Video - Keynote Plus Q And A for Bitcoin

Bitcoin Wednesday #22 Featuring Andreas Antonopoulos on 1 April 2015. The Bitcoin Expert gives a keynote about cryptocurrency, social and economic implications and future applications. After the keynote he does an extended Q&A session in which he answers questions asked of him by the Dutch government and the public at Bitcoin Wednesday. He also talks about the Bitcoin technology as well as his startup Third Key Solutions which was launched the day before

TRANSCRIPT

Male: It is Bitcoin Wednesday.

Male: Bitcoin Wednesday, the digital currency of revolution in The Netherlands. Register using the link on bitcoinwedenesday.com.

Male: Hi Andreas, thank you very much for agreeing to come and speak with us. Also, we’d like to thank the audience also for coming out and -- and supporting us. What we're -- what we're doing is, what we're all -- we're all actually activist for the digital currency revolution. And -- and it's really you know, a very, very positive step that we’re all gathering here, and we’re hoping to -- to really start a very open, transparent and very informational or educational series of conversations about the possible importance of this -- this technology for society as well as the Dutch economy.

And thank you very much for -- for everyone who sent questions in here. And before we get started, I’d just like to say, we will call some of you up to ask your questions directly into the microphone here. Please keep the questions as short as possible. We only have a limited amount of time to go through a lot of questions. And the idea is that we'll be answering these questions at a high -- relatively high level, so that we can you know get a general sense, and also to be able to distribute the video they were making of this to interested parties within the Dutch Government.

So, the very first series of questions are going to be, you know, relatively general questions that -- that are of interest to -- to our government. And when -- when we're refinished with this video, when we packaged that, we will be sending that to them. And hopefully, that will be the first step in an ongoing dialogue which you are all participating in as members of the audience, or people who have contributed questions or who will be asking questions. So, when you do come to the microphone or ask your question, briefly state your name and very briefly give the -- the question and nothing else. There are a couple of except -- exceptions where people will mention their affiliation. And you'll -- you'll see for yourself while we’ve done that and the reason for that. So, thank you very much. Andreas, we give you the floor.

Antonopoulos: Thank you so much. All right, can everyone hear me? Hello, everyone. Thank you so much for coming out tonight. I -- I wish I could be there in person. Amsterdam is one of my favorite cities in Europe and I really wish I could visit again. So, just a quick check, I wanted to find out how many people in the audience are new to Bitcoin. All right, a few people there.

Male: Maybe about 10 Andrew, yeah.

Antonopoulos: All right. And how many people in the audience own some Bitcoin at this time? Oh, great, very good, very good. So, I wanted thank you all for having me at this event. My name is Andreas Antonopoulos. I am the author of Mastering Bitcoin. And Bitcoin's number one fan is probably the best title I can give myself. I've been involved in Bitcoin now for three years. And it's a technology that really excites me. It excites me as an engineer. It excites me politically. It excites me socially and it's something that I'm very interested in and talking about to as many people as possible. And so, I've spent the last three years working full-time in the Bitcoin space doing a lot of public talks like this one, as well as writing a book about Bitcoin.

So, what is Bitcoin? Bitcoin is something really unique. It seems at first glance if you look at Bitcoin, a lot of people will think that Bitcoin is simply a form of PayPal or a digital payment system, or perhaps a digital currency, like the currencies you find in games or casinos or things like that. In fact, the first time I heard about Bitcoin, it was in relation to some casino, and I thought it was some form of digital casino chips and I ignored it because I didn't realize the importance of this technology.

Bitcoin is much more than all of that combined. At first glance, Bitcoin appears to be a currency but it's not just a currency. It is a technology platform and an invention that allows two individuals to exchange value across the internet without having met each other, without having to establish trust in each other, and without any intermediary or counter party getting in the way of the transaction.

Bitcoin isn't just one more currency in the world of currencies. It's not a national currency. It's not just a form of money. Bitcoin is the first to transnational currency, the first global currency and also the first completely decentralized digital currency. What Bitcoin allows is a world without borders where economic transactions between individuals can occur instantaneously and at low costs. It brings the principles of internet connectivity, communication, freedom of expression, and freedom of association to money. It is the first time that we have seen innovation happen to the banking industry.

For the last 50 years, the banking and financial services industry has had the ability to veto new entrance to new competition using regulation as a means to start competition, and promoting technology from the 1950s, credit cards for example, as the latest cutting edge technology. In fact, banking and finance has barely innovated in the last 50 years. Instead what we get is a world in which at the time of the internet, banks operate Monday to Friday, 9:00 to 5:00, at least in my country, where transacting between two individuals involves sending a paper check or transmitting a wire transfer that takes three days to cross the globe, if you are lucky. Where getting access to your funds can be delayed by three to five business days, and where exorbitant fees are the norm.

The banking industry has been able to get away with this because they do not face any serious competition, because they are able to -- to attain a monopoly over most national systems through regulation. Bitcoin changes that. It will do to the traditional relationship between money and people what Skype did to long distance phone calls. You know, a decade ago, if I was trying to do what I'm doing right now, which is speaking to you by remote videoconference from the other side of the planet, I would have to probably pay AT&T by the minute. There might be, on the side of my laptop, a little slot where I could put coins every thirty seconds in order to pay for this videoconference.

But fortunately, the internet changed the relationship of power between telephone companies and people. And now, again the internet is going to change that relationship between banks and people, and also between governments and people. Bitcoin enables us to unite the world economically to extend the reach of an individual to be the same of that of a multinational corporation, an individual who can transmit money cheaply and instantaneously anywhere in the world.

But again, Bitcoin is much more than that. Underlying it is a platform and decentralized system that can be used to replace many hierarchical, centralized, counter party-based institutions. For example, Bitcoin can be used to implement stock market, stock exchanges, bond payments, lending, peer-to-peer lending, crowd funding, public offerings and share offerings, the organization of elections where the private elections would ensure holders or even on a broader scale. All of these things are possible because Bitcoin provides a platform of trust, a platform of trust that is not controlled or owned by anyone, but it's based on a series of mathematical rules called consensus which emerged from the participation of everyone on the network.

Bitcoin diffuses the power of trust, just like the internet diffused the power of publication and communication and gave power to more people while removing the power from centralized locations. And Bitcoin will do this with a platform of trust in ways that we cannot yet imagine. It can affect not just economic systems but many forms of social organization. And at its core, Bitcoin operates on a completely transnational level. Like the internet, it doesn’t even see borders. Every person who connects to the Bitcoin network is treated as an equal peer. Bitcoin is a neutral platform that doesn't care whether the source or the destination of the money isn't individual, in a first world country with access to incredible resources, or a farmer in a developing nation or a third world country, in a rural setting using a small text-based messaging system in order to communicate via Bitcoin with the world. 

Bitcoin doesn't care if you are a bank, a multinational or an individual, if you're trying to transmit one dollar or million dollars. It is a neutral platform that enables these transactions regardless. And with that, it brings the power -- the power of desktop banking and mobile banking to everyone without constrains, without limitations.

The promise of Bitcoin is not just the promise of making shopping easier within the developed world. It's not about replacing Visa or MasterCard or PayPal. It's not about doing online commerce or buying a cup of coffee in Amsterdam. It's not about making those things easier. What's it's really about is bringing the power of international banking to four to six billion people who have never had excess to powerful international banking.

According to the World Bank, some two-and-a-half billion people have no access to banking whatsoever. They live in cash-based or barter-based societies. An additional four billion people have limited access to banking, banking that can only be used in the local currency, banking that cannot be used internationally with very limited access to international liquidity and credit, lending or other institutions of finance that we are accustomed to.

I can open a bank account and a brokerage account and be trading on the Tokyo Stock Exchange tomorrow in Yen, and neither my bank nor my government will get in the way or try to stop me from doing that. I will have very few limitations to do that. That is the position of privilege that a very small percentage of the population of this planet have today.

Bitcoin brings with it the promise of extending global instantaneous financial services to every citizen, every person, everyone on this planet with technology as simple as text messaging phones or with a very inexpensive smartphone such as a $25 android. And this promise really is what is going to drive the development of Bitcoin because Bitcoin solves problems that are enormous problems that have prevented the spread of banking and financial services for many of the furthest remote places on this planet.

And by solving these problems, Bitcoin creates an enormous possibility for people to connect towards one another. And people will not be stopped because for many people in the world, this is not about making shopping easier or reducing the cause of a transaction, or buying you a cup of coffee with a single tap and pay and saving sometime in the checkout counter. This is about freedom and control over money in places where the governments are hostile, the banks are organized criminals, and people have very few opportunities to invest in the future of their children, in the next generation, in healthcare sanitation, food and security. Bitcoin gives them the power to do that without controls, without constraints, and without a series of intermediaries trying to steal their money at a return.

