Video - CoinScrum and Proof of Work - Tools for the Future 3

Andreas M. Antonopoulos - Tools For The Future [3] - CoinScrum & Proof of Work Media Recorded By IamSatoshi, London 2015. He discussed the technicalities of ledger and proof of work which iterates how important it is on every Bitcoin transactions.

TRANSCRIPT

Andreas: All right. Good evening everyone, thank you for being here. What an exciting time. Thank you. So this is the second time I've been here at Hoxton Square. If you noticed in the trailer, Mayor Taki was in front of the same red curtain. That was about a year ago when we did a show here. And just like today, it was absolutely packed and I'm really excited. We got some slight differences. Today's show is being broadcast simultaneously using Streamium, which is a pay by their second micropayment streaming video service that launched just a couple of months ago and it's one of those things that really grabs you and shows you the innovation that is possible with Bitcoin. So I'm really excited about demonstrating that technology among other things. Hopefully out there someone is paying small amounts of Bitcoin to watch this live. Of course, the show will be available afterwards under a Creative Commons license. All right. Let's get started. Are there any Germans in the room?

Unidentified Male: Yes.

Andreas: I apologize for some of the things I'm going to say. Are there any children in the room? Okay, good. That way I don't need to apologize for some of the other things I'm going to say. So if you didn't notice, I'm Greek, and a lot of people who a lot of people have been asking me about what's happening in Greece. And I'm going to talk a bit about that today, and then I also want to talk a bit about Bitcoin and what's going on in this space. First, however, I have some bad news about what's happening in Bitcoin. Over the last two weeks, probably three weeks, we've had some difficulties in Bitcoin, we are now experiencing increased volatility. Have you noticed that? Now two years ago, increased volatility was the really bad thing in Bitcoin. Everybody was like, "Oh, Bitcoin is too volatile, we can't really use it." Then we had six months of no volatility at all. And I remember at that time on one of my trips I got paid in Euros. And in the time when I invoiced until the times that I got paid by wire transfer, which was, you know, a short 16 days or so, by wire transfer standards, the Euro had dropped 8%. I was, like, "Wow, I miss the days of volatile Bitcoin. This euro volatility really sucks." And then nobody talked about volatility. For about six months, volatility was not a problem. And now no one's talking about volatility again, right. Because volatility is something you complain about when it's going down.

You complain less about it if you're invested in Bitcoin and it's going up. However, the truth is volatility is not a good thing whether it's going up or going down. And I have news for you, Bitcoin is going to go through a boom and bust cycle. It's going to go through at least three or four more boom and bust cycles. If you think the drop from 1100 to 225 was a big drop, then you were not around in the days when Bitcoin dropped from 30 to about 25 cents. Now that was a sudden and really harsh drop and it took almost two years for Bitcoin to recover from that one. We have at least two more boom and bust cycles ahead of us, probably more. So what's the morale of this story? You're going to hear something that you probably don't hear very often from people who are involved in Bitcoin.

Bitcoin is not a smart investment, right. I know you might be shocked to hear this: Bitcoin is not a smart investment. In that, the idea that you would invest in an experimental technologically disruptive currency at its infancy and do something exceedingly silly like, for example, take your entire retirement fund and plow it into Bitcoin. And I've met people who have done that. That's a terrible idea. That's an absolutely terrible idea. Bitcoin currently represents the level of volatility of a hummingbird on crack and it will continue to do that. And the reason it will continue to do that is because what Bitcoin represents is the first transnational currency with only three billion dollars of capitalization.

Now if you have that kind of base, it can be manipulated. If you're involved in finance you will know that a few billion dollars is a single account manager's weekly allowance for trading on forex markets, right. It's nothing. So if you want to manipulate the Bitcoin price, if you want to play around with it and you're a traitor, if you manage to get your hands on some Bitcoin you can make it move pretty dramatically. So why am I telling you not to invest in Bitcoin? Surely, we're all here because we're interested in Bitcoin. The reason is because I believe that it's much more important to look at Bitcoin as a technology, not as a currency. That will come a day, I hope, when Bitcoin will be a globally accepted transnational currency with millions, tens of millions, hundreds of millions of users. And when that day comes, Bitcoin will be very stable. It will have excellent trade ability, it will have masses of liquidity. But that day has not come yet. Bitcoin is a toddler. And every time something happens on the news, this toddler throws a tantrum. And recently the news has been all about Greece. So, first, let's get some terminology correct. It's oxi, not oxy. Oxy is an opioid that you crush up and snort if you happen to be an addict, that's Oxycontin. No, that's not what Greece just did, we did oxi. Now the Germans should have seen this comment because this isn't the first time that the Greeks have been presented with an ultimatum threatening sovereignty.

