Thank you all for having me here today. I'm really excited to be in Milan. This is a very vibrant community, lots of people. I'm really impressed by the number of people that came here tonight, especially given the terrible weather. You can blame me, it came with me on the plane. And thank you to Giacomo and the rest of the team who worked so hard to organize this relatively quickly because we only set this up in the last month. My name is Andreas Antonopoulos. I'm the author of Mastering Bitcoin. Today I'm going to be talking about money from an evolutionary perspective. The title of this talk is Bitcoin, a new species of money. This topic is something that I've been thinking about for quite a while. I have a great interest in the subject of evolutionary biology, but I'm not a biologist. There are probably no biologists in the audience, which is a good thing. I will say things that will probably upset biologists because I'll get them wrong. I'm speaking in general terms and this is more a narrative to help you understand where things are going. We're having some interruptions with us. I don't know if somebody can check the microphone. Let's keep going. We'll manage. If it runs out of battery, give me another battery. Something really important happened on January 3rd, 2009. The world changed. As with many fundamental and significant changes in the world, very few people noticed. Almost no one noticed. That change started out as a small ripple and it started spreading. We are here seven years later, and that small change, Bitcoin, is radically rewriting history and human society. We are part of something unique, something really special, that started as an idea that even the author of this idea didn't believe it would work. All of the people who looked at the idea and looked at the theory behind Bitcoin had many things to say about how it wouldn't work. On the internet, some of the most interesting things are things that do not work in theory, but do work in practice. My favorite example is Wikipedia. If you think about Wikipedia objectively, based on what you know about human knowledge, it shouldn't work. Why would anyone spend their time for free writing an article about a single Pokemon card for months? That doesn't make any sense. And yet, people do that. We underestimate human nature sometimes. Bitcoin is like that. In theory, it's difficult to understand how it works, but in practice it has spawned a revolution. It has created something very new. The era before Bitcoin can be characterized by a short-lived period of time, which started in the beginning of the 20th century with the introduction of central banking. For the first time, money became completely detached from commodity and managed on a national basis by central banks. This was a very different model than we had before, and it continues to this day. Many of us in Bitcoin believe that when we look back 100 years from now, we will see central banking as a short-lived and not particularly successful experiment. What Bitcoin started is different not because it replaces central banking, but because it opens the door to a new form of competition. A competition where money can be created on the internet by anyone and be instantaneously global, unforgeable, open, and secure. With that new system, we not only created a new form of money, but we also created a new environmental niche for money to compete in. With the invention of internet money, we now start to see the first model for a network-centric evolution of money, where different forms of money compete as species. They compete by finding an environmental niche and adapting to that niche through simple competition. This has never happened before. The reason it has never happened before is because the environment was hostile to that form of money. Geography, nation-states, limited the ability of money to spread and compete with other money on a global basis. What happened on January 3rd, 2009 was a very significant event. It fundamentally changed the environment in which money competes. The best or similar example I can show is a very special moment for the history of this planet, when the levels of oxygen in the atmosphere started rising, and they gave the possibility of aerobic metabolism. It meant that species could now metabolize with oxygen. Before that, all species were anaerobic. They metabolized without oxygen. They lived in an oxygen-free environment. In fact, oxygen is toxic. Oxygen is an oxidizer. It is poison to an anaerobic organism. It is like an acid. It destroys them. What happened when the environment changed to allow aerobic metabolism, was suddenly a whole new environment opened up for species to compete. Species that were not competing with the previous species, because they operated in a completely different niche. They had a significant advantage because aerobic metabolism is in order of magnitude more efficient. Within a very short period of time, the planet changed. Aerobic organisms got pushed into the deepest crevices of the world. They still exist at the bottom of the Mariana Trench, buried in glaciers inside volcanoes, in places where oxygen doesn't reach. They still exist. They haven't gone away. This is now a planet of oxygen-breathing organisms. The world changed. One of the interesting things about evolution is that it doesn't work in a linear fashion. It works through a process that has been called punctuated equilibrium. Things have equilibrium for a long time, and then suddenly there is a great rush of evolution. As a lot of things change, your environment opens up. Species evolve very rapidly in a short period of time, and then they reach equilibrium again. They persist for hundreds of thousands, millions of years. Then again, something changes. Some environmental factors, some external stimulus, some advance in evolution. Species able to create DNA instead of RNA, oxygen in the atmosphere, or for the dinosaurs, a meteor. Or other geological events. On the 3rd of January 2009, a meteor appeared in the sky of our society. Until that time, banks were the kings of this planet, like giant, lumbering dinosaurs, completely dominating for hundreds of millions of years, with complete disregard, even contempt, for the tiny little furry mammals.  But something has changed, and very soon those mammals will inherit the Earth. In this new environment, we don't compete against banks with Bitcoin, because Bitcoin is adapted to a different environmental niche. Bitcoin is not the money of the physical space. It is the money of the internet. Bitcoin is not the money of the nation-state. It is the money of the world. Bitcoin is not the money of the current generation. It is the money of the generations to come. It doesn't compete against banking, because for Bitcoin, banking, borders, and physical money are irrelevant. To mammals, dinosaurs were irrelevant, and to anaerobic bacteria are irrelevant, unless they are suitable as food. When you look at this environmental niche, you have to realize that it is not just one species of money, not just one new species of money, Bitcoin, but an explosion in the ecology of money. On January 3, 2009, there were 194 currencies. Today, there are more than 3,000 currencies. Of those, all about 194 are digital, decentralized internet monies. They are the new species that live on the internet. Most of them will go extinct. Most of them will disappear, but they will continue to evolve independently. When you look at the evolution of money in this environment, you have to realize that there are many