We live in an era where fear has overcome reason

Transcript

hi everybody welcome to our weekly hangout with the most interesting people from the Bitcoin in alternative money space I'm your host Paul bad ink and my co-host today is your partner of Bitcoin API company block trail-cam and Tim Pastore of 2/8 at i/o he's on his way so I guess he will join soon our guest is Andreas Antonopoulos a well-known advocate who wrote a book mastering Bitcoin and who's been one of the most inspiring bitcoins in the space our last share with him and January was immensely popular Andreas it's a great pleasure to have you on again oh thank you so much I'm really looking forward to meeting some of the most interesting people on Bitcoin weren't they going to be on yeah today for example and usually almost every week so I wouldn't consider myself

one of those but I'm very grateful for your kind words so thank you yeah so basically the structure for today and as we've planted this is we first want to talk a little bit about Greece like lost time because problems don't seem to ago way there and then afterwards we want to talk about this whole blockchain versus Bitcoin debate you know Bitcoin is more and more being kind of dismissed by banks and Means Committee as a whack of currency and we'd like to get your view on that and then also we want to talk a bit about a Bitcoin tech and some of the interesting a Bitcoin 2.0 things going on and then afterwards we have some time for questions from the audience so

people that are watching his life and I know you're many please submit your questions and we can address them at the end of the show so first Greece Andrea's maybe first more on a personal note the problems have been very intense over the past few months and it's for me the moment where I saw this Greek pensioner kind of collapsing against the wall of this Bank being unable to collect this bench and it really made me very sad from the insight and since you're a Greek I was just mmm this whole ordeal and how it has been affecting you personally and your family well both of my parents live in Greece and my extended family I grew up in Greece myself my parents are both

retired pensioners and even though my father certainly had a private pension that was very well funded and to which he contributed for 45 years in the end they nationalized the pension plan merged it with a couple of public pensions rated its assets and left it broke and as a result my father's pension got cuts almost by half so did my mother's and that was just one of many many insults and injuries heaped upon the Greek population my parents have been rather fortunate because they both live in their own house and they

have an extended network of support so they're not going to go hungry and they're not going to go homeless but certainly living as a pensioner in Greece is is really difficult right now because effectively the promises have been broken and and this is not about people who didn't pay their taxes or lazy or retired at 40 with a cushy public sector job although there are some people like that the truth is that people who did everything right to work harder than anybody I've met in Europe who were honest and paid their taxes and built a retirement for themselves and now finding themselves with all of the promises broken and essentially they're being robbed by their own governments

and by the European government and and all of the burden has fallen on the middle class so as usual as with many other countries the banks got bailed out and the people got sold out and that is especially true in Greece a country that is not a country of lazy people who don't pay taxes but is a country where the number of working hours are among the highest in Europe and where people are honest and warm and kind and have worked hard all their lives and are now being victimized by essentially a remote unelected and moralizing elite made up of representatives of countries that

themselves bailed on their own debts in the first and second world war now are presenting this more allistic argument of why the Greek people need to be punished and to the second generation for the choices of their government that most like in many vlogs democracies that people don't really control yes I see because you're saying they did everything right but you could argue that they did one thing wrong and I was electing the wrong officials over all these decades oh well I mean I guess so if I don't know how is the the democratic institutions in Holland do people elect politicians who do what the people wants because as far as I know in most countries including Greece the people elect one of two

choices both of which have been thoroughly vetted by the banks and the rich to do what the banks and the rich want and there isn't really much choice the first time that the Greek people actually elected a government that was not controlled by the banks in the rich was in January when they elected syriza and they did a referendum to express their own political opinion in view and both of those results were ignored by institutions that are completely unelected unaccountable and corrupt so you know I mean the idea that somehow we will hold an entire population not only responsible for the choices of the government but for electing that government in the flaw democratic system I don't think any country can stand up to that level of scrutiny and in effect

the idea of punishing people because it would be unethical to let them off the hook even though they they they did not you know cause this directly and is is appalling and it's it's been unfolding as a tragedy it is a betrayal of the principles of the European community and the European Union and keep in mind Greece wasn't the first Greece won't be the last Cyprus was the first Italy Spain Portugal Ireland Spain by it's coming to you too this model has been played out twice it is basically allowed the privatization

of all of the prophets and the nationalization of all of the debts which massive Lia rich certain banks protecting them from insolvency and if that model can succeed without an armed revolution in Cyprus and Greece then it will be exported pretty soon to another European country come to the cinema near you this dis old Greek tragedy so you were a big supporter of the oxy to know at the referendum and you did you feel like a huge or kind of like like a success or joy when when the know was voted or did you already feel like well it will probably not make make a damn difference

well I didn't think it would make a damn difference anyway for sure because there's a no had to be combined with with effectively the the confidence and decision to leave the euro which which I think in the end not only would be the right decision which is to leave the the common currency area but I think it will be the inevitable issue because Greece was bankrupt in 2012 is bankrupt today and will only be more bankrupt in the future there is no way the states that can ever be repaid and there is no debt no way Greece will grow as an economy for the next two decades unless it is taken out of this straitjacket of economic austerity no no economy can

