Video - Disrupt Conference - What is Bitcoin?
In this short, "TED style" talk, Andreas delivers an introduction to bitcoin for a general non-technical audience. Delivered in Athens in November of 2013, this is one of the most shared bitcoin videos, an easy way to explain bitcoin to anyone.
ANDREAS ANTONOPOULOS: (Speaking in foreign language) Good afternoon, Athens. Thank you for having me today. You want disrupt? I got disrupt. No, I’ve got downright revolution. We’re going to talk about the most exciting, most interesting and probably the most important technological innovation – no, invention in computer science of the last 20 years.
I’m here to talk about Bitcoin and perhaps you’ve heard about Bitcoin before. Let’s do a quick check. How many of you here have heard of Bitcoin before today? All right, we’ve got a good crowd. How many of you owned Bitcoin? Even better. All right.
Bitcoin is digital money but it is so much more than that. Saying Bitcoin is digital money is like saying the internet is a fancy telephone. It’s like saying that the internet is all about e-mail. Money is just the first application. Bitcoin is a technology, it is a currency and it is an international network of payment and exchange that is completely decentralized.
It doesn’t rely on banks, it doesn’t rely on governments and we have never done this before in the history of humanity. This invention is truly revolutionary and when we look back at this moment we will see that this is a historic moment in the evolution of computer science but also a social and political revolution in the making.
So, let’s get started. Bitcoin is digital money. It’s money just like euro or dollars only it’s not owned by government and you can send it from any point in the world to any other point in the world instantaneously, securely and for minimal or no fees at all.
Two days ago we saw one of the largest transactions every recorded on the Bitcoin network where someone transferred 150 million dollars between two Bitcoin accounts in one second for zero fees and just that allows you to grasp how disruptive this technology is going to be in terms of international payment systems. But this is just the beginning.
Bitcoin is a digital currency that came into existence in 2008 as an invention by a person called Satoshi Nakamoto and he published a paper where he posted he had found a way to create a decentralized network that could achieve consensus agreement without any central controlling authority. Now, if you have studied computer science or distributed systems this is known as the Byzantine General’s problem. It was first posted in 1975 and until 2008 it was an unsolved problem.
But we immediately understood importance of solving this problem and Satoshi Nakamoto said I have solved it and guess what happen next. Everybody laughed and ignored him and dismissed him. And he published this paper and then three months later he published software that allowed people to start building the Bitcoin network.
Bitcoin is not a company. It’s not an organization. It is a standard or protocol like TCP/IP or the internet. It’s not owned by anyone. It operates by simple mathematical rules that everyone who participate in the network agrees on. And through the simple mechanism and through the invention of Satoshi Nakamoto Bitcoin is able to allow a completely decentralized network of computers to agree on what transactions have occurred on a network essentially agreeing on who currently has the money.
So if I send money from my account to somebody else’s account in this peer-to-peer completely decentralized network it’s just like sending an e-mail. There’s no one in the middle it just goes from my computer where the money is stored to the recipient’s computer with no intervention and the entire network every 10 minutes agrees on what transactions have happened without any centralized authority by a simple election that occurs electronically. This particular solution, this invention is far more important than currency.
Currency is just the first app, just the first application that you can build on a distributed consensus system. Other applications include distributed fair voting, stock ownership, asset registration and notarization and also many other applications we’ve never thought of before.
I discovered Bitcoin for the first time in 2011 and since the internet I have not felt this feeling of being completely overwhelmed by the possibilities that I saw. I was there at the dawn of the internet 1991 when it was pre-commercial and I could see that this was going to change the world but couldn’t tell everyone around me because no one believed me and I have that exact same feeling about Bitcoin.
Now some of you may have heard of Bitcoin as a currency, as a system of money that is currency going wildly high in price one day and wildly low in price the other day and what I am here to tell you is to ignore the price and to ignore Bitcoin the money and understand Bitcoin the technology, the invention and the network it creates because if we mess up the money we’ll just reboot another currency.
