Video - Bitcoin Money As Language and the Multi-Currency Future
In this talk, Andreas looks at currency as a form of language, discusses the implications of a multi-currency future and the proliferation of non-national money. From the Bitcoin Expo in Toronto, April 2014.
ANDREAS ANTONOPOULOS: Yeah, good afternoon everyone. I hope you can hear me well in the back. Everybody hear me?
Andreas Antonopoulos: All right, great. So, I am usually very high energy but I’ve spent the last three days really enjoying this conference a lot and I am exhausted. I’m sure many of you are too. So you’ll forgive me if this is not my usual high-energy presentation. I’ve been thinking for two days about what I’m going to talk about during this keynote.
I left it purposely vague because I like to try to assimilate some of the ideas that come from the conference as I experience it and try to put it together into a bit a narrative. This is going to be a bit more of a philosophical talk about the future of cryptocurrencies and what I’ve learned here at this event. So, first of all thank you all for coming. I think this has been a spectacular event and have a lot of fun.
If you come to this event it’s called The Bitcoin Expo 2014. It might have been called The Bitcoin and Ethereum Expo 2014. I don’t know if you noticed Ethereum had a pretty big presence here.
An interesting question comes up which is – actually quite a few asked me does Ethereum threatened the future of Bitcoin? Does it steal some of its thunder? And that’s a question that I’ve heard several times and I’ve heard people refer to that issue in trying to understand altcoins and wondering whether the altcoins essentially threaten the dominance of Bitcoin of if they make Bitcoin weaker of if they distribute the value of the network too broadly.
I’ve been thinking about this question for quite a while and I think fundamentally it’s a question that evokes the old paradigm of currencies. We’ve all going to open a world where currencies are forced up us in a monopolistic fashion where currencies are defined strictly by the geographies in which they occur and where the choice of currency is not yours, it is an accident of birth just like many other things in our lives.
As an accident of birth I was born into an upper middle class family in Greece fully loaded with the (0:02:25) lottery of privilege in my life and I also acquired the drachma. I didn’t choose the drachma, it happened to me any more than I choose to be a white male, any more than I choose to be born into a family of educated people. Those things simply happened to me.
Currency as we understand it is an artifact of the nation state and it imposes upon us certain constraints. We don’t choose our currency, it chooses us. And we are forced to use that currency in all of our interactions. We don’t have a choice until 2008, that is. And so now we live in a slightly different world but a lot of the old paradigm still persist in our thinking in a world where you currency is a monopolistic nation state artifact that is constraint by geography it’s a zero sum game.
The currency is the flag, is the nation state. It is the expression of the economic value of your state and it defines your interactions in a world of geo-politics and a global struggle for domination among nations. It’s not up to individual choice. It has nothing to do with the individual except for that one individual whose face is on the currency, you know, after recently here in Canada some old white lady called Elizabeth and that’s the only person who really has control over the currency.
Up to that point I was thinking how many currencies will there be? How many altcoins will there be? And how will altcoins compete in a world of cryptocurrencies? As we move into the future will there be hundreds of altcoins? And if there are hundreds of altcoins what does that mean for the value of each of the altcoins? How do they compete? And that was the wrong way of thinking about it because I saw currency as a zero sum game just like it had imposed in my world view from the nation states that create currency. And then I started thinking of currency as an application and then I started thinking of currency as a means of expression.
See, money at the very root of it is a language. It’s a language we use to express value to each other. When I give you a dollar bill I am saying that I want to hand you the equivalent value. I am communicating my desire to exchange value with you because I appreciate something you can do or something you can give to me so I am using this as a token of language. And this thing happens in human societies whether you have currency or not. And if you don’t have a currency with a stamped face on it you invent it and you can see this.
One of things that really captivated me was understanding that if you have a primary school environment and you watch children in their natural habitat, very unnatural habitat in most schools but in any case, they don’t have currency. Young children don’t have currency and they don’t understand currency. So what they do is they invent currency.
They start trading rubber bands, Pokemon cards, Tamagotchi, tokens of affection, tokens of popularity. Humans create currency as a means of expressing their desires, of expressing their individuality. So I thought what happens when a five-year-old in a primary school can use a website to create Joeycoin to compete against Mariacoin in a game of popularity within their school and then it dawned only.