grow in conditions of imposed economic warfare and usually these things end badly so the Aussie was really a symbolic issue it was a it was the ability of people to express the popular will and and to say that the austerity that has failed since 2008 that has made Greece Greece's economy worse and worse and worse every year and that has made that that more and more unsustainable is not going to be the solution you don't solve that by introducing more debt and so what so why did tsipras then eventually betrayus people because this is not

sustainable we will eventually of course I guess it will be reelected because the people will not accept I suppose this betrayal and and going again following the same the same route to more timorous Terra T and more unemployment and all of these things very simple because in in order to have the room to have a better deal tsipras had to protect the country from the extortionate and extremely dangerous concept of purposefully forcing the banks to collapse in order to punish the all key votes so he's

buying time to set up a parallel system then well I mean the European government the European Central Bank and specifically the European Central Bank put Greece in a position where they said we will not provide liquidity for the banks even though that's part of the requirements of the European common currency area and and we will force the banks to collapse and if the banks collapse that would be a disaster for Greece that and there wasn't enough time to nationalize the banks or go to the drachma or something else so so so effectively to press was bullied into a position where the the choice was disaster now or disaster later

and as usual later the only thing that's happened now is we've extended the timeframe for disaster which has already happened three times in Greece but the disaster is coming and it's not a Greek disaster it's a European disaster this is the basic collapses of European compact so the plan B was to today were yesterday it was leaked that Firefox apparently on the 16th of July had this very interesting telephone conference with a group of unelected central bankers and other people and in which he kind of leaked a lot of confidential information about plans for the Greek people Plan B so my first question is why is he sharing those things with a bunch of unelected hedge fund managers and central bankers instead of with his

people and secondly how could he be so naive to think that something like that would not leave because 80 people were going in well the reason he he shared those plans with unelected central bankers and hedge fund managers is because they run the monetary system in which in which fire factus has to exist but he was supposed to be the sort of the against all of that and he was the voice of the new generation almost yeah and he was working in an old system where he is constrained by the reality of the situation and the reality of the situation is that if you want to build a plan be like that you need to you need to have buy-in from the people who are part of the system that's that's the

problem with building these currencies as national monopolies is that you need to switch the existing power structure that's why these centralization matters that's why bitcoin is the real plan B because you don't need anyone to approve or opt-in or support your decision what you need is for every person in the country to opt out from a hostage situation and I think the lesson of Greece is that you you got away with it this time 20 years from now bitcoin will not allow you to ever do this again so Plan B plan Bitcoin in your presentation for wired money it was a very interesting a very exhilarating showed to what you talked about you said basically Greece is not ready for

Bitcoin and Bitcoin is not ready for Greece but it's something you said half year ago as well so when when are the Greek people are going to be ready for cryptocurrencies in general or bitcoin specifically well so let's let's change the conversation just a tiny bit now if he told me that California was suffering from a massive currency crisis in the US dollar was collapsing I would tell you that California is not ready for Bitcoin because but and bitcoin is not ready for California so it's not just a matter of Greece it says this is a technology that is in its sixth year it's a toddler and it's about - its competing on a global basis with well-established national currencies with a hundred and fourteen trillion dollars of liquidity behind

them and it's a ten billion dollar baby that's only six years old obviously bitcoin is not ready any more than in 1992 the internet was going to lead to popular revolutions and the unseating of tyrants that didn't have them for another 20 years it's going to take a while until this technology is widespread enough has enough liquidity and power behind it that it can actually start affecting to your politics there is absolutely no question in my mind that the world of financial geopolitics changed on that morning in January in 2009 and that change is going to ripple out through history over the next 20 years it is going to rock the foundation

of the world however it is slow and it is by necessity so it's going to be faster than many technological revolutions we've seen before it's going saloons with Greece it is these kinds of things accelerate against the absolute development because people see that again maybe not this time but the next time 10 years from now 15 years from now this would play out very very differently when people have an escape valve when they have a safe haven and that safe haven has enough infrastructure and enough adoption in a country to make a real impact in the financials then you can't take a whole population hostage anymore and and and people are learning part of it is building trust in Bitcoin but part of it

is the complete collapse in trust in traditional institutions and institutional forms of money and banking and those two things are happening simultaneously but give it give it a decades give it 15 years give it 20 years things are going to change dramatically and that's quite inevitable in in my mind it seems like oh it seems like the old system is doing a lot of things in favor for Bitcoin right now with with them freezing up china's of China's stock market Greece nobody can get to a bank anymore it seems almost like they are do they're doing as a I don't know a favor well but still it's incredible bad for Greece and China but

people will see the power of Bitcoin in controlling your own money through these events right yeah absolutely so there's two ways to think about this you know if you're an engineer and you're building a brick house so you can give people tours you can show them how it's nice and cool and how it's safe and stable and structured now it helps if the rest of the city is on fire and all of the wood buildings around you are burning to the ground then you can point at your brick building and say hey non flammable and and maybe that's not going to save the city but is sure going to give you a better blueprint for building the future city on top of the ashes of the existing one so yes the fact that every national currency is going through a crisis right

