Vinay Gupta: So, this is going to be a slight­ly hard­er talk than I’d imag­ined, for rea­sons that should be obvi­ous. I’ve spent a good chunk of my life work­ing specif­i­cal­ly on how we were going han­dle cli­mate refugees. I was expect­ing you know, on the order of 150 mil­lion, 250 mil­lion peo­ple. And I was try­ing to fig­ure out how we could use the exist­ing set of tech­nolo­gies that we have, the social orga­ni­za­tions that we’ve got access to, to man­age human­i­tar­i­an need on that scale.

And after a long time work­ing on that, what I decid­ed was the glob­al machin­ery was sim­ply unable to con­ceive of tak­ing action on that kind of issue. And I looked around for a new mod­el of change. And the only effec­tive actor that I could see in the world that was work­ing with issues of at that size suc­cess­ful­ly was Elon Musk. So Musk was doing work that basi­cal­ly should have been the job of some kind of world gov­ern­ment, or the United Nations or you know, the great vision for the whole of human­i­ty. But he was work­ing on that as an indi­vid­ual. He just decid­ed that the machin­ery was not there at the state lev­el, it wasn’t there at the glob­al lev­el, and so he just start­ed build­ing it him­self and imple­ment­ing it.

And I looked at that and said, well you know, if it can work for space maybe it can work for the human­i­tar­i­an world as well. So I basi­cal­ly moth­balled twelve years of work on emer­gency shel­ter, infra­struc­ture man­age­ment, pass­port­ing for migrants, refugees, all this kind of stuff. I basi­cal­ly put all of that stuff in cold stor­age and start­ed work­ing out how I could build a busi­ness that would gen­er­ate the kind of reach that I need­ed for the kind of change I want­ed to see in the world.

And that was what took me into this blockchain space. I was look­ing for the tools that you could use to solve glob­al prob­lems in an envi­ron­ment when the nation-state has turned out to be a very very inef­fec­tive set of machin­ery at all.

So I’m going to talk a lit­tle bit about the tech­nol­o­gy. I’m going to talk a lit­tle bit about what it does and where it’s going. And then I’m going to try and tell a sto­ry about the kind of glob­al long-term pic­ture that we could get if this stuff actu­al­ly works.

So. Could I have a quick show of hands, how many peo­ple own any cryp­tocur­ren­cy at all. Bitcoin, ether, any­thing like that. It’s probably…maybe one in…five? One in ten? How many peo­ple have heard of blockchain and Bitcoin and all the rest of that stuff. Damn near every­body, okay. So that’s the gap that we’re going to try and close today.

So, where’d I come from? You know all this kind of stuff, right. Started out as a tech­nol­o­gist then went into defense, secu­ri­ty, and resilience. Tried to fig­ure out how to do this kind of large-scale sys­tems pro­tec­tion work. Couldn’t find the plat­form do it, moved into tech. We’ve already cov­ered that. Was one of the team the launched Ethereum, which is also a use­ful detail.

So, the blockchain. The real rea­son that this stuff exists is the Internet is very slow. It takes rough­ly half a sec­ond for a mes­sage to get all the way around the world. And in com­put­er terms, half a sec­ond might as well be a week and a half. You can do pay­ments at the rate of some­thing like 25,000 pay­ments a sec­ond if you’re a com­pa­ny like Visa. So the half a sec­ond delay in a mes­sage going around the world is basi­cal­ly 10,000 pay­ments made. And if you’re work­ing with some kind of tech­nol­o­gy which allows a pay­ment to be made instan­ta­neous­ly— So I send you a mes­sage and the mes­sage is imme­di­ate pay­ment, the risk is that I send a pay­ment to Australia and while the pay­ment is on the wire and it takes a quar­ter sec­ond to get there and anoth­er quar­ter sec­ond to get back, I then pay the same mon­ey to a bunch of oth­er peo­ple.

And this is known as the dou­ble spend­ing prob­lem. I take my mon­ey, I throw it to Australia. While it’s in flight I give it to a bunch of oth­er peo­ple. Then it lands in Australia and now we’ve got to decide who it is that actu­al­ly got paid. And that prob­lem plagued elec­tron­ic pay­ments for years, which is why the way that we han­dle elec­tron­ic pay­ments is cred­it cards. The cred­it card solu­tion that we’re using is there because this kind of more advanced sys­tem always had this bug that the slow­ness of the Internet allowed for this kind of fraud. And it was a real prob­lem.

