The title is not mine. The title is the comment made by the person hired to transcribe the most recent contribution of that particular idiot to idiocy in general and to idiocy unfortunately surrounding Bitcoin in particular.
Here you go :
We now have Amir from --from Intersango but essentially you're a bitcoin expert Amir, I think.
And um, well, I like it, this is, this is Amir's only slide, and I rather like it cause it says "down with banks, rise of bitcoin," so uh, over to you Amir.
Uh, yeah. How're you doing, nice to meet you all. Uh, yeah I don't have much faith in uh finance industry. I think it's a bit of a sinking ship, and uh, I don't think the change is gonna come from within, it's like gonna have to come from outside. And I'm gonna present to you this new system that's really invigorating and uh, you know we're not some flashy start-up we're just hackers, we're technology people that are like enthused with and like absolutely fascinated with technology and this is I think one of the most interesting applications of technology. Uh there have been a number of really cool technologies over the years like bittorrent, wikileaks, and bitcoin is uh, one of the culminations of the applications of whole-- a bunch of concepts have come along and you know we're just hackers who are very much interested in uh these things and uh yeah.
What bitcoin is really is, uh, the way you'd use it as a user is you have like a piece of software on your computer and it has your, your bitcoins on your computer, your wallet and nobody else is able to touch those bitcoins, nobody else is able to tell you how to use those bitcoins. Uh, you are in control of your entire financial infrastructure. You are essentially your own bank. And the most incredible thing is, is, for instance myself, I've written my own bitcoin client, uh, with my own bitcoins that I've got and I'm able to send bitcoins to someone else on the internet, and it goes over an entire infrastructure which I've created as myself as an individual on the internet. Because it is open source software, what that means is anybody can read how the code is written. And in the same way that someone can read French or Spanish or whatever language I can read source code because I'm a programmer so I can actually read what is written and I can see actually this is how it works.
So, uh, this is a piece of software that actually came out three years ago and started off as an experiment. And I might be here explaining it to you today and probably a large portion of you won't get it but that's fine because they laughed at Columbus, they laughed at Marconi and they laughed at, uh Gutenberg. So, and even they also laughed at Alexander Graham Bell, uh Western Union said that the telephone is nothing more than a mere toy and they refused to invest in it and something that is experience it-- an immense amount of explosive growth. Like I said, we're not a flashy start-up, we're just people and this is an example of a piece of technology which has really risen from a community of people around the world. You really like feel this-- they really like look at this and see something that this can bring to the whole world. You know uh, I can stand here and explain it's about digital money but it's really so much more than that. You know, if you read the original white paper, bitcoin is described as being a decentralized timestamping system for contracts, and what you can do with it is so much more than is currently possible, it's really unimaginable like some of the things that are possible. So, uh, I think bitcoin will always exist. Like, no matter what it will always exist because there will always be a class of transactions for which bitcoin is only possible.
So, what is, uh, what can you actually do with bitcoin now? Do I have the internet? So uh, yeah, one of the most uh, well so one of the things you can do with bitcoins is as a (drugs market you could silk road?). And uh, what this is is a anonymity network with Tor, and what it is is it's impossible for people to stop to uh monitor your uh connections on the web. So you can actually set up websites which are totally anonymous. And there's a website, which, using bitcoin as I said earlier like no one can like, stop you making whatever bitcoin payments you wanna make, there's like this online marketplace where people were actually able to order drugs from anywhere in the world and have them shipped to anywhere else in the world. And last summer, this US senator came out,
(US Senator on video)
"They prevent people from tracking the financial end of this. Using real money users purchase these bitcoins which can be traded at roughly nine dollars uh to one bitcoin, and use them as proxy for real money when they buy things on Silk Road.
It's an online form of money laundering, used to disguise the source of the money, and disguise who's both selling and buying the drug. The transactions are anonymous, secure, and untraceable; a lethal combination that makes illegal underground websites like Silk Road possible.
Well, despite all their best efforts to stay under the radar, news media have begun to--"
(Taaki, talking over ongoing video)
Or like another thing you can do is like, uh...
...make donations to politically subversive organizations. So, uh, yeah last summer I think it was the US Department of Justice put pressure on Wikileaks and within a single day had their Mastercard, their Visa-- oh (cell phone in Taaki's pocket is ringing, creating feedback).
Yeah, hello? No no I'm doing, I'm in a conference. Alright okay goodbye.
