ABOUT THIS EPISODE

In this talk, Andreas looks at currency as a form of language, discusses the implications of a multi-currency future and the proliferation of non-national money. From the Bitcoin Expo in Toronto, April 2014.
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Read more:
“Mastering Bitcoin” - https://www.bitcoinbook.info/
“The Internet of Money” - https://theinternetofmoney.info/
Originally published as a YouTube video: https://www.youtube.com/watch?v=bVEMa7YkefY&list=PLPQwGV1aLnTvCuQXCZ3RBvdlCnqstTirl&index=7
English
United States

TRANSCRIPT

00:00:06Yeah good afternoon everyone I hope you can hear me well in the back everybody here may all right great so i'm i'm usually very high energy but i've spent the last three days really enjoying this conference a lot and i am exhausted I'm sure many of you are
00:00:23too so you'll forgive me if this is not my usual high energy presentation I've been thinking for two days about what i'm going to talk about during this key note I left it purposely vague because i like to try to assimilate some of the ideas that come from
00:00:39the conference as i experience it and try to put it together into a bit of a narrative This is going to be a bit more of a philosophical talk about the future of crypto currencies and what i've learned here at this event So first of all thank you
00:00:53all for coming I think this is being a spectacular right I have a lot of fun If you come to this event is called the bitcoin expo twenty fourteen it might have being called the bitcoin and ethereum expo twenty fourteen i don't if you notice the therm had
00:01:10a pretty big presence here and an interesting question comes up which is i actually quite a few people ask me that there's a theory and threaten the future of bitcoin Does it steal some of its thunder and that's A question that i've heard several times and i've heard
00:01:27people refer to that issue in trying to understand all coins and wondering whether the alter coins essentially threatened the dominance of bitcoin or if they make bitcoin weaker or if they distributes the value of the network to broadly i've been thinking about this question for quite a while
00:01:48and i think fundamentally it's a question that evokes the old paradigm of currencies we've all grown up in a world where currencies are forced upon us in a month ballistic fashion where currencies are defined strictly by the geography is in which they occur and where the choice of
00:02:10currency is not yours It is an accident of birth just like many other things in our lives as an accident of birth I was born in into an upper middle class family in greece fully loaded with the lottery of privilege in my life and i also acquired the
00:02:30drachma I didn't choose the drachma It happened to me any more than i choose to be a wide smell any more than i choose to be born into a family of educated people Those things simply happened to me currency as we understand it is an artifact of the
00:02:50nation state and it imposes upon a certain constraints we don't choose our car and see it chooses us and we are forced to use that currency and all of our interactions We don't have a choice until two thousand eight that is and so now we live in a
00:03:07slightly different worlds but a lot of the old paradigm so persists in our thinking in a world where your currency is a monopolistic nation state artifact that is constrained by geography It's a zero sum game the currency is the flag is the nation state It is the expression
00:03:29of the economic value of your state and it defines your interactions in a world of geopolitics And a global struggle for domination among nations It's not up to individual choice It has nothing to do with the individual except for that one individual whose face is on the currency
00:03:49you know up to recently here in canada some old white lady called elizabeth And that's the only person who really has control over the currency and now we live in a new world rolled in which currency is a choice and not just the choice in terms of use
00:04:11it's not just a matter of being able to choose which currency we use as individuals but it's also a means of expression This is one of the things that crystallized in my mind a few months ago as i thought about the evolution of all currencies as they're called
00:04:29Ah if you haven't seen it there's a website called coin jen dot io and it allows you to use a web form to create a currency Up to that point i was thinking how many currencies will there be How many old coins will there be and how well
00:04:45all coins compete in a world of crypto currencies as we move into the future Will there be hundreds of all coins And if there are hundreds of all coins what does that mean for the value of each of the all coins How do they compete And that was
00:04:59the wrong way of thinking about it because isil currency is a zero sum Game just like it had been imposed in my world few from the nation states that created currency And then i started thinking of currency is an application and then i started thinking of currency as
00:05:16a means of expression You see money at the very root of it is a language it's a language we use to express value to each other When i give you a dollar bill i am saying that i want to hand you the equivalent value I'm communicating my desire
00:05:36to exchange value with you because i appreciate something you could do or something you can give to me So i'm using this as a token of language And this thing happens in human societies whether you have currency or not and if you don't have a currency with a
00:05:56stamped face on it's you invent it and you can see this One of the things that really captivated me was understanding that if you have a primary school environment and you watch children in their natural habitat a very unnatural habitats in most schools but in any case they