And so, that's why I'm excited to be in this space. I think bringing the principles of the internet to money is a lifetime opportunity. And for those people you are in Bitcoin today, this represent a front seat in the making of history. And I'm very glad to be part of this, and it is a huge privilege to be able to work with this incredible global community to bring the promise of individually controlled free, fair, transparent money to the world. Thank you.

Male: Thank you very much, Andreas. And I just wanted to, kind of, emphasize that we are all, by being here, by participating in Bitcoin Wednesday, by spreading the word, by sharing the information that we've learned here and getting more people to come and to raise awareness within -- within that society, we are contributing to making history for Amsterdam, for The Netherlands so that we can make this country and this city one of the international hubs for Bitcoin and for this technology. And I really want to thank Andreas for bringing that point and making that point clear.

And now, what we're going to do is go through some of the official questions that we've been given by interested parties within the Dutch government. There are a lot of questions. So, in order to get through them, you'll see that we're really going to only answer them on a high-level, maybe just a couple of minutes for -- for each question. But it's really just to beginning. So, we hope to go into much more detail in the months ahead. This is only number 22 of Bitcoin Wednesday, and I hope to see you all when we do 222. We're going to be here still doing this. And you can bring your children and your grandchildren as well. So, having said that, let's start with the first question.

Male: Okay. Well, here's the first question. To gain some better understanding of the ecosystem, could you a) tell us what are the different types of parties using crypto tokens or of departments and services a partition services based on them? Could you understand me, by the way?

Antonopoulos: That really depends on which country you're looking at, and it depends on how you're looking at Bitcoin. Now, we’ve got to understand that at the moment Bitcoin is really in its very early stages. It's not that easy to use. It’s complex technology, and it requires some -- some complex concepts. So, as a result, you know, the truth is that a lot of the early adopters in Bitcoin are the technically literates, the most -- the people who adopts the technology at the earliest, the nerds, the geeks as me. And we tend to have an easier time absorbing rapid technological change and being exposed to these kinds of experimental technologies.

However, what we're seeing is gradually Bitcoin is spreading in various places around the world and with various usages. We see Bitcoin being used in online commerce because it actually provides for a much better consumer experience. It allows people to buy things online very quickly and easily without exposing their private banking information or credit card information to intermediaries, in a way that is much more secured than traditional credit card payments. We see Bitcoin being used increasingly for remittances, for immigrants to send money home to their families, replacing a much more expensive alternative such as Western Union, MoneyGram and others like that. We see Bitcoin being used in import and export businesses as a faster way to send payments instead of wire transfers.

We see Bitcoin being used to pay subcontractors, suppliers and partners in multiple different countries because it facilitates international payments very, very affectively. We also see Bitcoin being used for a variety of individual usage from, you know, buying coffee, to buying t-shirts to all kinds of things like that. In -- in different places, we will also see that Bitcoin is gradually being approached by various governments that are interested in seeing if they can use Bitcoin to accept payments for government services. It's interesting to see that in -- in many countries. For example, it is -- they use various forms of electronic payments for public transportation that are very restrictive in their use and not very flexible. So, we know that there are a number of governments interested in seeing how Bitcoin could be used to offer municipal services and local government services.

Those were the kinds of usage we see today but, you know, it's interesting to note that because it is still a very early stage of this technology, what we're seeing is a lot of the traditional usage of currency simply being replicated in Bitcoin. Well, I think Bitcoin will get much more interesting as we see broader adoption, when things that cannot be done with existing currencies and payment systems start being done with Bitcoin, including for example, micropayments for creative content on the internet, which is not possible today, and various other forms of autonomous systems that can use Bitcoin directly, whether that’s self-driving cars perhaps, or automated hotel systems. And so, we've barely scratched the surface of what type of usage Bitcoin might have.

Male: All right, thank you. You answer my second there. Sir, the third one was, what will the ecosystem look like in, like, 12 months or maybe three years or five years?

Antonopoulos: I think it's important to understand that Bitcoin time is about four times faster than normal time. Meaning, one year in Bitcoin is about four years in most other technologies. The amount of development and innovation that has occurred just in the last year is absolutely breathtaking. And so, I do not offer five year predictions on Bitcoin. I don't think I can even confidently make three year predictions on Bitcoin. For the next 12 months, I think what -- what we're going to see mostly in Bitcoin is development of fundamental infrastructure services. We're at the stage in this currency where the most basic infrastructure needs to be built in order to make it easier for people to get Bitcoin, to earn Bitcoin for their labor and to use Bitcoin in everyday circumstances, and that means Bitcoin exchanges, Bitcoin ATMs and Bitcoin Wallets.

Male: Okay, thank you. The next question is by Richard.

Kohl: Hi, I'm Richard Kohl. I'm one of the Board Members of the Dutch Bitcoin Foundation. And I’d like to ask this question from -- this official question from the Dutch Government. Please tell us what are the different profiles of the various types of investors and users, and the types of financial products and services that are based on crypto tokens that they might be using?

Antonopoulos: Well, again it's -- it's difficult to say at the moment. I think a lot of the early ushers at the moment are people who are involved in high-technology. We're seeing a lot of investors interested in investing and start-ups in the Bitcoin space, and that's one of the most promising areas because that represents investment directly in innovation and technology, research and development. That's the area that is generating jobs and I think that's very interesting.

We also see speculative investment. So, there's a lot of people using Bitcoin as a speculative investment, trading Bitcoin on Bitcoin markets. That activity is generally very high risk because Bitcoin has extremely high volatility. And certainly we are seeing a lot of that going on but it's -- it's not very interesting to me because it doesn't reflect the technology and the innovation. It's basically treating Bitcoin as a stock that can be traded in -- in the stock market, and really Bitcoin is too small to be a stock. It’s too volatile and that activity resembles gambling more than anything else. I hope that answers your question.

Kohl: Sir, certainly. I’d like to extend the question. Now, this is something that we've spoken about in Bitcoin Wednesday and within the *00:22:32 extensively. Please also tell us what are the different profiles of the various users and the types of non-financial products and services based on crypto-tokens that they are using, so non-financial.

Antonopoulos: We're beginning to see a lot of interesting usage of the blockchain technology in order to do secure registration of assets. So, for example, and I think this would be a perfect example for Amsterdam, one of the projects that I've seen that has been of great interest to me, is a project to create a registry for bicycles, so as anti-theft mechanism for bicycles. I've heard that you have bicycles in Amsterdam.

Male: One or two.

Antonopoulos: One or two. And so bicycle anti-theft activities, in many -- in many cities around the world, you can register your bicycle with the local police department and have them add your serial number or stamp a serial number on the frame in order to protect it from theft. These systems are not very distributed, and they're relatively difficult to operate because they're highly centralized. Blockchain technologies allow you to do secured timestamp databases.

And what that means is that you can take something like a bicycle registration, record it in the blockchain, and then be able to transfer the ownership of the bicycle using a standard Bitcoin like transaction, where what you’re transacting is not the value itself but the use of a tiny amount of Bitcoin as a token of ownership, as a title of ownership of an asset. You could do this with bicycles. You could do with cars. You could do it with houses to buy and sell a house for example.

What that would allow you to do is also to apply other techniques such as Escrow to protect buyer and seller without having to expose them to the risk of a third party Escrow service. You can do automated Escrow in Bitcoin without anyone taking custody of the funds by using the network as the Escrow service. There are -- there are many exciting possibilities around registration and time stamping offered by this technology.

Kohl: Great. The next question is what are the advantages and the risks for users and investors in crypto-tokens?

Antonopoulos: The advantages are that Bitcoin and other crypto-tokens offer a completely new security model, one that diversifies the risk by putting security in the hands of the end-user. Now, we see in traditional financial services that's when centralized institution, like for example, a large retailer or bank is hacked, that can lead to the compromise of millions and millions of credit cards or consumer identities and identifying information. So, the systems that we use today are not very friendly to privacy. Bitcoin, allows consumers to protect their privacy and to protect the security of their funds by spreading the security across all of the users. So, to compromise millions of Bitcoin users, you have to attack millions of different computers. If the Bitcoin protocol is used correctly with its decentralized nature, it decentralizes risk, and that’s a tremendous opportunity.

Now, for investors on the other hand, Bitcoin is a relatively risky investment at the moment. And we also see that there are other risks. For example, in many cases, we see companies trying to implement traditional banking models, centralized banking models on top of Bitcoin. If you have an organization that takes control of user funds and takes control of the private keys that control the funds, then what that organization is doing is, they're building a bank. It's using Bitcoin but it's still a bank. And if you have custodial control over users’ money, that exposes those users to tremendous risk. Essentially Bitcoin and the blockchain technology allow users to control their own money. But if you take that security model away and you create something that's looks more like a bank, then that actually increases the risk for users, both in terms of privacy and in terms of hacks, embezzlement and fraud. And we saw that repeatedly with examples like, Mt. Gox in Japan, and other exchanges that centralized control.