factors that affect this evolution. One of the factors is us, human beings. We give these things life. This evolution is not evolution by random mutation. It is directed by designers. In this room, there are people who are directing the evolution of these new currencies. In doing so, they are responding to environmental stimuli. Supply, demand, the needs of customers, the applications they have in mind, untapped markets and opportunities that traditional currencies can't fit in. They direct the evolution of these currencies in that direction in order to take advantage of these new niches. There is also a broader environment. At the same time that these new currencies are evolving, the old currencies are in crisis. We are now facing an unprecedented currency crisis around the world that is affecting hundreds of countries. It is affecting every central bank. We are in an environment that hasn't happened in the last 200 years. When I was going up and studying just some basic macroeconomics, economic orthodoxy said that the lowest you can go with interest rates is zero, and you never go there. Never go full zero. And yet, now, 24 different central banks are at zero, and not just temporarily. Some of them for eight years, some of them longer. I think the Japanese bank is the longest at zero, and some of them have also gone negative. Never go full negative. Interest rates wasn't orthodox economics until a couple of years ago. It was unthinkable. Bitcoin is not going to destroy central banks.  Central banks are doing a pretty good job destroying themselves. The reason is because we live in a world where billions of people have no access to finance, have no access to banking, have no access to traditional financial instruments. They operate entirely in cash in a single currency, isolated from the rest of the world, and that is an environment into which Bitcoin can thrive. We're not going after the environmental niche of traditional banking, because there's a bigger environmental niche. The gray economy is more than 60% of the economy in the world. The unbanked, debanked, and underbanked are the majority. The disenfranchised, disempowered are the majority. That is the niche that Bitcoin is tapping into. We will continue to serve the needs of people who are not being served today. Some of us because that's a matter of principle or ideology. Some of us simply because it's a matter of supply and demand, and it is the prudent, sensible, and profitable thing to do. In this evolution of currencies, we're going to see external stimulus. One of the most important things to keep in mind is that these new currencies will be attacked. They are being attacked with misinformation and propaganda. And in some countries with direct attacks, with legal attacks, with extra legal attacks outside of the judicial system. These new currencies remove power from people and organizations that are accustomed to power, and therefore they represent a threat. Who do they represent a threat to? Really, the question you should ask yourself is, what kind of government and what kind of organization is threatened by the idea of people having independent financial control and empowerment over their own money? A government that is threatened by that is threatened by the fundamental concepts of the renaissance, of the enlightenment, freedom of association, freedom of expression, freedom of speech, freedom of commerce. A government that is offended by freedom is not a government I want to support. Now, arguably most of the governments in the West today are not hostile to Bitcoin. They're curious. They don't understand it. They want to see how it can be fit into the status quo. They want to tame it, control it, co-opt it. And in other countries where it represents a more serious threat because it represents freedom, Bitcoin is illegal with very heavy penalties. One of the things about an evolutionary system is that it doesn't stand still. If you introduce into the environment a predator, then the system evolves to defend itself against the predator. If the predator is an attempt to identify every user of the system, which is antithetical to the evolution of Bitcoin and other cryptocurrencies, they will evolve to become more stealthy and more anonymous. If you isolate a cryptocurrency, you trigger a specific type of accelerated evolution. We've seen this happen with species, too. Species that became isolated, for example, on the continent of Australia, with fierce competition for very limited resources, evolved to be the world's most venomous, poisonous, and dangerous animals in the world. Everything in Australia is trying to kill you. Australians actually love to remind tourists of this. They even make up species that don't exist just to scare tourists. But why did species in Australia evolve that way? Because they were isolated and pressured. When you isolate and pressure something, it adapts. It adapts by increasing its stealth, its venom, and its resistance. Bitcoin already has an element of evolution that is quite effective. In the current regulatory system, banks that try to swallow Bitcoin get indigestion. It doesn't kill them, but it certainly makes their tummy hurt. Bitcoin can't be co-opted and absorbed by the traditional banking system, which is a huge advantage in evolution, because it means that we can continue to do our own thing, without worrying about being swallowed by the traditional system. This comes as a huge surprise to traditional banking. Over the past 50 years, they have been accustomed to swallowing any type of competition. They can't swallow this one. It doesn't taste good. When we look at the evolution of money, we see this explosion of thousands of new currencies. This will continue. We will have thousands, tens of thousands, and possibly hundreds of thousands of currencies. You think about that, and it doesn't make any sense. If you look at it from the traditional perspectives of money, how can you have hundreds of thousands of currencies? That doesn't make any sense. How could they possibly have value? What happens is fragmentation. They have value, but to a smaller and smaller group. Which is the normal behavior of money. Money is something that emerges among small groups. The idea of one money for an entire nation is relatively new. If you watch children in kindergarten, they develop their own money. They develop their own culture of money. They trade rubber bands and Pokemon cards and cubes. They use it as a language to express themselves. Out of the hundreds of thousands of currencies that will evolve in this space, the vast majority will have no real economic value outside of the small unit that uses them. Maybe some will represent your most favored football team, which in this city is Milan. In some cities, that's a dangerous question to ask. Half the room says one team, the other half says the other team, and then fistfights break out. But fortunately, this is not a problem here. But you can imagine currencies that represent loyalty. They represent an artist's loyalty to a sports team, loyalty to a friend, loyalty to a business. They are minimizing currencies that are used to represent commodities or assets, to represent sharing tokens for taxi service, to represent all kinds of things that we haven't imagined yet. This is a completely new space. Out of these hundreds of thousands of currencies, we will see some that will behave very much like traditional money. They will be used as the primary means of exchange, store of value for societies. But these will not be geographic