00:06:16don't have currency young children don't have currency and they don't understand currency so what they do is they invent currency they start trading rubber bands pokemon cards tamagotchi tokens of affection tokens of popularity humans create currency is a means of expressing their desires of expressing their individuality So
00:06:42i thought what happens when a five year old in a primary school can use a website to create joey coin to compete against maria coin in a game of popularity within their school And then it dawned on me to ask the question how many currencies will exist is
00:07:03equivalent to ask the question how many bloggers will there be on the internet And the answer is simple All of us currency is now means of expression But if everyone can creates a currency how does it derive value What does it mean What is the difference between currency
00:07:21is an expression of popularity as an expression of desire as a mean a fad The brands Down there right now canadian teen idol is running one of those contestants Armor has a big fan group Maybe he wants to create armor coin so that his fans can express their
00:07:46desire to watch more of his dancing Why not People have talked about me doing andreas coin i think it's a bit silly but why not I think at some point we're going to see things like that happen So we're not gonna have hunted small coins We're not gonna
00:08:04have thousands of all the coins were goingto have hundreds of thousands and then millions of all coins And then there'll be thousands of all coins being created every day to organize local communities to express bands too Create popularity contests for short term for fads to codify the latest
00:08:23internet mean to create the latest fad How the hell do you tell which ones have value and which ones don't have value that's a very different world from the one we live in today and i'm looking for parallels to understand what this means and i often go back
00:08:42to looking at the emergence of the first decentralized system in my lifetime the internet and what It did for understanding information information scarcity opinion and authority of opinion and what it did to us as a society as the internet emerged into our global scene So there used to
00:09:03be a time that if you wanted to read authoritative opinion you bought a piece of paper from a organization that had a printing press That was three stories high and four football fields long and had a really great name like the new york times and that's organisation could
00:09:21buy ink about the barrel and through that ownership of this enormous manufacturing facility They had the weight of authority And so we imbued authority into these institutions and we use that authority to decide which opinions mattered And which opinions didn't We use them as gatekeepers of authority to
00:09:45give us guidance in understanding opinion And then the internet destroyed all of that because suddenly anyone could prince and anyone could publish And i remember in the early days people talked about well how the how will we know which opinions matter If anyone can have a opinion the
00:10:04world will come to an end surely A funny thing happens We shifted from a world in which authority of opinion came from the issuer from the authority of the publisher by proxy into a world where we had tto look att opinion on its own merits on the content
00:10:23of that opinion And we arrived in the world where judith miller of the new york times prince bullshit that sends an entire nation into war and an egyptian blogger on the front lines of revolution prints the truth and nobody wants to hear and suddenly the world is upside
00:10:41down Authority is no longer the person who owns the printing press but it is now the person who has the content that matters and we just did this to currency because now the authority is not derived from the sovereignty of the issuer from the printing press of a
00:10:59nation state that khun declare through monopoly and use of force that this is the currency you will use Now we can choose currency and a five year old can create currency and maybe the currency that the five year old created has a monetary value Maybe it doesn't most
00:11:19likely it doesn't sum will and so we need to get used to a world where we have to judge currency not by who issued it but by who uses it or rather how many people use it and what they use it for so let's imagine a world in
00:11:39which currency is being used in a widespread fashion And no one remembers who created the currency or why They only know that within their local community it has purchasing power as a little fanciful thought Imagine a decade from now in a rural village far detached from our developed
00:12:01nations civilization Asian villagers exchanging two currencies one that has a shiba inu a japanese breed of dog on the front and is pronounced doggy coin Or does coin or dog coin And i'm not quite sure But it doesn't really matter But you could buy half a dozen banks
00:12:23with it and other villages of training Another currency that has an old white lady called elizabeth on it and they have no idea who elizabeth is And they don't know why she got her picture on the coin Maybe she wrote a nice song Maybe she want canadian teen
00:12:39idol Nobody remembers anymore but you could buy six sex with it And to those people it doesn't matter who issued the car and see what matters is whether it has purchasing power Not the currency has now evaluated purely on its monetary basis because of adoption because of use
00:12:59And there is one fundamental difference between those two currencies One has a predictable stable algorithmic monetary supply and the other has an old white lady called elizabeth on it So in fact one of them has some real intrinsic value because it's removed some of the uncertainty of the
