Translator: Michele Gianella Reviewer: Robert Tucker
Good evening, Bucharest!
Future spoilers, getting to know things that happen in the future
before they actually happen.
That's cheating, isn't it?
Do we love cheating?
Yes, we love cheating!
When I was a politician and doing interviews for television,
I would sometimes taunt the reporters,
when I saw they were still setting up the camera
and weren't really ready yet.
I would say things like:
"Well you know, I'm a politician,
so it's not really cheating unless you get caught doing it."
They would get all stressed out and try to get the camera rolling
in case I would say something like that again.
That was fun.
So, future spoilers.
A bit of background about me.
I'm Rick Falkvinge, I'm Falkvinge on Twitter.
In case I say something insightful, something funny, or just plain dumb,
feel free to quote me on Twitter.
Because I love seeing my name on Twitter,
especially when I say something dumb - that's funny.
So, a bit of my background.
My claim to fame is that I founded a new political party in 2006
with a mission of defending the Internet and civil liberties.
It spread to 70 countries,
so it was quite successful by any measure,
and I led it for its first five years in its original country, Sweden.
Under my leadership, we put two people in the European Parliament,
so that was good.
And we did this using new methodologies.
We became the biggest party and the most coveted youth demographic
on less than one percent on the competition's budget.
So we had two orders of magnitude of cost-efficiency advantage.
The methods we were using, we call them swarm methodologies -
we were decentralizing wildly.
And they can be used by, frankly, any business or social cause,
or, well, almost any.
There's a small asterisk there.
But, as a result of this, I got a number of awards,
like I was named the IT person of the year from the Swedish IT industry.
"Foreign Policy" magazine named me
one of the world's Top 100 Global Thinkers,
and people at "Time" magazine named me
one of the world's 100 Most Influential People.
That's quite humbling really.
I'm not saying they're incorrect, but it's still quite humbling.
So, today's entertainment: spoilers for the future.
We're going to be talking about Bitcoin.
We're going to be talking about the underlying technology for Bitcoin,
what's called the blockchain.
And we're going to be looking at some conclusions
for the power struggles for the next decades
when we realize the implications of this.
So, Bitcoin blockchain technology, and how the power is about the ledger.
Bitcoin.
How many of you in here have heard of Bitcoin before?
Let's see a show of hands.
OK, so that's about half, I'd say, giving it a ballpark.
How many in here have used Bitcoin, or are carrying Bitcoin right now?
Another show of hands.
One or - . Okay, so that's a few scattered hands.
So, going through this just briefly,
what Bitcoin is.
In 2008, somebody with a Japanese name solved a really difficult problem.
And that problem was:
How to make many people agree on a set of data, a set of facts - like a language.
How do you make a group agree on what a language is?
It evolves quite naturally.
How do you encode this into technology?
It turned out
that if you can make 51 percent of people agree that this is the data set,
then we're all good.
That sounds very easy, that sounds very intuitive,
but it's a really hard problem to solve in technology,
and this was called blockchain technology.
So, what this does is, it does away with the idea
that you must have somebody at the central point
to establish what the data is.
You don't any longer need somebody to go to
to ask what does this word mean,
or how much does this person have in their bank account?
It's all distributed.
Everybody and nobody knows the entire set of data.
And that has enormous implications,
which we'll get back to many times in this presentation.
So, these crazy guys thought,
"Hey, this is a cool technology,
let's use this to create a new form of money!"
Which is obviously the first idea you get when you create something, right?
But the deal here was
that there was no central point of control, right?
There's no centralized bank.
Instead there's this distributed idea, like a language.
So, just like a language where everybody knows the meaning of the word,
this is a distributed bank,
where everybody participating knows every account and how much is in it.
And, this doesn't just work,
it turns out that this actually blows banking out of the water.
My first Bitcoin transaction was on a Sunday in April 2011.
I sent the value of a cup of coffee, a very small amount,
to a friend on the other side of the planet.
They had the money instantly.
Nobody was able to prevent or track this transaction
or seize the funds in transit.