now just at the same time the Bitcoin offers a safe haven alternative it's not a coincidence there's a reason why Bitcoin was so effective at gaining attention in 2009 it's because the traditional institutions had collapsed trusts with the people and there's an entire generation that has been betrayed have had their futures and jobs and and and security stolen from them in order to bail out elderly populations and fat-cat bankers and corrupt institutions and inefficient industries and that entire generation is already looking for alternatives and guess what the one thing that has not betrayed them is the internet so it's not surprising to me

that you're going to see this generational switch yeah and and if you look at the look on the ground in Greece and do you see actual adoption taking place now where there are more merchants accepting its do you see the rise of ATMs in Athens can you tell me a bit more about that it's still very very slow I keep in mind you know Greece's Greece has always been maybe a decade behind most of the technological trends I had a rotary pulse dial telephone in the 1980s at home in Greece and so you know I was amazed in 1988 when we introduced tone dialing in Greece and then in 1990 call waiting whoo high-tech

stuff right and that's you know I mean this is simply things happen a bit slower in Greece that's always been the case the technology filters through degrees a lot slower California is going to be ready for Bitcoin a lot before perhaps he in a decade before Greece is ready for Bitcoin but that's okay the other effect that you have to look out for however is the leapfrog effect that's when a technology is replaced by something completely new without going through the intermediary stages we saw that for example in sub-saharan Africa Southeast Asia and South America with the introduction of cell phones where people who never had landlines and never had a

chance of having landlines simply jumped directly to mobile telephony because it was a lot cheaper and easier to deploy I think we're going to see that leapfrog effect so you know with countries like Greece you've got to decide are they infected enough by central banking that they can't move forward but not yet adapt enough in technology there's other countries where they haven't been infected by central banking that way and they could just completely bypass that whole mess and go directly to mobile and digital money No so maybe let's do it just a few questions from the owners now with regards to this topic before we go to the next topic topic case the dieter asks the Greeks had a plan B what do you see as a plan B

just leaving aside Bitcoin now because for example in Greece now there's this problem with with bank accounts being limited or banks being frozen altogether what will be in your a few a good short-term solution to for the Greeks there is no short-term solution there is no good solution for Greece it's either tragedy and disaster now or its tragedy slowly and then disaster later those are the only two options the the only good solution to Greece would be to erase 40 to 50 percent of the debt and treats Greece the way you would have a post-war situation because that's effectively the

economic situation in Greece and rescued Greece and put it back into function but that's not going to happen because the European Central Bank and other European authorities are too busy spinning this moralistic narrative of a failed culture and a people who are flawed in character rather than treating this as a financial and mathematical problem they're treating it as a lack of morality and that is a very dangerous thing to do with economics because pretty soon you find out that in the eyes of this elite everyone is failing morally and so now it's the Greeks the Italians look pretty failed morally to

the Germans so to the Spanish so the Portuguese so that the Irish eventually you have a European Union of just Germany maybe Austria parts of the Netherlands the rest of it all falls away everybody else everybody else is too morally inferior to succeed which is ironic given that Germany has twice reneged on its debts this last century and was only able to grow because it's that's well wiped out even though arguably its debts were caused by its own bad moral choices with regard to war so this is all very hypocritical and ironic to impose these ridiculous situations on the Greeks yeah but do you

think shovel is really trying to force a grexit in the ends because he wants to teach a lesson to the likes of Italy and Spain and France that you cannot get away with accumulating so much debt and it is waiting to to even allow for a huge humanitarian disaster in Greece just to set an example yeah which is which is realpolitik of the most Machiavellian form devoid of ethics and morality and empathy and based on this completely fictional idea of rational actors and moralistic behavior it's disgusting it's absolutely disgusting it's it's it's unethical it's immoral

it's unchristian if you want to take that perspective and what it does is it forgives the enormous crimes of Goldman Sachs and Deutsche Bank and all of the other banks where is the punishment for them why are they not being taught an example because you know none of this happened in a vacuum and a lot of banks made a lot of money through this by putting grease into the 0 by fudging the numbers this wasn't something that they did out of the kindness they did it because it was enormous ly profitable where's teaching them a lessons I think it grexit is a double-edged sword if if Greece does eventually exit the European Union it's going to be a disaster of monumental proportions for the European

financial system not because it removes Greece's economy but because you know where do you think the 280 billion dollars are sitting right now they're sitting on the balance sheets of other European nations and European banks which are practically insolvent accepting defaults from Greece means accepting that the European system is insolvent and that can't happen amazing well let's switch to a more positive topic and that of Bitcoin and of course we briefly touched upon already let's let's talk a bit about this whole Bitcoin versus blockchain and debate and like I said in the intro it's you see a lot of media and banks they they praised the blockchain and they dismiss the