00:13:22monetary system from it The other one doesn't really we need to get ready to live in a world where multiple currencies will co exist so currency as a means of expression currency is a tool of language is no longer up to the issuer It is up to us
00:13:38as individuals making a choice to use that currency and we give it value through argues we give it value through adoption and we will be surprised by some of the currencies that will emerge from a fat that will emerge from a joke perhaps even a sick joke and
00:13:56will explode into viral consciousness on the internet and then become really monetary powers in use across a broad population surprising all of us How the hell do we operate in that kind of world And what does it mean Tohave competition between currencies if there are millions if digital
00:14:17scarcity really applies but only on a local basis and only within the context of each one of these currencies if scarcity is not derived from the issuer but is derived in terms of adoption and in terms of the token itself we're gonna have currencies for different hues already
00:14:35you have bitcoin that provides a very specific monetary policy You have a theory Um that can provide a contract platform there's name coin for distributed naming conventions and there's many others and there will be many others that will solve other problems protein folding search for extraterrestrial life Maybe
00:14:54we'll have currencies that are better from micro transactions and micro payments with very fast resolution Maybe we'll have currencies that are better for larger transactions like real estate Who knows If you think his currency is an application then you realize that it doesn't really matter on the internet
00:15:13email was the granddaddy of them all or the grandma jamal An email like bitcoin was the killer app that allowed us all to see the power of the centralized communications and adopt this new platform and it was enough to create utility to spread this network all around the
00:15:31world but it was only the first half and then instant messaging and forums and bulletin boards and facebook and twitter do you worry The twitter will destroy email do you worry that facebook will destroy instant messaging Do you worry that the value of e mail is eroded somehow
00:15:54by the existence of twitter We don't worry about these things because we understand that each one serves a different purpose Some allow us is to express a modality of instantaneous riel time communications Some allow us tow have asymmetric communications where using twitter i can address an audience of
00:16:14thousands and receive real time feedback without having to have ah bidirectional synchronous communication some like email allow us to have more long term asynchronous communication between people and what we do is we build interfaces we build abstractions we build unifying tools that allow us to use all of
00:16:38thes modalities from a single interface and fluidly move from one to the other so that we can start transmitting a short tacks message to someone get into a conversation convert that to an audio conversation decide that we want to show them our dog turned on the video camera
00:16:59converted into a video conference and when we've finished with a conversation follow up with an e mail to summarize what we agreed on And now we've gone through five Different modalities of communication in a single unified interface I think that's what's going to happen with currency We're going
00:17:17to start treating currency is an application And in order to do that we're going to need interfaces that allow us a unified currency experience that allow us to have a single wallet with perhaps one hundred fifty different currencies in it And because of inventions like side chains and
00:17:34decentralized exchanges and fluid liquid systems and the complete absence of monopoly of lock in of hostage situations around the currency we will be able to instantaneously and at very low cost convert from bitcoin to name coin to does coin to a syrian And if we can do that
00:17:54then it doesn't matter because we won't do that Our unified wallet interface will do that by trying to see what we're trying to achieve with our currency If i'm buying a house it might express my transactional will in the modality of bitcoin because that's the most suitable currency
00:18:14when i try to name the domain for that house it will convert some to name coin The contract itself will be paid for in easter and when i tip the bartender for the cup of coffee they gave me when i got up that morning i'll tip them in
00:18:29doshi my interface won't hide all of thes differences I can see a world in which we khun smoothly move between currencies in a multimodal way there's one other thing that comes out of this which is the very real possibility that we will abstract value an exchange rate from
00:18:49the actual currency If we have a multimodal communication system we no longer need to look at the individual values and exchange rates of all of these commodities or assets or currencies or call them whatever you want There's a very real possibility we're going to have an index currency
00:19:07a currency that is not in itself tradable that has no intrinsic uses a transactional commodity but instead is only used to express the purchasing power visa vi The various coins in our wallet I may have a thousand you know unified currency units you can't buy unified currency units
00:19:31you can buy bitcoin and you can tell me how many unified currency units that is and i price everything in unified currency units and then i pay in does your name coin or bitcoin or ether depending on how i want to use it We already do this in