societies. These will be societies of common purpose. These will be ad hoc perceives and groups that exist on the internet, beyond borders, beyond nation states. We now see the emergence of the first opportunity for the cosmopolitan class and the cosmopolitan-minded people to have a cosmopolitan currency. A currency that belongs to the world, not a single nation. We will see these types of things emerge. They do not compete against traditional currencies. We are not going to replace the euro with Bitcoin. In fact, that would be a disaster. That would be even worse than the euro, arguably. The reason is because the fundamental failing of world money is the imposition of monopoly and centralized control. The fundamental evolutionary characteristic of the new money is decentralization and choice. That is why we do not compete for the same environment. We create our own environment. When you think of these forms of new electronic money, the instinctive thought, at first, is to evaluate them in the context of traditional money. How many euros is a Bitcoin today? Everybody in this room knows that answer. That shows that we are still evaluating Bitcoin in the context of traditional money. We are still assuming that if we earn, we will probably earn in traditional currencies. We will then convert again and spend in traditional currencies. With that thought, you have to think about exchange rates and volatility. I am one of the people who does not do that much anymore. There aren't many of us, probably just a few thousand. For the last three years, I have been earning my income in Bitcoin. For the last two years, I have been earning it almost entirely in Bitcoin. Gradually, the vast majority of my spending also happens in Bitcoin. In many cases, it is priced in traditional currencies. But as time goes by, increasingly, it is not. Increasingly, I am using Bitcoin to buy Ethereum. I am using Bitcoin to buy services, disk space, websites, bandwidth, VPNs, etc. In those questions, the only thing that matters to me is purchasing power. Gradually, in my mind, Bitcoin has started to evolve... from a simple means of exchange that I translate into another currency... to a store of value that has its own purchasing power, completely independently. One day, this transition will happen completely for a few people, for more people, and for more people. We will build an economy operating in denominated, entirely in digital currencies, entirely on the internet. Never exchanging, never touching the traditional banking system outside the system. On that day, the answer to the question, how much is one Bitcoin worth, will be 1,000 millibits. We have made that transition. You will have to explain this to your children. They won't have to explain it to their children. They will have to explain paper money to their children. Just like I would have to explain VHS and fax machines to younger people. Just like I realize how old I am when I get to a traffic stop... and I want to ask the other person for directions, and I go, this doesn't mean anything anymore. We haven't had a window that opens like that on a car for 25 years. If the person I am making that motion to is elder, they get what I mean. But to a young person, it's like... These things are the relics of my thinking. The thing about this is that you don't notice that you are bathed in the relics of old thinking... until you have an opportunity to step outside of that context. Bitcoin is giving us that opportunity. Bitcoin is the vehicle by which we step outside of the traditional notions of money... tied to geography and nation controlled by a central bank, with intermediaries of trust. We step outside of these and re-evaluate fundamental truths. What does it mean to trust? What does it mean to have authority in a network-centric system? What does it mean to express value on a global basis? As we enter that new context, we are evolving as a society. We are now moving into the environmental niche of the crypto cards. Thank you very much. That was a new topic I wanted to present on video. I hope you enjoyed that. We will post it on YouTube in a week or so. For the next part of this evening, we have two things. One, I will be happy to do an extended session of questions and answers with the audience. Anybody wants me to answer a question? I will be happy to do that. And then, at some point, after, let's say, 45 minutes to an hour will break, are there any people here who have a book that they want me to sign? Okay. I see two, three, four. Okay. So... Did you just sign books? Did you make physical books? Yes. Do you intend to sign? I asked me yet to sign the PDF with a digital signature, but I'd be happy to try. What I'll tell you is that it won't take me a nine-page blog post full of screenshots to sign a single document with a single key, because that would be absurd. Come and see me if you want to sign a book. If you're leaving before we end the Q&A, just interact with me. Come up here. I'll sign it quickly, and then we'll continue because I don't want you to leave without that. So thank you so much for buying my book. All right. Questions from the audience? Who wants to ask a question? When you mean banking, I find that sometimes it's not only payment system. You think that there are lending and other stuff on banking, not only payment system. You think bank can still add value trust on the layer of payment system on Bitcoin? Yes, but I think a much more fundamental change is happening in lending because fundamentally, and this may come as a shock to people, banks don't lend money. They certainly don't lend their money. They lend your money. And for that privilege, they give you 0.0001 APR, while they charge the borrower of 29% compounded. That's a nice business to be in if you're an intermediary. I think lending itself is changing, and not just because of Bitcoin, but Bitcoin and other currencies will accelerate it. I'm going to see the emergence of massively global peer-to-peer lending. I think that type of peer-to-peer lending will require a lot less intermediation. Will banks still have a role to play? Absolutely, I think they will. They can act, especially at first, in the transition period, as guarantors, as underwriters, as providers of reputation metrics, and things like that that are required in the early days of the system. Over time, their power will be diminished, and their profit margins will be greatly diminished, until what comes out at the other end doesn't look anything like what we understand to be bank-based lending today. But it might still be a bank. It just won't look like a bank. Just like phone companies today are internet service providers, I don't have to pay five euros to call my family for ten minutes on a payphone. They didn't go away, but they lost a lot of their power, a lot of their profits, and a lot of their control in the process of transforming themselves into what they are now, which is unrecognizable in some ways from what they were then. So their business model is not a pay-by-the-minute anymore. It's a monthly rental basis. They have a lot more competition. That competition is getting global. Some of the biggest providers today are companies that weren't phone companies in the past, Google, Apple, etc., that have a lot of control. So we may see, for example, in the future, banks will exist, they will offer a lending function, it will be a very different lending function, and they will be competing with companies that were never in that space. Maybe Google, Apple, Facebook, or maybe one of the