The last time that happened was when Mussolini delivered an ultimatum, and it's our national holiday, and it's called Oxi Day. Because when Mussolini's ambassador went to the Prime Minister Metaxas and said, "We're going to invade. You better stand down and surrender," Metaxas, historically or according to myth said, "Oxi." And we celebrate that day of defiance to an ultimatum. He actually said, "Alors, c'est la guerre," meaning, "Therefore, it is war." We said it's somewhat differently to the European Union, but Oxi had a special significance in Greek culture. Now if you think the Bitcoin price is going up -- because Bitcoin is being adopted in Greece I have bad news for you, Bitcoin is not being adopted in Greece. The reason the price is moving at the moment is because a lot of people who are excited about Bitcoin already, many people in this room, see this as an opportunity of validation, see this as a moment when Bitcoin the currency is being mentioned in world media every single day as a safe haven, as a currency of choice, as a way out of currency controls. That is the vision of Bitcoin. And we get to hear this vision. It's a moment when Bitcoin is being mentioned not as the currency of drug dealers, pedophiles, and terrorists, but as the currency of choice for people who have been squeezed into a corner.

Now I visited Argentina about a year and a half ago and I got to see that attitude represented beautifully in Argentina. Here's a country that has been ravaged by hyperinflation, by economic manipulation, by the central bank, and by decades upon decades of brutal dictatorships. And so when I went to Argentina, the question was not why Bitcoin, they already knew why Bitcoin. What everybody wanted to find out in Argentina is, "How do we do Bitcoin and how fast can we do it?" Of course, in Argentina it's illegal to exchange currencies outside of the official government currency system. In fact, when I went through the airport visiting Argentina, passport control took about a minute and customs took about an hour. And during that hour, they were searching everybody's luggage and they weren't looking for agricultural products and they weren't looking for contraband. They were looking for currency. There were signs and posters throughout the airport, explaining the very harsh, very harsh penalties that could be on you if you brought foreign currency into the country because currency control is extremely important in a system of monopoly. If you have monopoly over the currency of the central bank, it's robbing the people by inflating the currency. Then everyone in the country is trying to get their money out.

As in Greece today, in Argentina, they were buying hard assets. You would see people who had very little money and had three cars. And two of those cars were covered up and parked and kept. Because in Argentina, if you buy a car, the moment you drive it off the lot it appreciates by 30%. And that can only happen in a country of insane economics, which is exactly what hyperinflation is. It's insanity and monetary policy, so currency is very important to the people of Argentina just as it is now to the people of Greece. Because in most countries when the central bank--whether it's your central bank or a European Union central bank--decides to impose currency controls or monetary controls or drives the country into hyperinflation, it takes the entire population hostage. And Bitcoin is not going to save Greece. Greeks are not going out and buying Bitcoin. And the reason Bitcoin is not going to save Greece is really simple.

Greece isn't ready for Bitcoin. But more importantly, Bitcoin isn't ready for Greece. In fact, it would have been an utter disaster if we saw a huge wave of adoption in Bitcoin. We don't have the network capacity, we don't have the exchange liquidity, we don't have the deep base of investment that would allow the currency to absorb that kind of influx. So if suddenly a million people went out and bought Bitcoin that would represent a 30% increase in the adoption rate. Bitcoin would go straight through the roof because there's no shorting in most of these markets. So there's nothing to hold it back. And then a month later, lacking any foundation, it would bounce off the ceiling and head straight to the floor again. We saw that happened on rumors of China and a tiny, tiny level of adoption in China in November, 2013. Bitcoin went straight through the roof and then spent a year and a half to two years collapsing. We don't want that to happen again.