Bitcoin as some sort of geek anarchist currency that's no good and in your presentation from Wired you were already raging against it what is what is your view on this whole debate there's a couple of different perspectives first of all please take my wired presentation in context I was presenting to a roomful of bankers hedge funds investors and financial technology companies that's that has spent the entire morning talking about how they're all about disruption and they want to disrupt their industry then they want to disrupt their own companies then they want to disrupt their own brain from the inside out so they can all be fully disrupted

and embrace this revolution and guess what all of that was [ __ ] because when presented with actual disruptive technology they run away screaming because they can't conceive of disruption that changes the fundamental principles of how they do banking roll centralization and regulation limited competition and they want to adopt the efficiencies without the decentralization and the low-cost but with control and the global nature but with censorship and you can't do that you can't have both you can't have the

revolutionary nature of Bitcoin while stripping it to all of the things that make its revolutionary and make it interesting and you can't have a blockchain that works without a system of rewards you know currency is an integral component to the security of the network no one has demonstrated a decentralized or even a distributed time-stamped secure ledger that doesn't have some system of incentives behind it and those systems of incentives so far we have one model that works and that's Nakamoto consensus as implemented through proof of work and the reward of Bitcoin senior age that is the only model we know that works and scales and is secure what they

want to do is create the CompuServe equivalent to Bitcoin the AOL equivalent to Bitcoin kind of like the Internet only closed and controlled - the innovation - the excitement - the possibility of anyone doing anything interesting without asking for permission first is that going to increase the efficiency of some banking operations sure sure it is just just as much as when AT&T routes is long-distance phone calls over IP it saves a lot of money is that gonna change everybody else's view of the world's no is that gonna bank four billion people who are currently

unbanked precisely because of the issues of scale and centralization no of course not that's not going that's not revolutionary that is to revolutionize and I've used this term before to revolutionize something is to remove anything we're actually revolutionary from it and then defined by committee some kind of pale unrecognizable alternative that is just palatable enough to present in front of an executive committee its timid it is weak and ultimately it is ineffective and it is the hallmark of every comfortable fat inefficient corrupt industry when faced with enormous

disruption to speak the words of revolution and then fail the actions of change to pretend to embrace the new but only as long as they are firmly routed and in the old firmly rooted in the old to pretend to want this receptive change even while they fear and know that they cannot adapt to this disruptive change whether it do you think they kind of take hostage the words blockchain in order to control the narrative well that's the exact other side of this which I find absolutely delightful if you had a year ago hired the best marketing company in the world you know

or you know you you get Jon Hamm from Mad Men to create an advertising campaign if it allows you to take all of the benefits of Bitcoin and package them in an unoffensive new brands that completely removes any associations with drugs terrorists pornographers and all of the other ugly things that people want to attach to Bitcoin to drag it down like if we had engineered this marketing coup within Bitcoin the people who did that would be receiving awards at marketing conferences for the most incredible bait and switch and rebranding of a failed brand ever the

bank's did it for us and for that we thank them because what they're doing is they're pouring billions of dollars at least a billion right now but it's probably together with the investments we don't we'll see probably closer to two billion dollars of investments just by renaming it and making its more palatable but guess what they're training people on how to build Bitcoin tec-9 they're building startups that learn how to do Bitcoin technology and when all of these people who are in the banks find that their model of control centralized blockchains cannot generate innovation they're going to take their Christmas bonus leave and create a start-up that's going to disrupt the banks from the outside so also they're they're dismissing of Bitcoin and embracing of

blockchain is actually kind of backfiring to them eventually but but of course it backfires because this is the history of every incumbent industry that has ever been disrupted and this is exactly the same as the phone companies trying to create Garr walled garden Internet's replicas with CompuServe and AOL and teaching people how they can do email but it's closed the email so you can only email people who are in your system well eventually they had to open the wall and when they open the wall everybody discovered the internet and got nicely trained on it and then they chose between the two and they chose the internet because it innovates faster because it's open because you can deliver these closed and centralized services to the parts of the world that

desperately need them because this doesn't solve the real problems with banking that are control and centralization and so yeah great teach everybody blockchain put a wallets on every phone train everybody to do mobile payments train them that there are currencies that do not come in paper form but have value nevertheless teach them all of that and then we'll show them Bitcoin and let them choose yeah well one spoken and commit about negative B or maybe yob you can address with Andreas the whole block size debating and what's going on there right now yeah I just want to add I'm still waiting for MS blockchain 2016 to come out next year so that will be awesome job Microsoft for doing that

just joking no entire blockchain you said already and answering one of our questions that Bitcoin is scalable the only one we know but we see at the moment that we see some scalability issues in and growing the Bitcoin network further I know you do not have like an outspoken opinion about what you think is best but what do you think of the entire discussion that's been taking place now for yeah well over two years already but it's been taken off last three months so first of all I think it's healthy to have this debate I don't think the debate has been had in healthy ways a lot of the debate has involved ad hominem it has involved attacking people

rather than ideas it has involved making ideological aphorisms and absolutist statements without sufficient data to prove them and you know listen I'm guilty of that as anybody else and and you know when I'm speaking to an audience I'll often say things that are hyperbolic and I may regret later and I'll have to correct myself this is what happens when you talk a lot and that's part of my job but in this debate I think when both sides tell you that the other side is destroying Bitcoin when both sides tell you that if you follow the advice of the other side Bitcoin centralization will dominate it will destroy the currency there will be

a disastrous hard fork that will collapse and all of that I think all of that is hyperbole I think that the truth is that we do have some long-term scalability issues these are not destroying Bitcoin these are not insurmountable in fact there are a number of solutions we can increase the block size we can create off blockchain transactions we can use payment channels and lightning Network and side chains to relieve some of the pressure on the blockchain while at the same time scaling up the infrastructure for running Bitcoin at least as fast as