companies incubated in one of these startups. Yeah, I just wanted to agree that the market and the middlemen will be cut out in terms of peer-to-peer lending and all that. I said middlemen, maybe I should have said men in the middle. But the reality is that even if we get to a point where we can have peer-to-peer lending and all that, there's still a huge problem in terms of authentication and basically reputation, more than authentication, sorry. Yes, just one second. The point being that when you start doing lending peer-to-peer from anonymous people and whatnot, anonymous can't really work well there because of reputation. So what are your ideas there? Well, I think, again, we're going to see this evolve gradually, I think the vast majority of lending today happens in ways that are secured on future income, secured on bank accounts, or secured on other assets. Pure, unsecured lending, I don't think, is the vast majority, but this may change. What I also think we're going to see is a redefinition of what it means to do secured lending. One of the things I've been toying with is this concept of redefining both the timescale and the granularity of what we considered secure lending. For example, today we talked about secured lending on an asset like a house over 30-year period, etc. Yesterday you had the lightning people here. Yeah! So one of the things to think about is that lightning payment channels in themselves are a form of extending micro-credit over milliseconds. Secured micro-credit based on a hash lock time contract redemption or confiscation or system. But what it does is it allows, for example, someone who's streaming video, to extend you micro-credit for one second of video, secured by assets held in a multi-seg on a granularity of Satoshi and milliseconds. So what we're doing is redefining the very scale of secured lending down to something that is completely unrecognizable in traditional sense. And if you extend that to other areas, I don't know what that does. Now, it doesn't change the fundamental... Sorry, because multi-seg payment channels are not... I do see them as credit. I see them as credit collateralized by the multi-seg balance. Because the multi-seg balance actually may be held by an intermediary, which then acts effectively as a bank extending payment channel credit based on that. That's another trust point. Yeah, so again, I'm not saying the trust points don't necessarily change. Some of them will. But a lot of the other parameters of what is secured lending and unsecured lending change quite dramatically. I think smart contracts allow us to address default risk much more directly than the way we do today. So today default risk is the thing we're trying to control for. Instead of controlling for default risk, we control for reputation, which is a derivative of default risk if you think about it on a timescale, because it's based on future earnings. And we don't actually do reputation itself. We take the proxy to reputation, which is identity and past behavior, which is a second derivative, right? And try to do that to control risk default. So when you're touching something that's two steps away from what you're trying to affect, that introduces a lot of inefficiency and risk. I think smart contracts may actually allow us to address default risk much more directly than through the proxy of reputation based on identity, based on past behavior. Let me give you an example. Reputation systems have colossal failure modes. Bernie Madoff had the highest possible reputation the day before he had zero. That is the failure mode of reputation systems. And in fact, that's exactly how they fail. And so, again, I think we will see a lot of change in this space. So we're not talking about simply changing the means by which we pay or the currency in which we pay. We're talking about restructuring the relationship between lender and borrower, the power and positioning of intermediaries, the time scale and granularity of payment systems and credit systems that exist in between, and the means by which we control for default risk. That is a very disruptive and fundamental change of the entire structure of credit systems. So it's a lot more exciting than just Bitcoin. All right, let's take another question. Thank you. I was wondering, so you are envisioning a future where there will be many different currencies competing within each other, each trying to target a specific need of a segment of the market, for instance. And I guess that those currencies, those cryptocurrency currencies, will be having some kind, some sort of monetary policy linked inside the protocol, right? So how do you envision the link between the monetary policy of these protocols and the needs of people? Yeah. Well, that is a really, really interesting question. I think monetary policy is one of those genetic traits that really, really focuses the environment in which a currency or token can compete. So, you know, I'll take a slight twist on this, because a lot of people ask me this question, does Ethereum compete against Bitcoin? And I think not. And I think one of the reasons not is because each one has traits that are focused on very specific things. Bitcoin has a monetary policy trait that makes it more suited towards fitting into a niche of reserve currency, global trading standard, point of reference for medium of exchange, and things like that. Ethereum, obviously, is much more focused on maintaining state within contracts in order to be able to enable smart contracts. And those are differences as much as the difference between a shark that has skin that allows it to glide through the water faster than any other fish and a human that has bipedalism two feet that allow it to walk upright. And to say, you know, do we compete against sharks? Well, if I go into the ocean, I certainly might compete against the shark, and I will lose. And if I took a shark into a boxing ring on land, I would win. But our domains are entirely separate. Our traits, the very things that make us top successful predators or competing species within one environment, automatically select us out of all of the other environments in which we could fit. There are no universally successful species. Species are specialists. By definition, monetary policy is one of the critical characteristics that determines where you fit as a niche. It's what defines Bitcoin. Bitcoin is a brand, but what Bitcoin is fundamentally is a decentralized, limited issuance system. 