Volatility is not a good thing in currency. So why are Greeks not buying Bitcoin? Well, there's a really simple reason. They don't have any money. In order to buy Bitcoin, you need money. If Greeks have money, then they don't have a problem. If they don't have money, then they can't buy Bitcoin. So it really isn't very much of a solution. I've read online a lot of people making snarky comments, like, "What kind of idiot would leave their money in a Greek bank?" Well, the answer is really simple. All of those people lining up at the ATMs, they didn't leave their money in a Greek bank. They've been living paycheck to paycheck for the last five years. Their money just got deposited. Friday the 27th of June, where you saw the big spike and people standing outside of ATMs, was the monthly paycheck, last business day of the month. Half Greek, half of the Greek population got paid that night. And at midnight, having no spare cash, they went to withdraw their monthly paycheck, so they could live paycheck to paycheck. That's why they were lining up at ATMs. And over the next week, they found currency controls happening. Greeks didn't leave money in the bank, Greeks don't have any money in the bank anymore. Any Greeks who had money in the bank moved it a long time ago. Now there's a proposal that over the next few months we're going to see bail-ins, possibly as soon as next week. Anybody here know what bail-ins are?

So, bail-ins are where a bank becomes insolvent and the depositor accounts are rated in order to liquidate the bank, in order to recapitalize the bank, and the proposal for Greece was to bail in anyone who had more than 8000 euros in the bank. This isn’t a country where you have depositor guarantees for anything less than 100,000 euros. And they were proposing to take that money in a bail-in. This is what really bugs me because somehow we now live in this upside-down world where the idea of a country defaulting on its sovereign bonds is radical. But the idea of raiding depositor accounts of pensioners to recapitalize the banks is normal. Now, I don't know what world you live in but that's crazy. There is nothing radical about a sovereign default. Countries do this all the time. In fact, if you study just a tiny bit of economics, the idea that a bond can't default is ridiculous. Why pay interest rate if the bond is guaranteed? You wouldn't need to, right. The interest rate is the insurance plan for the risk of default. And so therefore, of course, Bonds can default.

In fact, Germany defaulted in the First World War, then Germany defaulted again right after the Second World War, then Germany defaulted on the East German loans during reunification in 1989. But now, they’re moralizing. Now they have the goal to turn around and tell Greeks that it is irresponsible and immoral to default on your loans. What a crock of shit. Now I could sit here in bash Germans all day long and then I would fall into this special category called Godwin's law. Who's familiar with Godwin's law? Okay. So Godwin's law is when in a sufficiently long Internet debate, Hitler gets mentioned when the debate gets heated, right. That's Godwin's law. Now as of 2012, all Greek nationals are exempt from Godwin's law. I'm just putting that out there. You see the reason I'm not going to bash Germans is because I can make a very simple and obvious distinction. I can make a distinction between the choices and decisions of their leadership and the choices and desires of the people. That may seem like a bizarre idea. But I can make that distinction, a distinction that no one allowed for the Greek condition. The idea that while we invented democracy, we sure as hell haven't perfected democracy.

The idea that somehow out of all of the democratic nations on earth, where the one nation, where the will of the people translates directly into the actions of their elected leadership. I don't know about your elections here in England. Well, I do know a bit because I lived here. But that's not how it works, right. Democracy isn't quite that perfect. The desires and will of the people do not translate into the choices of their leadership unless they're billionaires in which case it's a one-to-one correspondence. That sounds like a joke. In fact, it was a study done by Stanford that plotted the popularity of specific ballot ideas versus whether they are adopted in the American Congress. And if you look at the graph, you should expect that the least popular ideas are not adopted and the most popular ideas are adopted, so you should get a diagonal line. Turns out, it's flat. There's equal probability of an unpopular idea being adopted as there is of a highly popular idea with one exception--if you draw that graph selecting only for the 1% of the 1% in economic class, it's a perfect correlation. So someone gets their choice, but it's not me, and it's not you, and it certainly isn't the Greek people. Greek politicians suck. But really that's superfluous, right? I don't need the word Greek first.

Politicians suck, politicians break promises. The difference is we don't hold an entire people accountable for the broken promises of their politicians. So now we have this moralistic patronizing Calvinistic attitude. The Greeks deserve what happened to them because they are failed culture because they are culture of lazy tax avoiding bums. The problem with that is the facts don't support it. Did you know, for example, that Greeks have the highest number of working hours in Europe? In fact, they work more than Americans. They don't have the highest level of productivity, I'll accept that. But Greeks are not lazy. If you've ever met a Greek, you know that. This hurts personally. I take this shit personally. And the reason I take this personally is because my father and my mother live in Greece. They're both pensioners. My father's pension which was a private pension that he paid into for 45 years was nationalized, stripped, and cut by 50%. After 45 years of paying into that pension, it was just taken away. Every month they invent a new tax to pay off the loans.