Moore's Law arguably we could do it a bit faster because there's economic incentive to run these things and we want to see investments in them and at the same time we'll see a fee market develop that both encourages people to optimize for fee to conserve you TXO and to actually pay for the services they are receiving and so the question is whether we should do one of these things versus the other the answer is really simple in my mind we're going to do all of these things we're going to increase the block size and implement off block sharing transactions and payment channels and lightning Network and side chains and a fee market and we're going to see upward pressure and fees and

we're going to do all of those things because the scale of optimization that is required is three to four orders of magnitude so anytime you're scaling a technology in terms of three plus orders of magnitude you use all of the tools the only question is how do you sequence these how soon do you need to start this and whether no matter what you plan events will overcome what your plan is and we may see two or three different scenarios we may see a situation whereby Bitcoin demands decreases because of an inability to serve that demand and in fact the adoption of Bitcoin slows down

by three or four years and we see this slump I wouldn't be surprised if we see that it will mean the end of Bitcoin Bitcoin will survive that too and will come back and continue but it might slow down we might see a sudden spike I am most afraid of a single documentary in China on TV attracting 2 million new adopters in a week and suddenly we double the Bitcoin population in a week and flood it with people who don't understand the culture or the investment dynamics who drive up the price and then panic and crash the price pretty much what happened in 2013 but on an even

bigger scale I don't know if you remember we had a moment on the internet when this happened which was when AOL released about 3 million newbies onto internet email and used that for the first time and opened their doors to the internet and dumped all of these newbies we don't call that the internet greatest moment in fact everyone on the Internet at the time called that black Tuesday because they dumped all of these newbies online who had no clue how to behave responsibly how to remain secure what netiquette was what the internet culture was and at first it was very

difficult to absorb all of that I fear that more so than making the wrong decision on the block signs or whether a hard fork will work or not I fear a southern spirit of adoption the drives bitcoins to a very high price point and then collapses again and we're going to have that happen - the point is can we absorb it gracefully so it doesn't delay the currency by another three to five years and so all of these in the end I trust in the consensus mechanism I trust in the market dynamics and I trusting the resiliency of this dynamic system so that if we choose big blocks Bitcoin will survive if we choose

small blocks Bitcoin will survive if we have a difficult hard fort Bitcoin will survive so it's just a matter of which is the best survival strategy yeah exactly and and also wanna point out to our audience even if we now decide to put it to two MB or 32 MB it would still not be the end you know it's still not be scalable until the future and we will still need all these innovations to actually take it to a global level to get us all on on the protocol but basically what you're saying Andreas it's like you fear the liquidity system then if that's in that case in that case scenario III fear both the liquidity and the and the transaction capacity and the

ability of nodes to sustain the bandwidth of that transaction burst will cause and so in an environment where you have stress tests plus an influx of new users we would see a lot of dropped and unconfirmed transactions a lot of chaos a lot of delays and Confirmation so in in general I think at the moment I'm I'm leaning towards a block size increase in the short term as a stopgap measure to give enough time because I don't think we have a well matured fee market and I don't think that the way to creates a well maturity market is to put pressure on the system now I think that these alternative choices side-chains

lightning Network etc were created quite comfortably these innovations happened even in environment where there wasn't fie pressure and we can allow them to mature and continue to be to receive investments the fee pressure won't go away if we increase the two or even eight Meg it will still be there and it could get acute if we have a sudden surge in adoption I I think it's naive to to have this kind of purist approach which says that Bitcoin must be small in order to maintain the principles I don't I don't think that's true I think even though she already had like a few forward Fisher's on this in the past as well you know Peter Todd came on the

show let's talk Bitcoin and and so he said something like that and Gavin Andresen said so you think Satoshi was wrong and he said yeah I think Satoshi was wrong and that's the only thing they quoted all over the Internet Peter Todd says that oh she was wrong you know yeah that's the problem with the entire discussion you know what we do know is that she was able to combine many interesting technologies into a system that worked that doesn't make her a saint it doesn't make her a prophet it doesn't make her a god it doesn't even make her a good programmer the first version of Bitcoin was a [ __ ] mess

absolutely we should use the incredible insights and intelligence shown by Satoshi Nakamoto in her paper and in the rest of her writings online but we shouldn't we should have just accept this kind of appeal to Authority so if the profits Nakamoto said this was the case then that's the truth nobody could predict five years out what's going to happen with a system at this scale and we need to be flexible and dynamic and and not start appealing people were asking me do you endorse big blocks or small blocks who gives a [ __ ] whether I endure or not what is this is this some kind of celebrity vote listen do I have data do I have analysis do I have interesting

opinions that I can back with data analysis maybe and where I do have those I've expressed them but this isn't some kind of thing where bitcoin will proceed according to the plan that received them the maximum number of celebrity endorsements among the core developers and a few Talking Heads like myself that's ridiculous that's not how you do engineering and neither do you do engineering in a system of mutually assured destruction and hecklers veto where no progress can be made because one person says no we all need to be a bit more flexible and less dogmatic on this issue I'm glad this debate is happening I'm disappointed it's almost the dogma that's in it but nevertheless I'm confident that in the end what it's showing is that Bitcoin consensus is