Kohl: What are the advantages and the risks concerning the growth of a newly developing financial market around crypto-tokens?

Antonopoulos: Well, a lot of this -- a lot of these markets are very, I think very exciting because they can represent a lot of innovation in technology, but I think the primary risk is that if you, again as I said, if you take the security model of Bitcoin and you violate that security model and instead you take control of users’ funds and centralize them, then some of the organizations to do that, they're not protected by the Bitcoin security model. And they're also not regulated as banks, so they fall into this grey area where they lack efficient oversights and controls. Bitcoin isn't security. Even traditional banking regulations are not covering them and very often we see fraud in those cases. So, I think that is a significant risk.

Kohl: Well, then comes the next question, of course. What the different -- what’s the differences are between the various Altcoins in blockchains when looking at the relationship between the various stakeholders, including miners, wallet services, users, traders and speculators, investors in assets and the exchange of value between the -- between these parties?

Antonopoulos: They-re -- at the moment, most of the Altcoins are really not that different from Bitcoin. And in fact, they represent a very, very small fraction of the value of Bitcoin in the marketplace. However, what Bitcoin has done is, it has created the possibility of any individual being able to -- to design and launch a global and affordable, instantaneous and secured currency. The ability to create powerful secured currencies on a worldwide basis in the hands of an individual changes the fundamental relationship between currencies. So, what I would expect to see is that we're going to have a lot more currencies in the future.

And so, this is the democratization of currency creation, which you can see as a good thing or a bad thing depending on your perspective. Most of these currencies will have very little value. Some of them however will have surprising success. And so, really fundamentally what has changed is that it is no longer governments that have monopoly over the creation of currency. Any person anywhere can create a currency and if that currency is widely adopted, then it will be -- it will be valuable.

Kohl: Okay.

Male: So, hi, Andreas, this is Roby.

Antonopoulos: No problem.

Male: Yeah. Well, we just talked about the investors, the miners and the wallet services. What are the types of stakeholders that you expect to arise in the future?

Antonopoulos: It's -- it's very difficult to tell right now because even in the mining space, for example, we're seeing that split into a number of different layers. So, new industries are emerging within that. We see individual -- the mining service or the mining industry use to be fairly homogeneous. Now, we see companies that offer hardware, so hardware manufacturers. We see companies that buy that hardware and deploy it in very large locations, for example, mining firms that have primary hatching power. We see the organization of mining into syndicates or pools with mining pools. And we also see companies that are leasing out mining hashing power, which either they own in the form of hardware or they buy or rent from others and then resell it as an investments scheme.

So, already just in the space of mining, that industry has separated into four distinct players with independent markets in there that are trading both hashing power today and in some cases even hashing futures for tomorrow. So, it's very difficult to see who the stakeholders will be in the future. And I would expect that among other things, we will start seeing banking companies or financial services companies, large banks, consumer banks, investment banks, brokerage houses and various other financial services organizations, for example, insurance companies will start using blockchain technologies or Bitcoin directly in various ways.

Male: Andreas, how can a-- how can the stakeholders mentioned be comparable to parties in traditional finance or markets, for example banks, consumers, regulators, investors, exchangers -- exchanges brokerage and so on?

Antonopoulos: Well, that's what interesting, they’re not comparable. One of the fundamental impacts that Bitcoin has is that it changes some fundamental classifications and constructs within financial services. A lot of the classifications and constructs in financial services are the result of either regulations or constraints on activity, or natural monopolistic tendencies that occur within these industries. So, companies will organize around certain constraints, for example, and have a strict delineation.

Financial services networks are quite fragmented at the moment. So, for example, there are payments networks that are used for payments between countries. There are payments networks used for very large amounts. There are payment network used for consumers. There are payments networks used for business to business. There are payments networks used for very small amounts. And all of these are very distinct payments networks and around this distinct payment networks, you have this coalitions and collections of companies forming various industry subsectors.

All of these are really artificial distinctions and they occurred because of limitations in the underlying payment infrastructure. Bitcoin flattens all of that. It blurs the lines between institutions. It blurs the lines on many of the traditional concepts. So, a good way to make the analogy is in the era of the internet, how do you define the word journalist? And that may -- it's very difficult to say what is a journalist, what is a publisher, what is a creator, what is a consumer. All of these things are blurred because consumers can be simultaneously journalists and publishers, and to be a publisher doesn't mean much other than the act of publishing.

And so, traditional classifications and institutions that grew around these very, very restricted functions have now been flattened by the internet. Well, while the same thing is happening with Bitcoin. What does it mean to be a bank? What does it mean to be a broker? What does it mean to be a producer, a consumer, a business? What does it mean to be a custodian? What is the meaning of the word payment or transaction, all of these things are being re-defined because the underlying payment networks flattens and removes many of these distinctions.

And so, the existing stakeholders are going to find themselves adapting to this new environment. Some big chunks of industry may in fact be re-defined. A lot of intermediary functions are no longer necessary. It can be replaced by networks. For example, clearing houses and counter party institutions in the age of Bitcoin are about as relevant as travel agencies or real estate brokers are in the age of the internet. These industries disappeared in many areas because of the internet and something very similar is going to happen to banking. But at the same time, new industries will emerge to offer new types of services that didn't exist before. It's very difficult at the moment to predict what impact this technology will have but it certainly redefines some fundamental concept around the custody, control and transmission of money that can no longer be defined in simple terms.

Damian: I'm Owen Damian, Board Member of the Dutch Bitcoin Foundation and I have a question regarding investments. And it's about -- what are the advantages and disadvantages of making investments in crypto-tokens instead off traditional investments?

Antonopoulos: I think that's using crypto-tokens as an asset class or an investment is extremely risky. And I am not sure that there are benefits at the moment. Even Bitcoin, which is the most stable of the crypto-tokens, has extremely large volatility. More broadly, however, these are not assets in the traditional asset class scenarios. Bitcoin -- what is Bitcoin, is Bitcoin a currency, is it a stock, is it an exchange-traded fund, is it an index fund, is it a bond, is it a sovereign fun, is it a commodity? Well, the answer is that Bitcoin is simultaneously none of those things and all of those things. It behaves like a currency. It behaves like a stock, a sovereign fund an index fund, a commodity, an asset class of its own. The asset class of Bitcoin is cryptocurrency. It is a new asset class that has characteristics of stock, bonds, currencies, funds and commodities.

And so, traditional investment strategies are fraud with risk when applied to an asset class, if that has unique characteristics that have never been seen before and behaves in ways that we do not anticipate. Investors who involved in investing in crypto-tokens must account for not just exchange rate fluctuations but also industry segment fluctuations, fluctutations in consumer adoptions, supply and demand, but also the industrial capacity of mining, the internal dynamics of the mining difficulty and hash rate. And all of these parameters influence the market for cryptocurrencies in ways that we don't yet know how to analyze.

So, as a result, I would say crypto-tokens themselves are a brand new area of investment which has to be approached with extreme caution by sophisticated investors who understand the kind of risks that they are engaging in. Rather, if you are an investor and you are interested in this new phenomenon of cryptocurrencies, I would consider as the most important areas to invest in, are pure technology innovation, start-ups, product development and service development, not the crypto-currencies themselves.

Cryptocurrencies are vehicle. The technology and the -- the companies that come out of this create real jobs, real products, real services. And those are areas where people should invest, which means that at the moment this -- the space of Bitcoin and other crypto-tokens is -- is really an area for venture capital investments and -- and not for the kind of market-based speculation that we see. 

Damian: Okay. Thank you.

Antonopoulos: If you'll excuse me for just one minute before you ask me the next question, please.

Male: So, for those of you -- excuse me, may I have your attention? Can I have your attention, please? Yes, yes, so for those of you who have walked in a little bit later and -- you kind of missed the beginning, we -- we are planning on conducting these types of sessions, you know, in order to -- to educate the public and ourselves, and to raise awareness. And what we're looking on behalf of Bitcoin Wednesday as well as on behalf of the Dutch Bitcoin Foundation, the Stichting Bitcoin Nederland.

We're looking for volunteers, people who have time and are interested in helping us because we have a lot of work to do. As you can see, the type of change or the type of challenge that we face as a society, preparing for this transformation. Not only a transformation in technology but also financial transformation, as well as social, it will be you know dramatic social transformations that will -- we will be experiencing. And in order to do that as a society, in order for us to succeed in our -- in our ambition of petitioning Amsterdam, The Netherlands is one of the key countries in the world for this.

We have the opportunity to do that but we need to work together. So, if you have time to contribute to us as a volunteer, please do contact us [email protected]. It’s a good email address. Otherwise, if you don't have so much time but maybe have some additional funds that you -- that you can contribute, we certainly would accept that as well. So, thanks very much. So, thanks for coming back, Andreas.

Antonopoulos: Yeah, sorry for that slight interruption. Thank you.