21 million coins. If it's not 21 million coins, it's not Bitcoin. You know, you could say that's part of its birth certificate. That is what defines it. Many of the other things can change, but not that. And Ethereum is smart contracts, and many other things can change, including its monetary policy, but not that. So, yes, I think it's really important to look at monetary policy as one of the characteristics, but also the degree of decentralization, the flexibility of the scripting language, but also the security and conservatism of the scripting language, in order to decide where do you think this fits. And here's another piece of news. Where you think this fits isn't where it's going to fit. Because no matter what you do, as someone who is involved in this space, you don't define the future or the potential evolution of this thing. It's moving. Society is moving at the same time, and everything is changing around it. It will fit where it fits. And we have yet to discover exactly where that will be. And part of the big debate we're having in Bitcoin and in other places is, where exactly does it fit. And you can express an opinion, but you cannot direct, at least in a predictable fashion, where it's going to fit. Traditional consultancy companies or food leaders of the internet era, I'm thinking about task offer, are saying that Bitcoins are nothing, very are focused blockchain. In those gatherings, Bitcoins and blockchain go together, which is your view. Can we have blockchain without Bitcoins? That's a question that comes up a lot, and I'm going to talk about that more tomorrow. So, I think there's a lot of misunderstanding as to what blockchain is, what Bitcoin is, how they two relate, and what each can do. So, I like to call Bitcoin the open blockchain, with the emphasis on the word open. And that qualifier is the all-important one. Bitcoin has an open blockchain, which is global, decentralized, borderless, and allows anyone to participate and innovate without asking for permission. Those are the characteristics of open. It's also a system that works by anonymous submission of proof of work, which is also a very key characteristic of Bitcoin. Now, you can create other blockchains. However, if you create a blockchain without a currency, you have to come up with an alternative way of reaching consensus that doesn't lead to centralization. And the other thing you have to realize is that some of the characteristics that you see in Bitcoin do not exist but for the anonymous proof of work system. One of the most important of those is immutability. And you'll hear a lot of people tell you that we have a blockchain where we can record things that cannot be changed. The reason things cannot be changed on Bitcoin is not because of the open blockchain. It's because of the proof of work. Meaning that even the miners with 99% of the hashing power colluding together cannot rewrite history for more than a few dozen blocks. 144 per day. They can affect an afternoon. Beyond the scale of an afternoon, Bitcoin is immutable. And it's immutable because you cannot forge proof of work. You would have to recalculate proof of work for all of these. And that is physically impossible at certain scales. And that characteristic comes directly from the needs to present proof of work. And a lot of people who use the term blockchain, not open blockchain, or decentralized ledger technology, which is the new one, they're not talking about things that use proof of work, yet they assume immutability as one of its characteristics. And it doesn't have immutability. It has unforgeability to a certain extent, in that if the five banks that are part of the consortium of the blockchain and have signing privileges decide to go back, rewrite the last two years, and zero the balance of WikiLeaks because the government ordered them, not that that would happen. Of course not. We live in a democracy that would take a big court fight. They could do that. They could do that instantaneously without presenting any proof of work. But they couldn't do that without it being noticed. That's the fundamental difference. Whereas on the Bitcoin open blockchain, they could not do that. That is immutability. These two characteristics are very different from a security modeling perspective. And there are many other characteristics that are very different. One of the fundamental aspects of having a proof of work system, and you can say that Bitcoin is more centralized than we would like, and the miners are less anonymous than we would like, but they are still decentralized and anonymous more so than many other systems, certainly more so than any other system at that scale. By being anonymous, they can't be coerced. And that is another very fundamental aspect of this. If you know who has permission to write on the permissioned ledger, then you can extort, hack, steal the keys, and take away that permission for yourself. I can't imagine all of these systems running as permissioned blockchains with full identity of every participant, because they also want to put identity KYCAML on top of it, with full identity of every participant in a system where all it takes is one set of keys, or several set of keys to be stolen, or one copy of the blockchain to be stolen for every single transaction to be visible to the world, and the ability to disrupt the operation of that system. That is Panama Papers on a magnificent scale. If they want to build a blockchain where it is completely controlled by five entities, and it can be leaked and provide forensically secure evidence of every transaction that every corporation put on there, I will bring it on. Anonymous is going to have a field day. They are going to have so much fun hacking these decentralized ledger technologies. I'm very skeptical until I've seen what is the security model and what are you trying to achieve. Bitcoin sacrifices transactional efficiency to give you freedom, global access, open access, permissionless innovation, and most importantly, censorship resistance. If you don't want those things, then why are you sacrificing transactional efficiency, and what do you really get? There is no question that a distributed ledger technology is probably better and more secure than a single entity clearinghouse. That is only because a single entity clearinghouse is a ridiculously anachronistic and insecure idea that should have died two decades ago.  To me, that puts me to sleep. What I'm working on, and what many people in this room are working on, is the open, global blockchain that fundamentally changes the nature of trust and authority on a global level, empowers billions of people to participate economically, and provides censorship, resistance, and individual freedom. And for that, I'm willing to sacrifice transactional efficiency. Just in a second, I will actually extend the question a little bit more. So, now many financial institutions are starting the topic, kind of, and I'm starting to understand that if you have permissioned and known and identified actors, maybe federated actors validating the chronology of the blockchain, they don't need proof of work. And many of them are also understanding that they don't need blocks because they can just sign every couple of transactions and they don't need a chain. So, when they understand that for the private blockchain, they don't need blocks and they don't need chains, do you think it is worth the terminological battle for safe of clarity to tell them, well, you are not doing a blockchain or we should strategically just leave it be, okay, you are doing the blockchain, I will keep the Bitcoin world. Wouldn't it be more honest and more useful for clarity just to stress how much a replicated multi-master database with digital signature without blocks and without chain is not a blockchain? I don't really care about terminological purity, defining the term simply to enforce purity of action and say, what you are doing isn't what I am calling what I am calling. What I really want to do is clarify the issue. So, to me, when I use the term open blockchain, I am clarifying the issue by saying open is the characteristic that matters and here is why and here is what you get with it. The blockchain part is really an implementation detail. The blockchain is the best way we have found to do open decentralized global consensus. But as a technology itself, it is not that interesting. The blockchain is the least interesting part of Bitcoin. The proof of work is much more interesting, but what is really interesting is when you combine all of these things together and then make something that is