My mother is a disabled pensioner. Her pension has been cut by a third. And right now neither of them can withdraw money from the bank. But that is the reality of economic depression, that is what happens in a country that is seeing an unprecedented recession, unprecedented in peacetime across the whole of Europe. So if we're going to accept that, don't call us lazy, that's just one step too far. The important thing to realize is that what's happening in Greece is a failure of economics. Now unfortunately, I'll go back to the topic of Bitcoin. Bitcoin can't save us right now. And the reason Bitcoin can't save us is because Greece isn't ready for it and Bitcoin isn't ready for Greece. But what I know and what most of you in this room know is that, one day, maybe a decade from now, maybe two decades from now, Bitcoin will be the answer for some country somewhere, for some population somewhere. Even today, some Greeks were able to use Bitcoin to protect their wealth. Not many, just a few. But already we're seeing a resurgence of Bitcoin in Argentina. And one day Bitcoin will be suitable for protecting against the ravages of central banking. What we're seeing in the news today is a realization not of Bitcoin's vision and success but of the failure of central banking especially unelected, unaccountable, detached central banking that happens hundreds of miles away from the population it supports.

So what happens when an unelected bureaucrat like Mario Draghi or Desha Bloom (ph) or any one of these chumps, turns around and sends a direct message to the Greek people and says, "You'd better be careful and make sure you vote correctly." What happens when you say that to the birthplace of democracy? Well, 61% of the people turn around and say, "Oxi." That's what happens. And we don't know what's going to happen next. The reason we don't know what's going to happen next is because this is unprecedented, there was no plan for dissolving the monetary union. There was no plan for bailing out one of the European countries. What I can tell you is that whatever happens, it can't be as bad as what happened in the last five years. Greece has suffered a catastrophic 25% collapse of the economy. Among people my age and younger, the unemployment rate is 45%. The average Greek employed person is supporting eight family members on a single paycheck. And guess what? Greece actually managed to deliver a primary budget surplus for the last two years. In a Europe that no one else is delivering primary budget surplus. but all of that money didn't go to bailout Greeks and none of the money Europe sent went to bailout Greeks. No, it turned right around and went to German and French banks, and Spanish banks, and Italian banks. When people tell you that Greece is being bailed out, make no mistake.

The banks are being bailed out on the backs of the people as always. Some shit never changes. So to make the obvious movie reference, you can take away our pensions and you can take away our emergency liquidity assistance, but you can never take away our freedom. All right. That was the wrong movie reference because in that particular case it was the Scots and they voted, nay. Maybe the ballot was in Greek and they thought nay means yes, rather okey. Nay, no, it sounds kind of similar, maybe they were confused. So the correct movie reference is imagine this, Alexis Tsipras turning around to Desha Bloom and saying "In the south of Greece, there is a small town that is still called Sparta. This is way you have to use your imagination. Imagine me delivering that line with abs of steel, developed over six months of insane CrossFit preparation, a lot of Russell Crowe. Unfortunately, I've spent the last six month coding in Python, so my fingers are inflexible, but my abs are not steel. This is the problem with being in the Bitcoin space, we're all geeks.

So that's what I had to say about Greece. I think, what happens next, nobody knows. But one thing I do know is that Greece will survive and the Greek people will survive. My father put this best. He told me on a phone call just about a week ago, he said, "There's nothing they can do to us that we can't survive." When my father was twelve years old, he ate donkey during the famine, during the Nazi occupation. There is nothing that can be done to the Greek people that we can't survive. Sorry. I didn't mean to get emotional, but that is the truth. All right, so we've got a lot of stuff going on in Bitcoin and I'm very excited because regardless of all this news, regardless of this big Greece drama, and the increase in the price of Bitcoin, and trust me it's not going to last, what's really happening in Bitcoin is something tremendous. Anthony (ph) mentioned it. By the way, thank you for sponsoring us, Proof of Work and Roolo for sponsoring us today. But what's happening in Bitcoin today is that we're seeing this unprecedented wave of innovation.