Male: Sure. What are the critical similarities and differences between crypto-tokens and the traditional financial instruments and financial organizations?

Antonopoulos: I would say there are more differences than there are similarities. A lot of the traditional financial instruments, which also affect the organization of industry and financial services companies around them are really reflections of artificial constraints of geography and artificial constraints of transmission, communication and the overheads and complexities of organizations through intermediaries. Meaning, that we get financial services that are organized in a specific way because of the delays and difficulties imposed by the transmission of money instantaneously without intermediaries.

Bitcoin has redefined that space by removing these constraints. And so, to provide a common analogy to that, the reason -- the reason we had the supremacy of very large publishers who controlled the dissemination of information in news through ownership of very large TV stations, printing presses and distributions of newspapers, was because the industry organized itself around the difficulty in transmitting and publishing information efficiently to many, many people. As long as that difficulty existed, as long as the cost of publishing to millions of people was very, very high, the industry would produce very large companies that filled that role.

As soon as the internet removed that cost, it subverted the very fundamental structure and building blocks of that industry. And as a result, a blogger operating out of their house with a Twitter account or a video camera would immediately have the same reach as a national classed newspaper or even greater reach in some cases. And the same thing has happened across the news industry. The removal of costs, the removal of complexity and the ability to make access to the same power of publication to an individual as a large company, fundamentally transformed the industry.

The same thing is happening with Bitcoin and crypto-currencies. It allows an individual to operate as a bank. It allows an individual to have the same powers and capabilities as an international bank. An individual who can behave as if their desktop computer is the swift terminal, a Bloomberg terminal, a stock market, a bank, a tracking account, an ATM system, a Western Union terminal and all of these things, this fundamentally transforms the industry, because the reason that financial services are organized in the way they are, is because these things were not possible for individuals, and now they are.

Male: Great. What is your view of how quickly adoption will spread and to which groups, to which new groups it will spread the most quickly?

Antonopoulos: I think it's -- it's -- it's easy to look at things in retrospect and feel that they’re too slow but then anticipate things in the future and then be surprised by how fast they are. So, if we look back at the first five years of Bitcoin, to those of who are in Bitcoin, the development of Bitcoin and adoption of Bitcoin may appear slow. But if you look at it objectively, it is absolutely staggering. It is breathtaking. The fact that basically a bunch of geeks can write some software and create an international currency and that in five years is being discussed in every country in the world, is generating an enormous community and just in the last year has attracted close to half a billion dollars in investment as a technology sector. If you ask me in 2012, for example of 2011 if I would expect that we would have seen this level of development in Bitcoin by now, I would probably have said no.

So, I think on the one hand, for those of us who are in this technology, things do not seem to be moving fast enough. But for the rest of the world, Bitcoin is a phenomenon that is exploding across the world and will have very far-reaching impact. It took about 20 years for the internet to go from a curiosity within a computer science lab limited to an academic environment, until it had influenced many different aspects of life, and the vast majority of people in the developing world at least had a daily interaction with the internet. I think, instead with Bitcoin, we're going to see that timeline compressed to less than 10 years total time. So, we're already beginning to see Bitcoin evolve much faster than people expect.

Male: Andreas, what are the advantages and risks compared to making investments and using crypto-tokens, compared to the traditional financial system as a whole? So earlier, Owen asked that question specifically compared to financial instruments, but now compared to the traditional financial system, what would you say are the advantages and the risks?

Antonopoulos: As I said, I think that the crypto-tokens at the moment are tiny. They represent a very small liquidity pool as we would call it in investment terms. And what that means is that they are subject to great and sudden variation and volatility which makes them extreme or risky as an investment vehicle. On the other hand, this token represents markets that are in some ways predictable. We can estimate the release of crypto-tokens. We know how many Bitcoins will be available on the markets today and how many Bitcoins will be in a 100 years, and we can estimate that to a great degree of accuracy.

You know, some -- contrary to traditional investment thinking, I would say that some investors are probably concerned about the fact that we have no idea how many Euros will be released in the next year. We have no idea what the strengths of the Euro will be, and we have no idea what the implications of issuing trillions and trillions of Euros or Dollars in debt by central banks will have on the economy. But certainly some economists believe that that's probably not the safe exercise, and that the current unprecedented currency wars that are occurring across the world are an extremely dangerous situation for the world economy as a whole.

So, it's really difficult to answer these questions without -- without that context. I would say that at the moment cryptocurrency should not be seen as an investment vehicle. I think the most important thing to do with cryptocurrency is to see how you can develop skills personally as an individual, learn about these things and see how you can make them part of your life and use them in a practical way. I think for many people around the world, these currencies can offer immediate solutions to problems, like, sending money home to your family in another country. But I -- I do not believe that they make for good investment vehicles.

Male: Okay. Then two more questions to go from the official channels. Do you have concrete suggestions on how governments and regulators can responsibly and efficiently approach the rise of this new technology? For example, what do you think of the suggestion that the government formalizes its intention not to add any regulations or guidance with respect to crypto-tokens for the next five years?

Antonopoulos: I think it’s important to wait and see how this space is developing, and even the people who really, really understand how crypto-currencies are working cannot really predict what kinds of applications will emerge in this space. And to make assumptions about what applications will emerge and create regulation for them would be a mistake at this point. I think formalizing an intent to provide safe haven environments, to create exceptions for small businesses, to create exceptions for start-ups that allow them to operate in this space, to experiment, to innovate, to generate jobs and innovation and research within The Netherlands would be a good idea.

An important thing I think, however, is to note this, you do not let the incumbent industry write the rules for the new industry. If we allow the banks, if politicians allow the banks to write the rules for crypto-currencies, they will try to bury this innovation because it represents the first and most significant competitive threats the financial services industry has faced in the last 50 years. Consider what would have happened to the -- if the phone companies had been allowed to write the regulations for the internet. I would be putting coins into the side of my computer right now to continue this video conference.

So, there are many entrenched interests which control the regulatory framework around financial services. Most of those entrenched interests represent the financial services industry and they make the fundamental mistake of assuming that the economy is the financial services industry, and the financial services industry is the economy. And so as a result, they will write rules that will attempt to completely stop any competitive threat from this emerging technology.

Male: Okay. Well, then one more question and then we have public questions. I'll explain more about that later. Are there other people we should approach with these questions? Who would you recommend?

Antonopoulos: Oh, that's a good one. I -- I have no idea how to answer that.

Male: Okay, well, that’s clear. Thank you.

Male: We can follow that up later Andreas, no, no problem.

Antonopoulos: Thank you.

Male: Well, then we go to the public questions. Maybe someone need to have a sip of water first?

Male: I do.

Male: Oh, sorry, here's the next question.

Male: Hi, Andreas.

Antonopoulos: Hello.

de Goeij: Hi, I'm Roland de Goeij from the Dutch Bitcoin news site, bitcoinspot.nl. And in this country, there has been a lot of focus on merchant acceptance of Bitcoin. Do you know why other countries have not focused on this as much as we have on the Bitcoin merchant adoptions part? And what is your opinion on the important of merchants adoption and its effects on Bitcoin becoming mainstream?

Antonopoulos: I think merchant adoption is good because it makes it easier for people in the developed world to adopt Bitcoin and find places to spend Bitcoin. However, I don't think it's the most compelling application of Bitcoin technology. Being able to buy goods online is probably a better application of Bitcoin than making sure that your local coffee shop or pizza shop will take Bitcoin to sell you goods and services. However, from a marketing and popularity perspective, if you get Bitcoin or buy Bitcoin and you need to spend it, finding shops near you will make that easier. And if you see shops that take Bitcoin, that will increase your interest in this emerging phenomenon. It gives people more opportunity to experience this in their everyday live, to see other people using the currency and technology themselves.

de Goeij: Okay, thank you.

Male: Next question.

Male: Hello, Andreas, thank you for being here.

Antonopoulos: Hello.

Male: My question is -- yeah *00:55:08 as well. My question is, what do you think about the efficiency of -- of networks and efficiency of hierarchies especially in the long-term in the context of increasing entropy, Second Law of Thermodynamics?

Antonopoulos: Yes. Hierarchies are more efficient. Hierarchies can deliver the same service at a much lower cost. All you have to do is trust someone else with the controlling power that they get through the hierarchy. It's just a minor inconvenience. You trust people with the power of money. And sometimes, they turned into tyrants. So, efficiency is a great phenomenon but it creates tyrants. And I would rather have a system that appears at least to be less efficient but diffuses power among many participant s, and doesn't allow the concentration of power, which leads to abuse of power and corruption by those who have it.

Male: But I don't really agree. I think even the abuse of that is working against the efficiency of the system would be the --

Antonopoulos: Not for those in power, it works very well for them.

Male: Yeah, true. Thanks, thanks a lot.

Male: Okay, thank you, Tim?