Sorry that was a friend.
(Something inaudible from audience.)
Oh okay. Okay, so the Department of Justice had their PayPal their Visa their Mastercard their Amazon their Swiss bank and their domain registrar shut down in a single day. And the only form of payment they could accept was bitcoins. There's also another guy, who's working on a really interesting project where people can build 3-D printers in their home and 3-D printers is totally subversive technology by itself. Like instead of having something shipped from China all the way over to Europe, and then having to sell it in the shops, I can now print it in my house. And uh, the Pirate --the Pirate Bay added a new category to their website uh not so long ago and they have books films movies music, they added (fisibles?), and what you can do is download the plans for these 3-D printers, and one of the items that got loaded was the plans for a (warhammer 40k model?), that got taken down by DMCA requests last December. And this guy was actually working on a 3-D printable gun, which he actually set up on the internet and was raising funds using PayPal and IndieGoGo, which got shut down. And he actually started accepting bitcoins and he ended up raising twenty thousand dollars to make his project a reality. There's also, uh, you can actually buy food with them, there's like a bunch of restaurants in Berlin, which, like when I was living in Berlin every day as we put it "the Bitcoin Bar" and we went every day and we was buying food and it was like the, it was like a project for the whole keech which is like the whole street, for the, all these merchants to accept bitcoin and they're all really enthusiastic about it, because it's like in the bohemian part of, uh, Berlin.
So, uh, yeah, I would make a demonstration but I don't have bitcoin. So one of the things that we're working on now is, uh, a bitcoin credit card, so, I can actually like show you this. You can actually buy debit cards which are reloadable with bitcoins like that. Uh, there is also
(Googles for Casascius, misspells it "cascascius".)
You can actually also get, uh, like a bitcoin cash. And what this is is a physical manifestation of a digital currency and you can actually use some of these physical coins to make payments in everyday life. So what it is is the coin is like, if you irreversibly damage it, uh you can actually unlock the bitcoin that's locked inside the physical coin. Uh, but there's like a lot of work that needs to be done. Uh, in China there was an examp-- there was uh, so there's like different types of virtual currency, type 1, type 2, and type 3. In type 2 currencies you can only buy into the economy, whereas type 3 you can buy into and then sell to move out. So that's like, bitcoin is a type 3. But in China there was this a currency called "QQ coin" where uh what happened was people were buying these and their merchants started to actually accept this because there's a huge demand for virtual currencies in China. And so they start to develop this black market where people can actually sell QQ coins for real cash. So that actually made it into a type 3 currency and the Chinese government had to come and shut it down. But the whole point about QQ coin was it was a very-- it was, uh, the currency was very flexible because there were a lot of like, uh of infrastructure that was developed outside of QQ coin on top of that. Now bitcoin is a very early system. It's like a brick in a larger system of like what is possible. And we still have to build a lot of that. And part of the question is like how do we improve the illiquidity by actually like building a lot of this infrastructure, but then the other half of that is actually, if we build, if we improve the experience of bitcoin, you know, if we actually develop a lot of these things around it, a lot of that stuff will just naturally develop and we won't have to worry, you know?
(Inaudible comment from audience.)
Oh, okay. Yeah, okay. Uh....
The, the two things I cannot emphasize enough about bitcoin really, is, it is a system which is based off of mathematics and cryptography, not laws and legislation, because, for, when you have a system which is based off of the-- off of people, and subject to the social fallabilities of failings of people, you have a system that is subject to corruption and failures. The other thing I cannot emphasize enough about bitcoin, the second point, is it's decentralized. It's completely free from control. Nobody controls the infrastructure. And all of the amazing properties of this system evolve out of that property like that it's always running, there are no bank holidays, you know, no closing times. It's international, there is no concept of borders, like I have a friend in Iran, who contributes enormously to the free software movement, but because of one attack by one politician on another politician and the US embargo on Iran, he cannot participate in the global economy. That is incredibly unfair. And that is another example of like, corruption in finance, like I mean what is it when I'm in Amsterdam and I have two thousand dollars, and to send that two thousand dollars to London, I have to pay twenty percent in markup? That's like four hundred dollars, just for moving money around, it's ridiculous. Like in the digital age, you know?
And there's no fees, you know there's a new privacy model like--
(From audience: We gotta get you--you're over time now)
Let's have some questions.
