Getting Current on Crypto | Global Summit 2018 | Singularity University

we're gonna be discussing what crypto assets are and why many people are interested in their 10x potential but first let's have each of you describe what it is that you do in this phase how do you fund in crypto hi everyone I'm Galia Bernard C co-founder of banker protocol bank or launched currency the bank or network token BNT in June of 2017 Bank Court is a protocol that allows crypto currencies to be automatically convertible one for the other so it's a mathematical exchange rate between all currencies in the network which allows for the longtail of currencies to emerge we'll get more into that cool so I'm Mickey Kosta I'm the founder of access network and we're a decentralized token economy dedicated to providing better financial services to the unbanked so basically it's a kind of two pronged system you have a this network of human infrastructure for banking people in parts of like Africa for example today can just with the smartphone become ATMs tellers to the people around them in their community and they're earning tokens for increased activity there are then using those tokens to vote and guide the incentives and rewards for a global app marketplace of developers because there's kind of just too much stuff to be done on top of that infrastructure and they're using the tokens to kind of have access to those applications and get discounts on services hi buh-bah rights you saw me present ever a few minutes ago Abra is a cryptocurrency bank that globally allows consumers to make investments send money make payments all using Bitcoin based smart contracts we have customers in about almost a hundred countries now and we're one of the fastest growing apps for doing crypto investing and soon other asset classes all from a smartphone so we kind of started this discussion already through the talks but I still want to hear obviously from from Galia and Mickey how would you define crypto assets or cryptocurrencies and also how would you differentiate them from other forms of money that people are already familiar with I'll leave a more technical answer for you I'm always motivated by the kind of result of how this can change the world so to me with crypto assets are as a way for us to as global citizens to coordinate together to solve any kind of problem financial or otherwise right so now you have this ability to incentivize any kind of behavior you want you know a person with the computer can create a trust environment where people can coordinate to solve a problem and the other exciting thing for me about tokens as opposed to the old financial world is is liquidity right certain things today in the developed world like a car and apartment are when you can tokenize these things you can collateralize them more you can share rights in them you can share and sell them themselves and that can be applied also to our work in West Africa where some I'm gonna do the same thing to a goat and that's just exciting for I think all sorts of parties private and public and even old institutional people that we sometimes rag on because now you have a whole new asset class from digital memes – you know tokenized apartment buildings that just didn't exist before so it's just allows for completely new things that didn't exist before add to that if we go back to what money actually is money is a tool that we use to collaborate like you said it's a tool that we use to create trust between large networks of people people you might not know personally and most importantly money is a belief system it's an agreement system and so unlike some other inventions like the wheel or things that are are more physical and more defined the invention of money is actually very open to interpretation in terms of what we believe it to be and what we agree on and so Laura mentioned maybe you heard her say in the opening that there's this feeling now that you can create money out of thin air all the money that we use was created in a way out of thin air and these cryptocurrencies are created in a way out of thin air and that doesn't make them not valuable because they still represent some kind of agreement between people and that's what the money is meant to virtualize basically so our work at Bank or is basically around looking at a multi currency world we look at Bitcoin as the first user-generated currency so that's a concept from the internet from consumer Internet whenever you reduce the technical barriers to entry and you let folks approach tools like WordPress or YouTube the internet shows us that you eventually see millions and hundreds of millions of folks approach and use these tools and use them to create content and so Bitcoin and the open source nature of the technology is the first user-generated currency that we've seen and the team at Bank or believes that where you see one you'll soon see hundreds of millions of these user-generated currencies like Bill said we today have hundreds thousands probably of currencies and we don't see that slowing down the real question with all of these currencies and any currency what makes a currency money is that we agree that it's money is that someone else will accept it from you in exchange for something to date we have outsourced this ability to governments or empowered our governments to create these monies for us the the monies of countries are accepted they are recognized by people at some exchange rate or another but in a world with hundreds of millions of currencies what will make any one of them potentially valuable is only their liquidity to other currencies it's only their fungibility as you said to either another currency that you want or a good and service that you want so to answer your question