Tim: I am Tim *00:56:45 co-founder of Identify. I believe you've heard of me before. My question is, you've stated earlier that decentralized currency or Bitcoin distributes risk and that that's a good thing to which I agree. But isn't it at the same time creating new forms of risks, since doing business instantaneously with anyone, anywhere in the world also makes it harder to find out which of these parties you can trust? It seems like we can't solve something as subjective as trust among people with Nakamoto Consensus which all parties agree on the party being trustworthy or not so. How do you see this issue being solved in the future?

Antonopoulos: You're absolutely right that it introduces different types of risk, and part of the non-reversible transaction nature of Bitcoin at first appears to make those risks worse. However, this is a form of programmable money. And through programmable money, you can implement things such as automated escrow, time delay transactions and consensus mechanisms through multisig. All of these really offer interesting and innovative solutions to the various issues of consumer protection and trust across distance. But most importantly, they offer solutions to this that remain decentralized and keep the power and control over money in the hands of the individual, rather than centralizing that control and power into institutions, institutions that at first promise to solve issues of consumer protection, and then eventually ended up serving only their own interests.

Tim: Okay, thank you.

Male: I'm *00:58:47 and I've been a co-founder of the Bitcoin * 00:58:53. And I have a question for you for -- could the government use public keys and set them fixed so that we can have a transparent following *00:59:10?

Antonopoulos: Yes. But they could also publish their financial accounts transparently today. They could publish the statements of the bank accounts. That is not an issue of technology. It's an issue of transparency in governments. And for variety of reasons, governments chose not to be transparent. So, giving them the ability to do that with a cryptocurrency doesn't make it any more likelier that they will do that than they can today. I'm sure most of municipal organizations and governments receive a statement from their bank on their various operating and treasury accounts in the form of a PDF. If they wanted to, they could publish that.

Male: I have one more question and this concern to ATMs. In The Hague, we have also two-way system, so you can * 01:00:13 in and you get Bitcoins out or the reverse side. Now, this engine uses a lot of authentication and identification tools. What do you think about that?

Antonopoulos: I think it's a waste of time. And also, it promotes an attitude that says that financial totalitarian surveillance is okay. Somehow we accept a level of surveillance in our financial lives that we wouldn’t accept in any other aspect of our life, and that's somehow assumed to be okay. The justification for all of this, of course, is that it's going to stop crime or stop terrorists or stop drug dealing or things like that. The truth, of course, is that terrorists use bank wire transfers, U.S. dollars in cash. And none of these techniques have ever been effective at stopping crime or any of the other things.

What they are very effective at is destroying the privacy of individuals and giving enormous and unaccountable power to governments that can then abuse it. I don't believe in Know Your Customer rules or KYC as they're called. I believe in Know Your Banker Rules or KYB as I call it. Know your banker because your banker is probably financing warlords and probably financing drone bombings and other activities that would be considered terrorists, except that our government is going them.

Male: Andreas, I have a personal question for you. One, it's personal for me, one of the things I've been thinking as a Board Member and organizing the Bitcoin Wednesday, is that because of the potential impact of this technology, historical impact, because of its economic potential and its potential for innovation and for a societal -- social transformation and so on, and because it simply raises some of the very interesting essential questions about the world we live in, the financial world or government and so on, wouldn't it be -- what do you think of the possible idea of calling for an international moratorium on regulations or new regulations on -- on this technology so that we can take the time to have more of these types of informational session so that we can be better as a society, better understand what it is that we're working with? What do you think about -- about declaring or calling for that type of moratorium?

Antonopoulos: I think it's a fantastic idea to call for such a moratorium. I think it's a great idea to demand that politicians represent the interests of our constituents. The truth however is that they don't, and the reason they will not offer you a moratorium on regulation is because they don't work for you. In most cases, they work for the banks. And so, that is the reality in most countries in the world, is that your voice doesn’t matter because you're not going to be funding the reelection of a politician any time soon, and they know exactly who's paying their bills. So, a regulation moratorium would be nice but in the meantime, the most important thing we can do with these systems is make them useful for more people around the world so that people can use them day-to-day and use them to control their own future and their own destiny with this incredibly disruptive technologies. We didn't ask for anyone's permission and we're not asking now.

Male: I understand, Andreas. Can I -- can I see just for my own curiosity, a quick show of hands for the people that might support such a moratorium or put their name to it? Thanks very much. Is Eva or Andrei here? I know I spoke with Eva. Please come and ask your question.

Eva: Hello, my name is Eva and I guess from a beginner’s -- from a beginner’s viewpoint, I would like to ask, do you ever see Bitcoin becoming as common as everyday cash or will it still be in the realm of having various advantages as cheaper fees compared to Visa or PayPal? Or I guess a question before I can ask this question is, do you see in the near future the volatility of Bitcoin decreasing as the infrastructure grows?

Antonopoulos: I think what's more likely is that cash will disappear. Cash is already disappearing in most developed worlds. Unfortunately, what's replacing cash today is a network of payment systems that have very high degree of surveillance built into them, which is a very dangerous situation. I think in fact Bitcoin will become a system of payment that is extremely widespread. And that will mostly be through the influence of a new generation that grows up with the ability to use technologies like Bitcoin from a very early stage in their lives. Let me ask you a quick question, what is the age at which you can open a bank account in The Netherlands?

Eva: That's a good question even I --

Male: 12 or something?

Antonopoulos: In most countries, it's 12 maybe 16, maybe 18 in some. Here's the interesting thing. We've already heard from people who participate in some of these online communities who say that they have had their cryptocurrency account for four years but have only been able to have a bank account for one year. Imagine the generation of young people who grow up and have access to crypto-currencies from the age of 5 when they first go to a primary school and start using crypto-currencies among themselves. And then at some points later on in their lives at 12 or 16 years old, they are introduced to a technology that appears as antiquated as baroque and ridiculous as a fax machine or telegram appear to us today, and they will have already lived their entire life steeped digital currencies, and then their bank will ask them for an ID and will give them a check books so they can write paper checks, and they will then go and have to ask to their grandmother what a paper check is.

Male: Thank you. Okay, I'm going to turn the computer a bit so you can see who you’re talking to.

Antonopoulos: Oh, very good, thank you.

Male: So, Andrea please --

Male: Hello, Andreas I'm *01:07:43.

Antonopoulos: Hello.

Male: And I’d like to know your opinion. I’m afraid I have a very technical question but I’d like to know your opinion about the replace-by-fee proposed by one of the Bitcoin developers and possibly also the Bitcoin core developing module. I’d like a brief introduction. Thank you.

Antonopoulos: Yeah. I'm not a big fan of replace-by-fee. I think it's a -- it leads to far more disruption than is worth. I think it's provocative, which is not surprising. Peter tends to make his points through provocation and that's okay. We need that as part of the core developers’ groups. It's always good to have that kind of diversity of opinion. In this particular case, I think it would be a safe devising factor. I'm very interested and I think as a much better solution an alternative approach called Child Page for Parent.

So, the Child Page for Parent approach is where a miner will allow the mining of a transaction that creates a chain, the page in the child transaction for the parent. Let's say, for example, you make a transaction from wallet A to wallet B, and you don't pay sufficient fee and that transaction is stuck in a memory *01:09:12 and it's not being processed by the network. Now, you can make a second transaction from wallet B to wallet C, or from wallet B back to itself that depends on the original transaction. And that second transaction has sufficient fee to cover both. So, the child transaction essentially is paying for the parent.

Now, a miner that has abled this capability would mine both transactions because the aggregate fee is sufficient to make them happen. And that gives you a mechanism by which you can create a subsequent transaction to push through a transaction that didn't work previously. So, there are some interesting ways to solve problems similar to the problem that is supposedly solved with the replace-by-fee without causing disruption to the network. I think it's really important that your confirmation transaction continue to work. And at the moment the approach of the network where the first transaction that is valid and seen by the network overwrites subsequent transactions, provides some measure of protection against double spend on zero confirmation transaction.

Essentially a merchant that is paying attention to the propagation characteristics of the network can see within a matter of seconds, if a double spend transaction that might disturb their original payment is propagating on the network and alert that something is wrong. And that can actually significantly increase the security of zero confirmation transaction. I think zero confirmation transaction for small amounts and for products or services that are delivered instantaneously is probably something we need in the network to make it useful. If you buy a cup of coffee at a coffee shop, you can wait 10 minutes for confirmation. But with a fair degree of security in zero confirmation transaction, you will know within maybe five to six seconds if that transaction is safe.

Male: Thank you.

Male: So, before we open up the floor to -- to more spontaneous questions, are there any journalists or media members of the press that would like to especially ask any questions to Andreas?

Antonopoulos: How do you define journalists?

Male We like to make sure that everyone has an opportunity to do that.

Male: None, that's very interesting. I wonder why that is.

Male: I couldn't tell. Well, anyway. I'm wondering who has some questions to ask Andreas. Please come forward because then he can see you too.

