This talk was given at a local TEDx event, produced independently of the TED Conferences. Eric makes the case for distributed technologies and the advantages that they offer to finance, law and society as a whole.
Eric is a former public accountant that became heavily involved with digital currencies in 2012. He is actively involved in Canada’s Bitcoin community and serves as director of several NPOs while running a digital currency payment processor called Bylls.
Transcript
Transcript generated by YouTube auto-captions. May contain errors.
[Music] now I'm curious how many of you have heard about Bitcoin before today wow all right put your hands down how many of you have Bitcoins all right very nice a couple of years ago there probably would have been only a couple of you so this this is really cool I'm excited to get to talk to you about Bitcoin today now when I first heard about Bitcoin I didn't quite get it but I was curious so I tried to learn more and the more I read the more I spoke about it and spoke to people about it the more excited I became about the potential of what it could enable people to do and that's why about a year ago I decided to give up on everything that I was doing and start working fulltime on several Bitcoin projects I was really excited to do this but those around were a little bit less enthusiastic my parents were worried that I was getting sucked into a Ponzi scheme my friends they warned me not to take this magic internet money too seriously and I can understand these concerns I mean there are a lot of misconceptions about Bitcoin so just to clear a couple of things up right at the beginning Bitcoin is not a company or an organization it doesn't have a CEO and it doesn't have any employees it cannot go bankrupt it's simply an open-source software that allows people to transfer money over the internet if you want to get some Bitcoins all you need to do is accept it as a method of payment for goods or services or you can always go buy some on a Bitcoin exchange which works kind of like the stock market now Bitcoin has grown a lot in the past year in fact over over $50 million a day is transacted on the Bitcoin Network upwards of 50,000 Merchant accept it as a method of payment and inspirational people like Bill Gates and Al Gore and Ben banki have all praised its merits and its potential but Bitcoin can seem quite complicating and daunting at first and the reality is if you're really able if you really want to be able to understand how it works and to appreciate Bitcoin on a technical level you need a PhD in mathematics or cryptography and that would take a lot of time but the reality is we use a lot of Technology every day that we don't fully understand how it works our smartphones our computers the Internet and the fact is Bitcoin is the same way there's a bigger picture here that goes beyond its price or its inner workings Bitcoin is the idea that we can take back power and control of our money and that we can transact in a better way now simply put Bitcoin is two things it's a digital currency and an international payment Network where this digital currency can be transferred I know what you're thinking we already have currencies and we already have payment networks so what's the big deal well in fact we also already have digital currencies if you consider the fact that only 11% of all US dollars exist in physical printed form and the rest are simply digital balances in bank accounts which is very similar to bitcoin actually so before we look at why Bitcoin is different from what we have and what its benefits are it's important to understand the current systems that we use today currencies are managed by central banks and governments we trust that these entities will protect the value of our currencies and that's why the $20 bill you have in your pocket isn't really worth $20 the plastic that it's printed on isn't worth much at all but we trust the government that backs it and we trust them and give them the power to manage this currency and fight against inflation by well giving them the ability to print as much as they want and we hope that they won't print too much as for payment networks we rely on centralized institutions like Banks and other Financial companies like credit card compan credit card processors we trust them with our personal data and we trust that they'll initiate our transactions and process them on time and I've used the word trust a lot and the fact is we give them a lot of trust blind trust and we give these Central entities a lot of power as well and the fact is times are changing today while we're giving all these entities blind trust the reality is only 14% of people in the United States at least really truly have great trust in their governments and even less people have great trust in financial institutions but again they're controlling our money they're printing it they're transacting it this is a problem around the world governments have breached this trust in fact in some countries they've been hit with hyperinflation upwards of 12,000 per per year in Argentina and millions of percentage points it's it's unfathomable but imagine waking up one morning and a loaf of bread goes from costing $3 to hundred billion dollar this is the reality in places like Zimbabwe where their currency is so volatile only because the governments are poorly managing their money money supply and printing money as they please but it's not only governments that have breached our trust it's also banks that have breached our trust as well we think back to the 2008 financial crisis where Banks who we trusted to secure and Safeguard our money took very