of Prometheus and Prometheus had the audacity to steal fire from the gods and give it to man. And as punishment for that he was tied to a rock where an eagle would eat his liver everyday and then overnight the liver would be regrown so he could be tortured all over again. Satoshi Nakamoto stole money from the state. Not stealing the money itself but stealing the technology of money and giving it to man directly and if we ever find out who Satoshi Nakamoto is the most likely result will be that someone will either metaphorically or quite literally tie him to a rock for an eagle to eat his liver out or her liver or their liver. The day after Nakamoto is found we will discover from the media that this person is a criminal, a terrorist, a muslim, a lesbian, a vegan, an anarchist, a punk rocker and biologically related to Justin Bieber. I just enumerated, you know, ten of the most horrifying things I can think of because that’s what the media is going to do, right? Probably at the behest of governments. We’ve got to realize that Satoshi Nakamoto disappeared just in time. I think it’s very wise to recognize that Satoshi Nakamoto is not a deity or a prophet and that even though he, she or they created a vision for what Bitcoin could be Bitcoin is not theirs and their idea of what Bitcoin could be or is is not divine truth. We are Bitcoin and Bitcoin will always be we not a single person. That’s the whole point and therefore it doesn’t even matter anymore what Satoshi Nakamoto thought Bitcoin is. In fact Satoshi Nakamoto was mostly arguably unsure about whether this would actually work. They were extremely hesitant to think that would work. So the bottom line is that Satoshi Nakamoto can’t tell us what Bitcoin is because neither he, she, they nor we yet know what Bitcoin will be. We are making history. We have to take responsibility for the fact that we are part of making history. And part of making history means that you have no idea what comes next because it’s never before and so you have to make your choices carefully and with a long view into the future. So the stewardship of Bitcoin has passed to all of us. What do you think Bitcoin is?

MAN #6: Thank you. I would say I completely agree that Bitcoin is a platform as a Lego which gives you creativity to create whatever you want so in this point I completely agree with you, I completely agree with you in a lot of the points but in this one for sure. So yeah, it actually gives you the ability to build anything starting from the currency, from the payment system and ending with the projects which are now built with Ethereum when you used the Blockchain to create the token for the trees trees in the Canada and then when somebody’s making a guitar from the trees you can follow the history of guitar in the Blockchain so I –

ANDREAS ANTONOPOULOS: Why not?

MAN #6: Yeah, that is also the great way to decrease the level illegal –

ANDREAS ANTONOPOULOS: Foresting.

MAN #6: Yes, exactly. So –

ANDREAS ANTONOPOULOS: So, here’s the other thing. Here’s the other thing that’s really important to understand. Bitcoin doesn’t have to be one thing, that’s the whole point of a platform. It can be that to you and it can be something completely different to me and it could be a different thing for everyone of you. in a system where you don’t require permission to innovate, to be creative where in order to launch an application on the network all you need is to create a new application and then find someone else who wants to interact with you using that application. The user base of a legitimate application is two, okay? For some applications one. You don’t need to focus group it or test it, right? The protocol definition launched it on the network it’s like how many people do you need to run an application on the network? Two, at most. And that’s enough for that application to be meaningful to you. So Bitcoin is. But Bitcoin is also whatever you want it to be. It allows you to express the application of just two people and that’s one of its magical capabilities because if you want to create a financial application on a modern financial system it has to be something that billions of people will use profitably for the banks which really means that you can only have very few applications. So, I think it’s important to think about it as something you own and I own and we all own. Let me take one more question. Gentleman in the back there. Let me get you a microphone and then we’ll come over here.

MAN #7: Thank you. It’s a short question. What is your opinion on the block size debate?

ANDREAS ANTONOPOULOS: Short question, indeed. You know surprisingly enough I’ve never been asked that this evening. I actually did a talk specifically on scaling and why scaling is not something you solve, it’s something that you continuously aspire to and push back as a frontier of scaling. Scaling is the thing you can’t yet do today and how you keep pushing that frontier back by failing to scale and then scaling a bit better which creates opportunities for new applications.