So there are a set of ways of look­ing at that that we’ve used as approx­i­ma­tions to solve that prob­lem. The first one of those, the one that’s the most com­mon, is called HFT, high-frequency trad­ing. You put an enor­mous machine, a super­com­put­er, and you send the trans­ac­tions over to the super­com­put­er. We clear the trans­ac­tions in the super­com­put­er, and the pay­ments are made there.

But then you say well, where do we put all the machines which are instruct­ing the trades? Where are your machines or my machines in that sto­ry? Because the clos­er they are to the exchange, the fur­ther for­ward they are in the queue of trans­ac­tions. So what this results in is the sit­u­a­tion in New York where you have the New York Stock Exchange (and the com­modi­ties exchanges work sim­i­lar­ly), and they’re sur­round­ed by rings of com­put­ers and super­com­put­ers that are packed phys­i­cal­ly as close to the exchanges as pos­si­ble to get the ear­li­est response to news and to be able to trade imme­di­ate­ly. You know, you get some kind of fluc­tu­a­tion in price, all of this stuff is auto­mat­i­cal­ly trig­gered, and the trad­ing hap­pens essen­tial­ly imme­di­ate­ly. And those kind of sys­tems are…that’s run­ning the glob­al stock mar­ket, right. That’s how every­thing is actu­al­ly held togeth­er. Very very very odd.

The oth­er approach to this is Google’s Spanner. And Spanner looks at the same kind of prob­lem, how do we syn­chro­nize all this trade. And it does it with atom­ic clocks in every data cen­ter that Google oper­ates, pret­ty much. And they very care­ful­ly mea­sure the amount of time it takes for infor­ma­tion trav­el between the cen­ters, and they’ve got a bunch of soft­ware that does very advanced phys­i­cal mod­el­ing. And at the end of that, they get the abil­i­ty to keep all the machines that Google oper­ates syn­chro­nized in a way that pro­vides ser­vices like Google Docs. The abil­i­ty to get col­lab­o­ra­tion where you’re edit­ing a doc­u­ment at the same time as some­body in Australia, or some­body in America. Or you’ve got an inter­na­tion­al team all work­ing on the same doc­u­ment. What’s keep­ing all of that stuff straight­ened out is a net­work of atom­ic clocks in data cen­ters called Google Spanner.

So, these solu­tions are wide­ly used. A lot of work in the world is being done using those kind of tools. But it’s not the only approach that you can take. The blockchain approach is not effi­cient. Has every­body heard these peo­ple talk­ing about bit­coin min­ing. Quick show of hands? Yes, everybody’s heard the term. So Bitcoin min­ing is basi­cal­ly how we solve this prob­lem about syn­chro­niza­tion in a way that doesn’t require a sin­gle cor­po­ra­tion to be run­ning the entire sys­tem.

So the prob­lem with the Google Spanner approach is Google Spanner is phys­i­cal­ly decentralized—the data cen­ters are all over the world—but it’s not decen­tral­ized in terms of own­er­ship and con­trol because it’s all owned by Google. So the New York Stock Exchange exam­ple, it’s nei­ther phys­i­cal­ly decen­tral­ized nor polit­i­cal decen­tral­ized. All the pow­er and all of the hard­ware are in the same place. So the blockchain is attempt­ing to get both phys­i­cal decentralization—so the whole thing is oper­at­ing glob­al­ly with­out a fixed cen­ter like Spanner—but it also wants polit­i­cal decen­tral­iza­tion.

So instead of hav­ing Bitcoin Inc.” as a com­pa­ny that owns all of the bit­coin sys­tems in the world, the thing is basi­cal­ly an anony­mous decen­tral­ized net­work. You take some com­put­ers, you put them into the Internet, they join the net­work by com­mu­ni­cat­ing with the oth­er machines, and you have a kind of col­lab­o­ra­tive con­sor­tium of unknown tens of thou­sands of peo­ple whose com­put­ers togeth­er form what you think as Bitcoin. And that is called decen­tral­iza­tion.

It’s very unusu­al. It’s a kind of new human orga­ni­za­tion­al struc­ture. We haven’t seen any­thing that real­ly works that way before except pos­si­bly mar­kets. And it has a very broad pos­si­bil­i­ty for future trans­for­ma­tion. Whether it will be as rev­o­lu­tion­ary as peo­ple hope or not is an open ques­tion. But you know, when you see some­thing which is new at that fun­da­men­tal a lev­el of human soci­ety and human cul­ture and human tech­nol­o­gy, at least the pos­si­bil­i­ty that some­thing gen­uine­ly trans­for­ma­tive will hap­pen is real­is­tic. There is a very real chance that this stuff will be epochal in its impact. But you know, it’s still in the wait and see phase. Just because it’s pos­si­ble doesn’t mean it will hap­pen.