I know you're very passionate Amir. That's very very obvious. Does anyone have a question, would anyone...Oh!
So the fundamental underpinnings of bitcoin are very interesting. But um, a key component of any currency is trust. And we're quite irrational creatures. And we form trust in very, instinctual behavioral ways. What's gonna have to happen for bitcoin to be a truly trusted currency on mass rather than what-- just hackers?
Uh, well, I don't really need to say like uh we need to do this and this cause there's already an economy that's working, it's like the biggest, I think virtual currency in existence, you know? It's like people are going --(drowned out by cell phone interference)-- maybe I should turn this phone off. But it's actually something that's like being put into practice.
(Back to audience)
Uh, you know, there's like, (more phone interference) as I said there's like a whole class of transactions for which only bitcoin can exist, and it's like enormous imperative for people and drive to use bitcoin, you know?
Can I be a millionaire overnight, can I create my own money?
Uh, no, that'd be ridiculous. What, why would you want that? That'd be silly.
Well how, you talk about bitcoin being completely decentralized. Where does the supply come from?
I don't understand that.
Well, okay I can explain how bitcoin works, right? Uh, (inaudible from audience) well it is it's tied into like the infrastructure and how bitcoin actually works, you know? Is, like--
I've got a calculator at home, if it's mathematics I can just put loads of numbers in and--
Right. But, uh the underpinning, of the infrastructure, for security the network, is tied into how supply --(drowned out by cell phone interference)--you know?
(To ringing cell phone.)
Yeah, I don't know how to do that. It's my-- my Mum's-- I don't ordinarily use a mobile phone, so, I'm like...it's funny.
How is bitcoin created?
Yeah, so for securing the network, like, people would do this, like, calculation, these mathematical calculations, and as a reward for doing this really valuable work, they get like a small, uh reward.
(Inaudible question from audience)
Uh well it's just uh, part of the infrastructure for the network, so-- let me ex-- when you are computing, when you're computing mathematical riddles, you're using up processor cycles. When you're using up processor cycles, you're using up electricity. And when you're using up electricity that's costing you money. And, the way it works is there is some self-adjusting algorithms, the, the more electricity is being consumed, uh and the more people who are competing to do these calculations the, the more har-- difficult it gets to do these calculations. So much so in fact, that that the reward for generating bitcoins is actually zero. So it's actually like an example of a market with uh pure, uh, market competitiveness, you know it's purely driven by market dynamics.
Because there's a really, there's a, basically no barrier to entry to this market--
Are bitcoins a creative form of electricity?
Uh...that's not quite how it works, but maybe you can put it that way if-- like it's actually like something that's like, it's like, if you were asking me like, 'Oh, uh...wh-what is an operating system, is it like a computer?' you know, I would have to explain like, okay there's a (ios?) layer in your computer and you need to have access to these device drivers, you know? So, it's part of like some...complex--
How do you get twenty bitcoins? If I want to get twenty bitcoins tomorrow, how do I get that?
Yeah. Well, you can offer services, you can do this mining, or you can do a trade with someone else who has bitcoins. So asking how-- if I have Euros, how can I get Dollars? Well you, you either do a trade or you offer some service, or, yeah you do some valuable work.
(Possibly Question 5, else new Question)
But the European Central Bank prints Euros. Who's printing the bitcoins?
No one's printing bitcoins. It's tied to the underpinning of the network, how the network functions.
(Audience member offers to explain, exact verbiage inaudible.)
(Someone else in audience: Can you tell us, in English?)
There's a mathematical series a bit like prime numbers, but there's not an infinite supply, there's only about a million being discovered. And those are basically what represent the bitcoins, and so you buy one of those numbers, and then someone keeps a registry of who owns which numbers. So you might (inaudible) the number five (inaudible). And so uh
(Someone else in audience, to Audience Explainer)
So how do you create an exchange rate? There needs to be an exchange rate.
Well it's a free market, trading things so you post on (inaudible mumbling). So uh, it's a bulletin board exchange system.
It's a floating exchange rate.
(Inaudible comment from audience)
Hi. Uh, sorry, firstly I wanna condone a few of the very cynical remarks and cynical tones of voice from people around here, it's a complex system, in all fairness, I don't necessarily agree with it, but it is very complex and I suggest you go and read about it on Wikipedia if you really wanna learn about it. Um, the issue with bitcoin is that it fundamentally right now relies on exchange into fiat currency. Right? Everything eventually turns up in real money somewhere. All the exchanges, all the major exchanges, even your own I guarantee, somewhere underlying it has an exchange into real money, and a lot of it is actually, the trade in bitcoin actually revolves around people gambling just as they do on the currency markets today in terms of the valuation because it is uncontrolled, because it is unaffected by economic variables, and so people are trying to suss out how to game it.