Scaling is not something we’re going to solve. Scaling is something that we will improve continuously hopefully over decades until we can do more and more and more interesting things. But the thing about the debate today is that there’s a lot of noise and a lot of drama and part of that is because we’re used to financial systems in which there is zero noise or drama, right? So the way traditional financial systems work is that a committee of 12 white men get together, they smoke a couple of cigars and they say “Well, how can we best help our shareholders? I don’t know shall we drop interest again?” “Well, we’ve already dropped them a hundred times and the economy is dead.” “Yeah, then I think a hundred and one times might do the trick.” “Okay, let’s drop them again and see what happens.” “I mean I’m going to be in the Bahamas next week.” It’s okay, I don’t give a shit.” It’s like “Okay John, you’re going to do the announcement?” “Sure, I’ll go do the announcement.” After zero deliberation and with absolutely no disagreement we are now dropping interest rates. That’s great. It’s like “Oh, at least they’re not fighting because that would be bad.” Democracy is loud and noisy and dirty and weird. If someone in Bitcoin could say “It’s been a year you’ve had you thing, you’ve talked about the block size limit but it’s now time to make a decision so, here’s what we’re going to do” and that’s the one thing you can’t do in Bitcoin because there is no one in control. So the fact that we can’t simply dictate our decision to everybody else, the fact that consensus is a ‘everyone together or not at all’ proposition is not a bug, it’s a feature. It’s probably the most important feature in Bitcoin. Ironically people don’t realize that now that we’ve reached a point where the distance in opinion is very, very small. So a year ago we’re like “20 megabyte block size limit with exponentially increase until forever and no hardfork,” right? And now we’re like “Well, how about we do 2 meg now plus segregated witness later” and the other side is “How about we do segregated witness now and a 2 meg hardfork later,” right? That’s really, really close. If you haven’t notice one of the interesting things that happened is Classic just reached more than 6%. Segregated witness activation on BIP9 requires a 95% consensus. So now Core has veto over the hardfork and Classic has veto over segregated witness. Interesting times ahead. Because when you have two parties and they hold veto on each other’s most prized possession compromise is just around the corner. It is an illusion that one party controls Bitcoin because you might appear to have a lot of power in Bitcoin if you continue to do the things that the consensus wants you to do and when you stop serving that consensus your power evaporates. So that’s what I think about the scaling debate which is I’m not pro-Classic, I’m not Pro-Core. I am pro-consensus and consensus is coming. Within the next year and a half we’re going to do segregated witness and a hardfork to 2 meg and thin blocks and invertible blue look-up tables and a number of other optimizations and then we will hit a scaling wall again and the debate will continue. Let’s take one more question over here. Yes?

WOMAN #1: What kind of a system in your opinion would replace the current banking system today?

ANDREAS ANTONOPOULOS: What kind of system will replace the current banking system? I have no idea. What I do know is that it’s not Bitcoin that’s going to necessarily cause the current banking system to need replacing. Part of this argument, you know, from our perspective (0:46:03) Bitcoin is fighting against the banks for the most part they don’t really know we exist except for a few people who have noticed and they’re like “Guys, over there. We’re in trouble.” But for the most part most of the banking system is a bit more worried about the fact that the world economy is lying on the floor, the heart rate is zero and has been zero. They’ve now applied a hundred and one electric shocks and it’s still not moving. Twenty-four central banks have the interest rates at zero and they’re like “Wow, we never went negative.” “How about minus five? What happens then? “Who knows? Let’s try it.” “But people will take their money and they’ll exchange it for cash and put in their mattress so, I don’t know let’s ban cash.” “That sounds like a good idea.” The world currency system is in the deepest crisis its ever been for the last two centuries and it’s not about Bitcoin, it’s about choice. So, we don’t know what’s going to play out because we were following only one part of the equation and the other part of the equation is completely outside of our control. What we do have a choice to do however is not yet this year, not yet next year but maybe 10 years from now when the central bank goes “Hey, we’ve got 550% hyper inflation but we’re all going to stick together, right? Nobody leave, everybody follow the sinking ship to the bottom” maybe a third of the population is going to go “Hmm, I don’t think so. I’m going to be over here in the Bitcoin life raft while you do whatever you’re doing.” In Venezuela it’s starting. They just arrest these Bitcoin people because Bitcoin is used by criminals; has nothing to do with their hyper inflation of 550%, I’m sure. This is going to keep happening. One day there will be enough people to say “No, I opt out” and then the world has changed. In fact the world already changed it’s just a matter of that change propagating to enough people. We are going to see dramatic change over the next 30 years and only a small part of it will be related to Bitcoin, a big part of it will be related to the fact that the fundamental Bretton Woods, central banking, free-floating currency system died at the turn of the century and the repercussions of that are going to be enormous. So, I don’t know what banking will look in a century but it will be different.