We're seeing technology being developed at a frenetic pace. And the reason for that is because Bitcoin represents the first open decentralized transnational programmable system of trust and currency. And if you understand that, you realize that what can be built with that is endless. Over the last three years, we've seen two or three technologies building blocks emerge in Bitcoin. Some of my favorites are hierarchical deterministic wallets. Who knows what those are? Anybody here? Okay. And multi-signature technology, know about that? And we've also seen the development of locktime, which is the ability to post-date a transaction. Now when you look at these building blocks, what you have to realize is that one of the amazing things that happens with Bitcoin is that using these building blocks is like composing sentences. Think of these building blocks as verbs or nouns and then what people can build with these in a permission list environment is complete sentences. Sentences that do new things, things we've never imagined before. And if you have a number of verbs and nouns, you can create an infinite amount of sentences out of that.

Right now, this is being broadcast using payment channels on a platform called Streamium. Streamium launched about two months ago. And what Streamium allows you to do is it allows you to transmit streaming video where the viewer can pay using a micropayment as small as one Satoshi build at intervals of 200 milliseconds. Let that sink in for a moment. What's really amazing about this technology is that it didn't require any changes to the underlying a Bitcoin protocol. It's basically a combination of hierarchical deterministic wallets, multi-sig and locktime, and using those three technologies together, you can build this thing called the payment channel that allows you to do micropayments. Only really calling it micropayments doesn't do it justice, I like to call it P-copayments. I've mentioned I'm a geek, right. So what this technology shows is the potential for companies in the Bitcoin space to invent completely new models for doing micropayments. So what are the banks doing with this technology?

They're doing blockchain. This has got to be the greatest marketing coup in the history of marketing. So even though that term is really kind of silly, especially in the way it's used, I love the fact that we've managed to pull off this incredible marketing coup. So Bitcoin is the currency of drug dealers, pedophiles, and terrorists as we all well know because we read that in the news every single time, right. I don't see any drug dealers, pedophiles or terrorist in this crowd. But who am I to judge? You know, maybe you can't tell, maybe they're hiding amongst us. To take that and then rename it, blockchain shiny new technology that even the banks can do is just amazing. It's amazing. So let me burst that bubble just a tiny bit and explain to you what a blockchain is. Have you heard of this thing called the Internet? Well, if Bitcoin is the Internet, a blockchain is an intranet. All right.

How many of you work at a large corporation that has an intranet, that has a firewall, that won't allow you to do Facebook or Skype or anything useful? That's an intranet. In the key characteristic of an intranet, is all of the technology of the Internet, none of the benefits, right? Let's take a beautiful decentralized powerful technology, let's neuter it, firewall it and then deliver this lU.K.ewarm pale alternative if that is politically correct and corporate accessible that is acceptable to the executives and will ensure that no one is offended because someone said something involving free speech. That's what an intranet is. And so now they're trying to do that with blockchain technology. It's like, "All right. We've got this revolutionary decentralized open currency with no center of control where anyone can connect and do whatever they want, where transactions can be originated from any node on the network, where identity is not required. Let's take all of that and just remove the most interesting innovative features. Let's make it controlled, centralized, and closed. And then we too can participate in this revolution of FinTech." Well, some VCs are buying this. If you wanted a technology that allows you to store a centralized ledger that tracks every transaction, use Quicken or Sequel. There's nothing magical about that. Ledgers are not the amazing invention. Ledgers were invented before writing was invented. The first writing were Ledger's, right? What do you write down on papyrus? Or what do you carve in a stone tablet? How many goats your neighbor owes you? All of the examples we have of early writing are ledgers. Ledgers are not new technology and they certainly aren't revolutionary. But what a lot of these banks are trying to do is not revolutionary, it's not disruptive. In fact, they're terrified of disruptive and revolutionary because this is the first time in centuries that the core function of finance is being disrupted by technology and the banks can say no. They can't prohibit it, they can't ban it.

In fact, ironically, having a banking license forces you not to compete in Bitcoin, it's an impediment. For hundreds of years, regulation has been used as a tool by banks to prevent competition. And now that very same tool that allow them to keep out any disruptive competitor is going to hang like a ball and chain and drag them to the bottom because if you have a banking license, you can't do Bitcoin. Because you have to do KYC, AML on every transaction and we all know you can't do that on Bitcoin. You can wish it. I wish I had hard six pack abs so that I could deliver that Sparta line much better, but I don't. And wishing it doesn't make it so. The reality is that the fact that you can't do KYC and AML in Bitcoin is not a bug, it's a feature.