The invention of Bitcoin, the technology that makes it possible cannot be uninvented and it creates the possibility for decentralized organization on a scale never before seen on this planet. And here’s why it’s important to me.
Today in the world approximately one billion people have access to banking, credit and international finance capabilities primarily the upper classes, the Western nations. Six and a half billion people on this planet have no connection to the world of money. They operate in cash based societies, with very little access to any international resources. They don’t need banks.
Two billion of these people are already on the internet and with a simple application download they can immediately become participants in an international economy using an international currency that can be transmitted anywhere with no fees and no government controls and they can connect to a world of international finance that is completely peer-to-peer. So, Bitcoin is the money of the people at its center, simple mathematical rules that everyone agrees on and no controls.
The possibility of bringing six and a half billion people into productive society by connecting them to the rest of the world is truly revolutionary. First, we’re going to start affecting the payment processors. These enormous companies that make it more expensive to send money the poorer the destination country is.
A situation that is exploitative and corrupt and these organizations make enormous amounts of profits for a function that can be done in Bitcoin for free. So, as the adage of the internet once went ‘I just replace your entire industry with a hundred lines of Python code’ and that’s exactly what we’re doing with Bitcoin.
How can you use Bitcoin today? Simply speaking Bitcoin can operate as a currency and you can think of it as buying a foreign currency, you can connect to an exchange over the web, you can wire some of your euros and then you can use those euros to buy Bitcoins at the current exchange rate. But that’s not really the right way to do it because we’re entrepreneurs, right? And we want to disrupt. So, the best way to do it is to find a product or service that you can offer that someone with Bitcoin wants to buy and to start earning Bitcoin.
If you think about starting up a business within an international environment there are two primary barriers to becoming a global business. The first barrier is that it is difficult to transport products and services across borders and with the internet we solve that because we can now create products and services that are virtual, that we can sell anywhere in the world so we can deliver the product. But we still have one big problem. How do we get paid? Bitcoin solves that part.
It now allows us to receive payments from anywhere in the world instantaneously. The Bitcoin network allows any individual to send an amount that as small as one hundred millionth of a Bitcoin which in today’s term is very, very tiny amount of money. You can’t do that with today’s money and payment systems. Credit cards were made in the 1950s and they were most certainly not made for an internet age but Bitcoin is made for the internet age.
So if you can suddenly send payments that are one hundredth of a euro or one thousandth of a euro you can sell content, you can do microtransactions, you can collect payments from millions of people in tiny amounts and make them in aggregate be worth something. And on the same network where you can send one thousandth of a euro or even one millionth of a euro you can send a billion euros or trillion euros and the fee will be exactly the same because it depends on the size of the transaction in kilobytes, not the content.
So, let’s look back at the internet and see what lessons we can learn about why Bitcoin is important. One of the most important principles on the internet is neutrality. The internet doesn’t distinguish between a large organization and a small organization. It doesn’t know the difference between CNN and an Egyptian blogger and it gives the possibility for an Egyptian blogger to speak to the world with the same power and voice that CNN has.
Bitcoin is neutral to sender and recipient and also to the value of the transaction and that means that it gives every citizen and user of Bitcoin the ability to innovate in terms of financial innovations and instruments, in terms of payment systems and to use the currency with exactly the same facility that a bank has. You become Citi Bank and you can operate on the same level as Citi Bank and that is truly revolutionary. It takes a hierarchical system of international finance that up to now has achieved security by limiting access because that is the main method of trust on our payment systems.
You can’t get in unless you’re vetted and it turns that on its head and creates a completely flat and decentralized network where every node is equal. Where the protocol is neutral to the transactions and it pushes innovation to the edge of the network allowing exactly the same phenomenon we saw on the internet – innovation without permission. You don’t need to ask anyone if your application can be published on the internet. You don’t need to ask anyone to completely subvert a new industry with your information technology. Well, on Bitcoin you don’t need to ask anyone to invent a new financial instrument, a new payment system, a new service. You can just do it.