We have time for maybe one or two more questions?

MAN #1: Absolutely.

ANDREAS ANTONOPOULOS: All the way in the back there. Gentlemen, who wants to go next? Right here, okay. First gentleman in the back there and then we’ll get to you. Sorry, these people have been asking before.

MAN #8: So, with the Bretton Woods system being broken and traditionally infecting markets in developing regions by, you know, the World Bank and then the IMF deploying capital into these market say, you know, in parts of Asia, Africa, Latin America, how does Bitcoin expand and take advantage of these developing markets? How does it become a more used currency amongst a greater portion of the population without having macroeconomic and geo-political policy dictating its expansion?

ANDREAS ANTONOPOULOS: That’s a great question. The simple answer is with three of the people in this room and so the people who can code Bitcoin’s user interfaces suck, some of the security implementations suck, the documentation sucks and no one can use this yet unless they spent hours and hours and hours trying to understand this weird thing.

In 1989 or early 1990 I sent my first e-mail, very first e-mail. I connected over a modem to a remote account where I logged in to a Unix shell. I proceeded then to download, compile, and execute a mail program. I used that to compose an e-mail message, I got the e-mail address of another person who was on another continent. I sent him an e-mail and it was amazing, it was amazing. Thirty-six hours later they received my message. It only took about two hours of work from someone with, at that time basic, you know, Unix command line, C programming skills. Exactly 20 years later my mom picked up the new iPad I sent her and went (0:51:22) and sent me an e-mail. That’s the transition we have to make. Today Bitcoin is like being thrown into the bowels of Unix and nothing make sense and all of the words don’t mean what they actually do and none of the interfaces are polished or useable and you do something and it does the exact opposite of what you expected. It’s almost impossible for individuals to secure their own Bitcoin well because it’s bloody difficult, right? And we’re seeing change, we’re seeing new devices, new user interfaces.

When I first joined Bitcoin there was one wallet and we didn’t even call it Core then, we just called it Bitcoin. When we get to the point where my mom can use Bitcoin we’re beginning to win. And so that should be your goal if you’re a developer, designer, user interface designer or documentation person.

In the meantime what we can do is we can help the people whose need is so high that they will take the tremendous leap of faith and the very difficult user experience leap to reach Bitcoin because for them it’s the matter of life and death. It affects their ability to generate wealth for their children which means every single taxi driver you meet you ask them “How do you send money home and how much does it cost you?” and then you teach them about Bitcoin. Every single immigrant you meet you teach them about Bitcoin, you help them set up wallet and you them some Bitcoin because once enough people learn about that the places where it’s the biggest effort to use money Venezuela, for example today, Argentina, Kazakhstan, the Ukraine, increasingly Greece and Cyprus where people are under currency controls, where they are under hyperinflation or places where to wire money from an immigrant worker to their family cost 15%, 20%, 25% you know think about the power of sending your family 20% more every week by finding this crazy technology no one’s ever heard of you help those people. Everyone in this room is an ambassador for Bitcoin and the way you’re an ambassador for Bitcoin is by confounding the very message of the media. The media says that Bitcoin is only used by terrorists, pedophiles, drug dealers and pornographers. By a show of hands how many of you in this room are not one of those things? When the media sells that message and the average person goes out and they meet someone and they are a Bitcoin using dentist or a Bitcoin using interior designer or a Bitcoin using architect or Bitcoin using taxi driver the person they meet goes “Hang on a second, I thought you all were terrorists” right, and you break that opinion. Also they then go “Wasn’t Bitcoin dead like three months ago? Wasn’t the CEO arrested in Japan? I thought I read something about that.” So, confound expectations, be an ambassador, teach people how to use it, give them a small amount of Bitcoin, don’t explain, help them experience and we move forward. All right, let’s take one more question here. Thanks.

MAN #9: Hi, thank you for your talk. So, I would like to ask you what to you is the most interesting thing happening right now on Bitcoin and maybe cryptocurrencies in general and maybe if you have time what is your opinion on proof-of-stake because there are like people saying it’s fundamentally flawed because there is nothing in stake.

