The failure rate of closed systems. Misunderstanding the value of the open internet and Bitcoin, Intranet vs. Internet of Money. Consensus through democracy is messy but enables freedom. We buy freedom by paying the price of inefficiency. Presented in Sao Paulo, this talk by Andreas focuses on the opportunity that bitcoin brings to emerging economies like Brazil.
Transcript
[AUDIENCE] How do you feel about these companies that are trying to implement private blockchains? Will they be productive or will it just be another altcoin? Maybe it will just be another form of coinage. Or a fork like Classic.
Will they achieve broader use in the financial system? [ANDREAS] Very good question. Let me take the first one and then I will try to tackle the second one. We don't have enough time for a broad discussion about scaling, Classic, and forks.
To the first question, what happens when companies make private ledgers, blockchains, and coins? How many of you work at a company that has an intranet, an internal network and email system? How cool is that? It is not cool.
Yet when the internet started, a lot of companies thought, "That is great, but..." "The internet will be full of perverts, criminals, fraudsters, and weirdos." "Anyone can publish. That is a terrible [thing] because most of it will be crazy ideas." "How about we take that technology and make a close system instead, where we control who can connect and publish? A nice system that is suitable for all ages." A Disney version of the internet. CompuServe, AOL, and Prodigy.
All of these systems that companies built would fail because they misunderstood the value of the internet. It wasn't the ability to send and receive data. It was the equalization of producer and consumer. It was about the opportunity of an open online environment where everyone has the freedom to speak..
and be heard by anyone, anywhere, without any controls or censorship. That was the real value of the internet, and it is the real value of Bitcoin. It is a borderless, global, uncensorable, open system that allows anyone to access it and innovate without... asking for anyone's permission.
If you turn that into a closed, bordered, censored, controlled system, it might generate profits for some, but it is not interesting in the broader sense. Once you create all of these little systems, you would still need to connect them together. Bitcoin is the internet of money. If you build an intranet of money, eventually you will want to connect it to the internet of money, through Bitcoin.
Bitcoin is the interesting blockchain. Others may be interesting for narrow purposes, just like a JustinBieberCoin may be interesting to fans of Justin Bieber. A JPMorgan Chase coin will be interesting to JPMorgan Chase executives, but very few other people. It certainly won't be as successful as a JustinBieberCoin.
[Laughter] When it comes to the Core versus Classic client, I think it is important to understand that Bitcoin... is undergoing a [constant] debate. In traditional systems of money, when a debate lasts for too long, the boss will stand up and say, "Enough." "Here is what we will do." But there is no boss in Bitcoin. No one can say, "That is enough debate.
Here is what we will do." We need to all agree. Bitcoin is difficult to change. The process of changing Bitcoin is full of loud and noisy arguments, accusations, and drama. Where I come from, we call that democracy.
You may not have seen democracy in financial systems before. it may be a new phenomenon, but that is not a problem for Bitcoin. That is its greatest strength. The fact that no one [person] can impose a decision on everybody else.
Core can't, even if it appears so. Classic can't [either]. They each hold a veto over each other. Consensus is broader and more nuanced...
than we understand, and democracy looks messy. If you want efficiency, then put one company or person in charge, and you will get efficiency. The price is freedom. We [obtain financial] freedom by paying the price of inefficiency.
I will [choose freedom] every single time. Thanks.