risky Chances with it and actually lost a lot of money and people lost their retirement savings people lost their homes and a lot of these Banks weren't held accountable instead they were given more money by the government they were bailed out but worse it's not just the banks even our credit card companies let us down time and time again it seems like every week There's a new story about tens of millions of people's personal information that's just been stolen and used for fraudulent purposes so while in theory having a currency managed by a central entity like a bank or government and having payment Networks that are overseen by all these financial institutions well in reality they're taking advantage of the power that they have and we're the ones that have to pay the price when we think about money money is very important it's almost all we think about that's why we go to school most of us that's why we go to work we need to pay for things but we have very little control over our money as we can see the way it's created the way that it's transacted now people have tried for years many years decades even to find a way to create a currency and a payment Network that can exist outside of these typical control structures a currency and a payment Network I guess just money that we can control ourselves we don't have to rely on any single entity to create or to help us transact and Technology always provides many solutions so many computer scientists have spent almost over 40 years actually trying to create this and they've all failed in fact there's never been a financial system or digital currency that's existed in a decentralized way and the reason for this is simple the reason we trust governments and we give them the power to create our money is because well if they didn't do it who would where would this money come from if we didn't have financial institutions to process all of our payments and Banks to store our funds well who would do it we need to trust these people to verify things and to create money well the only reason that we haven't been able to create a system like this is because of a problem that's been dubbed by many computer scientists as the double spend problem now digital things are great but the problem with things that are digital is that they can be easily copied so if we create a digital currency or a digital payment Network well how do we stop people from being dishonest and copying their money or just creating more money out of thin air and this is a problem that well has been unsolved for many many years until recently and one man had an idea he found a technical solution to this problem where we can prevent people from creating money out of thin air digitally and spending money twice and this man or an anonymous developer in fact CU we're not really sure who he is was named Satoshi Nakamoto and in 2008 he put forth to the community online this technical white paper about eight pages where he said hey I solved the problem we can have a digital currency and a digital payment Network that doesn't rely on central banks or financial institutions it's entirely self-sufficient and he promoted this he showed it to everyone online and then he disappeared and he left it in the hands of the community and since then 6 years later thousands and thousands of developers cryptographers entrepreneurs they've all come together to create Bitcoin payment Network and community and today this eight-page paper has transformed into a payment Network in digital currency worth over6 billion doar that's used around the world and how he did this is the coolest part now traditional structures that we have today are centralized that means all of our money is stored in a central location and we tell the banks hey we need you to record all of the transactions that we perform in one Central spot and we'll pay you fees to do it and we're going to trust that you're going to make sure that all the records are accurate and you'll process all the transactions what Satoshi Nakamoto said is no this is not good we need a better way wouldn't it be nice if we can all do this together and everyone that uses payment Network can all record transactions at the same time having a decentralized network has many benefits not just the fact that we don't need to trust centralized institutions but there's actually much more to it than that with a decentralized network we can prevent people from spending money twice because you can't fool an entire network of users and computers who are validating all these transactions but it's more than that because now anyone who who contributes computing power and resources to support this network this peer-to-peer Network that's open to anybody who wants to contribute well that means that we have a fixed supply of money you can't print Bitcoins if you need more they're generated every 10 minutes at a fixed and predetermined rate we fight inflation by design using the laws of mathematics and not politics but it's also more than that Bitcoin also gives us an international payment Network that's fast and cheap Bitcoin does what payment processing companies charge billions of dollars a year to do but it does it more efficiently and cheaper in fact all the Bitcoin Network needs to operate is the internet and people that want to use it it can exist entirely outside of the infrastructures of lawn Finance which is important in areas that have political instability recently in Ukraine there's been a lot lot of political instability and what people have done is they've turned to bitcoin and they said hey we can raise money from around the world very easily very quickly without any restrictions