In fact, no blockade whatsoever
on the national or individual level was consulted.
I didn't pay anything in fees to do this transaction,
and last but not least, I didn't log on to any bank of any kind.
I didn't identify myself to anybody.
I sent a value of a cup of coffee.
I could've sent millions and it would still be instant and without fees.
And when you look at this -
I mean the first time you use Bitcoin,
it feels like you are jumping 40 years into the future.
But what's really happening
is that it's banks that for some reason have stopped developing.
So they're not any longer fulfilling the expectations we have -
just beginning with the fact that I did this on a Sunday, right?
And then moving on to no fees to the other side of the planet,
instant and so on.
So I observed then that Bitcoin is going to do to banking
what the email did to postal services.
This is going to obliterate today's banking.
But, with any money, it's only as good as it's usability.
So what can you use Bitcoin for?
Early 2011, it was kind of limited.
You could use Bitcoin to -
or rather you could use US dollars to buy Bitcoin,
which you, in turn, could use to buy back your US dollars.
So it wasn't very useful.
You could also use it to buy weed, and smoke the weed,
but, then again, you could do that for US dollars already,
so it wasn't very useful.
And then, for some famous or infamous reason,
you could also use Bitcoin to buy socks made from wool from alpaca animals.
And that was the total you could use Bitcoin for.
Things have changed a bit since then.
Today, there is no single good or service that you cannot buy with Bitcoin.
You can't buy them from any body,
but if you are picking up something to buy,
you can buy that with Bitcoin today.
And, notably, including from countries that are normally under financial blockade
by order of the United States,
like Iran or other people where you can't usually use a credit card.
You can use Bitcoin there, and they are starting to take notice.
But not from any body.
If we're looking at Bucharest for instance,
you can observe that there are three businesses
in the entire central city
that deal in Bitcoin.
And obviously that's not too impressive at this point.
But this is going to change.
It'll only be a matter of time before everybody accepts Bitcoin.
And the reason for that is that the transactions are so dead simple.
You see somebody bringing you a coat,
you scan that coat with your phone,
you see an amount and get an "Accept" button.
And that's it.
It's simpler than a credit card transaction.
And it's not just simpler than a credit card transaction.
The reason this will succeed
is that it's also cheaper than a credit card transaction.
Much, much cheaper - remember how I said this has no fees?
Credit cards typically take 3-5% of every transaction.
Bitcoin eliminates that,
so this will succeed on purely commercial grounds.
It roughly doubles the profit margin.
It has some way to go in terms of usability,
and, in particular, with storing and keeping Bitcoin.
So we can observe from past technologies
that they typically take 10 years until they reach maturity.
That means we can predict that this will have a breakthrough
in the 2019 to 2020 time frame,
which is supported by the data set of how transaction volume is growing.
So, let's take a look at the blockchain technology,
the underlying blockchain technology.
I mean, this has been used to create a currency, right?
A currency called Bitcoin.
But it could be used to track any asset.
Any, any asset.
And that has enormous implications.
If you are at the central point of control and get to determine who owns what,
you have an enormous power.
You essentially control society.
Who owns that house?
Who owns that fortune?
Who owns this plot of land?
Today the government does that,
and they are about to lose that ability.
Just something as simple as passing through nation borders:
you can see customs seizing valuables,
and people using Bitcoin are just smiling and walking straight through.
There was an event on Cyprus recently
where the government needed a bailout from the International Monetary Fund.
But in order to get the money they needed to even get the bailout,
they decided to seize and confiscate bank savings from ordinary people.
They went into ordinary banks
and just took a good chunk of people's money,
which caused panic across Europe at the time,
because most people realized this might happen in my country too.
And it didn't take many months until politicians realized that:
"Hey, what they did at Cyprus actually worked.
We can just swoop in and take people's savings.
How convenient?"
So, this obviously had a reverberation in the Bitcoin community as well, right?
If people realize that banks aren't just unnecessary,
trusting banks can actually hurt you or hurt your savings.