Male: Please walk this way, and carefully around the camera.

Male: Hi, my name is Javier and --

Antonopoulos: Hello, Javier.

Javier: Yes, I'm pleased to see you live. I've been hearing lots of you in videos and many things about you. There is something that we haven't really talked and it's about price. And well, I think it's very important, and I haven't really understood how the price has evolved from the beginning, like, from the few cents to $1 to $10, $100 and even to $1,000. And now like you can expect $300 or so and what does it reflect on the history of the Bitcoin?

Antonopoulos: It doesn't reflect much. A lot of the speculation around Bitcoin is driving the price rather than any fundamentals. So, you've got to realize that the investment environment around Bitcoin consist of a lot of people who are looking at lines of a chart and saying well, if this line goes over that line, then I'm going to sell, and if that line goes under that line, then I'm going to buy. And what they're doing is, they're playing this game with all of the other people who are trying to read the lines. And they're reacting to other people's behavior based on what they see on a chart, which is reflecting what other people are seeing on the chart, which is reflecting what other people seeing on the chart. The very rude way of calling that in the U.S. is a circle jerk. That's what it's reflecting. It's reflecting idle speculation, people treating Bitcoin as a get-rich-quick casino gambling thing.

Of course, among those there are sophisticated investors, and there are some important signals that are coming through. Let's look at some of the important signals. At the moment, there are 3,600 Bitcoin created every single day. At the current price, that represents what maybe $6 six million? I'm not doing the math correctly correct me if I'm wrong.

But so -- so the thing is that if adoption on a global basis is more than that amount of $3,600, then the price will go up because you’ve got to realize that when miners generate 3,600 Bitcoin, they do that by spending a lot of money on electricity. They need to pay that electricity, and they pay that electricity in U.S. dollars, in Yuan and in Euros. So, they must sell their Bitcoin as quickly as possible. That means every single day, the vast majority of 3,600 new Bitcoin will be sold on the market in order to pay for electricity. And if there are less than 3,600 Bitcoin being bought by new users who are entering the space or investing in the space that will drive the price down. And at the moment, it's -- it's simply the case that there are fewer people entering the market, and there is less than 3,600 Bitcoin demand in the space, and as a result the price is suffering downward press a lot of the time.

Now, keep in mind that at 2016 next year, the reward will fall by 50%. That means that only 1,000 to 800 Bitcoin will be created every day. And if only 1,000 to 800 Bitcoin are created every day and the demands and price are more or less the same as they are today, that would create enormous upward press as more buyers and sellers exists, which theoretically at the same level of equilibrium would lead to a doubling in the price of Bitcoin. So, if the reward is halved, the exchange rate price should double. But a lot of that would be hidden by the noise in the market that's caused by speculation, essentially by chart reading by various people who are using Bitcoin as a gambling instrument. Somewhere in there, there’s a signal but it's sometimes difficult to see it through the noise.

Javier: Okay. Thank you very much.

Male: Well, thank you. Our next question comes from --

Male: Hello, I'm *01:17:03. I’m asking about the efficiency in networks before, but --

Antonopoulos: Yes.

Male: -- this time, I'm wondering if you're familiar with the earliest history of money and how it can relate to Bitcoin. What I mean here is that it wasn't really barter anywhere. People before they grew to bigger communities, they've just simply remembered what happened between them. And I -- I see it relating to Bitcoin by Bitcoin making it just global, simply remembering what will happen, and that's why we're going to need the physicality of it because it's -- the function is -- what would you think about this?

Antonopoulos: Yeah, that's a very good observation. In fact, the earliest forms of money were not barter or tokens, they were ledgers.

Male: Yes, yes.

Antonopoulos: So, whether that stylistics or writing on a piece of papyrus how many goats so and so gave so and so, that is a ledger. What Bitcoin does is it introduces a form of decentralized ledger that doesn’t give the power of control over the ledger to a single individual or organization, and it makes it instantaneous and global. So, it's bringing us back the most futuristic form of money we have is an echo of the most original and ancient form of money we have. Money used to be a community and society activity, a language of transaction between individuals, not something designed by kings and governments. The idea that money exist only as a monopoly of governments with a 194 currencies defined strictly by arbitrary lines written on a map and geographical constraints of borders, is an absurdity that has existed for a few 100 years and will probably disappear in the future.

Male: Yeah, thanks, thanks.

Antonopoulos: Thank you.

Male: I think that gold was chosen for this ledger because it was also decentralized. It's not an electronic and doesn't teleport, but it's decentralized ledger which no one can manipulate by creating more of it?

Antonopoulos: Well, it's interesting about the first form of metal money is actually silver and it was developed in Western Turkey.

Male: Okay.

Antonopoulos: And around the same time, 600 to 700 BC, around the same time that democracy flourished in Greece, the first forms of metallic money were being minted in Western Turkey. It’s all part of the same origins of civilization.

Male: Yeah, thanks, great.

Antonopoulos: Thank you.

Male: Thank you. Now from Toronto I’m probably going to say your name wrong so, please introduce yourself.

Male: Hi, Andreas. My name is *01:19:59. I’m listening in from Toronto, great to see a lot of people here. I’m very surprised by the turnout. You mentioned earlier how Bitcoin is evolving much faster than -- rather much faster than other technology, so about four to five times faster. Last year, you mentioned that crypto-currencies are like language and there's going to be millions of crypto-currencies. About a year later, then you talked about unified currencies with the advent of sidechains and what's happening right now. Do you think that unified currency might be Bitcoin?

Antonopoulos: I think a unified store of value maybe based on Bitcoin or as a derivative of Bitcoin. That doesn't change the idea that there will probably be -- and I didn't say millions of currencies. I think what I said specifically was thousands, tens of thousands perhaps hundreds of or even millions. So, yeah, that was --

Male: That was it.

Antonopoulos: -- the far edge of the speculation. I think it's safe to say that thousands of currencies is already on the near horizon. We’re at 750 known and registered Altcoins at the moment. So, I think it's a safe assumption that thousands of currency is as well within the realm possibility. And I think 10,000 currencies is not far off. Sidechains and other technologies like that provide a common grounding, an anchor value that allows you to solve the fundamental dilemma, which is that until a currency is successful and has value, it is vulnerable to security attack, and it cannot acquire value if people are attacking it.

So, the ability to bootstrap a currency at a time when it is most vulnerable and doesn’t have value, when you're trying to reward the miners who are securing that currency in a currency that is worthless, is a very difficult problem to solve. And the only reason Bitcoin solved it is because it remained in obscurity long enough that by the time it had value, no one had yet noticed that it is worth attacking. It not only happens once or twice in history, it's unlikely that it will happen in exactly that way again. Now, when people anticipate that new currencies will have value, they may start attacking them much earlier.

So, the biggest problem with launching a new currency is that if it acquires value, it's subject to attack. You solve that by using the underlying security of Bitcoin to basically give value to new currencies that offer new features, capabilities or innovations that are not possible within Bitcoin. I think that will lead to an explosion of innovation. It will lead to even more development in this ecosystem of currencies, an evolutionary environment that has a moment of rapid mutation and evolution because of the ability to have a common value core. So, yes, we will see the acceleration of innovation in currencies because of these new technologies.

Male: Thank you very much.

Male: Our next question?

Male: My name is *01:23:23. I came to The Netherlands because the country where I used to live was not very friendly towards Bitcoin. In fact it was rather restrictive. You might know about it I don't know. It’s Estonia. I would be very interested to know what you would tell the Government of Estonia about the consequences of their attitude towards Bitcoin.

Antonopoulos: Well, the consequence is standing right in front of me here on camera. The kind of people who can and choose to leave a country are the kind of people you want to keep inside the country. The kind of people who are willing to take risks, who have the means and the courage to change their life’s trajectory because of a decision or a principle, those are the kinds of people you want to keep in your country generating jobs rather than alienating them and sending somewhere else, sending them to a more open society that is willing to bring people from around the world together under a common cause or to create a more fertile environment for experimentation and innovation research and development. In Bitcoin as in many things today on the internet, there are no borders. And so, the only thing you can do is deprive your own citizens of opportunity because if they can they will leave. And companies that are evolved in the space can and do leave and they'll take their jobs with them.

Male: Thank you.

Antonopoulos: Thank you.

Male: Robbie or Job. Job, please.

Male: Hi, Andreas. First, congratulation on your new company and --

Antonopoulos: Thank you.

Male: -- can you tell a bit more about what you're going to do and how important that is right now in the industry?