non-national and independent. But again, I don't care. When you are presented with the word blockchain, that is not an answer. That is a prompt to start asking a lot of questions like, what is the consensus algorithm? How decentralized is it? Is it open to innovation? Is it open to permissionless innovation? Does it afford anonymity or does it afford privacy? So, we have to remain open to blockchain. Is it censorship resistant? Is it censorship resistant and is it also coercion resistant? The important thing to me is this. In the next 20 years, we will live in a world of entirely digital money. This is not a possibility. This is a certainty. We will live in a world where the vast majority, if not all transactions, will be entirely digital. So we have a choice. We can live in a world where the norm is one in which our identity is tied to every transaction. We voluntarily give the power of complete financial surveillance to whichever government we elected last week, hoping that this one is a good one, and knowing that the next one could be just as crazy as the one before. Or in many countries knowing that there is not a good thing about them, that they are evil in action. We give the power of full financial surveillance over every human being on this planet to centralized authorities. We are walking down a very dark path. A path in which, when you say the wrong thing, your bank account disappears. When you go to the wrong protest, your life savings disappear. Without judicial process, without question, without answer, without recourse. That is not a world I want to live in. The alternative choice is a world that re-establishes the fundamental balance between the government and the government. That is a world in which individuals have transactional privacy, as we have had for millennia, without horrible things happening. Most people use their money to buy food, shelter, healthcare, clean water, and to express themselves. We can live in a world where we have complete privacy and governments have no secrecy to hide behind. They are forced transparency, which is the way the balance should work. We live in a world where there are no borders for our ability to trade and do commerce with the people of this planet, and a world in which everyone can participate. This is the choice we face today. The future is digital money. The question you have to ask yourselves is, what kind of future do I want to live in? That is a really important question. So, if you would have your own Bitcoin startup, and you would be selling point of sale, how would you market it? Would you be going from shop to shop, from office to office? I think point of sale is very difficult. If I had to look at all of the applications for Bitcoin, I think retail, in-country, in-person transactions are probably the least useful transaction you can do with Bitcoin. Part of the reason is that most people here would assume that we live a life of financial privilege. We have access to debit cards and bank accounts and currencies. We are not prosecuted or persecuted by our government for a simple retail spending. We don't live in fear of our government. In that environment, why would you need to use Bitcoin to buy a cup of coffee? Other than for the ideological principle, which means you better be prepared for a very klugey experience involving QR codes, delays, confirmations, and fee uncertainty, because this is still an early-stage experimental system. The other thing to realize is that to do retail point of sale, what you are doing is nailing down supply and demand to a narrow geographic area. In order for it to be successful, you need a high density of merchants who accept, and a high density of customers who will transact for it to spread. Otherwise, you have a merchant who accepts Bitcoin, but there are no customers to buy anything, or you have a customer who has Bitcoin, and there are only three merchants in Milan who will take it, which is the model we see today. The reason is because you need a network effect of density of adoption that is a much higher degree of adoption than we have today. It is for the same reason that you couldn't do Facebook on the Internet in 1992. Because nobody had Internet in 1992, we could barely do email. The first question people asked me when I was installing email systems was, like, great, who am I going to send email to? I don't know anybody who has it. Andreas, you are the first person I have ever met who has an email address. Other than communicating with you, why would I need email? That changed, right? Then you have to go through stages of adoption, where you have enough density of people who have it, enough density of people who use it from a broad enough sector of society, enough people with mobile access, enough people with permanent access, enough people with investment in it before you can start doing these things. I would guess probably the better part of a decade before in-person point-of-sale retail is going to be a really interesting Bitcoin application. There are far more interesting Bitcoin applications right now, whether serious pain points, cross-border remittance by immigrants to their families, supporting international charities and NGOs, import and export trade companies that operate globally, companies that do outsourcing or insourcing of personnel and need to pay suppliers, trade associates, or providers all around the world in 150 currencies. Those companies need Bitcoin right now, and they can see a real benefit. Because on the Internet, you don't have the problem of density. You have enough people who have it and enough people who use it that you can actually start deploying these applications. Think of it as a matter of scale. The killer application for Bitcoin in the beginning was speculation. Because for speculation, I don't need anybody else to have Bitcoin. Just me, find somewhere to buy some, done. Now, second scale applications is e-commerce. Now, I need to have Bitcoin, and the store needs to accept it. So that takes order two. And gradually we're going to start increasing the complexity. But unfortunately, point of sale is not where it's at yet. Thank you. I love you to get back to the privacy and transparency issue you touched upon. I mean, we all had in mind the Tinkook resistance to the FBI request of providing cryptographic backdoor to the iOS operating system. And oftentimes when I talk with regulators, I make the point that in the near future, monitoring communication and that subset of our communication, which are financial transactions, would not be possible because even with cryptographic backdoor, the honest people will have their privacy exposed and bad people would just use backdoor less cryptography on the top of whatever layer. So we will be facing a new different society in which the transparency for low agency that we have been used for will not be available anymore. And we'd better get ready. Do you share some ideas on this? Law enforcement never had visibility into our finances until probably the big 1970s and the beginning of the 1980s. Until then, most of our finances were completely invisible to law enforcement. Somehow they were able to enforce law. In fact, they reduced crime quite significantly without visibility. The actual tool of having visibility into finance has proven to be not a very effective law enforcement tool. It's a very addictive law enforcement tool. It certainly gives a lot of power, and with that power comes great addiction to power. But it doesn't actually demonstrably change the fundamental requirements