To ask the question how many currencies will exist is equivalent to ask the question how many bloggers will there be on the internet. And the answer is simple – all of us. Currency is now a means of expression. But if everyone can create a currency how does it derive value and what does it mean? What is the difference between currency as an expression of popularity, as an expression of desire, as a mean, a fad, a brand.
Down there right now Canadian teen idol is running. One of those contestants, Amar, has a big fan group. Maybe he wants to create Amarcoin so that his fans can express their desire to watch more of his dancing. Why not? People have talked about me doing Andreascoin I think it’s a bit silly but why not? I think at some point we’re going to see things like that happen.
So, we’re not going to have hundreds of altcoins, we’re not going to have thousands of altcoins, we’re going to have hundreds of thousands and then millions of altcoins and then there’ll be thousands of altcoins being created everyday to organize local communities, to express bands, to create popularity contests for a short term, for fads to codify the latest internet mean to create the latest fad.
How the hell do you tell which ones have value and which ones don’t have value? That’s a very different world from the one we live in today. And I’m looking for parallels to understand what this means and I often go back to looking at the emergence of the first decentralized system in my lifetime, the internet and what it did for understand information, information scarcity, opinion and authority of opinion and what it did to us as a society as the internet emerge into our global scene.
So there used to be a time that if you wanted to read authoritative opinion you bought a piece of paper from an organization that had a printing press that was three stories high and four football fields long and had a really great name like The New York Times. And that organization could buy ink by the barrel and through that ownership of this enormous manufacturing facility they had the weight of authority and so we imbued authority into these institutions and we use that authority to decide which opinions mattered and which opinions didn’t. We use them as gatekeepers of authority to give us guidance in understanding opinion and then the internet destroyed all of that because suddenly anyone could print and anyone could publish.
And I remember in the early days people talked about “Well, how the hell will we know which opinions matter? If anyone can have an opinion the world will come to an end surely.” A funny thing happened. We shifted from a world in which authority of opinion came from the issuer, from the authority of the publisher by proxy into a world where we have to look at opinion on its own merit, on the content of that opinion and we arrived at world where Judith Miller of The New York Times prints bullshit that sends an entire nation into war and an Egyptian blogger on the frontline revolution prints the truth and nobody wants to hear and suddenly the world is upside down.
Authority is no longer the person who owns the printing press but it is now the person who has the content that matters. And we just did this to currency because now the authority is not derived from the sovereignty of the issuer, from the printing press of nation state that can declare through monopoly and use of force that this is the currency you will use. Now we can currency and a five-year-old can create currency and maybe the currency that the five-year-old created has monetary value. Maybe it doesn’t. Most likely it doesn’t, some will. And so we need to get used to a world where we have to judge currency not by who issued it but by who uses it. Or rather how many people use it and what they use it for.
So, let’s imagine a world in which currency is being used in a widespread fashion and no one remembers who created the currency or why. They only know that within their local community it has purchasing power. As a little fanciful thought imagine a decade from now in a rural village far detached from our developed nation civilization villages exchanging two currencies.
One that has a Shiba Inu, a Japanese breed of dog on the front and is pronounced Doggiecoin or Dogecoin or Dogcoin and I’m not quite sure but it doesn’t really matter but you can buy half a dozen eggs with hit. And other villages are trading in other currency that has an old white lady called Elizabeth on it and they have no idea who Elizabeth is and they don’t know why she got her picture on the coin. Maybe she wrote a nice song, maybe she won Canadian teen idol nobody remembers anymore but you can buy six eggs with it.
And to those people it doesn’t matter who issue the currency. What matters is whether it has purchasing power or not. The currency is now evaluated purely on its monetary basis because of adoption, because of use and there is one fundamental difference between those two currencies. One has a predictable, stable, algorithmic monetary supply and the other has an old white lady called Elizabeth on it. So, in fact, one of them has real intrinsic value because it’s removed some of the uncertainty of the monetary system from it, the other one doesn’t really.