much more broad amorphous and involves many more constituents than we see merchants exchanges miners wallets core developers they all have a role to play and they all have a voice in the consensus mechanism and in the end I think that consensus mechanism works what I will say is this is my ultimate aphorism you can be a small block Asst or you can be a large block is what you can do is go against consensus that will punish you with a hundred percent loss of income yeah that was what I was actually going to because we saw also this this split off idea of the XT guys is offer XT guys I'm doing the same right now actually

but what do you think of that ironic ste I run Bitcoin core I run Lib Bitcoin and I run Bitcoin J yeah that's not especially the angle I was going to but basically like but two guys or one guy or whatever not agreeing or not getting consensus then moving to another tube to get your own statement in there how do you think about that one because that's what's the only thing I was literally thinking okay what the hell is going on right now I I think it's a perfectly legitimate alternative the possibility of working the code or forking the chain is always open that's the ultimate the

whole point of consensus among the developers and consensus on a reference implementation is to lead to smooth they're hard Forks and consensus in the network but at the end of the day none of it matters the only thing that matters is consensus on the network the runtime consensus of actuality over desire and so if you say that you cannot do hard Forks that change the network consensus what you're saying is you're giving the developers the ultimate control and monopoly control over the reference implementation I think that's just as dangerous you know if you really believe that's Mike Hearn and Gavin Andresen are wrong then why are you

worried if they're wrong they're going to launch Bitcoin XT and no one's going to adopt it and if you're worried that a lot of people are going to adopt it then who the hell put you in charge to say no to all of these people maybe they should be adopting it so it's a it's a subtle thing really I don't think anyone should be in charge and I think ultimately if you have choices then those choices force the discussion to move forward and ultimately it gets resolved by runtime Network consensus and that's the only vote that matters and that's a vote that's not just the miners the miners the developers the web wallets the exchanges and the merchants take at the same time ok thank you and right before

we go to a few questions from the audience just a very short commercial break as in please like this video and make sure to subscribe to this channel because we're very dependent on people promoting and supporting our show and also if you happen to live in Europe check out reinvent that money which is the conference I'm organizing at a 26 of September in Hollands and that could be interesting for anyone living in Europe or especially in close Islands okay so I will be interested first of all if you could please send me the link to the YouTube I would like to tweet it after we and secondly for reinvents thoughts money I am willing to accept compensation entirely in stroopwafels

I'm ordering I'm ordering the way I will be amazing if you could make it Andreas of course we talked about it briefly before the show but it's if your schedule allows and if you happen to be in Europe around that time then I mean I will clear up the agenda of course too to give you a great slot yeah I've been to Holland eight or nine times I've traveled all over the country I've ridden a motorcycle throughout Holland I love the Netherlands I especially Bob Amsterdam it's one of my favourite cities and I can't tell you how much I miss the French fries with mayonnaise I think it's the most brilliant invention ever I like to build fiction we drowned them in mayonnaise okay well we have a lot of

question from you only we need to just to select a few ones because we don't have too much time so we have here from top five reddit Bitcoin links he says would you or you ask would you describe a blockchain without the money protocol as a slow database or could it be more it could be more it could offer in certain closed systems a degree of decentralization let's take an example when a bank wants to send a wire transfer to another Bank they usually have an intermediary which acts as a clearinghouse and an escrow system for securing trust between two corresponding banks that have no reason to trust each other

there are dozens of these networks wire transfer networks like Swift equity settlements networks like DTC see in the u.s. bricks and others and and all over Europe so the question is could banks come together and run a blockchain where instead of mining they're signing where you have 15 participants signing and taking turns signing a blockchain in order to do clearing of equities or wire transfers absolutely that system would be more efficient it would be more fair more transparent more secure than giving that role to a single centralized intermediary so there is significant benefit to doing that and

yes arguably you could do it with a slower database but the the advantage of having a hash chain which is time stamped with digital signatures is that it's significantly better than that so there is a use for blockchain is that going to revolutionize the world is it going to extend financial services this is going to be a platform for innovation no no and no but it will save money for the banks and it's better than the system that it replaces which is more centralized in higher risk and gives too much control to one party so there there are many uses for internal blockchains however once you realize that value so you suddenly realize that it would be nice if these intranets were connected to each other and then you go looking

for an internet of money and I have one called Bitcoin yeah another question about the banks from a Jim White's Carver do banks have to live with completely trusted systems would not trust add value to a trusted environment and as lost parties doesn't promoting trust with alternative currencies revolutionized trusted environment system so basically it boils down to our bank just going to have to deal with the fact that we will have trusted systems in the future and of course in saying their business to be a trusted third party but is it just for them the fact now that they will have to live with that and that I have to maybe even support that with certain services or maybe it will be a great fit in the