So this decen­tral­iza­tion thing is hard to describe because the world that we’re in is extreme­ly cen­tral­ized. Almost every­thing that you touch has an own­er, and you either are the own­er or you’re rent­ing it or you’re bor­row­ing it. But for the most part, things have these kind of chains of cus­tody that go from us to some­body else. Even things like your house. Your house sits on a piece of land. If you’re lucky enough to own your house, you may or may not own the land under your house. Even if you own the land under your house, it’s still embed­ded with­in the frame­work we call the UK. And the UK has a sin­gle point of con­trol which is called the Crown. Or the state. Sovereignty.

And this sov­er­eign­ty thing was more or less invent­ed. And whether you think of it as some­thing that comes with the first human cities, or whether you think of it as some­thing that was rat­i­fied in the Middle Ages with the Treaty of Westphalia, how­ev­er you think about it the assump­tion that for any giv­en patch of land there must be an author­i­ty that gov­erns what hap­pens there, and if there isn’t some­thing is fun­da­men­tal­ly bro­ken, is an under­pin­ning assump­tion that has gone from land, where it might make some sense (or might not) into every oth­er aspect of life. We expect sys­tems to have own­ers or oper­a­tors, and when we come across a sys­tem that just works with­out an own­er or an oper­a­tor, we don’t often per­ceive how strange and how rad­i­cal that is.

So, all the way through the 80s and 90s, there was a near-messianic faith in this thing that peo­ple called the free mar­ket. That there was going to be some kind of instinc­tive mass col­lab­o­ra­tion that would be facil­i­tat­ed by price sig­nal­ing, and you could take a lot of the key func­tions of the state, you could hand them to the free mar­ket and every­thing would mys­te­ri­ous­ly just work.

No, I think we can all agree that has been a project with at best mixed suc­cess. But it gives you a sense of why peo­ple are excit­ed about this whole decen­tral­iza­tion thing. The prospect that you could take the prob­lems that the free mar­ket has been unable or unwill­ing to solve and you could deploy anoth­er thing which is not a cen­tral­ized con­trol struc­ture but has the abil­i­ty to do problem-solving at scale, and you could kin­da push it into the gaps is very excit­ing. And there are some real­ly big gaps that that might pro­vide us a lit­tle bit of lever­age on, and I’ll talk about those a lit­tle lat­er.

Now, the peer to peer econ­o­my, right. This is a newish thing. It’s always been there in a kind of infor­mal sense in things like agri­cul­tur­al mar­kets, peo­ple swap­ping goods and ser­vices with each oth­er. There’s always been an abil­i­ty for us to seek solu­tions col­lec­tive­ly with­out hav­ing to chan­nel­ize our­selves down a spe­cif­ic track. There’s always been that implic­it thing. And com­mons that you might find access to. Things like aca­d­e­m­ic libraries or aca­d­e­m­ic knowl­edge. There’s a kind of glob­al col­lab­o­ra­tive struc­ture where we search for truth togeth­er through repeat­able exper­i­ment, the sci­en­tif­ic method, or his­tor­i­cal inves­ti­ga­tion.

And that commons…you know, sci­en­tif­ic knowl­edge doesn’t have a cen­tral own­er. There is no Ministry of Science which owns the entire world’s sci­en­tif­ic knowl­edge. It’s kind of a col­lab­o­ra­tive endeav­or and it is in some ways anoth­er thing a bit like the mar­ket. It’s this process that the whole of human­i­ty is involved in, and when it works well you get you know, par­tial cures for can­cer. And when it goes bad­ly you get sci­en­tif­ic fraud. It’s a thing that per­forms in some sit­u­a­tions and not in oth­ers, but we still have a cer­tain amount of faith in sci­ence as a process.

So, in the last twen­ty years, real­ly start­ing with Richard Stallman of the free soft­ware move­ment, there’s been a move­ment towards a new way of pro­duc­ing knowl­edge. Or at least the arti­facts of knowl­edge. And they call this commons-based peer production—that’s Yochai Benkler’s term. Stallman calls it the free soft­ware move­ment. Open source tried to depoliti­cize this free soft­ware move­ment and make it more accept­able to com­pa­nies. And one of the fruits of the open source move­ment is the Android phone oper­at­ing sys­tem which runs some­thing like 70% of the world’s tele­phones. That’s free—open source soft­ware. I’m not even sure if it’s tech­ni­cal­ly free soft­ware. It might be.