The largest exchange in the world, mtgox, which controls about seventy six percent of bitcoin currency trading is all gambling at the moment, right? So it's almost like a gaming currency. I see lots of potential for it, but I don't think it's quite there yet. And I think the fact that it's also finite also ensures that there's, you know, that the gaming that you can do around the bitcoin universe is quite extreme. A lot of people have played with it.
Uh, come on, I think like a large portion of the financial industry is based on gambling and gaming, like--
But you condemned the financial industry and bitcoin is actually an extreme example of that. You know?
I don't think so. Like I traveled to Amsterdam, to London, to Warsaw, to Prague, you know to Barcelona, and I never once, oh yeah and Rio de Janiero, and I never once paid money to money changers, like I was able to change my money without paying any fees whatsoever.
(Question 7, Taaki attempting to talk over throughout)
Yeah but you can do that in real currency as well, in all fairness. There are plenty of services out there that you can do it for pretty much next to zero, and in fact bitcoin encompasses the spread which incorporates the change back into real currency. I guarantee you on every-- on the major exchanges, your bitcoin spread, or the price you buy and sell at incorporates the exchange rate back into US Dollars or Sterling or Euros anyway. So the cost of the transaction's always there.
No no, I'm talking about finding people and doing trades with them. You cannot do that with Yen. Because if I have like a bunch of Yen in my pocket, and I say to you uh yeah 'Do you want to like trade some, my Yen for your British Pounds?' you'd be like, 'Why would I want this, I'm not going to Japan any time soon.' But like, bitcoin is actually something that anyone anywhere in the world can actually use right now. And so it actually does make sense for it to have people in every city or actually, every exchange in bitcoins. And it's not some hypothetical thing it's actually happening now, and something that I've actually been using, like for, for months--
And I agree with you, there's potential, but that's basically-- you've just given an explanation of a credit card, right?
No. It's not a credit card, because a credit card you pay fees. But I'm saying that I'm able to change money without paying any fees.
You, you do pay fees.
Um, so I, I kinda just want to ask about, I mean, it's pretty clear that nobody wants bitcoins or dollars or for that matter anything currency-wise for its own sake, I mean unless you're a bit strange. Um, you want to use it for something. So, bitcoins, their value has to be underpinned by the willingness of people to accept them for something that's real, somewhere in the world. And I'm looking here (looking down at something on his desk, can't see), apparently I can buy almost anything in Finland with it and it's perfectly legal. Um. What do you think the relationship is between bitcoin's value and the footprints of places where you can actually spend them? Because at some point there is going to be a clamp down where the governments say. "You can't take these and you know, we'll check and we'll fine you. We'll put you in jail." Um, I mean there are already quite strict constraints on how you can use you know semi-anonymous debit and credit cards, although they do exist. So what do you think that willay, the relationship between footprints, and the use of bitcoins is going to be? And particularly how that would, how that would compare to cash and other forms of semi-anonymous payments?
So here you have like a currency, which started out from zero dollars, and there was an example like somebody bought pizza, for like thirty thousand bitcoins, and now each bitcoin is worth like ten dollars. And the reason is, is a lot of these people who are like technological people, they look at this system and they say (she says?) like wow this has like massive potential. And so they really get it, they get enthusiastic about it, they like really like get involved in it, and there's like a lot of people that are like actually building bitcoin businesses, even though they're not making anything they're losing money, you know? Because they understand the potential that a system can bring, like this to the whole of society. Like imagine that you could actually fund mesh networks, using a currency. You can actually incentivize the development of mesh networks which don't require the need to have ISPs. So you can create publically-funded infrastructure without the needing central authority. There's so many things that are possible. You know you can actually create uh contracts where uh, you have like a group of funds which are owned by several people and, to actually send those funds out needs their, needs the total consent of all of those people involved, and that's something that's...mathematically-based, not something that's based off of legal contracts which is a very fallable thing. And it only gets more and more deeper the more you-- the more further along you go. Like....
Okay you know, that's really really interesting. Thank you very much.