Antonopoulos: Oh, thank you so much. So, for those who haven't heard yesterday, I launched a company called Third Key Solutions. Our CEO, Pamela Morgan, myself and Richard Kagan, our Business Advisor together launched this company. If you've looked at the Bitcoin space, you know that one of the big challenges we have is security, especially security of accounts managed by start-ups or companies at the Bitcoin space. For most companies, it's very difficult to secure large amounts of Bitcoin. It is a complex, technical issue but it's also very difficult from an organizational, operational and people perspective. The very same tools that people use to secure Bitcoin to make them vulnerable to lost. It’s like taking the most valuable thing and then trying to bury it somewhere in your garden. If you do it very well, you forget where you buried it and then you’ve lost it. The same thing occurs with Bitcoin. If you do all of the encryption very well, you run the risk of losing the very passwords that you've used to encrypt your Bitcoin and then you’ve lost your Bitcoin.

We have technology to solve this, technologies like multi-signature. But these technologies also require operational process. So, the company I found, it is a company that advises Bitcoin start-ups how to develop organizational programs for protecting and securing their Bitcoin using multi-signature. And as part of that, we will generate store and hold a key as part of a multi-signature plan. If a company has problem with one of its existing keys, then we can provide a signature to do recovery of funds. So, that's a solution that we’re now we're offering. It involves a good understanding of operational security. It’s not just about the technology. And so, we launched that company, yes.

Male: Thank you, well, applause is good. I was looking at the Twitter feed. Robbie?

Robbie: Hi, Andreas. Thank you for taking the time to talk to us. I'm a Board Member of the Dutch Stitching 51 Bitcoin Nederland, which is the sort of Dutch Bitcoin Foundation. And this may not completely be your field but I know you have experience talking to other Bitcoin-related organizations. And we are wondering what you think would be a good role or good things to do for the -- for the Dutch -- do you think so for the Dutch Foundation. We usually hold forums here where we hold polls and then we ask what people want us to do. The current top three is support start-up for legal help funding, etcetera, then support non-financial applications of Bitcoin and enabling bank accounts for Bitcoin companies and users. So, those are the three things we're focusing on right now. What -- what do you think that we should do. Is this something you want to answer or can't answer?

Antonopoulos: I think the -- probably the most useful thing in an organization like yours can do is create education initiatives within the space. So, one of the organizations that I started in San Francisco was the San Francisco Bitcoin Developers Group. And this is an organization for developers, helping software developers train each other and teach each other how to use digital currencies, cryptocurrencies, decentralized currencies. So, how to program the blockchain. This is -- this organization creates basically a community of skilled people who can help each other and promote each other, and also allows local companies to get the one thing that they find most difficult. And that's not legal advice and it's not funding. It's skilled employees. So, creating programs of education that can help the local technology industry develop skills in blockchain to create a pool of talent that start-ups in the space can easily access, I think is probably the biggest impact you can bring.

Male: Okay, thank you.

Male: Next one, Mr. Krue.

Krue: Hi, Andreas. I want to -- I want to ask you about inflation. It's a huge factor in today’s economy and everyday people create more and more of values since we get more and more effective. So, why would I spend my Bitcoin today if tomorrow they are going to be more valuable?

Antonopoulos: Well, you spent your Bitcoin today because you need to buy something.

Male: Yeah, definitely but I mean --

Antonopoulos: So, you would spend your Bitcoin to, either because you need to buy something, food, shelter, healthcare, education.

Male: Right.

Antonopoulos: Or you would spend your Bitcoin today because you believe that the area that you invest in, if you invest your Bitcoin, will generate a great return than simply sitting on that Bitcoin.

Male: But --

Antonopoulos: What I will do is, I will encourage very basic consumption based on needs and investment in productive opportunities, rather than with money that is becoming worthless faster than you can hold it. It creates opportunities and the incentive to spend on useless plastic crap that nobody needs to fill in your house. And then when your house is full, you get a bigger house and you spent more money on that, and then as soon as you have the bigger house, you start filling it with plastic crap again.

Male: Yeah.

Antonopoulos: And the cycle continues. Most of Western society is caught in the cycle of endless, pointless, consumption, and trying to find ways to protect the value of their money rather than looking for opportunities to invest in things that have an actual return. So, what we in the West called hoarding, most of the rest of the world calls sensible saving. And since I started using Bitcoin, I found myself doing a lot more sensible saving. I don't think that's a bad thing.

Male: And there are also the things that people will have more -- own more real value not just coins in their pocket.

Antonopoulos: Well, yeah, I think that if you hold coins and you don't invest them, you may -- they may gain some value but they won't do anything for you beyond that. And if you have some assets, a form of some savings, then you can put your money to work for you, and you don't have to be a labor slave essentially where every hour of your life is the only productive asset that you could give society. You can use your mind to decide which investments are good and then put your money to work, essentially investing in productive opportunities that make things better for society.

But in order to do that, your money has to be worth something. And if your money is becoming worthless overtime, then what you want to do is get rid of it as quick as possible and replace it with something that hold value longer. I was recently paid for an engagement I did in Germany, and I quoted in U.S. dollars and I was paid in Euros. And in the two weeks the wire transfer took to transmit across the Atlantic because as you know, the way the Bundesbank does wire transfers apparently is by steamboat because it took 16 days to get to my bank in the U.S. in the age of the internet, it was slower than a telegram. And in that time, the Euro dropped 15%. And at that point, I realized that Bitcoin volatility wasn't so bad after all.

Male: Thank you.

Male: Well, thank you. We have time for about three or four more questions. So, please Roger. But first, he has two questions, one from a friend as well, so.

Roger: Hi, Andreas, I'm Roger from Bitcasa and co-organizer of Arnhem Bitcoin City. I still remember the time where there were hardly any places where you can spend your Bitcoins. And I'm a big advocate of Bitcoin and always promoting it to anyone who wants to hear about it. We've been putting a lot of effort in getting more and more Bitcoin acceptance to quite some degree of success, especially in Arnhem. And nowadays more and more often I'm getting a question from end-users or consumers who are not into Bitcoin at all yet, saying well, you know, this fancy Bitcoin stuff, I'm sure it's all good but what's in it for me? Why should I start with this? What is the advantage? And I'm curious to hear your take in this especially considering the perspective of a Western consumer who has already excellent banking *01:35:13.

Antonopoulos: Oh, it's a very difficult question to answer. There really is no fundamental benefit if you're going to use Bitcoin purely to replace Visa payments or to do everything that you're going to do in Euros because, you know, for most consumers today the Euro works quite well, then visa works quite well, why would use this complex new technology? I remember a time when there were only two websites, two. I visited both of them the first day I used a browser. And that was it. There were only two websites. And at that time, a lot of people might ask why would I use the web? I mean there's only two websites, what am I going to do with them? I'm not into physics, I'm not interested in either of the two existing websites.

The world changes much faster than we expect. For most Westerners, what we need to think about is applications that cannot be done with today's software and today's money. So, if you are a sophisticated user, are there services on the internet that you can only buy with Bitcoin? Are there things that you can do on the internet that you can only do with Bitcoin? And we see a few of those applications already. But they're not very mainstream. They’re not very important yet and they’re not the kinds of applications that would make people consider using Bitcoin. For example, I can tweet people on Twitter with ChangeTip or other tipping platforms. I can't do that with traditional money. I can send money to another country. And I can do that almost instantaneously. I can't do that with traditional forms of money.

Now, if I could pay a YouTube creator to watch a video or if I get paid to read an article and pay two cents or five cents, then that would be an activity that I simply can't do with traditional payment mechanism. So, what we need to do I think about what applications can we build that can't be done with today's money. And then, while you're thinking about that, the other part of the question which your friend is asking why should I be using Bitcoin instead of the Euro --

Roger: Well, and so the question --

Antonopoulos: -- will be answered by European Central Bank. They will --

Roger: Yeah.

Antonopoulos: -- help you answer that question by destroying the Euro.

Roger: Yeah, I agree, yeah.

Antonopoulos: And then your friend will have a reason.

Roger: Well, this other question was from my friend and colleague, Patrick who cannot be here today. He says, you claim you get most of your income payment in Bitcoins yet you aren't too enthusiastic about paying with Bitcoin on the street. This means you must be converting a big part of your income back to fiat money every month. How do you expect Bitcoin to become a major player in the *01:38:16 when, for example, Philippians cannot pay their groceries with Bitcoin, so they've to convert a Bitcoin immediately back to their local currency, wouldn't it be great if they could keep their money in Bitcoin and pay their expenses directly with Bitcoin instead of having needs to convert Bitcoin into fiat money as soon as they receive it?

Antonopoulos: Oh, I think that's a very valid point. It would be a lot better but we're not competing with perfect. So, we're competing with Western Union's 90% fees and you can do a lot better than 9% even if you have to convert the money immediately in most countries. And in some countries it's even worse.

In some countries, Western Union will charge up to 20, 25% once it includes the exchange rate. Bitcoin can do this for 3% or less even if you do exchange at both sides. And so we're not competing with perfect and we don't need to be perfect. We just need to be good enough to make a significant impact in people's life, so that's why people in the Philippines are using Bitcoin for remittances. Not a lot but just a bit but it's already happening.