So that project has been very suc­cess­ful. You’re all using open source soft­ware every time you use the Internet, for exam­ple. Because most of the back­bone machines that run the fiber optic cables and so on are open source. And the idea that this kind of peer pro­duc­tion approach is capa­ble of doing large-scale problem-solving has been pret­ty well proven by Android and before that with the suc­cess of the Internet as a medi­um. We know that togeth­er we can do this kind of work and it can suc­ceed and it can change the world. Albeit in small, incre­men­tal ways.

So we have the mar­ket, we have sci­ence, we have open source soft­ware. And then along comes this thing that every­body calls Bitcoin. And Bitcoin is where we begin to see the real direct incur­sion of this commons-based peer pro­duc­tion direct­ly into the machin­ery of mar­ket cap­i­tal­ism.

Somebody fig­ures out how to use peer pro­duc­tion to pro­duce mon­ey. And not to earn mon­ey. You know, where the mon­ey is pro­duced by the cen­tral reserve bank or it’s pro­duced by the Bank of England. Not to take the mon­ey that some­body else has made in some kind of mys­te­ri­ous legal process. But to actu­al­ly just…produce mon­ey. And if you think about it that’s a remark­able thing. You know, the idea that you would just have a group of peo­ple get togeth­er and cre­ate cur­ren­cy…kind of a sur­prise. It used to be very com­mon. That kind of stuff used to be how the world worked. There’s all kinds of his­to­ries about large stone wheels and carved shells. Cultures have always had ways of cre­at­ing tokens for trade, because car­ry­ing stuff around has been too heavy.

But it’s not hap­pened in a long time. And to have some peo­ple fig­ure out how to do it at Internet scale was real­ly quite rev­o­lu­tion­ary. And this is going back more than half a decade now. It’s been a while since that break­through was made. It’s been incre­men­tal­ly refined. It’s been pol­ished. There’s been a whole bunch of work on tak­ing that license to print mon­ey and mak­ing it more and more and more effec­tive. And this has pro­duced the thing called Bitcoin.

So let me explain a lit­tle bit about how the Bitcoin thing works, just to sort of give you some sense of the under­ly­ing archi­tec­ture, the thing which is hap­pen­ing under the sur­face that pro­duces this strange effect.

So, you have a glob­al com­put­er net­work which is large. It’s on the scale of the com­put­er net­works of Google or Facebook or Amazon. You know, it’s a thing that exists in the form of end­less ware­hous­es con­sum­ing enor­mous amounts of elec­tric­i­ty. And what it pro­duces is a bunch of com­put­ing. There are no direct ser­vices pro­duced. It’s not like these com­put­ers are load­ing web pages. They’re engaged in an enor­mous col­lec­tive grind to pro­duce secu­ri­ty for this cur­ren­cy. And what they basi­cal­ly say is unless you’ve got more com­put­er pow­er than all of the machines which are in the Bitcoin net­work, you won’t be able to fake a trans­ac­tion. You can’t fraud­u­lent­ly spend oth­er people’s mon­ey unless you can do more com­put­ing than the entire Bitcoin net­work.

And the expens­es of the peo­ple run­ning those machines are paid for using Bitcoin. So when the Bitcoin net­work was small and the mon­ey wasn’t worth very much, when Bitcoin was trad­ing for two or three cents rather than $7,000, the machines that were secur­ing the Bitcoin net­work were not very numer­ous. And they weren’t very spe­cial­ized. It was you know, hob­by­ists with a cou­ple of decent machines sit­ting in a hall clos­et. And those machines would pro­duce five or ten dol­lars a day. And that was enough to pay the bills for the elec­tric­i­ty and it was enough to pay for the hardware—it was a cou­ple of thou­sand dollars-worth of graph­ics cards.

And Bitcoin rapid­ly moved from that phase to hav­ing cus­tom sil­i­con chips made. And then the cus­tom sil­i­con chips wound up in very large ware­hous­es with heavy engi­neered cool­ing. And every time more peo­ple want­ed to buy Bitcoin or Bitcoin became more expen­sive, secur­ing Bitcoin became worth more mon­ey. So peo­ple spent more mon­ey to secure it. And so there was a kind of incre­men­tal step­ping ratch­et where when Bitcoin was worth more mon­ey peo­ple would spend more mon­ey on com­put­ers to secure it. And then once peo­ple were sure that that new lev­el of secu­ri­ty was in place, the cur­ren­cy would rise again.