Just think about this for a second, what's the number one problem in finance facing consumers? Identity theft, right. Identity theft is the number one problem. And Bitcoin solved it by design from the very beginning. The main reason identity theft is a problem is because the existing banking system requires you to attach identity to every transaction and then give it to every intermediary in that transaction, and there's always a very long string of them and then hope that they do a better job than all of the previous intermediaries who got hacked and lost the data. And what we know from 25 years of experienced in information security is that you cannot secure a personally identifiable information. Targets can't do it, Home Depot can't do it, Barclays can't do it, Chase can't do it, the NSA can't do it. The Office of Management and Personnel in the U.S. just lost the background check database that contained all of the drug addiction, alcoholism, and previous criminal records of everyone who ever got a security clearance. Oopsie. Turns out there's only one way to protect personally identifiable information, and that is to not collect it in the first place. Don't collect it, don't store it, and then you can protect it. Bitcoin solves identity theft. They solves the one problem that consumers have more than any other problem and what are the banks trying to do and one of the regulators trying to do. They're trying to impose KYC--if you don't know what that is, that's Know Your Customer rules"--and AML, anti-money-laundering on to Bitcoin. They're forcing the companies that are involved at the edges of Bitcoin, the exchanges, to monitor all of the transactions and collect identifying information on all of their customers.

Let me give you an analogy. Who's been to Wembley Stadium? All right. They have about a hundred gates, right? And when you have a big game, hundreds of thousands of people go streaming through those gates. What do you think would happen if you put tickets collectors at two of the 100 gates and left the other 98 gates wide open? Something would happen. No one would pay for a ticket, right. The first time you do it, there'll be some idiots who walk up to the only gate that has a ticket person and pay full fare. By the second time you do it, even the idiots have gotten smarter and they'll use the other 98 gates. Bitcoin is completely open and decentralized. What happens when you put identification requirements on two of the 100 gateways? The only ones you can affect in your jurisdiction, the only ones that have ties to the banking system while leaving the other 98 uncovered. Well, anybody who's got some kind of nefarious intent will use one of the other 98. Congratulations, you have now built a surveillance apparatus for the innocent and the idiots.

You're now collecting massive amounts of identifying information on all of the people who are doing nothing wrong or who didn't know better to go do it somewhere else. And then all of that information is exposed to identity theft. Well, in technical terms, that's called worse than useless, right, because useless would be okay. Useless is where you fail to achieve the primary goal of these laws, which is to prevent criminal activity and the profiting for criminal activity. But failing to do that while exposing millions of people to identity theft, well, that takes a special kind of idiot. An unelected regulator, a bureaucrat who doesn't understand the first thing about Bitcoin and things they're achieving something, someone who has forgotten the difference between means and ends, someone who has been doing KYC for so long that they forgot that the end is prevented criminal activity and KYC is just the means.

And now they think the means are the end. So they're doing KYC just for the fun of it even though all they're going to do is expose millions of innocent people to surveillance and identity theft. So when I hear about blockchain, don't get me wrong, this is going to generate profits for banks. This is going to disintermediate some of the massive intermediaries that exist in the banking system. This is going to put big financial networks like Swift, the American ACH Network, the Depository Trust & Clearing Corporation and big chunks of the City of London out of business because banks will be able to do these things themselves on a blockchain. But this isn't disruptive and it's not revolutionary and it's not going to help consumers. When's the last time you heard a consumer say, "Well, I was really thinking of going to Lloyd's. But I heard that Barclays has a much better KYC program?" I'm really worried that I might accidentally money launder myself. So I really need a bank I can trust to protect me from that. Consumers don't care about this. Consumers care about identity theft. So I'm not a fan of KYC. I'm a fan of KYB, Know Your Banker. If more people knew their bankers, they'd realize some really ugly truths about their bankers. For example, they'd realize that the biggest money launderers on the planet have a banking license. In fact, this city is now the number one money laundering destination in the world. Hundreds of billions of dollars, not Bitcoin, is money laundered through London every single year. Most of that done by companies that have banking licenses.