future they are already untrusted third parties right yeah I hate I hate the term trust list I have to tell you I hate the term trust list because to most people what trustless means is a system you can't trust it's a bad combination it's it's a very bad connotation if you combine that with a trustless crypto currency the word crypto means hidden sinister and and strange to most people so though those are terrible terrible terrible branding terms so let's change that what a trustless system is a trust in which is a system in which you do not need to trust a third party because you can trust in the network it's not a trustless system it's a

network trust system I am trusting that the network will give me certain guarantees certain trust primitives certain trust functions that emerge as Network behavior without reliance on any one party that system of network trust means that my transaction will be validated can be verified cannot be forged will be sequence will not be cashed before the right time cannot contain the wrong amount and cannot be executed without my signature that's just one of approximately 12 trust primitives that the Bitcoin network delivers as building blocks to build trusted applications Bitcoin isn't trust this Bitcoin is the first system in which you can absolutely trust that

about a dozen network functions will be executed in exactly the predictable way and no one can mess that up so does that make trust in third parties obsolete yeah absolutely it does because that form of trust is a lesser form of trust because concentrating the trust in one party is is less trustworthy than trusting a network effect that exists at scale and which cannot be violated I think systems that offer Network trust will replace systems that offer platform trust which are already replacing systems that offer institutional trust

this is the societal trend from institutions like banks and central banks to platforms like PayPal and eBay and Amazon and Facebook to protocols and protocols are the most decentralized effective model of trust we have they're better than other models of trust and they will displace other models of trust gradually ok another question from top five are Bitcoin reddit Bitcoin links I've heard you're promoting a theory on let's talk Bitcoin what are your thoughts now also in the light of the new steps they will launch anytime soon sorry was that saying that I promoted etherium ah what a question has said so

I mean I first of all I try not to endorse products or companies or all currencies or currencies specifically I mean I like to talk about things like technology and innovation and the social implications of that without any endorsements I can tell you that personally I have been very interested in aetherium I consider Vitalik veteran a brilliant software engineer and visionary who I actually personally quite liked and like spending time with and I learned a lot every time I talk to him and I'm fascinated to see what the theorem can be whether etherium will succeed as a platform as an alt currency or as a protocol that runs on

top of Bitcoin or as a side chain to pick one nobody knows but certainly I'm interested in using etherium capabilities to build even more complex smart contracts we can do smart contracts on Bitcoin some really interesting smart contracts maybe a theorem extends that capability we'll wait and see I I bought some ether I played with some aetherium technologies I've used the proof-of-concept alpha and beta versions to try to write some contracts and I'm fascinated to see where it goes next okay well let's try to wrap up because we're already close to an hour Timothy I think you joined your camera

isn't working but they hear us yeah I can hear kami yeah perfectly fine maybe you have one more question for address well I saw the first of all sorry for for my delay I had some technical issues on my side I wanted to ask you about after the talk I saw that you gave for Wired I was wandering around kyc do you think any more privacy friendly solutions are possible because as you explained just a few minutes ago with so-called permissioned Ledger's they could be more efficient for banks they could make it they could bring down the costs banks do you think sort liked in

technologies like distributed networks distributed databases good maybe also enable more privacy friendly kyc procedures etc I think the concept of privacy friendly kyc is an oxymoron I think that kyc as a concept doesn't scale it works on a limited basis in a system that you control end to end but the fundamental concept of applying financial totalitarian surveillance on masses and masses of innocent people while exposing to the risk of identity theft just in case you can catch a narrow segment of criminals is antithetical to the very principles of the Renaissance and the Enlightenment

and democratic institutions the idea that you will surveil and punish the innocent in order to catch one guilty person is the antithesis of democratic ideals in fact the famous concept by Lord Black who was a senior judge in England was better to let a hundred guilty people free than to punish one innocent person that has been the basis since the Magna Carta of the judicial system of Western societies and now suddenly in the last decade and a half we've come up with this new concept we surveilled the innocent financially and totally in the hope of catching one guilty person and in the process we destroy the financial privacy the

freedom of association freedom of expression and race and a lot of people even without kyc laws are willing to submit their submit over their personal data to facebook like a lot of people apparently doesn't seem to care much about this issue so even without kyc laws they would surrender themselves to big corporates or whatever just because it's easier for them because they want to share pictures or their name or whatever so how that's just a voluntary thing right how would you avoid that then well I think there's a big difference between voluntarily giving information of a non-financial nature to a private corporation even if that private corporation is leaking or surveilled itself and accepting the idea

that completes in total financial surveillance by all of our governments is unacceptable societal arrangements and in the end the point with Bitcoin that really changes all of this is that it's it's like having a stadium with a hundred doors and you cover two of them and you leave the other 98 that anyone can come and go and what are you achieving really what you're achieving is the guarantee that the the two doors that you are covering will only be traversed by the innocence or the idiots who didn't know that the other 98 doors were an easier way to get in and when you're doing surveillance of exchanges and the endpoints on Bitcoin what you're doing is you're accepting

that the means justify the end even if they don't work and that kyc is a is a good principle even if it doesn't work and that it is worth exposing the innocent to private to privacy risk and identity theft even though you know you're not going to catch any criminals because the criminals are going to use any one of the many options to bypass these controls that is fundamentally fascist in nature and it is abhorrent to free societies we live in a in an era where fear has overcome reason and usually that doesn't last very long in society eventually reason recurse and and then we stop trying to do these

extreme measures that ultimately are completely ineffective so I think kyc and I identity based controls are an artifact of closed financial networks are irrelevant and will disappear over time because they don't scale I see your point and I agree for I think 99% but but let's say that also with poll by the way that privacy itself doesn't sell it's mostly usability that cells and if privacy comes along with that if it's a side effect then a lot of people would happily welcome that but in most cases people don't look at privacy in the first instance when they based choice to whether they go for a surface or not but

where I want to go to why what I meant sorry when you say a lot of P you're speaking with the perspective of Western affluent societies agree yeah of course that's true sorry andreas you're mute for some reason did you meet yourself no no no it wasn't you before it address you made it time again can you let me just I'll meet you