So this is a very very cap­i­tal­ist sys­tem. It’s very very very market-based. And as a result it’s been able to com­pete very effec­tive­ly in a market-based world. It’s not real­ly a utopi­an project in the direct sense. It was a machine that was made to sur­vive cap­i­tal­ism and it’s done very well. But it’s sur­vived cap­i­tal­ism large­ly by being cap­i­tal­ism. And that’s a real­ly impor­tant thing to under­stand. A lot of peo­ple come to Bitcoin with a very utopi­an vision of how this is going to trans­form human­i­ty. But it is unlike­ly that the cure for cap­i­tal­ism is more cap­i­tal­ism.

You could sug­gest that there are cer­tain mis­fea­tures of cap­i­tal­ism that a bet­ter cap­i­tal­ism would cure. But I think it’s rea­son­able to talk about Bitcoin as being a poten­tial approach to tak­ing some of the prob­lems in cap­i­tal­ism and get­ting rid of them. But the prob­lems which are inher­ent to cap­i­tal­ism are unlike­ly to be solved by Bitcoin or things which are too close­ly relat­ed to it, right. It’s a mar­ket sys­tem.

However, what it has done is the entire kind of Bitcoin and asso­ci­at­ed world is cur­rent­ly worth about $200 bil­lion. So, in the past less than ten years, $200 bil­lion has been print­ed by a col­lec­tive of nerds. And it wasn’t that they made com­pa­nies and then sold the com­pa­nies for dol­lars. They skipped that inter­me­di­ate stage where you make com­pa­nies, and they just sold the dol­lars. They just sold the bit­coin.

It’s remark­able when you think about it. I mean it does sound a lit­tle per­pet­u­al motion machine. And you sort of think well, but…can that pos­si­bly be right? And the answer is nobody’s quite sure. It works, it’s here, it’s demon­stra­bly suc­cess­ful by all the met­rics that we mea­sure these kind of projects by. But there is still this thing where you kind of stare at it and you’re like, That can’t actu­al­ly be what it looks like.” It’s exact­ly what it looks like.

And in the long run, we look back at moments like that and we call them rev­o­lu­tions. Heavier-than-air flight was impos­si­ble. It was impos­si­ble. Only birds and insects could have heavier-than-air flight. It was thought to be some­thing that was for­ev­er out­side of the reach of human beings. And you know, I can’t remem­ber the exact quote but the feel­ing that heavier-than-air flight would nev­er hap­pen was the com­mon sci­en­tif­ic opin­ion of the day. And then the Wright broth­ers, who haven’t real­ly been told it’s impos­si­ble, go out there and they do it.

And at the point everybody’s kind of look­ing around like, What do you mean it flies?”

No, it total­ly flies.”

You’re kid­ding.”

No no, they’re real­ly doing it.”

How does it work?”

It’s basi­cal­ly like a motor­cy­cle with wings.”

That can’t pos­si­bly work.”

No no, but it real­ly does.”

And then you come back you know, fifty years lat­er, and the entire world is dom­i­nat­ed by flight.

So that’s sort of what’s hap­pen­ing with Bitcoin. It’s a rev­o­lu­tion in that you stare at it, and you keep star­ing at it, and it doesn’t get any more sen­si­ble and it doesn’t go away. And once you’ve got a cou­ple of gen­er­a­tions of kids who’ve grown up with that thing always there, they’re just going to turn around and be like, But…what are you talk­ing about? It’s always been this way.” Because it’s only the peo­ple that are in that bridge gen­er­a­tion when some­thing went from being impos­si­ble to being pos­si­ble that get the expe­ri­ence of this rev­o­lu­tion­ary feel­ing of I just don’t under­stand and this doesn’t make any sense.”

After that bridge gen­er­a­tion… I know a cou­ple of kids who are 15 or 16. And they’ve made— Maybe one’s 15, one’s 18. They’ve made more mon­ey than their par­ents have made in a decade, trad­ing what start­ed out as pock­et mon­ey. And for them this is nor­mal. Well yeah, of course we just keep a real­ly close eye on the mar­kets and you know, every time we get some pock­et mon­ey we buy some more coins.” And pret­ty soon they’re pay­ing their way through uni­ver­si­ty on the basis of trad­ing peer-to-peer cur­ren­cies.

And for them that’s total­ly nor­mal. They don’t think of it as being strange at all. It’s always been there for them. They hit adult­hood at the same time as these tech­nolo­gies went main­stream, so for them these tech­nolo­gies are main­stream.

So as we move for­ward, what you’re going to see is a gen­er­a­tional divide where there are peo­ple that just looked at it and didn’t under­stand it and weren’t curi­ous. There are peo­ple that saw it come over the hori­zon and get very engaged in try­ing to fig­ure out what it is and how to use it and how it will all work. And then there’ll be peo­ple for whom it’s always been there.