ANDREAS ANTONOPOULOS: Well, I am currently on a diet that reduces my – preference for carbohydrates, you know, I’m trying to prevent diabetes at an age while I still can so I am a big believer in stake. As for proof-of-stake I think it’s rather interesting but we only have one proof-of-work consensus algorithm that works today. A few years ago my main work was trying to understand just how Bitcoin works at a very fundamental level and keep understanding at a deeper and deeper level. Now my main job is still understanding Bitcoin at a deeper level but also reading about all of the other things that are happening and just when I think I understand something new comes out and I’m like blown away. Five months ago I did not know anything about segregated witness and then Peter (0:56:46) pulled something out at a conference and blew my mind away and now that’s that. I started reading about Lightning network six months ago, I started understanding it about three or four months ago to a level of depth and it’s blowing my mind. There are dozens and dozens and dozens of projects that I know of that excite me tremendously because I can see all of these raw creativity and sometimes I think this is really, really funny because the banks are like and the governments are like “We’re going to regulate Bitcoin.” You have no idea what is going on this space. You have this caricature version of Bitcoin in 2009 that you’re trying to regulate meanwhile, you know, Peter (0:57:35) and Greg Maxwell were building confidential transactions and segregated witness and payment channels and Lightning network and God knows what else and there’s thousands of people building interesting things so yeah, good luck with that. It’s overwhelming how many interesting things are happening, overwhelming. I started writing the second edition of my book and I was like “I’ll just make a list of the things that are new since I wrote it two years ago or a year and a half ago that I need to add to the book” that’s a four-page document and I’m needing to edit now because it won’t fit, right? And by the time I print it I’m going to start working on the third edition list because it will already be almost obsolete, right? That’s the nature of putting things on dead trees.

I find a lot of the new features fascinating. One of the things here’s I’m going to blow your mind by probably the end of 2016 Bitcoin will have a hybrid proof-of-work, proof-of-stake system. What? I didn’t see that announcement. By the end of 2016 Bitcoin will have a hybrid proof-of-stake system. Why? Because Lightning network is a poof-of-stake system and people haven’t yet realize that Lightning network is a proof-of-stake system. In order to set up a functioning channel on Lightning network you have to commit money to a multi-sig address and the more money you have committed to the multi-sig address the more transaction rates it can handle and the more fees it can generate locally and the definition of I stake money and it generates more small amount of fees while I have that money staked is a proof-of-stake system. Only it’s a completely trustless proof-of-stake system based on Bitcoin transactions running on top and guaranteed by Bitcoin’s proof-of-work. And I only realize this about six months ago that’s what Lightning was and I then had to go to one of the developers who’s writing and go “Just to make sure am I getting this right? Is this really a proof-of-stake system?” and he’s like “Yeah, you could call it that.” I’m going to go call it that in Berlin. So, the thing is Bitcoin is full of surprises and proof-of-stake could be a really important part of the consensus algorithms in our future. What it does allow us to do is scale much farther than proof-of-work. So, that’s a benefit and I think we’re going to see a lot of development. Let me take last question. Who’s got a really good one? Oh, come one don’t be shy. Who has a mediocre question? All right, in that case I’ll wrap it up. Thank you all –

MAN #1: Wait a minute, wait a minute bad question.

ANDREAS ANTONOPOULOS: All right. Well, one bad one microphone coming to you. That takes a lot of courage.

WOMAN #2: Hi, I’m (1:00:57). I (1:00:59) experiences () and I just heard about cryptocurrencies today.

ANDREAS ANTONOPOULOS: Wow!

WOMAN #2: So, I was just trying to decide whether this is worth looking into and it seems like there is a real question of ethics going on and I know you kind of spoke to the media and stuff but I was in (1:01:24) like real job interview today for a profit company and I just – I want to know what the role of user interface designers and like (1:01:39) and stuff is for, I don’t know, this kind of platform like where is their room to be, I don’t know, so you thought it’s a bad question?

ANDREAS ANTONOPOULOS: No, it’s not at all actually.

WOMAN #2: What I’m trying to figure out is like what’s important about it and where to find the spot inside it, you know?