We need to get ready to live in a world where multiple currencies will co-exist. So currency as a means of expression, currency as a tool of language is no longer up to the issuer. It is up to us as individuals making a choice to use that currency and we give it value through our use. We give it value through adoption.
And we will be surprised by some of the currencies that will emerge from a fad, that will emerge from a joke perhaps even a sick joke and will explode into viral consciousness on the internet and then become real monetary powers in use across a broad population surprising all of us. How the hell do we operate in that kind of world? And what does it mean to have competition between currencies if there are millions? If digital scarcity really applies but only on a local basis and only within the context of each one of these currencies, a scarcity not derived from the issuer but is derived in terms of adoption and in terms of the token itself. We’re going to have currencies for hues.
Already you have Bitcoin that provides a very specific monetary policy, you have Ethereum that can provide a contract platform, there’s Namecoin for distributed naming conventions and there’s many others and there will be many others that will solve other problems, protein folding, search for extra-terrestrial life. Maybe we’ll have currencies that are better for microtransactions and micropayments with very fast resolution. Maybe we’ll have currencies that are better for larger transactions like real estate, who know. If you think these currencies as an application then you realize that it doesn’t really matter.
On the internet e-mail was the granddaddy of them all, or the grandma of them all. And e-mail like Bitcoin was the killer app that allowed us all to see the power of decentralized communications and adopt this new platform and it was enough to create utility to spread this network all around the world but it was only the first app and then instant messaging and forums and bulletin boards and Facebook and Twitter. Do you worry that Twitter will destroy e-mail?
Do you worry that Facebook will destroy instant messaging? Do you worry that the value of e-mail is eroded somehow by the existence of Twitter? We don’t worry about this these things because we understand that each one serves a different purpose. Some allow us to express a modality of instantaneous real time communication.
Some allow us to have asymmetric communications where using Twitter I can address an audience of thousands and receive real time feedback without having to have a bi-directional synchronous communication. Some like e-mail allow us to have more long-term asynchronous communication between people. And what we do is we build interfaces, we build abstractions.
We build unifying tools that allow us to use all of these modalities from a single interface and fluidly move from one to the other so that we can start transmitting a short text message to someone, get into a conversation, convert that to an audio conversation, decide that we want to show them our dog, turn on the video camera, convert it into a video conference and when we’re finish with the conversation follow-up with an e-mail to summarize what we agreed on and now we’ve gone through five different modalities of communication in a single unified interface. I think that’s what’s going to happen with currency.
We’re going to start treating currency as an application and in order to do that we’re going to need interfaces that allow us a unified currency experience that allow us to have a single wallet with perhaps 150 different currencies in it and because inventions like sidechains and decentralized exchanges and fluid and liquid systems and the complete absence of monopoly of locked-in, of hostage situations around the currency we will be able to instantaneously and at a very low cost convert from Bitcoin to Namecoin to Dogecoin to Ethereum and if we can do that then it doesn’t matter because we won’t do that, our unified wallet interface will do that by trying to see what we’re trying to achieve with our currency.
If I am buying a house it might express my transactional will in the modality of Bitcoin because that’s the most suitable currency. When I try to name the domain for that house it will convert some to Namecoin. The contract itself will be paid for in Ether and then I tipped the bartender for the cup of coffee they gave me when I got up that morning I’ll tip them in Doge. My interface won’t hide all of these differences. I can see a world in which we can smoothly move between currencies in a multi-model way.
There’s one other thing that comes out of this which is a very real possibility that we will abstract value and exchange rate from the actual currency. If we have a multi-model communication system we no longer need to look at the individual values and exchange rates of all of these commodities or assets or currencies or call them whatever you want.
There’s a very real possibility we’re going to have an index currency, a currency that is not in itself tradable, that has no intrinsic uses of transactional commodity but instead is only used to express the purchasing power of vis-à-vis the various coins in our wallet.
I may have a thousand unified currency units – you can’t buy unified currency units, you can buy Bitcoin and you can tell me how many unified currency units that is – and price everything in unified currency units and then I pay in Doge or Namecoin or Bitcoin or Ether depending on how I want to use it. We already do this in financial markets. In fact you can trade S&P 500, you’re not buying a single company what you’re buying into is the aggregation of all of the different things that are in the stock market as an expression of the total value of the market and you can then use that meta instrument in order to price transactions.