anything is money as long as we agree to it so I think that what bitcoin did is and digital currencies have been around for decades it's just that what bitcoin did is it change the narrative right up until now the slogan for money has been in god we trust' and ultimately let the people in that secret room at the for the Fed Board of Governors make the decisions now the mantra is trust no one verify via the code and play your role in the incentive based ecosystem now that's enabled via this cool technology that solved the double spend problem you know using every canary in efficient blah blah blah but in terms of solving that problem it's it's it's huge and it's a fundamental shift in the way we should think about think about money and call me I actually wanted you to talk about bankers experience with hearts because I think that's like a really concrete example that people can wrap their minds around yeah sure so the team behind Bank are previously experimented with what we call user generated currencies or community currencies community currencies you can think of like monopoly money which you drop into a group of people and we discovered shocking so that when you give people money they use it and we ran pilots all over the world with tens of thousands of users in each group and the one Laura's talking about was called hearts and it was a currency issued for mother's so mother's could join this group they would get hearts when they joined there were all these things they could do to get more hearts like volunteer at the school babysit for other parents in the neighborhood all kinds of things that were relevant to that community and then they could spend the hearts with each other so all the mothers would upload into the mobile app things they wanted to sell clothes bite toys services consultations really over fifty thousand items we saw it at any given time and it was a fascinating experiment because in just under a year we saw over twenty million dollars worth of Commerce take place among twenty thousand people only using hearts so no dollars no fiat currencies exchanged hands how do we calculate it just one heart was worth one dollar that's what we told folks it wasn't worth that meaning you couldn't cash it out but for pricing for ease of pricing a heart is a dollar if you're gonna sell a cake for twenty bucks you could sell it for twenty hearts in this network and what we realized was that when you look at a number like GDP for that year that we ran this experiment you know GDP could be at twenty billion dollars in a small country and and in this country it was actually twenty billion plus twenty million that no one was counting because that was economic collaboration that was happening between folks in a currency that wasn't being measured things got really interesting after that year when we started seeing usage plateau and then decline and what we understood and pilot after pilot with mothers with children with vegans I mean a diverse set of use cases in a diverse set of countries was that liquidity ultimately was the breaking point of these currencies what does that mean if you couldn't use the hearts to shop at the supermarket or if you couldn't use the hearts when you went out of your community or on a vacation to a different place the meaning of that money collapsed in your mind right it's like you can use monopoly money in a game but you can't use it anywhere else so we don't think of it as money and that's actually how we backed into the solution we work on at Bank or which is how could you allow all of these currencies potentially hundreds of millions of currencies like hearts and stars and and and things for communities all over the world how could you allow folks to get the abundance that they were getting out of local commerce and yet still have these currencies be globally relevant globally tradable and that's when we moved to essentially a mathematical based solution which as bill said programmable money is the key here you can now solve problems that the economists of old newer problems but didn't know the solutions to and now with very simple algorithms with very simple computer code you could tell a heart how much it's worth in dollars at any given time based on a really simple formula that says you know if more people are using hearts the value is climbing up and if people are not using hearts if they're selling out of them the value is climbing down and you could make those formulas take in any kind of factor that you think is relevant or that folks in your community think is relevant and that's what we call the longtail is really a world with hundreds of currencies like hearts that are relevant to communities whether they're Geographic whether they're local whether they're affinity based groups you know folks online and in different networks whether their corporate currencies and truly this idea of making money out of thin air is more like making agreements online or in code between different networks of people something that's come up a lot which I also talked about in my speech was decentralisation and we've been talking about you know these like user generated currencies or user incentivize systems and you know you talked about just providing the tools and people can create their own but how do we get there because a lot of these start off somewhat centralized right there's like an identifiable group of people that are creating this project so how do you get from kind of the original version which is somewhat centralized to an actual is a centralized crypto Network yeah give you my take I think what Mickey's doing is really interesting and creating the on ramps and off ramps to I think it's gonna happen in three stages I think that the so first of all we look at kind of