because you can't with Bitcoin transactions can't be blocked you can send money to anyone anywhere in the world and it's really easy in fact in fact I'm going to go and send her 50 cents right now and it's done I just sent 50 cents to Ukraine and I paid 5 cents in fees was near instant you can't send a PayPal transaction to Ukraine you can't send money there very easily at all but we just did now what can Bitcoin do to help us today how can it change the way that things work in a really practical sense so look at identity theft this is a problem that's very large around the world annually $21 billion are lost by businesses and one in 10 people will be affected the most common way getting your identity stolen is by having your credit card information stolen from a database or your banking information now how many of you have downloaded a digital product in the last year an app song a movie you all had to pay with a credit card but you didn't receive anything physically I there's no reason for you to provide your name your address you're just downloading something but the way that credit cards were designed to work way back in the 1950s way before the internet was invented was this way so we're stuck using it and putting our information at risk with Bitcoin you don't need information like like your address to buy digital products you can just click and purchase them which makes life a lot easier but safer and it's the same thing for Bank transactions if you want to send a wire transfer this is all the information that you need very invasive for yourself but also for the person you're sending money to with Bitcoin this is all that you need to send a transaction so again it's secure by Design it's safe because it doesn't require you to trust your information it doesn't take it in the first place another great thing about the technology as we just saw when I sent 50 cents to Ukraine is that well the network doesn't care how much money you're sending or where you're sending it to it doesn't charge you more for doing that so if you want to read an article on the internet why subscribe for a 3- Monon subscription why not just pay a couple of cents to read the article well credit card fees would be very extreme and it wouldn't make it worth it but with Bitcoin you can and the Chicago Sun Times has actually started accepting Bitcoin payments for articles but what's cooler with microtransactions such as this are the other implications that it can have think about going on Facebook you like a post someone posted something and you you think it's cool a like is pretty useless I mean it's gratifying but doesn't give you anything tangible imagine you can tip someone on the internet a few cents hey that was funny I like that picture I'm going to give you 25 cents it's possible with Bitcoin and it's very easy you just click a button so microtransactions are great but this is all really first world problems it's cool but what else what else can it do what else can it help us achieve International remittances and payments are the lifeblood for many people in many countries but unlike the Bitcoin Network payment processors do care where you send money to and how much you send and they discriminate with that and it actually costs more to send money to a poor country the average in subsaharan Africa is 12% the highest extent it could go up to 25% Africa itself as a continent on an annual basis loses 1 .8 billion in excess fees imagine if people sending money to Africa didn't have to pay such extreme fees what this extra money could do to help local economies and help people in their everyday lives Goldman Sachs has estimated that if Bitcoin is used for all types of international transactions not just to Africa but around the world it could introduce savings and fees of almost or even over $100 billion just in fees that are saved by using more efficient Network than what we have today now this financial Network that Bitcoin can well Bitcoin has created is very useful and very fast and very cheap but it's also very inclusive and there's a big problem in the world today we're looking at high fees and we feel like we're getting ripped off but there's some people who would be happy to get ripped off by payment processing companies and Banks just to have access to a financial system because the reality is there's a lot of people that don't have any access to any Financial systems whatsoever a lot well there is some good news in the circumstance they may not have access to a financial institution but they do have access to telephones and with Bitcoin they can have a bank in their pocket by connecting to an international payment Network that's free to use cheap to send money with and easy to access there's a lot of projects going on right now to help bring this payment functionality to cell phones in Africa and around the world and they're making great progress so to conclude I have to ask why does Bitcoin matter and simply put it matters because it allows us to transact freely we can send money to whoever we want wherever they are with no restrictions they cannot be blocked we can transact safely because the network requires a minimal amount of information it's efficient but more than anything we we can take back power and control of our money and reduce the amount of trust that we need to put into Central points of failure and this is profound because like I said money is important and we want to make sure that we can keep keep control of it and that we really ultimately have the power to do what we want with our money and it can't be taken away from us when we can't have transactions blocked thank you [Applause]