For example, the London Interbank overnight rate is used as a metainterest rate to contractually tie things to a global set of interest rates and so you don’t need to say “I will buy this at whatever the Bundesbank says” you say “I’ll buy this at LIBOR plus two” and then you have a stable point of reference with which you can do transactions. I expect we’re going to see much of the same with currency.
We’re probably going to see metacurrencies whose only purpose is to aggregate the value in all of our wallets from all of our currencies and allow us to understand value as an abstraction that exist independently of the currencies in which it’s expressed. So that’s a slightly philosophical perspective and that’s why I think it doesn’t matter and Ether is not competing with Bitcoin, Bitcoin is not competing with Litecoin. They are all means to express the transactional modality we want to use at any point in time to achieve the goals we want.
With this comes a very important and powerful tool. In the choices we make with these currencies we’re also choosing to align ourselves with the community. Adoption is not simply the act of using the currency it’s also attaching oneself to a community that has also choose to adopt that currency. When I choose to adopt Bitcoin I am a believer in monetary policy of 21 million total coins as a stable source of value.
If I choose to adopt Freicoin I am a believer in an inflationary basis demurrage coin that has a negative interest rate, that enforces consumption and discourages hoarding. I am choosing my politics through my currency and through that choice I am associating myself with the global community that has made the same choice as me and that is expressing that choice through currency.
Just like when I choose an application on the internet to communicate with I’m also aligning myself with the corresponding community. I don’t use Twitter just because it’s the convenient communication mechanism, I use Twitter because I also agree with many of the concepts and philosophies of the community of other people who choose to use Twitter. But with currency that choice is a much more power political choice. We have entered the realm of metapolitics, of politics by algorithm, of the ability for global communities to form around a common consensus of politics through the choice of currency. You want inflation? Use an inflationary currency.
You’re a gold bug, use a deflationary currency. You want a currency that creates a guaranteed minimum income from the poor? Use a currency that expresses that politics. You want a currency that puts aside tokens for carbon sequestration? Use a currency that expresses your green politics. We’re going to start seeing communities.
Politics and currencies converge and allow us to make these choices just like I can support Joeycoin in order to say that Joey is in fact the coolest kid among the five-year olds. I can support Greencoin because I care about global warming or not, right? I can support Meatcoin if I really, really like red meat whatever, Worldwidewrestlingcoin, no problem there’ll be one of those too.
MAN #1: (0:23:59)
ANDREAS ANTONOPOULOS: Absolutely. So, really all of these things are forms of expression and that comes back to the original point that currency in the end is really a form of language. It’s a language by which we communicate our expectations and desires in value and now that we can do it on such a massive scale, now that everyone can create currency our choices won’t really matter. We’re pass the zero sum game. This isn’t about nation states anymore.
This isn’t about who adopt Bitcoin first or who adopt cryptocurrencies first because the internet is adopting cryptocurrencies and the internet is the world’s largest economy, most populous economy and is the first transnational economy and it needs a transnational currency. To summarize what we’ve really done is we’ve inverted the very basic and most fundamental equation of currency which is that from millennia until the year 2008 sovereignty defined currency.
Sovereignty was the basis upon which currency could be created and that currency allow that sovereignty to be expressed. The monopolistic control of currency is the basis of sovereignty. And now the internet has a currency and the internet is going to use that currency to create sovereignty. After 2008 currency creates sovereignty and the internet has its own currency which means the internet has purchasing power, which means the internet has economic freedom, which means the internet can exert that economic freedom in post-nationalist way, in a way that ignores borders and makes the nation state not obsolete but simply less relevant because when an Egyptian blogger cannot only blog about the revolution but also fund that revolution in Bitcoin and they can connect with people from all around the world who share their ideals for self-determination and freedom.
They are expressing their own sovereignty as an individual and they are expressing the sovereignty of their community through the use of that currency. So this is the world we now live in. A world in which currencies can co-exist and where currency and its user adoption creates sovereignty. That’s basically what I wanted to talk about today. Thank you.
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