the Bitcoin world as my favorite analogies the matrix right when you're you've seen the movie when you're inside the matrix in theory you don't know about the outside world except for the people that have hacked in and they use these hard lines to kind of hack into the matrix and that's how we use exchanges now exchanges represent kind of the hard-line back into the banking system to get money in and out so phase one is is is that that Austrian playbook that I mentioned before which is massive speculation which is what should happen when you have a deflationary asset that's been created out of nothing right and it's playing out that rulebook and so phase two says okay if the deflationary acid via stops and starts because especially because governments don't like it eventually gets up into the right from a price perspective the purse strings will be loosened because people are going to have massive amounts of wealth they want to take advantage of and people will offer lots of payment services because you know people are going to be incentivized to use their their crypto to make payments and then the third is what I talked about earlier where you see true programmable money in the form of smart contracts and other things enable things like micro contra micro payments decentralized investing networks hardware as a server myriad applications that can't be done easily with that or at all without cryptocurrency but require the first two steps right the press doesn't understand when they write about the lack of usage of Bitcoin that you simply can't bypass the first two steps in creating a decentralized system and it has to play itself out and wanted to get there right and 20 years is not a long time frame I had reunion last year with folks from Netscape we couldn't believe that it's been 25 years but it has right and so this time is it's it's it's not that long when you think about how many currencies have failed over the last 250 years to put the right pieces and tollways in place to make all this work in the decentralized model so I think the value of decentralization on a long enough timeline is kind of everything so on technical level you need to have more on chain governance you know how do we coordinating make decisions together but what interests me more and I think will lead to adoption more is is really more of a philosophical economic point right you know if all things are equal in a centralized legacy system let's take a facebook right and the service the network effect is the same the value of Facebook and Facebook decentralized Facebook's the same the only difference is decentralized Facebook pays you automatically you know $10 a month or $50 a year based upon your data and the things that are being monetized I you know we would think that economically you would go and join the decentralized Facebook so the thing that matters the most you know I think that thesis is easy to get on board with the thing that matters the most to me is people talk about a long time a long timeline all the time you know what's gonna happen first and I'm a big believer that if you look at the developing world you'll see the value of a decentralized company or service have you know more adoption first because it's really hard to match the value of Facebook today or uber in the US they do a pretty good job right so when you go to the developing world and I'll use we're talking a lot about thankfully today so solar energy so let's go to the developing world and blanketly across the place like Africa some people don't have energy or if they do they're spending about ten dollars a month on it right and there this could be ten five percent monthly income it's a lot so now with solar it you know it completely works so if you could have mechanisms to fund solar energy grids a local community can pay continue to pay to use something maybe five dollars a month now there have reliable energy I think it's great that it's green but maybe they don't care it's way cheaper right so now they're beating the legacy value of the $10 a month government-run legacy system that often goes out for like hours a day by the way right and but what's the result now compared back to me at home where I have reliable and at a pro-rata level pretty cheap electricity of a con Edison in New York City I'm not the co-owner of this network right so now you have these local networks we have you're solving a real problem and people are co-owners and profit errs as users of something that they use and I'll descend on this node at a high level because that model could be applied to pretty much anything else an infrastructure you know real-world level it's a lot cheaper using back of the envelope math to build a Hyperloop somewhere than to rebuild a New York City subway system so I think places where they have real pain points and they don't have a legacy system so kind of a blank canvas to build things you'll see using crypto economics and decentralized models a lot of this idea of users Co owning things that they use and you have the mix of this kind of free market libertarian ideals that have this kind of more utilitarian outcome by the way just one comment on that so if you look at the early writings from I say this like the religion but I didn't mean it that way like that when Satoshi was first releasing Bitcoin he actually talked about where she talked about whether Bitcoin was being released then to it as a result of the financial crisis that was happening at the time and and they said no we're actually trying to prepare for the one that's coming next in 10 or 15 years because like clockwork it is coming right and so let's get ready for that by laying the the rails and the groundwork to be prepared for that now it's interesting so Carly I want