[ __ ] thing maybe yeah that's weird okay I'll mute yourself because I want to mute you then it's said music Hey okay we can again so yeah you're jumping up with your back sorry yeah no actually my microphone managed to somehow either unplug itself or stop being recognized by the system anyway can you hear me now yeah I can but but just to clarify my question because what I wanted to say or what I meant is save that hypothetically spoken that we could have some sort of consumer protection without either processing or sending the personally identifiable information so do you think for example on a peer-to-peer network

where people can do this voluntarily exchange information with the people they like and maybe even in a way that you don't actually have to process any kind of sensitive information do you think that could be helpful because the the the idea apart from anti-money laundering behind kyc is also consumer protection thing yeah I think that's a ludicrous idea because kyc doesn't work as consumer protection and has never protected consumers in fact the people who violate kyc and AML laws are usually those with a banking license and they usually get away with it so the idea that somehow this is consumer protection you know the worst abuses in society are always sold to the population as protection from

some kind of external evil let the government keep you safe because you can't do it yourself and that's [ __ ] the bottom line is that consumer protection as a programmable feature of the network is effective it is achievable today and does not require any personally identifiable information personally identifiable information does not equal consumer protection it's a weak it's a weak proxy in the most inefficient way to achieve that goal and we now have better methods that achieve consumer protection programmatically that is effective and does not expose people to the risk of identity theft which arguably is the biggest risks the consumers face and care about on financial networks no consumer ever said

I'm going to go bank with Barclays because they have a better AML program and because I think they're going to came I came I see much better but but certainly consumers are very reluctant to conduct transactions that reveal their personally identifiable information because many of them have been subject to identity theft so the bottom line I agree with you Tim is this privacy will not be sold as a feature privacy will be a side effect of using a highly usable system like Bitcoin where just the convenience of not having to put all of your personally identifiable information and the convenience of utility of the currency and the payments Network and the platform for building applications and the innovation that

comes with that that's what's gonna make it happen and then you're going to get privacy as a side effect and that means we need to strengthen privacy so that it's always on by default in every transaction and every wallet and not something that a consumer must choose but something that happens even without the consumer knowing they're getting that benefit and I think that's the way forward and we're gonna see a lot more of that and consumer protection is something we can easily program we don't need personally identifiable information that was a very bad approach to start with it has led to very little consumer protection and enormous consumer damage with identity theft and it's about time

we stopped it so do you think it's going one more question to finish it up then Bitcoin Oh to see like the web of trust of Bitcoin over the counter it's it's a sort of kyc kind of system it's an identity and reputation system although you can use with nickname you don't have to submit any kind of PII any kind of sensitive data do you think those kind of solutions like an organic web of trust where people voluntarily use this kind of system to know who they're dealing with do you think those kind of systems may be good for the future I mean I think they're slightly better than with an identifiable information identity is kind of a

second-degree proxy towards trust and reputation is a first-degree proxy to towards trust but neither are trust because identity doesn't predict future behavior and past behavior doesn't predict future behavior and in the end I'm much more interested in programmatic controls of security and Trust that actually prevent negative behavior by making it impossible escrow and programmatic refunds and multi signature control structures are real consumer protection because they deliver real trust and inviolability of transactions regardless of identity regardless of reputation and as a result those schemes scale to a new global economy where you

can't possibly know or evaluate the reputation of everyone you're dealing with but with control systems of trust in place you don't need to depend on these weak parallels or proxies towards trust you get actual trust not an approximation of trust through reputation or identity right thank you okay well thanks so much andreas anything else you want to add before we wrap up no I thank you so much as always this has been a fantastic conversation great questions I really appreciate it and I look forward to doing this again and perhaps visiting the Netherlands and doing this in person which I would absolutely love yeah it'll be amazing and you want to tell

something about your book where people can get it oh well the book is available on Amazon and many other book retailers you can also download it for free online it's available on their open-source license if you have read my book please go and give me a review preferably on amazon.com authors depends highly on reviews and I would like an honest review good or bad any time from as many people as possible so please do that if you want to participate in what I've done with the book yeah and everyone should follow you of course in Twitter it's at aan t o n o P that's just the best thing you can do to keep up with Andreas and all the great things

he's doing so thanks so much and race and let's keep in touch for September and if not then well anyway do it this again possibly in that January next year yeah thank you Paul Thank You y'all thank you Tim really appreciate your time today see you soon see you next time bye