ANDREAS ANTONOPOULOS: I did a presentation which you can Google at the (1:02:05) Idea Lab in San Francisco. It was actually – the Idea Lab is the company from San Francisco I did this at Harvard University as part of a workshop between Idea and Harvard and they were doing a workshop on design fundamentals on hackathon and they had all these young designers to come and do design for Bitcoin and I did a presentation which basically was an hour of me telling them everything that sucks about Bitcoin design. And the really interesting thing about Bitcoin is that if you look at it simply as a computer technology you’re missing the point. Bitcoin is probably the fifth change in a technology that is the most ancient technology we have as a human species and that’s the technology of money so it’s like barter precious metals, fiat pieces of paper, credit cards, Bitcoin. You know one of the elements of design is taking something that is new and creating metaphors, visual metaphors, linguistic metaphors, ways to make something that is completely new and different accessible to people who have an existing paradigm in their head and helping them understand it through metaphors by setting up expectations of behavior. So if we call it Bitcoin what does that mean? What do you expect it to behave like? If you say this is a wallet what do you expect it to behave like? So for user interface designer nothing is better than taking a really, really strange disruptive technology that affects the most important technology we use in the society – money and change it in a way that it hasn’t change more than five times in more than two million years and taking that technology and trying to explain it to people through design and the good news is the attempts we’ve made to explain it through design are laughably bad.

So, let’s take Bitcoin the name, right? What do you call the most abstract form of money ever created? Let’s call it a coin which is the most physical money ever created. That’s not a good idea. How about we put the prefix bit in front which in some languages means small because that’s what you want to associate with money and in other languages means I am a geek. That should alienate anybody over 40. Now let’s take the main user interface that everyone will interact with. It’s a collection of keys. Let’s not call it a keychain, let’s call it a wallet because the one thing you can do with a keychain is make copy of it. If you have a key to your house and you make a copy of the key to your house another person can get into your house that makes far too much sense. Let’s call it wallet. Let’s call it the thing you have in a pocket that you can’t make a copy of that actually holds all your money even though a Bitcoin wallet doesn’t hold any of your money and you can make a copy of it because all the coins are actually in the network and it goes on and on and on and on. Bitcoin is a space played by design decisions made by engineers. I mean what greater challenge could that be for a designer to come in and fix all these mess. As far as work is concerned the interesting thing is that this space has been generating thousands of jobs, well-paying jobs. There are over two billion dollars of investment that have flowed into this space just over the last two years in a time when outside of this space the vast majority of jobs are minimum wage, unqualified and in this space the jobs are creative and sophisticated and highly paid. I’ve been – I know you said you had an interview for a real job that pays real money and I understand that. This has been my real job but I’ve been earning fake money, internet money, Bitcoin for just over three years now and I live happily with an income paid in Bitcoin. In fact interestingly enough this seven-city tour involves six talks which are organized by Bitcoin meetups that are helping me support my expenses and one conference that is organized by Swiss Banks. Who do you think paid me faster? I sent the Swiss Bank the invoice then they asked me for the Swift code but my bank was closed so I had to wait until the next day. Then I called my bank to give me the Swift code, I sent them four pages of instruction, they made the payment, nothing happened for two weeks. Then I followed-up with my bank and they told me that they can’t find the payment so they asked me to follow-up with their bank but my bank was open but their bank was closed so then they followed-up with their bank the next day and they couldn’t find the payment so they asked me to follow-up with my bank but my bank was closed. So the next day I called my bank again to ask where wire transfer is and they say “No, you see what happen is this is a US dollar account and they sent Swiss francs.” So you converted them. “No, no we can’t convert them if the wire is in Swiss francs and the destination account is US dollars it can’t go in.” “Well, can you give me the details of the wire?” “No, we can’t give you information about the wire unless you are the verified recipient. So, tell my which company sent you the wire?” I said “Well, I received a dozen wires every month. All of my work is international. I don’t know, you know, maybe this was the German wire?” “No, no it wasn’t a German wire.” Was it the Swiss wire?” “It sasn’t the Swiss wire.” “Was it the English wire?” Oh, you’re getting warm. Like this is some kind of bizarre, sadistic, 20 questions game with my banker in order to receive my money. Long story short, the wire didn’t come through it was bounced back. Bounce back means they didn’t get it either. So I call them back and I said the wire was rejected. They said well, we didn’t get it. So we’ll call your bank. My bank is closed today so they called the bank the next day and then they found out that the bank wire has been lost. Of course these are the kinds of things that happen when you try to do banking with Botswana. Wait no, it was Switzerland. It was Switzerland it’s the central banking of the world and they can’t do a wire transfer. So, they’re still looking for the wire. It’s been more than seven weeks. They haven’t received the money back. I told them about a very important American expression which is NMP – not my problem and said you have to pay me anyway. Like you lost your money Hmm, sorry, you used the banking system I used Bitcoin that’s why I told you to pay me in Bitcoin so then they sent me another wire which took only four days to arrive. And this happens to me with half my payments. So now my contract says if you want to pay me in Bitcoin this is the price. If you want to pay me in anything else this plus 20% because that’s the fee – and I know I’m not answering your questions anymore but I’ll get back to it. That’s the fee that is required for me to have to talk to a banker for an hour a week.