you to answer this question in particular because of what happened with bank or recently and where your I guess they call it the escape hatch key was was exposed so can you talk a little bit about that I know you guys have probably thought a lot about the essential ization versus decentralization pain point sure so I'll add that we think decentralization is a journey and not a destination what do we mean by that if you you know go to the essential nature of what it is we're trying to do and different people have different definition of this but we're trying to create systems that are more inclusive that are more fair that are more accessible and that hopefully make living together as humans on this planet a nicer experience a better experience and decentralization is a legitimate cause right because when we see centralization when we see governments when we see central bank's when we see you know over time if we go into back in history kings and empires and and all of the formats that we've taken around governance centers tend to abuse the power right that's the problem if the centers were not abusing power we might not be on this March for decentralization and so the question becomes not must we decentralize but how do we prevent centers from abusing power decentralizing is certainly one of the tools that we have in the toolbox but now thanks to program ability we also have other tools like open source like transparency if you could see every single dollar that was printed by the Fed and where it went in that moment there'd be much less abuse probably by you know bodies like the Fed they might still do do some bad things but they would have to account for a lot of the things that they do do right it's the the call for transparency and so to Laura's question recently at Bank or we used a what you would call a centralized control within our smart contracts which allowed us in this situation to retrieve over 10 million dollars of stolen tokens from the network there was a security breach there was a hack of the system and millions of dollars of cryptocurrency were stolen our central control was used to return the part of that currency that we had control over and so this this conversation ensued about decentralization vers centralization and we came out with a few additional points that we think are really important when looking at decentralization as a concept one is like I say open source and transparency can you see when an emergency control is being used do you know who has the ability to use it are there clear statements around who can use it when they will use it how that will be announced okay so the the transparency of the network is a big factor whether it's decentralized or centralized the second one is fork ability if the code of a network is easily for Keable because it's open source and because all the data is owned by the users then again you you extremely prevent abuse if Bank Horn knows that when we abuse our controls folks can make their own Bank or take all the code and leave that's gonna make us highly unlikely to abuse our own system because the next thing that will happen is it will collapse and the third thing is really the custody of the users do users in the network like in a decentralized Facebook example or in the bank or network do users maintain control of their own assets and their own passwords and their own private keys at all times with Bank where the answer is yes even during a security breach when the whole network was down any user could access their own wallet could access their own tokens could take them all could move them somewhere else at any moment even while our network was down and so again whether the central control that we had to activate in an emergency situation makes the network not decentralized is something that we would say look at look at these other parameters if users always have access to their own assets we think that is a huge step towards decentralization the last thing I'll say is that we think it takes some trust to get to trust lists right so you're talking about the crisis that will come in 15 years will we have products and services will we have teams working in the space that are able to provide progress in this time frame or will we keep waiting for the perfect solution to materialize perfectly in a technology environment that is incredibly unknown and so again some of the tools that we offer to the community as kind of pathways right and the thing about progress is its progressive and it goes step by step often are things like on ramps so we as an example gave our smart contract three years before it moves to its upgradable and immutable state we told the community we think it'll take about three years to monitor the early behavior of the network to make sure that the code is written appropriately to test some of the edge cases that are impossible to test until you go live and this three year on-ramp to immutability is what we think is safe for everyone in the first three years of this network will be the most accountable and responsible for the network safety we use the analogy sometimes of an infant an infant will become a fully self-sustaining human eventually that can feed themselves and live on their own without their parents not on day one and not on year one there's a certain amount of care that it takes for that infant to become even potentially self-sustaining and we think networks especially technology networks written on very new underlying block chains like aetherium or EOS or whatever you're building on written in smart contracts which are a new type of programming paradigm we're deploying immutable code to a block chain we think that these on-ramps are another tool that the community has in our toolbox to getting where