Now, we used to talk about dig­i­tal natives. Now what you’re going to see are Bitcoin natives or cryp­to natives. And you know, it’s impor­tant to under­stand when you start meet­ing these peo­ple that they’re not mad. They’re just young. And we have to sort of make allowances for the fact that for them this is total­ly nor­mal; the world has always been this way.

Now. It gets worse. So, now we have this sys­tem where we have a kind of glob­al trans­ac­tion­al log­ging thing, right. Everything is in this big com­put­er net­work and everything’s linked to every­thing else. And the project I was part of it is called Ethereum. And Ethereum came along a few years after Bitcoin and said, Well that’s real­ly fun, but what if it was pro­gram­ma­ble?” Bitcoin was like a bank account. You had coins. You could receive pay­ments, you could send pay­ments. Well, that’s okay but why can’t I write a lit­tle com­put­er pro­gram that fig­ures out when some­thing should be paid? Suppose I want a direct deb­it and I want to make a pay­ment once a month. Well, why can’t I have a pro­gram that does that?

Well, why don’t you just run it on your lap­top?”

Well, what if my lap­top is closed? What I want to do is I want to take the log­ic for that repeat­ed pay­ment and I want to put it in my bank account. Kind of like you do with a stand­ing order.

So the idea of writ­ing lit­tle com­put­er pro­grams that do things like stand­ing orders and putting them in the bank account, kind of lodged with the bank” (only there’s no bank, but kind of lodged with the bank), gave rise to this idea of Ethereum. We’re going to make a pro­gram­ma­ble blockchain. So, you have this network—the big com­put­er net­work is called a blockchain. You have the big com­put­er net­work but now you can write lit­tle pro­grams that run it.

And for his­tor­i­cal rea­sons these lit­tle pro­grams are called smart con­tracts.” And smart con­tracts are not par­tic­u­lar­ly sophis­ti­cat­ed yet. They’re noth­ing like legal con­tracts. They’re real­ly much more like stand­ing orders. Programmable pay­ments or pro­gram­ma­ble mon­ey are good ways of talk­ing about them.

So, the kinds of things that you can do with smart con­tracts that you can’t nor­mal­ly do are rel­a­tive­ly sim­ple things. So, for peo­ple who are buy­ing and sell­ing across cur­ren­cies you can do things like have an order that when a par­tic­u­lar cur­ren­cy becomes cheap you’ll auto­mat­i­cal­ly buy some of it. But that sys­tem isn’t run by a bro­ker or a deal­er, it’s kind of inher­ent to the fab­ric of just car­ry­ing the pay­ments. Rude pro­gram­ma­ble mon­ey.

You could take an exam­ple for some­thing like a gam­bling game. If two peo­ple want to play pok­er on the Internet, they’re either trust­ing some­body to sit in the mid­dle of their pok­er game and take the pay­ments from both sides and deal the cards, but if you’re very very very clever, you can write a smart con­tract that basi­cal­ly gen­er­ates the cards, and takes the pay­ments, and trans­fers the mon­ey to the win­ner when the game is over.

And that sort of stuff sort of has lim­it­ed util­i­ty. There aren’t that many peo­ple that enjoy pok­er. But you know, the sort of seed of the idea is there that if you could do it for pok­er maybe you could do it for auc­tions. And if you do auc­tions that have this kind of auto­mat­ed log­ic and instant pay­ment and all the rest of the attrib­ut­es you get from these things, you begin to think like maybe that’s a part of the real world.

And if you had a sys­tem where you had the abil­i­ty to do an auc­tion but it didn’t go through some­thing like eBay… You know, eBay charges quite a lot mon­ey for host­ing auc­tions. Something like 10% of all the mon­ey that goes through eBay stays with eBay. And that’s why eBay is an enor­mous com­pa­ny. Well, the buy­ers and the sell­ers are pay­ing for eBay to exist, in the same way that the buy­ers and the sell­ers are pay­ing for Uber to exist. In the same ways that the buy­ers and the sell­ers are pay­ing for Airbnb to exist.

So quite a lot of peo­ple who are involved in this whole space—blockchains and cryp­tocur­ren­cies and all of these things—are look­ing at those enor­mous com­pa­nies as poten­tial inef­fi­cien­cies in cap­i­tal­ism that could be pulled out and replaced. If you have some­thing that works like eBay but it’s 10% cheap­er you will tend to shop there. If you have some­thing looks like Airbnb and it’s 10% cheap­er you’ll tend to shop there. And these things, because they’re liv­ing in this glob­al com­put­er net­work rather than inside a spe­cif­ic clus­ter of servers some­where, these things have a cer­tain mag­i­cal prop­er­ty, which is that they’re glob­al by default. They’re every­where from the day that you launch them, and the ser­vice is uni­ver­sal­ly avail­able.