00:19:46financial markets In fact you can trade s and p five hundred buying a single company What you're buying into is the aggregation of all of the different things that are in the stock market As an expression of the total value of the market ends you can then use
00:20:05that metter instruments in order to price transactions For example the london interbank overnight rate is used as a meta interest rate to contractually tie things to a global set of interest rates And so you don't need to say i will buy this at whatever the bundesbank says You
00:20:28say i'll buy this of libor plus two and then you have a stable point of reference with which you could do transactions I expect we're going to see much of the same with currency we're probably going to see meta currencies whose only purpose is to aggregate the value
00:20:44in all of our wallace from all of our currencies and allow us to understand value as an abstraction that exists independently of the currencies in which it's expressed so that's a slightly philosophical perspective and that's why i think it doesn't matter and ether is not competing with bitcoin
00:21:05Bitcoin is not competing with light coin They are all means to express the transactional modality we want to use at any point in time to achieve the goals we want with this comes a very other very important and powerful tool and the choices we make with these currencies
00:21:24were also choosing toe align ourselves with the community Adoption is not simply the act of using the currency it's also attaching oneself to a community that has also choose to adopt that currency When i choose to adopt bitcoin i am a believer in monetary policy of twenty one
00:21:46million total coins as a stable source of value If i choose to adopt fry coin i am a believer in an inflationary basis to marge coin that has a negative interest rate that enforces consumption and discourages hoarding I am choosing my politics through my currency and through that
00:22:10choice i'm associating myself with a global community that has made the same choice is me and that is expressing that choice through currency just like when i choose an application on the internet to communicate with i'm also aligning myself with the corresponding community I don't use twitter just
00:22:30because it's the convenience communication mechanism i use twitter because i also agree with many of the concepts and philosophies of the community of other people who choose to use twitter But with currency that choice is a much more powerful political choice We have entered the realm of mata
00:22:50politics of politics by algorithm of the ability for global community's the form around a common consensus of politics through the choice of currency you want inflation use on inflationary currency You're a gold bug Use a deflationary currency You want a currency that creates a guaranteed minimum income from
00:23:11the poor Use the currency that expresses that politics You want a currency that puts aside tokens for carbon sequestration use a currency that expresses your green politics were going to start seeing community's Politics and currencies converge and allow us to make these choices just like i can support
00:23:33joey coin in order to say that joey is in fact the coolest kid among the five year olds I can support green coin because i care about global warming or not right I can support meets coin If i really really like red meat Whatever Worldwide wrestling coin No
00:23:56problem There'll be one of those too Absolutely so really all of these things are forms of expression and that comes back the original point that currency in the end is really a form of language it's a language by which we communicate our expectations and desires of value and
00:24:15now that we could do it on such a massive scale now that everyone can create currency our choices will really matter We're past the zero sum game This isn't about nation states anymore This isn't about who adopts bitcoin first or who adopts crypto currencies first because the internet
00:24:34who's adopting crypto currencies and the internet is the world's largest economy the most populous economy and is the first trans national economy and it needs a transnational currency to summarize what we've really done is we've inverted the very basic and most fundamental equation of currency which is that
00:24:57from millennia until the year two thousand eight sovereignty decide defined currency sovereignty was the basis upon which currency could be created and that currency allowed that sovereignty to be expressed The monopolistic control of currency is the basis of sovereignty and now the internet has a currency and the
00:25:22internet is going to use that currency To create sovereignty after two thousand eight currency creates sovereignty and the internet has its own currency which means the internet has purchasing power which means the internet has economic freedom which means the internet can exert that economic freedom in a post
00:25:44nationalist way in a way that ignores bar borders and makes the nation states not obsolete but simply less relevant Because when an egyptian blogger cannot only blogged about the revolution but also fun that revolution in bitcoin and they can connect with people from all around the world who
00:26:04share their ideals for self determination and freedom they are expressing their own sovereigns He is an individual and they are expressing the sovereignty of their community through the use of that currency So this is the world we now live in a world in which currencies can co exist
00:26:20and where currency and its user adoption creates sovereignty That's basically what i wanted to talk about today Thank you

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