I get paid in Bitcoin. Honestly, I use Bitcoin to make larger purchases. I buy electronics, I pay suppliers, sub-contractors. I buy posting services, web services, domain services and things like that. I don't use Bitcoin to buy my groceries or pay my rent. If my local grocery store did take Bitcoin, I would and if I could get my landlord to take rents in Bitcoin I would but I don't think that's the killer application for Bitcoin.

And I am confident that overtime as adoptions becomes greater, the simply lower cost of Bitcoin transactions and the efficiency which they can be done, will make them the prefer choice first for international payments, then for online commerce, and probably last but equally important in face to face merchant transactions.

Roger: Okay, thank you.

Male: Thank you. Here we have Beno. He has a question on the blockchain, so *01:40:33.

Beno: Hello, Andreas, thanks for being here.

Antonopoulos: Thank you.

Beno: I'm Beno. And I have a question on the potential of the blockchain technology on other application. And one of them, very interesting is in voting because a voting is very transparent, fast and cheap. What is your vision and your opinion about voting with the blockchain technology?

Antonopoulos: I think there are some risks with trying to solve social problems with technology. And the real question we have to ask is, what is the problem we're trying to solve in voting? The truth and reality is that in most developed countries, there is very little voting fraud.

And that the best mechanism for protecting against voting fraud is the decentralization of the election process itself, through controls that are dispersed from the local polling station through the district stations, all the way up to national stations. And when elections are run in a way that the various parties have participants and observers distributed at the local, regional and national level, and when the mechanisms for voting can be inspected openly, then voting fraud is extremely rare and extremely difficult to do especially in the level that changes election.

From that perspective, the right security operations together with a simple technology of paper and pencil remain the most effective, most scalable, most secure voting mechanism ever. In fact, the biggest problems we've seen with voting fraud have occurred when we’ve tried to replace paper and pencil with machines and touchscreens that cannot be inspected but can be infected by viruses that could be compromised by a single central application, and which cannot be audited in an effective manner at the local, regional and national level.

I am skeptical that blockchain technology solves a real problem at the moment when the vast majority of people do not have access to the technology to use this, and when the problems of voting fraud and corrupt elections occur primarily in countries with even less technology infrastructure and more rural populations which could not benefit from such blockchain technologies.

The truth is that in Western developed nations, the biggest problem facing voting is that your vote doesn't matter, at least in my country I get to vote and I have two choices, I can vote for Red Goldman Sachs and I can vote for blue Goldman Sachs. And that's the choice. And that doesn't change the fundamental election technology. The reason people don't vote is because they feel that their voice doesn't matter. And the reason people feel that their voice doesn't matter is because it doesn’t, and you don't solve that by changing the technology of elections.

So I think that blockchain technology is promising in many areas but for now, for at least another decade I don't really think that it makes any significant contribution to national elections. What's more interesting is to consider how you produce voting technology than the blockchain in order to change the fundamental governance model for corporations.

So, the ability to have registered shareholders use technology like the blockchain to conduct shareholder elections and decision making, or in the case of distributed autonomous organizations who effectively run a corporation without a board of directors but direct response to shareholder action, I think that's a really interesting area of technology.

Beno: Thank you very much.

Male: Okay. Now, I think room for two more questions if we're quick. Hans?

Hans: Have you seen or heard of any developments or ideas to solve the problem of centralized exchanges like FTO for instance or the problem with centralized exchanges?

Antonopoulos: I have seen many ideas. The problem of centralized exchanges occurs because of the difficulty transmitting traditional non-decentralized currencies. Non-decentralized currency creates essentially an access of centralization. When they touch Bitcoin, they create centralization by proximity. The reason you can't usually decentralize an exchange between cryptocurrency and the traditional national currency is because the national currency is difficult to transport, is difficult to decentralize, is difficult to process without declaring house, and because it is subject to manipulation, for example a freezing of a bank account or a confiscation or blocks and transmissions.

So the disadvantages of traditional nation currencies caused decentralization of these exchanges. In fact, if you look at exchanges that operate directly between crypto-currencies, we have several very effective decentralized exchanges for that. Shapeshift.io is a good example. It's a decentralized exchange that allows you to convert any cryptocurrency or most crypto-currency into another cryptocurrency in an *01:46:14 two-party transaction without decentralized clearing house, without counter party progress.

And we can see even more decentralized versions of that but we're never going to see absolutely decentralized exchange on a large scale on currencies such as the Euro, the Dollar and that's because of the Euro and the Dollar. What we will see is small scale decentralized exchanges for crypto-currencies, international currencies. Essentially local Bitcoins *01:46:44 traders and other person to person small value exchanges that allowed people to quickly enter and exit the market or by directional ATMs, you know, spread by the tends of thousands all around the world that allowed people to very easily exit and enter a cryptocurrency.

Male: Okay. Last question from Arum.

Arum: Hi, Andreas.

Antonopoulos: Hello.

Male: So, the development of Bitcoin right now is mostly run by about five guys who call all of the shots, the five co-developers. They are funded a small number of big companies or the Bitcoin Foundation which is itself funded by a small group of big Bitcoin companies. So my question is, how decentralized do you think Bitcoin still is and will be in the future and do you think it's a problem?

Antonopoulos: I don't think it's a problem. I think it's a misconception to think that Bitcoin development is really run by just five guys. The truth is that while five guys have complete access to the GitHub code, they have to consult with a much broader developer community, that includes probably about forty people who have various levels of influence in that community. And all they can do is create a new version of the code, and then they can release that version of the code.

Now at that point whether that code actually gets used on the consensus network of Bitcoin depends on adoption of that code by miners, adoption of that code by merchant processors, by wallet companies, by all of the software start-ups in the space, and at the last extent by the users who download and influenced each one of these versions who have Bitcoin core.

So, while nominally you could say that these five guys have power, if they try to do things without the consensus of the other 40 developers, they wouldn't get a release published. And if they go get a release published with the consensus of 40 developers but it violates the sensibilities of the miners, the merchants, the exchanges, the wallet companies or majority of the users that version won't get adopted. So, their control is actually rather tenuous. They have to seek consensus at every turn, and they have to seek consensus from a very large community that is expanding all the time with the addition of more and more developers in the space.

And I think pretty soon we’ll see in Bitcoin is that they're going to have to seek consensus in Mandarin because you know that is where the direction of this currency will go, the average human being on this planet is a twenty-three year old, Han Chinese male, who speaks Mandarin. It’s not you, it's not me. And so, if Bitcoin truly becomes a global currency, it will be in Chinese, and these core-developers who have even less power in that environment.

I'm not worried about Bitcoin decentralization. Perhaps it doesn't have the ideal level of decentralization that it had at inception, it still represents the most decentralized force in finance in the history of humanity that we have ever seen on this planet. At its absolute worst of decentralized version, Bitcoin is still more decentralized than Visa.

So, I think it is a *01:50:23 for decentralization. And if at some point in the future Bitcoin becomes too decentralized for my taste, I had a lot of Altcoins. I will simply build two or more decentralized currency and we'll move to that. Bitcoin opens the door for continuous disruption. For instance, it creates the possibility of desktop currency creation and desktop banking.

And that means that once that door is opened, if what we have is something we don't like, we’ll replace it with something else. Bitcoin disrupts banking today. Tomorrow, maybe we’d disrupt Bitcoin.

Male: Well, thank you. One final announcement from Robby and then we're going close the connection before a bi applause, of course.

Robby: Well, I have the honor to thank you for being here with us. And we have a gift for you which is, kind of, difficult to get to you from here. But we'll figure it out. This is a Raspberry Pie, model two.

Antonopoulos: Oh sweet.

Male: One gigabytes quad core, and it’s actually -- the SD card on it makes it a full Bitcoin node if you make it accessible for the internet. So, this will give you a full Bitcoin node for 5 watts of power, which is the equivalent of three cups of coffee if you pay for the power in The Netherland for a year. This is a project that was actually asked for on Bitcoin Wednesday here. And well, we'll figure out how to get it to you. If you want to pick it up sometime in Amsterdam or if we ship it to you, but yeah, for your time, thank you.

Antonopoulos: Thank you. Thank you so much, I really appreciate that.

Male: Well, Andreas thank you.

Antonopoulos: That's a really exciting project. I'm glad to see that you've built a Bitcoin node. It's really important to continue to run as many Bitcoin nodes as possible. I currently run three. I have one here at home and I have two more running on servers that I used for business activities. So, I will be very glad to receive the Raspberry Pi and experiment with it and write articles about it and then I will have four. Thank you.

Male: Well, thank you very much. Do you have anything to add or it was about two hours so I guess.

Antonopoulos: Thank you so much for inviting me and I hope next time when I work with the Amsterdam community, it's going to be in person. I would love to visit you. And my very first question when I arrive in Amsterdam is, I have Bitcoin, where can I buy *01:53:18 for Bitcoins?

Male: That's a good one.