of law enforcement. Most law enforcement still operates with very traditional mechanisms. If I want to find out what Bitcoin transactions a company has been making, you find someone who has done something wrong, you take them into a room and you say, well, 20 years for you, or you tell me everything about your boss's Bitcoin address. And you keep rolling them. I believe that was invented here in Italy, that system. The point being that law enforcement has never had full access to all of our finances, and we should be skeptical about the idea that in order to be safe, we have to give away privacy that we've had for thousands of years. Completely. In a way that has no accountability. I think that is a terrifying idea. I think what it does is actually endanger security. Privacy is not the antithesis of security. Privacy is security. And security is not the absence of crime. It is the presence of justice. And you don't create a secure world by removing crime. You create it by investing in it. You create a secure world by removing crime. You create it by increasing justice. And if we allow full financial surveillance, we are not increasing justice. In fact, the price we pay for full financial surveillance is the economic exclusion of four billion people from the world's financial system. Because without access to sufficiently credible ID and proof of assets, they are the unbanked. The price we pay for the bourgeois and pure oil illusion of security that we have bought with totalitarian surveillance is condemning four billion people to poverty. That is not a price I'm willing to pay. And so that's what we should be asking.  Because it doesn't make me more secure. I think we are actually winning this particular battle. A lot of the people who got involved in the battle for crypto in the last decade probably see us losing. But I was there in 1991 where they tried to ban it worldwide and put back doors in every chip. And we won then and we've got a lot more crypto now and a lot of more people who can write crypto now. So you're right. Not only is it not a good idea, but also it doesn't work. And we should resist it because it is evil. Hi Andreas, it's great to have you here. I would like to know what you think about the proof of work sustainability in the long term and those if you think that Bitcoin developers are trying to implement proof of stake in Bitcoin? Well, I've always said that I see lightning a bit as a hybrid proof of stake. It's a blockchain not open. There you go. I've always thought that some elements of lightning actually look a bit like a proof of stake system. So I find that very interesting. It's still very theoretical obviously and how it plays out we won't know. There will be some opportunities to do some interesting things with that. I don't think we're going to see a major change to proof of work. I think proof of work in Bitcoin as it exists today is one of the fundamental traits of what is Bitcoin. And if you change that, it's not Bitcoin anymore. And in order to change it, you would have to get the consent of the very people who that change affects the miners. So I don't think that's ever going to happen. But at the same time, here's the thing. We can talk about how proof of work isn't working, isn't scaling, isn't decentralized enough, isn't, isn't, isn't. But the problem is that in practice, in real life right now, it is. It still is. It has been running continuously without interruption for seven years, delivering security of transactions without having the fundamental algorithm and security compromised ever. Name one bank that can say that. Name one system of security that is centralized that can make that claim. So proof of work works today, demonstrably. And it continues to work. And so I mean judge claims that say that proof of work is not working with some degree of skepticism. I'm interested in seeing how it can be improved. But I don't think we're going to fundamentally change that. That is Bitcoin. And if you want to do something different or better, there are plenty of opportunities. There are hundreds and hundreds of points that do proof of stake and hybrid proof of stake and delegated proof of stake and proof of work with proof of stake and proof of work with different algorithms and CPU and GPU resistance for now. For now. For now. And, you know, all of those things are very interesting. If you think about consensus algorithms as a domain of science that came into existence in January of 2009 and is only seven years old, the number of PhD-level papers that are being written right now is astonishing. And it's developing very fast as a scientific domain in its own right. And I look forward to seeing all the incredible, amazing advancements we're going to make. Thank you. Well, I was wondering now in the realm of smart contracts, what do you think about decentralized oracles? And in particular, what are your opinion on provably fair oracles? If you... All right. That's... That's a tough one. There's a reason why the fundamental trust model that operates through consensus works on the transactions and tokens that are on-chain best. And that is because it can validate, and those are validated on-chain best in a decentralized way. One of the problems with trying to validate externalities that are, by definition, external is that you may have problems with maintaining consistency of the historical perspective of those externalities. Let me give you an example. Let's say you've got a smart contract that says, I will pay farmers in Italy if, during three days in December, the temperature remains below Celsius for three days. We call that a frost event. And if a frost event happens, right? Great. Where are you going to get those temperatures from? How are you going to get Bob? Bob, the open blockchain. Well, the problem is that the miners who are validating the consensus rules do not have thermometers in Milan. So they cannot validate that consensus rule. Also, depending on whether the thermometer is high or low, here or there, inside or outside, shielded or not, it will give you a slightly different reading. Because you're now talking about a real world, right? A variable that is measurable to a certain degree of accuracy within a certain statistical error. So the temperature is X plus or minus two degrees, two within 3% statistical variation, just on one thermometer. So then the question is, if you say I'm going to take that from one oracle, then you've centralized. If you say I'm going to take it from three oracles, what happens when they disagree? And two of them detect a fast event and one doesn't. And how do you reconcile the chain? This is not an easy problem to solve. You've heard about the electrolysis. Yes. What we do is that we try... I've used the oracle-wise, please. That's great. And we try to provide a proof... Microphone? Yes. Maybe an example. Basically, we try to provide a cryptographic proof that we are not lying. And that's the best that right now you would have on a decentralized blockchain. Maybe another stage would be to have some type of collateral so that if we lie, we lose some type of knowledge. So I think there are events upon which you can make that kind of determination. And there are events upon which you cannot make that type of determination, right? So, you know, people give various examples like, okay, what if Milan FC wins this game this Saturday? What if we put a bet on who's going to win the next presidential election or whatever? And most people assume, yeah, those events, you know, they either happen