And Bitcoin strikes directly at the power of a central bank,
and by extension it strikes directly at a government's ability
to regulate funds, transactions, taxation.
A government can no longer seize somebody's wealth or income.
So, where does that leave taxation?
That's an open question completely today.
And in the next steps, we can observe that you have tools and technologies
for things like self-arbitrating contracts.
Today, if you're signing a contract, and you disagree,
you go to a judge, and the judge decides who's in the right.
If the contract can do that, you don't need the judge,
you don't need the court.
This is Ethereum technology.
In the next step again, you have incorporation.
You can issue shares, you can issue dividends,
with counterparty technology built on the blockchain.
And you obviously ask yourself:
"Well, what court could possibly recognize such a company?"
But they're not using courts,
they're using self-arbitrating contracts with Ethereum technology.
In the next step again,
you can use the blockchain for land registry, social services,
using BitNation technology.
And these technologies are actually
outcompeting the government's core services on its own terms.
So if Bitcoin shows that we don't need a central bank,
the blockchain technology asks:
"Exactly why do we need a central government?"
And this is not a hippy anarchist question.
This is a matter of seeing that technologies in the pipeline
are actually outcompeting the government
and the core services a government provides,
which obviously has enormous implications.
So we can observe how the power is in the ledger,
the ability to not just know, but to determine who owns what.
If you control who owns what, you're essentially controlling society.
And with Bitcoin and the blockchain, we've seen how money cannot be seized,
because everybody is in agreement on who owns what.
And pointing the gun at somebody
is not going to change this distributed agreement,
any more than pointing a gun at somebody
and telling them to change the meaning of a word
has an effect on a language.
So, let's toy with the idea of scaling that up a bit.
Imagine land registry being on the blockchain in the same way,
and you're bringing a bigger gun to a plot of land.
You're parking a tank on a plot of land,
and all of a sudden that doesn't have an effect,
just like pointing a gun at somebody
doesn't make it possible to change the meaning of a word or a bank account.
This is when we're starting to realize enormous implications, right?
And these are not just geek dreams, these are not just nerd dreams.
I mean it's easy to dismiss this as just a couple of computer geeks
who are totally socially inept,
who can't get laid if their lives depended on it,
and -
(Laughter)
- and still dreaming about a future where technology reigns, right?
In 1995, these people predicted that we would socialize online much more
than we would over letters and phone calls,
and they were laughed at.
It was ridiculous.
It was just geeks dreaming, right?
That was in 1995.
But geeks tend to see technology before most people,
because they deal with it and build things using it on a daily basis.
So, that was 20 years ago.
And today, these same geeks are predicting
that banks will be as obsolete then as the postal industry is today.
And moving further up, in forty years,
we can observe that blockchain technology
will probably have outcompeted a lot of governmental core functions.
The technologies in the pipeline just today,
we can see them outcompeting land registry,
we can see them outcompeting incorporation, equity, dividends, courts.
These are core, core government functions,
and this is just what we can see today.
This is what we can see today.
So, in closing -
Yeah, obviously the government won't let go of its power without quite a fight.
But that's a bring-out-the-popcorn scenario.
In closing, the Internet brings much more change
than we could possibly first imagine.
We knew that it would bring more change than we had imagined,
we just didn't know quite what.
But this is typical for a very disruptive technology,
because the generation that invents it
can only think of a new technology in terms of what it replaces.
It's the generation after them
that sees the new technology in its own right, in its own potential,
and builds things on it on its own merits.
And that's what's happening now.
This was the case with electricity, this was the case with the printing press,
this has been the case with every major disruptive technology,
and it's now the case with the Internet.
So, in summary, we are learning that the Internet was -
When the Internet arrived, you know what they said?
Media said that this might compete with the fax machine.
We're finally learning, I think, or people are about to learn,
that the Internet was something just slightly more
than a glorified fax machine.
And this fight is going to stand over finance,
over core governmental functions,
over the next couple of decades.
And hat's my spoiler for the future to you tonight.
Thank you.
(Applause)