we want which is more decentralized systems not descent eyes are dying so we're running out of time but I want to ask one last question here we've been through this like major speculative phase we're obviously coming down from that but when I look at some of the usage statistics even on the more popular projects like crypto kiddies or auger which just launched it kind of a lot of fanfare and they've all got you know like 50 or less users per 24 hour periods and I mean it's just there's just very little usage of these things so how do we go from speculation to adoption I think we need more real-world use cases to Bill's point earlier the best technology you don't know how it works I I get into my car it works when I watch Netflix it works and I think what's taking us some time is what's a natural human behavior is while it's a global movement a lot of technologists are looking in their own backyard you know how can my life be better and it's what I said earlier I think that just is really hard to compete with legacy systems I think if we look to places like the developing world where they have pain points longer than I can list and any amount of time you're gonna see those real world uses happen I think what's really important is as we have a real world user base that's using crypto technology under the hood to solve nyrians how is it including the rest of the world and developed world users right so back to that solar analogy can we fund those things and in I'm not kidding with this napkin math in two months can we get a 2x investment I'm outside before this conference today and there's an add-on like the garbage disposal for the paper or something and for a bank and it goes locking your money for 2% CD and inflation is about two percent in America so I think also a lot of the average people here we're lacking I think will happen on fine financial stuff first we're lacking access to wealth investments and people over here are a great place individually and communally to invest our money and we just don't have an easy-to-use application for us to to connect to each other financially look I mean in 1993 you had to install a tcp/ip stack on a Windows PC to access the Internet right most I'm sure anybody here under the age of 30 doesn't understand what I just said so which is fine you shouldn't have to and look where we are 25 years later my prediction is is that Bitcoin or its successor will become the payment in Seto rail for what become banking transactions of the future hopefully via is something like lightning on top and the average person in this room or anywhere maybe less so in this room because savvy people but the average person will not know that it's using Bitcoin or its successor they simply won't they'll be using the you know fancy-schmancy multi-sig smart contract stuff that I rambled on about before but the bottom line is but just curious how long do you think it will take to get to the point where people use these technologies in that way but not know that they're doing so ten years oh well yeah because it was a lot of liquidity rails that have to be laid first we need more hard lines into the matrix in developing markets to make it you know really accessible but the large-scale applications which may be collectibles they may be you know new tokens on aetherium they may be just Bitcoin that I take advantage those rails I think are five to ten years out yeah I think on the on the shorter end of that spectrum five years we're already seeing at bank or we launched a project in Kenya where paper currencies that folks are using in rural villages they don't have access to the National money one of the biggest problems with money is that not everyone has it that's that's the problem and the killer app for blockchain is money lots of money all kinds of money money that people can actually get in their communities and that they can actually use to buy and sell goods and services right where they are it's not financialization its commerce its trade it's living life with the people around you we've already seen this literally this week in Kenya the first tomatoes were traded on the blockchain and folks in a town were given cryptocurrency put it on their smartphone it's true the apps are still you know a bit clunky a bit advanced but that's changing quickly because we have the underlying infrastructure the internet the smartphones and the the things that came before and they're using the currencies at the market so that they can trade amongst themselves it's already happening the moment the village next door gets wind that this village just made their own money and now everyone's using it and buying and selling from each other we think it's gonna catch like wildfire great well we'll leave it at that thanks so much thank you [Applause] [Applause] you

6 thoughts on “Getting Current on Crypto | Global Summit 2018 | Singularity University”

  1. Things are changing faster than even these people are aware… Herein lies the problem: The facilitation of Bitcoin is currently using a similar amount of electricity as Ireland and increasing, plus the bandwidth usage. A transaction takes 89 minutes to complete with a through put rate of 7 transactions per second… these timings will only increase incrementally with adoption. Blockchain and Bitcoin are in trouble… blockchain has been superseded in relation to secure transactions within peer to peer networks, it's now possible to undertake these transactions in real time. Plus bitcoin can now be centralized if necessity dictates. Please feel free to read the following 'tongue in cheek' article… if you understand it fully, you will comprehend why the crypto apple cart is about to be upturned yet again:

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