And this is quite inter­est­ing, because you think about the edge of the net­work. You know, we’re not real­ly very good at going beyond say the two bil­lion rich­est peo­ple on earth when we begin to talk about the Internet and the ser­vices that it pro­vides. But if you’re in a posi­tion where some bunch of kids build a hotel rental web site for California, but it’s actu­al­ly on the blockchain and it’s glob­al by default—it’s just born glob­al. And then you dis­cov­er that folks in South Africa are using it to rent hous­ing to each oth­er. And then the next thing you know it’s Mali. And then you real­ize that it’s being used in vil­lages all over the world for some com­plete­ly unin­tend­ed pur­pose. That kind of out­put and outcome is much more like­ly with blockchain than it is with the con­ven­tion­al sort of web site mod­el.

The fact that these net­works are inher­ent­ly glob­al; the fact that all the log­ic is kind of buried in the pay­ments archi­tec­ture; the fact that there’s no real recog­ni­tion of inter­na­tion­al bor­ders in these sys­tems because they all oper­ate embed­ded in the Internet; they don’t see the world as a set coun­tries, they just see it as an enor­mous glob­al net­work. All of those things point to the pos­si­bil­i­ty, cur­rent­ly very far off, but they point to the pos­si­bil­i­ty that you’ll begin to see glob­al ser­vice archi­tec­tures that run on these sys­tems. Not just the pay­ments, which we already have and they’re being used very suc­cess­ful­ly in a lot of poor coun­tries. But also the pos­si­bil­i­ty that the ser­vices which are built on top of those pay­ments will turn out also to be glob­al by default and that that will turn into a very sub­stan­tial devel­op­ment bonus.

Very ear­ly days, right. We’re at the point where we’ve just about got the thing off the run­way. We’ve giv­en it a few kin­da scoots around. But in terms of the size of these sys­tems you know, 200 bil­lion sounds like a lot of mon­ey. But the total val­ue of all the things in the world that have prices is said to be $700 tril­lion. So we’re in a posi­tion where we’re only at the very very very begin­ning of this kind of dig­i­ti­za­tion of mon­ey. This is only the start.

Now. The last thing I want to talk about is the real­ly ambi­tious glob­al megapro­ject. So, we would quite like, as a species, to send some of our mon­keys to Mars. Maybe we just want a look around. Maybe we just want to say that we did it. Maybe it turns out to be pos­si­ble to live up there and make a liv­ing up there, and we could go out there and we could do a whole bunch of the nasty, dirty, planet-destroying indus­tri­al engi­neer­ing that we’re cur­rent­ly doing on Earth. And we could do it in a place which has no liv­ing things to dis­turb.

And you sort of think you know…actually if we had anoth­er plan­et that didn’t have any trees or soil and there was noth­ing you could poi­son, maybe we could take a whole bunch of these filthy indus­tri­al process­es and just do them there. And if we’re going to be able to do that in fifty years, you sort of have to start think­ing about it now.

And it might require tech­nolo­gies like space ele­va­tors but there’re lots of peo­ple work­ing on that kind of stuff. And you know, one way or anoth­er you go from the Wright broth­ers with this sin­gle plane that looks like a motor­bike with wings to the entire inter­na­tion­al air trav­el sys­tem with tens of thou­sands of air­ports and hun­dreds of thou­sands of planes and bil­lions of pas­sen­gers a year, that hap­pens in fifty years. So, for peo­ple today to be look­ing at Mars and think­ing you know, what if?” I don’t think it’s going to take fifty years for Mars to get real­ly inter­est­ing. I think it may only take twen­ty years. And half of the peo­ple in this room have a mort­gage which lasts longer than that.

So you know, if you sort of think of this as like, could there be peo­ple liv­ing and work­ing on Mars by the time I pay off my mort­gage? Yes, there real­ly could. So, I think that we could do this kind of glob­al project, financ­ing and orga­ni­za­tions stuff using these glob­al pay­ment archi­tec­tures like Bitcoin and Ethereum and the oth­er things which peo­ple are build­ing. Everybody in the world that wants to see Mars hap­pen puts some mon­ey into a hat, and if they suc­cess­ful­ly go to Mars and it turns out to be enor­mous­ly prof­itable for some as-yet-unspecified rea­son, every­body that put mon­ey into that hat gets to take more mon­ey out of the hat.