Now I really shouldn't name names, but fortunately they already went to court and lost the case. So everybody knows who they are. HSBC paid 1.9-billion-dollar fine for violating money laundering rules more than 20,000 times. And this isn't the kind of money laundering where it's like an Argentinian who's trying to buy an apartment without their government taking a 45% tax cut out of it, which really is what most money laundering is about, right. Normal people protecting themselves from rapacious governments and banks. Now this was money laundering, the funds of the Sinaloa Cartel in Mexico that in that time killed 19,000 people. So how many HSBC executives went to jail? None. In fact, the 1.9-billion-dollar fine was less than the profits that HSBC made while money laundering. You see, there are a few special places in the world where that kind of justice can be dispensed. Rome has Vatican City, an entirely separate administrative region within the country of Italy that is a sovereign and is allowed to focus their governance on worshipping God. London has a sovereign administrative region called the City of London, where they're allowed to worship their God, money. They have their own police force, they have their own courts, they have their own independent region of the city, and they can get away with murder. And so that's why they're scared of Bitcoin. Here's the news flash, they're not scared that criminals will use Bitcoin, they're terrified that all of the rest of us will. Thank you. All right. Thank you all. So we're going to do some rapid fire Q&A. We did this last time I was here. I'm going to try and keep my answers to 10 seconds or less so we can get as many questions as we can. If you have a question, what you need to do is raise your hand, I'll point at you, and then you shout it as loud as you can, and then I'll try and repeat it because we don't have another microphone to do that. All right, who's got a question for me?

Unidentified Male: Here, yeah.

Andreas: Yes.

Unidentified Male: Here, here, here.

Andreas: Okay. You.

Unidentified Male: Like, recently as you said that Greece is not ready for Bitcoin and Bitcoin is not ready for Greece.

Andreas: Yes.

Unidentified Male: How do you know?

Andreas: Well, how do I know that Greece is not ready for Bitcoin and Bitcoin is not ready for Greece? I know why Greece is not ready for Bitcoin because I visit Greece all the time. I have friends there, I have families there. I've been to the Greek Bitcoin meetups. So I've been to the Greek Bitcoin community and it is tiny. It is absolutely tiny. Most people have never heard of it and what they've heard of is bad. So Greece is not ready for Bitcoin. The other reason is because the big problem in Greece is that people don't have cash, they don't have disposable income. If you don't have cash, Bitcoin is unattainable. And if you do have cash, Bitcoin is unnecessary. That is the truth. The second reason I know is because Bitcoin is not ready for Greece is because I don't know if you've noticed, we've been having this debate over the last two years that culminated just last month on scaling Bitcoin so that it can handle more than seven transactions per second and so is the block sites debate. Now the fact that Bitcoin is not ready and not scaled enough doesn't mean that it won't be ready. If you asked me if the Internet could support the Egyptian revolution in 1995 or if we could take down the VHS tape in 1995 through the power of Netflix or if it could demolish the long distance business that once accounted for 75% of telecom spent or revenue, I think you were crazy. In 1995, anybody who was on the Internet understood that VoIP could happen. Many of us were running voice over IP, but that doesn't mean we could suddenly replace all of the phone calls in the world with the Internet. Today, more than 80% of all long-distance calls happen on Skype, let that sink in for a second. That's an entire industry that disappeared in a decade. Now in '95, I could see this coming. But it doesn't happen immediately. The Internet took 25 years. We're going to do it in '15, and that's good enough. Yes.

Unidentified Male: How do you see the current situation in Bitcoin with remittances, using Bitcoin?

Andreas: All right. How do I see the current situation in Bitcoin with remittances? If you've been paying attention to what I've been saying for the last couple of years, you probably know that I'm a huge fan of Bitcoin for remittances. I think this is a market that is ripe. The reason Bitcoin can help in remittances is because it solves a massive problem. Every year, 550 to 650 billion dollars are transmitted from immigrants workers to their home countries. The vast majority of this money travels along four major corridors: U.S. to Mexico, U.K. to India, U.K. to the Philippines and from the United Arab Emirates to India and Pakistan. The average fee that is charged for these remittances is 9%. Some of the richest companies in the world make 175 billion dollars off the poorest people on the planet. Bitcoin can fix that. And it can fix it very, very simply and very easily. We're beginning to see it happen already. It's one of the areas in Bitcoin. It's silently growing behind the scenes. There's a little company in the Philippines, for example, that set up a remittance corridor between the U.K. and the Philippines in between the U.S. and the Philippines. And what they're doing is they're sending money back to Manila. They have a network of cash-in, cash-out systems. And they can charge 1% when the average fee is 7%. And so, imagine this, imagine you're a Filipino worker working in the U.K., 99% certain, you're a nurse, right. That's the number one profession of Filipinos abroad. And so what happens if one day in your hospital cafeteria, this weird Bitcoin ATM shows up, you're going to look at that and say, "Yeah, sounds fishy." And then one of your friends is going to try it just for fun and the money is going to get there and they're only going to get charged 1%. A week from that time, there's a line to use that machine and this is already happening in the Philippines. The Philippines is really special: highest penetration of mobile phones in the world, the highest use of text messaging in the world, an English-speaking American-friendly country with an enormous expat population. That is the fourth-largest destination of remittances. This is happening. And we are going to see Bitcoin impact remittances long before we see it impacting retail. We're not going shopping with Bitcoin. We're taking out Western Union. No follow-up, so I'll take another one later.