You can just write the code and you are now part of an international financial network that can run that code and put you in contact with millions of consumers. Now it’s still early days, we don’t yet have the polished interfaces. It’s difficult to use. It’s used by criminals. It’s used by various organizations around the world and it’s not easy to see exactly who is using Bitcoin. I’ve heard all of that before.
When I was on the internet in 1991 it was a den of thieves, pornographers, pirates and criminals, right? But it didn’t matter and it doesn’t matter now. And the reason it doesn’t matter is because the same power of the technology that can be used by criminals to promote their criminal activities can be used by all of the rest of us to do good, to do incredible things all across the world and there’s more of us.
So, Bitcoin creates this environment that is ripe for innovation because it’s not a currency, it’s a technology, network and a currency. And I can tell you today I’m very happy that Bitcoin’s price is climbing very high because I own some Bitcoins and it feels kind of nice but I don’t care about the price.
If Bitcoin crash tomorrow morning the technology is still revolutionary just like if a website fails on the internet or an application fails on the internet the internet doesn’t go away. So, if you understand that Bitcoin is a technology and not a currency you can truly grasp the importance it has but again it’s not about us. It is about the other six and a half billion. It is about the ability to bring to the world a level of financial integration that the world has never seen before.
And from our perspective it’s a great technology we can do some disruptive innovation, we can build some interesting services but if you’re a Kenyan farmer who’s trying to raise money in order to buy seed and now you could do decentralized peer-to-peer lending and reach out to lenders all across the globe this is not a technology, right? This is truly life changing.
So, understanding the impact of Bitcoin has on the vast majority of the world that lives under repressive and corrupt regimes with central banks that impose hyper-inflation of 30% a month it’s much more important to see how Bitcoin can affect all of those people. There are two billion people on the internet and only one billion of them have bank accounts and we can change that and it’s not going to be easy make no mistake about it.
When you throw a disruptive technology into the middle of the most powerful organizations in the planet they don’t like it. And right now we’re still in the early stages to use the tried expression first they ignored us then they laugh at us then they fight us then we win. We’re still at the ‘laughing at us’ stage and that’s quite all right because by the time they get to fighting us they’ve already lost because this technology just went global with the introduction of more than two and a half billion dollars from Chinese investors who discovered a counterbalance to the world domination of the global reserve currency of the US dollar.
There are 193 currencies in the world but there’s only one international currency. There are 193 currencies controlled by central banks and governments but there’s only one mathematical currency today and that’s Bitcoin and we are going to build more of them. Cryptographic currencies are going to be a mainstay of our financial future. They are going to be part of the future of this planet because they have been invented and it is as simple as that. You cannot uninvent that technology. You cannot turn that omelette back into eggs.
So, understanding that we already have more than a hundred competing currencies in that space shows how quickly innovation has exploded and even beyond Bitcoin the currency there are many other altcoins, alternative coins as they are known that use the very same basic technology of a decentralized asset ledge using consensus in the network with Satoshi’s algorithm in order to achieve other forms of currency – currencies that are inflationary, currencies that are deflationary, currencies that use demurrage or negative interest rates, currencies that are charitable and redistributable portion of the income to charitable organizations.
We can invent money non-stop and create new forms of money and the instruments. At the end of the day Bitcoin is programmable money. And once you have programmable money the possibilities are truly endless. We can take many of the basic concepts of our current system that depend on legal contracts and we can convert these into algorithmic contracts, into mathematical transactions that can be enforced on the Bitcoin network.
And as I said before there is no third-party. There is no counterparty. If I chose to send value from one part of the network to another part of the network it is peer-to-peer with no one in between and if I invent a new form of money I can deploy it to the entire world and invite others to come and join me. And so, if you see that Bitcoin has the possibility to introduce not money for the internet because yes, it is money for the internet, it’s perfect money for the internet, it’s instant and safe, it’s free yes, it is money for the internet but it’s so much more.
Bitcoin is the internet or money and currency is only the first application. So, if you grasp that you can look beyond the price, you can look beyond the volatility, you can look beyond the fad and understand that at its core is a revolutionary technology that will change the world forever. Thank you. Join me in this revolution.
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