or they don't. Well, that's not how our election went in 2000. We waited 29 days to find out who the president was, and then we delegated it to nine miners, let's call them, who arrived at consensus 5-4 and gave us George Bush. Right? And so there are very few real-world facts that can be quantified with certainty across all observers that are actually useful in any form of any commerce because the very events that you're trying to measure are the events that introduce uncertainty in commerce, and those events are the hardest to arrive at consensus of measurement. Like, if I had a smart contract that said, well, how many atoms is in the molecule of carbon? Okay, well, we can answer that for certain parameters of answering that, but that's not useful because if everybody can answer it, why do you need an oracle? And for the things that are really useful, you can't answer it in a definitive way at the right time. I can't tell you if Milan FC won. There's still a dispute, and the experts are going over the videos and the referees said they won, but then FIFA is now appealing the decision and who the hell knows, right? The election is uncertain. People actually said a few days after Lehman that it wasn't technically quite bankrupt yet. The people who said that were the people who had the insurance contracts to pay out because Lehman was bankrupt and they didn't want to. So even facts like that cannot be easily adjudicated. So the question is, how useful are oracles? If by oracle you simply mean put trust in one company that is through collateral or cryptographic signing putting their stake behind that. And that is only useful up to the level that you can stake, which again limits its applicability. I think it's a really interesting thing that will develop a lot over the next couple of decades, but it's a very hard problem. So thank you for trying. The last question, sorry. Then I will ask the few ancient people with paper books to reach Andreas for the signing and then the other one with the digital copy can reach him also in the next days to ask for the digital signature. Okay, last one. Hello, my name is Simone. I'd love to be here. Just referring about what you said before, the concept of illusionary biology. That's something that I've been looking, there's actually a lot of interest for many people around that and how you can draw similarity to that. And I think it was the case and there's been quite a lot of work being done with some anthropologists that evolution occurs when the more not competition but more cooperation. So the greater the level of cooperation between a certain species will draw greater evolution. So if you draw that parallel back to the digital economies, I think a Bitcoin going forward there will be two type, a macro type of currencies and I wanted to know what your feedback about my vision is. This one is sort of like a Bitcoin model where it's a rival game. So it's a total sum game, either you have it or I have it and it's trustless. It's sort of like Chicago school away. And then I think there's going to be another model where it actually is a multi-time player when you have the identities and you associate some metrics of reputation between people that they interact many times with each other. I think there's sort of like the needs of cooperative coin as well and a cooperative sort of like relationship economy. So I just wanted to know what your position was about it. Thank you. Yeah, that was very clear. So I think two things about what you said. Cooperation is a very important part of evolution and one of the things I didn't talk about was the concept of cross-pollination or horizontal transfer. So modern biology identifies the fact that a lot of evolution happens through horizontal transfer of DNA between species or cross genetic lines, not just parents to child, but also across. So we take genetic material from viruses, viruses take genetic material from us, give it to bacteria. There is a mishmash of cross-species exchange of blueprints, of ideas, of successful systems that end up jumping from one species to another. And I found that really interesting because there's a very close relationship between that and the open-source environment in which cryptocurrencies have grown up. Because one of the really important genetic traits of the new form of Internet money is that it is all open-source, almost all open-source. Which means that if somebody comes up with a good idea and they write an implementation, that little piece of DNA can be borrowed by someone else and they can incorporate it in their system. And I think we shouldn't underestimate how rapidly Bitcoin itself is progressing and how much it's changing both internally in how it works but also in some of the higher layers above it. And I think when you have a team of developers that are very talented and they can take very good ideas from other systems and adopt them and then run them on top of a $6 billion, $7 billion, $8 billion economy, that creates a very interesting environment. I think we're going to see a lot more cooperation not necessarily within the currency, but between different currency implementations through their open-source exchange of genetic material. Now, talking about consensus algorithms are systems that are more cooperative versus competitive. I think it's interesting to look at consensus systems like that. There's some interesting work being done, for example, about incorporating concepts of basic income. For example, which is a different political perspective than some of the stuff that Bitcoin does. And I think you're going to see these ideas evolve over time. Identity and reputation, I think, are double-edged swords. They are something that works really well in small communities of up to a couple hundred people and is part of our social makeup. But if you try to take those same reputation systems and scale them beyond a certain point, they start collapsing. And then you have systems that actually become problematic. So if you take reputation systems, and I've talked about this before, but it's something I feel very strongly about, reputation systems require infrastructure they're running on to be a close-knit society of humans that forget and forgetting is one of the features of reputation systems. Because when you have a small society, and that society is capable of forgetting, that means that it is capable of forgetting as part of it, and you put it into a mechanistic realm where you strip those very human characteristics, and it becomes a very rigid, inflexible system. We're already seeing this on Facebook and other social media structures. You're seeing very rigid systems of reputation, and collaboration, and social interaction that are guided by mechanistic algorithms, which are written without accountability by a very, very small number of people who can control enormous populations. I'm not sure that's a good way to go. So collaborative systems, consensus through collaboration, I think are great ideas and they're going to evolve. But whether they can also scale is another question, and whether we really want to do reputation at scale, we can, and now the question we have to ask is, should we, and do we really want to do reputation at scale? So a bit broader perspective, but thanks for that question, great. Thank you very much. So we'll see you here back in 40 minutes for the letter winner, and I ask you to be here also Friday night for a BitSquare presentation, and thank you very much to Andreas Antonopoulos to be with us tonight. Thank you.