Unidentified Male: When will we see widespread adoption of Bitcoin? And what are the key stages do you think in (Inaudible0:51:36)?

Andreas: When will we see widespread adoption of Bitcoin? Well, I mean, the obvious answer is I don't know. Nobody knows. You know, welcome to a front row in making history, none of us know where this thing is going. It would be a lie to say we do know. But when you combine open systems, decentralize networks and a massive unbanked population around the world, I think we're going to see Bitcoin get adopted more broadly much faster than the Internet. Now not 25 years, we don't need to deploy infrastructure, you can just download an app. But the thing about Bitcoin, the most important thing to understand about Bitcoin is that Bitcoin solves real problems for real people today. And all we have to do is make it secure, make it easy to use, and scale it. And that can be done. There are dozens and dozens of companies working on it. Yes.

Unidentified Male: Are you in favor of the eight megabytes increase?

Andreas: Am I in favor of the eight megabytes increase? So in this debate, there are two sides: one side says use overlay protocols; and the other side says increase the block size. And I say both. We're going to need to do both. And I think that increasing the block size now is probably a good move. At the very least, we need to understand how the consensus mechanism works in Bitcoin and how you can roll out controversial changes like this without disrupting the network. And we're going to find out over the next year. Yes.

Unidentified Male: Given the threat that Bitcoin represents the government's banks and control of currency, why do you think those that haven't made it illegal (Inaudible0:53:24)?

Andreas: Given the threat that Bitcoin represents the government's banks and the control of currency, why is it that more countries haven't made it illegal? It's a really simple answer. In the countries that can make it illegal easily, places like Russia and China, the rule of law means absolutely nothing. So if you go to a population and you say, "Your government just made this thing illegal" in Russia. Most Russians will say, "Oh, really? I'd better read up on that." When the Soviet Union banned the possession of hard currency, who do you think were the first to start stuffing suitcases full of hard currency? The Politburo, 30 minutes after they made the decision, then the generals, then the chief of police, then every cop. And so within two years, the preferred currency to bribe a cop was, yep, dollars. It has the exact opposite effect. In countries where the rule of law matters, there are some pesky civil liberties issues that come up when you decide you want to ban Bitcoin. In the U.S., it's really funny because just three years ago, the Supreme Court made a decision called Citizens United that said that money is a form of political speech. So now the government in the U.S. has a tricky problem. They can try to ban Bitcoin or severely curtail its use. And then they're going to get someone like Marc Andreessen, who has invested 150 million dollars into Bitcoin, who can hire 5000 lawyers a day, and who will take them all the way to the Supreme Court with a very strong possibility that they will lose that case. And if they lose that case, they've created a nightmare scenario where there's a precedent that Bitcoin is not just a currency, it's a civil right. So banning Bitcoin is very tricky. In fact, the smart political operatives understand that creating a gray area and using propaganda is far more effective. So that's why we are all terrorists, pedophiles, and money launderers.

Unidentified Male: What do you think about NASDAQ using Bitcoin?

Andreas: What do I think about NASDAQ using Bitcoin? NASDAQ is doing an interesting experiment. They are applying it to NASDAQ Private Markets, where basically what they're doing is they're using a Bitcoin or blockchain technology to register ownership of share certificates in privately-held companies, meaning that they're going to the one part of the market that isn't regulated by the Security and Exchange Commission. That's a really smart move because it's an area that's ripe for disruption. The vast majority of companies that are traded and share certificates that are traded on open or closed markets are still held in paper certificates. All right. With that, we'll close. Thank you very much for coming tonight. Thank you.

Unidentified Male: Thank you.

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