[AUDIENCE] Where does the
supply of bitcoin come from? How are you sure the market doesn’t get oversupplied? [ANDREAS] The supply of Bitcoin is
determined algorithmically, based on… a geometrically declining supply function. In the beginning, every ten minutes, fifty new bitcoin
[were] created. Every block, the heartbeat… …ten minutes, created fifty new bitcoin. This bitcoin is used as a reward in a game theory-based
security model that ensures every transaction is… independently validated by completely anonymous
actors, who have to stake electricity as a guarantee… of the security work they’ve done. If they succeed in doing the security work
of validating transactions correctly, they earn a reward based on a probabilistic return. Fifty bitcoin every ten minutes. That’s how
currency is introduced into the economy. Every four years, it gets cut in half.
Fifty to twenty-five in November of 2012. This year in July, this past July,
we had our second halving event, which was celebrated with
parties all over the world. Bitcoin’s [block] reward went from 25 to 12.5 bitcoin. The system is designed to have a monetary policy
that is purposely deflationary and simulates… the issuance of precious metals. It gets harder and
harder to mine gold, at greater and greater cost. Bitcoin is the same, the idea being that
less and less is issued over time. If you follow that geometric curve,
at some point you reach the end. In the year 2141, bitcoin is no longer issued.
Twenty-one million coins is the asymptotic cap. It will never reach 21 million coins. That is part of the
protocol. It is an unchangeable part of the protocol, and it is a rule enforced by every system
that participates in the Bitcoin network. It is meant to be sound money, but it’s
not the only monetary policy that exists. There are several other currencies that
implement different monetary policies. The idea is really for bitcoin to serve as a very
solid reserve currency for many other things. [AUDIENCE] I have a question
about bitcoin economics. [ANDREAS] Bitcoin economics, great!
[AUDIENCE] Referring to your first talk… [ANDREAS] Yes, thank you. [AUDIENCE] So 70% of all bitcoins
in the world have been given out? [ANDREAS] Mined already, yes.
[AUDIENCE] Okay. You seem to be a fan of bitcoin. [ANDREAS] I am.
[AUDIENCE] If there’s gonna be widespread adoption, do you think the supply of new bitcoins
is going to be sufficient for that adoption? Or is that going to be in the way of adoption? [ANDREAS] No. In my opinion, if there is
demand for bitcoin, the bitcoin that’s… already been issued is going to circulate
and create velocity in the economy. You have to think of this economy not
as a static thing, but as a dynamic thing, where the people who hold bitcoin are better off, in
an environment of adoption, investing that bitcoin. [AUDIENCE] Okay, I get that. I hold bitcoin, as many
of us do here. Would that make us the new 1%? [ANDREAS] It might make you the new 1%.
I certainly wouldn’t promise you that. It also might make you the new 0%.
We’ll see how it goes. In which case- [AUDIENCE] But in your world? [ANDREAS] Yes. To go to the root of the question,
Bitcoin’s current monetary distribution has a pretty… …nasty Gini coefficient, which
means it’s unequally distributed. The fundamental difference, if you become the new 1%,
is that you took a risk on an untested technology, based on a vision you had, rather than because
your grandfather killed more people than mine. [Laughter] Which is how the 1% have their money today. [AUDIENCE] But you don’t think that’s going to be in
the way of adoption? Because that’s my concern. [ANDREAS] I don’t think [the current distribution]
is going to be in the way of adoption. Also, we’re going to see other monetary
policies and other cryptocurrencies; they will serve different needs. We might see ones that are more geared
towards higher velocity currency, while Bitcoin becomes a long-term store of value. I don’t know, we don’t know
The market will have to decide these things. But I’m not particularly worried about the fact
that people who took enormous risk early on… get to have a significant reward if this works. Because if it doesn’t, nobody is going to bail you out.