[AUDIENCE] I have a question regarding usage. All of these great properties of Bitcoin...
that you described, I fully agree with.
Looking back, you have been in the ecosystem much longer than I have.
In recent years, there has been a shift in the start-up community, specifically among Bitcoin start-ups,
trying to push adoption and usage of bitcoin, to promote Bitcoin as a payment system.
In the last twelve to twenty-four months, we have seen that shift over to "blockchain for enterprise" etc.
I'm convinced that bitcoin is a great currency, with great social and economic value...
in all these things that you mentioned in your talk.
What needs to happen for that 'hockey stick' curve...
of adoption we have been wanting and waiting for in the last two to four years?
What needs to happen in order for that to occur?
[ANDREAS] That is a great question.
With entrepreneurialism in general, the most important factor for a start-up is timing.
We saw this with the early Web and internet companies. In 1998, people said, "Let's deliver food via the Web."
Those companies failed, pretty badly in fact. But that doesn't mean the idea failed.
It [worked] fifteen years later because [they needed to] wait for a density of adoption to set up that market.
There are different types of markets: one-sided, two-sided, and many-to-many.
Let's think about that for a second. What is the primary application of Bitcoin which has succeeded so far?
Speculation. How many people does it take for someone to speculate in Bitcoin? One person, the speculator.
You don't need or care if your neighbors have bitcoin, accept bitcoin or don't accept bitcoin.
In fact, it is probably better [for you] if they don't for [at least] another couple of years.
You will earn the premium [discount] for dealing with a difficult technology, early enough to be a speculator.
Speculation is a one-sided market; it is almost a zero- sided market because you only need one participant.
That is the most successful application [so far].
If you want a two-sided market, you will need buyers and sellers in the same vicinity with access to bitcoin,
or the desire to own bitcoin, and that is harder to bootstrap.
That is successful in areas like online commerce because I can make a product available [for sale],
say, "Hey, I will take bitcoin." I don't need people to be here [in person], I just need to be on the internet.
If there is someone on the internet who has bitcoin, or who wants bitcoin, commerce happens. Great!
But if you try to do that at your local bakery and there are only three people in a five-mile radius who have bitcoin,
and one bakery in a five-mile radius that wants bitcoin, you don't really have a market, right?
You just have frustration. That market takes a lot longer to bootstrap.
Remember when Facebook started? Did they win globally when they launched on [the first day]?
Did everybody sign up? Oh no, I am remembering it wrong. That is not how [Facebook] happened.
Instead, they went to Stanford and picked one building, knocked on everybody's door...
until everybody in that one building signed up, and [Stanford] was the only place you could.
Once that was successful, they [knocked] on five more buildings, and soon they signed up the entire campus.
When you went to Stanford, everybody you knew was on Facebook. It was useful now because it had density.
They bootstrapped the market by creating [a product for] a small focused group.
Then they expanded. You will see this happen with Bitcoin.
You can't just bootstrap a retail market [on the first day] and say, "Hey, we accept bitcoin. It is just our bakery."
"World, come visit!" Nobody shows up.
We will not see those types of retail applications [yet]. Part of the reason: [who] in this room has a debit card?
Maybe I should have asked this the other way around. [Who in this room] really needs bitcoin? No, you don't.
Not to shop at the bakery. You have cash, credit cards, bank accounts, tap-to-pay, swipe-to-pay, Venmo, PayPal.
You have everything. You don't need bitcoin. You live among the [top] 6% with enormous financial privilege.
[AUDIENCE] If I listened to your talk, I do need bitcoin. [ANDREAS] You need bitcoin because...
you understand it ideologically, which is very different from "my children will starve."
"I can't send them to school. My generation's wealth is being destroyed by my government."
I saw that in Greece, twice in my lifetime. My parents lost everything. In Argentina, if you talk about bitcoin,
they know why [they need it] and it is not theoretical to them at all.
What do you need for bitcoin adoption? You need to be needed [by many people].
To have applications that are needed. The basic application of paying [for things]...
is needed by four and a half billion people around the world who have very little or no access to banking..
and can't do cross-border transactions [without paying enormous fees].
I don't think any of them are in this room, but that is the majority of the human population.
It will take a decade to bring this technology [to them].
Do you need bitcoin if you live in a country...
suffering from hyperinflation, a banking crisis, currency controls, and your government occasionally...
throws people out of airplanes because they disagreed with them?
Yes. All of these things happened in Argentina in the last twenty years. They understand [why they need it].
We will not see much bootstrapping of bitcoin for retail payments among affluent, connected,
and banked people.
First, we will see many of the unbanked dealing with some very difficult problems.
In my opinion, the biggest application today,
other than basic infrastructure (exchanges, wallets, cross-border transfer, and internet service providers),
is remittances.
[Currently], if you are an immigrant sending money home [to your friends or family], Western Union will take...
9% as their cut, plus 3% on the exchange rate spread, plus another 5% in the destination taxes and fees.
[They] need Bitcoin. Bitcoin [means they will keep most of that] 17% of your money,
which is a tax on poverty and immigration.
[Those] people will go through the most ridiculous steps [to acquire and use bitcoin].
"Listen, there are [several] steps to set up a bitcoin wallet and you must read this very complicated manual."
"You won't understand [most of] it." They will say, "To keep 17% of my money? Sure, I will do it now."
In comparison, if you tell someone in Paris,
"Listen, next time you buy your morning coffee and croissant, instead of just tapping with Apple Pay,
read this manual with [several] steps, and then you will have bitcoin! The world will be a better place."
They will respond, "You are crazy!" [Laughter]
We need to understand who the audience is; they are very difficult to see from this perspective.
We assume that people have [other options].
The truth is, two and a half billion people in the world have zero access to banking.
They live completely in cash and barter-based societies.
Four and a half billion people have very limited access to banking, in a single currency, with no ability to...
send or receive money across borders, or only with very expensive fees and very difficult requirements.
In the United States, 18% of the population has no bank account, which is 60 million people.
You would [estimate] it was less than that,
but many of those people are immigrants and poor people who lack documentation;
people who would probably be arrested for simply trying to walk into the bank, because of how they look.
If you are homeless, illiterate, or completely uneducated, and you walk into a bank, it is a terrifying place.
You will not be able to figure out [how] to open a bank account.
That is [the reality for] sixty million people [there]. In this country, it is actually a bit higher than 18%.
In places like the Philippines, Indonesia, or Brazil, about 75% of people are unbanked.
That is where bitcoin will succeed, in my opinion.