Contrast this to this experience. On Saturday afternoon I sit down, I’m like okay, six Bitcoin meetups have agreed to help me with expenses, I’ve shared out the cost with all of them, I’m going to send out six invoices to six Bitcoin meetups in six different countries which used three different currency and I sent out the e-mails and I go make a sandwich and I come back fifteen minutes later it says paid, paid, paid, paid, paid, paid. And the thing is it was Saturday afternoon in the United States and it was Saturday night in Europe and I had just been paid Saturday night from six different countries and six different companies in 15 minutes and 10 minutes later that money was in my account irreversibly.

So, one of the – to go back to your question – one of the advantage of working in this space is that when you get paid, you get paid. And you get paid no matter where you’re working in the world and there’s no such thing as we sent you the wrong amount we can take it back out of your account, that can’t happen anymore. And as a professional you can bill and work anywhere in the world and work it with companies that work in any other currency and use Bitcoin as the international money of the internet. So, I know that’s probably not very appealing to you right now but there are opportunities for designers. The work is very high quality and we desperately need good designers and you won’t be able to pay any of your bills in Bitcoin at first. So when you receive the Bitcoin you’re going to have to convert it to euros but that’s very easy to do and right, and how many people here convert –

MAN #1: These guy – these guys in the corner and they are actually offering service so they’ll pay your bills and you pay them in Bitcoin.

ANDREAS ANTONOPOULOS; So, you can pay some of your bills directly in Bitcoin but even if you can’t all of them, even if you couldn’t one of the things I do is I convert – when I receive Bitcoin I immediately convert some of it into dollars and then I use that to pay the bills for the people who can be paid in dollars. I’m using (1:13:14) a change, coin base, yes. And I – as the rule goes I do not leave my money on the exchange. I move it in, I convert it, I move it out because if it’s your keys it’s your Bitcoin. And if it’s not your keys it’s not your Bitcoin. That’s the lesson that we all learn during (1:13:41) so, let’s try not to have to be taught that lesson again. I think we have one more question in the back and then we’ll wrap it up. The gentleman over there.

MAN #10: Hi!

ANDREAS ANTONOPOULOS: Hey!

MAN #10: What do you think a world where banks become technology companies and not banks anymore and then you give them smart contracts or Blockchains as the tool with which we wanted to avoid this control? Like it will be –

ANDREAS ANTONOPOULOS: I think we will see – first of all banks are technology companies today and part of the banks is 1970s technology, that’s the part that touches the most government and parts of the banks is, you know, cutting edge, 2016 machine learning technology and that’s the part that screws the stock market and you’re out of all of your savings very effectively with high frequency trading. But banks are technology companies, banks are not financial companies they are fundamentally software engineering companies and have been for more than two decades now. They will adapt. The vast majority of the banks will adapt when they are pressured to and when they need to adapt to a world in which digital currencies are part of the things that their customers need and use and when that’s the case they will adapt and some of them will thrive in this new world of transparent digital currency and decentralized legers and transferrable assets and tokens and all of that. If you talk to some of the – you’ve got to realize, you know, banks are not bankers. Bankers for the most part are not evil people they have some socio-paths at the CCO level but most of them are nice people trying to pay their mortgage and raise their family and some of them are really cool geeks who are doing things with quantum, you know, with – sorry, quantitative trading and algorithmic trading and when they look at Bitcoin they go “Oh, wow, I would love to play in that with a lot of money,” so they will adapt. I remember a time when phone companies still use the telegraph part in their name and they still were very proud of the telephone part in their name. Today all phone companies are internet service providers first and voice is one of the applications they carry and they were the biggest, if you like, opponent to the internet and now they are the internet. So, don’t be surprised if two decades from now a big chunk of the infrastructure of decentralized currencies and a big chunk of the liquidity of decentralized currencies is offered by transformed banks that have learned this lesson. But keep in mind that in that process some of them will go out of business very, very quickly, yeah. All right, enough questions.

MAN #1: All right.

ANDREAS ANTONOPOULOS: Thank you so much for coming today. Thank you.

Written by Andreas M. Antonopoulos on April 14, 2016.