But it would have to be done in a real­ly well-organized, glob­al way. And so much mon­ey is required that I think you’d have to be able to fair­ly eas­i­ly take mon­ey from any­body on Earth, for any rea­son, who want­ed to put mon­ey into those par­tic­u­lar hats. You know, if we’re pass­ing the hat to build a space­ship to go to Mars it’s going to have to be a very big hat and it ought to be glob­al. Because we’re doing it together—it’s a thing for the entire human species.

And you could say the same thing about cli­mate change. We’re hav­ing real prob­lems financ­ing cli­mate change because everybody’s point­ing the fin­ger at every­body else and say­ing, Well why don’t you pay for it?” But if we had clear, glob­al records about who is emit­ting the car­bon, who is ben­e­fit­ing finan­cial­ly from the car­bon being emit­ted. If we could visu­al­ize that whole car­bon econ­o­my, and with com­put­ers you can do things like that if there’s the will to do it. Then we could also start talk­ing about hav­ing large-scale glob­al visu­al­iza­tion of the mit­i­ga­tion efforts. When we’re work­ing on try­ing to stop these kind of prob­lems, we could have a glob­al visu­al­iza­tion of the prob­lem and we could have a glob­al hat into which the mon­ey is put to buy a solu­tion. And because of the extreme­ly secure record-keeping that these Bitcoin or blockchain sys­tems have, that would allow us to clear­ly iden­ti­fy where the mon­ey had been spent.

Same thing applies to things like the migra­tion prob­lem. If you want to be able to issue passport-type iden­ti­ty doc­u­ments to every­body on Earth, if you’ve already got a sys­tem that’s capa­ble of stor­ing data in this com­plete­ly secure, glob­al way, you could attach the iden­ti­ties to those sys­tems. And if you’ve got the right kinds of secu­ri­ty around that, you could have a glob­al iden­ti­ty sys­tem that gave ser­vices to peo­ple that couldn’t get those ser­vices from their nation-states.

So, there are a set of very large glob­al prob­lems that are large­ly above the pay grade of the nation-state. The sov­er­eign enti­ty that we’re part of, the UK, real­ly doesn’t work at the glob­al lev­el very much. It’s got a cer­tain amount of out­reach. I think their inter­na­tion­al aid budget’s about 2%. But more or less the UK sov­er­eign gov­ern­ment exists to orga­nize affairs that are in the domes­tic are­na. We have a shore. If it’s inside of our shore we’re kind of respon­si­ble for it. And if it’s out­side of the shore, well some­body else ought to be tak­ing care of that. But the some­body elses are not doing such a great job on a lot of this stuff.

So, the sort of notion that you could build these kind of light­weight, large glob­al sys­tems is not fun­da­men­tal­ly unre­al­is­tic. You know, Wikipedia real­ly did make a pret­ty good stab at orga­niz­ing all of the world’s knowl­edge into a sort of coher­ent, search­able, find­able thing. It’s not all of the world’s knowl­edge. It’s not per­fect­ly rep­re­sen­ta­tive. There are weird cor­ners where it’s got end­less amounts of unnec­es­sary detail and triv­ial things and big holes where it hasn’t cov­ered some­thing impor­tant. But as a first approx­i­ma­tion, it’s not bad, and their budget’s only about $5 mil­lion a year. It’s not a very well-funded orga­ni­za­tion and it’s doing great work.

So, the idea that the response to cli­mate change and space col­o­niza­tion and glob­al sort of iden­ti­ty and care for poor peo­ple could be these enor­mous glob­al machines which are large­ly run using the glob­al pay­ment infra­struc­tures, that are very light­weight and self-organizing and that are clos­er to Wikipedia than say, the New York Stock Exchange, this doesn’t seem unrea­son­able.

So when­ev­er some­body talks about Bitcoin or the blockchain, you hear peo­ple talk­ing about this. Remember we’re still at the sort of motor­bike with wings stage of the engi­neer­ing. It’s very ear­ly days. We do have prototypes—they do fly. They’re car­ry­ing a few hun­dred bil­lion dol­lars’ worth of trans­ac­tions. And that’s quite an impres­sive thing. But com­pared to what we’re going to see over the next five, ten, fif­teen, twen­ty years, I think we’re going to see this as the Wright broth­ers phase of the blockchain ecosys­tem. This huge glob­al com­put­er net­work that we’re putting togeth­er is the next stage of the Internet. It is going to solve prob­lems that the exist­ing gen­er­a­tion of the Internet can’t solve. And if we get it right, it might real­ly help with some of the glob­al prob­lems that we’re cur­rent­ly unable to face. Thank you.

Further Reference

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