The Future of Money: Is Cryptocurrency the Answer?


Good morning. I’m extremely
grateful to be here in Dubai. It’s my first trip, and I’ve travelled
a lot the last six or seven days, so everyone is getting me
at like 80% energy, which is probably very fortunate
for everyone in the audience. In the past 12 months
I have travelled a lot, not just across the United States and Europe
but really around the world. I have flown over 300,000 miles,
having conversations with delegates like this one,
with regulatory bodies, with young students in universities, in the pursuit
of answering a question around what really drives people
and their motivations? You know, we spend our entire lives
in the pursuit of money so that we can facilitate choices. And I think it’s kind of interesting to take a little time to reflect
about the future of money. And so today I hope to share with you
a little bit more about what we’re learning. So, once again
my name is Nicolas Carry, and I co-founded
a company called Blockchain, which is a key innovation that you’ll
be hearing a lot more about very soon, and today
I’ll share some stories with you. My company is one of the fastest growing
technology companies in the world, routing about a hundred thousand
users a week, and we now do business in over
a 140 countries in the world. All of the software we build
is open source. So you’ll see a lot of photography
in this presentation, it was taken by myself
and family members while I travelled around
the world this year. I have a kind of an unusual family, my mother’s French, my
father lives in South America, my sisters spent
the last few years in Morocco, so I went to visit her and got to see
how she was living there as well. So, this photo was taken there. Imagine a world with completely
frictionless payments, a world where you
can send value from a fly fishing lodge in southern Patagonia
all the way to Singapore instantly, basically for free. Imagine a completely frictionless
payment platform where users come first; an open payment network
that anyone on earth could participate in. Well, I’m often asked
to talk about Blockchain, and I’m often asked to
answer the question ‘what is Bitcoin?’ and it’s really
hard to talk about one without talking about the other. So, today I’ll start with answering
this question: What is Bitcoin? Bitcoin is massively misunderstood,
and that’s OK. Just like a lot of things that are new,
they’re complex and confusing, but over time
we can understand their utility. So, Bitcoin is a technology; it’s a financial protocol
for value transfer, and it’s the largest distributed
computing project in the world. It’s also a transaction network. Now, for a transaction network
to function it needs 3 things, you have to have a currency,
you have to have a trusted ledger so you can track the provenance
of transactions and the chain of title, and you have to settlement
with a high degree of certainty. Meaning you have to have
trust in the system. Now, Bitcoin has all of those things, and it stores all the transactions
in something called the Blockchain. So, what is the Blockchain? You’re going to hear about this a lot,
it’s a conversation that’s happening here in Dubai,
it’s happening in London, in New York , in Singapore,
and around the world. It’s one of the most important
innovations in computer science, period. The Blockchain is basically
a spreadsheet in the cloud. And as a transaction network
it’s fundamentally different than the ones we rely on
every single day. Now we use transaction networks a lot, like Visa, MasterCard
and PayPal. But these are proprietary,
they’re centralized databases with centralized risk. The Blockchain,
the Bitcoin Blockchain, which is what I’ll be primarily
talking about today, is a decentralized network, with copies of that spreadsheet
in the cloud all over the world; in fact, there are thousands
and thousands of them. And the core innovation
of this invention, is that when an update happens
to the spreadsheet, it happens simultaneously
in all of the copies. This is really important; if one of those copies gets corrupted
or burns to the ground, the network can continue
to process transactions instantly. This is entirely different from the type
of transaction networks we’re used to, and it’s vastly more efficient. So, once again,
Bitcoin is not a company, it’s not centrally controlled, and it’s not bound to jurisdictions
in a conventional sense. It’s a global and open payment
platform for value transfer. It is based on peer-to-peer technology, we use these things all the time; there’s a little company that was based
out of Luxembourg called Skype, that put peer-to-peer telephony
into all of our pockets, and actually most of
the phone calls in the world happen over this technology now. The interfaces for these
things have changed a bit, but the expectations have changed a lot. People expect to be able to call someone
instantly anywhere on earth nearly for free now,
and I can tell you the perceptions around value transfer
are changing too. So, today, Bitcoin transactions
happen between individuals, between companies,
and soon between machines. And like to talk a little bit more
about some of these opportunities. But for those of you that have
never seen a Bitcoin transaction, you can find me after this presentation
wandering the halls and I’ll set you up
with a Bitcoin wallet. In just 30 seconds you can download
an open source, free application and put it on your phone, that will completely replace your need
for a banking relationship. Let that settle in
for just a moment; ten thousand lines
of open source computer software can be placed
on any Smartphone the world, and then you can send value
and transact with anybody else, using the world’s largest
peer-to-peer payment network. And it’s amazing, it doesn’t care
what the color of your skin is, what your credit score looks like,
what your gender is; it’s as easy as signing up
for an email account. So, just like with email,
if I wanted to send someone an email, I would need to know
their email address, in Bitcoin, there’re Bitcoin addresses, and you can show one to anybody,
and then they can send you a transaction. When that transaction gets sent, it gets broadcast
to that spreadsheet in the sky, with copies all over the world. This is a live feed of transactions
on the Bitcoin Blockchain right now, and there are thousands of
transactions happening every minute. People frictionlessly sending value
from one place, across the border, instantly, as easily as an email,
for nearly no fee. So, the history of Bitcoin
is quite spectacular, and there’re some great books
you can read, there’s one by a New York Times
bestselling author, it’s called “Digital Gold”
and a chronicles all the drama and the interesting things
that have happened in the last few years. Most importantly, it was introduced
as a white paper in 2008; some early cryptographers
and computer scientists started to dedicate their time,
investing in this project and building scale into it. In 2010, the world’s first transaction
in a market price was set for the digital currency, when someone sold
10,000 Bitcoins for two pizzas. These are now the world’s
most expensive pizzas ever, they’re valued
about five million dollars. In 2011, some venture capital
started to come into the space and that’s when we founded
my company. Exchanges were formed,
merchant processors, and companies all over the world
started to accept Bitcoin, curiously, as a form of payment. Many of these companies you know of:
Wikipedia, WordPress, Overstock, Dell, Microsoft,
all accept Bitcoin as a form of payment. Why do you think
they would do that? Well, they can accept an instant form
of payment from anywhere in the world that’s purely digital,
that has no fees, no base fees, zero chargeback risk. And this is why all those companies
started to accept Bitcoin. Last year, instead of
votes of confidence, you had huge money
pour into this industry, and I’ll explain why in a moment,
but large firms have started to put nearly a billion dollars
into this technology, because it’s going
to reshape value transfer in the future. The economics of Bitcoin
are pretty interesting. The coins that people mine,
which explain in a moment, are released predictably.
So, unlike centralized banking, where we wonder
what the inflation rates will be set by the central banks
and lending rates, this whole thing is regulated
by mathematics, and it’s entirely predictable; there will be 21 million Bitcoins
at some point in the future, and they come into circulation
and get lent out, essentially, to the people
that maintain the network. They are known as Bitcoin minors, but they’ll be more than enough,
21 million doesn’t sound like a lot, except they’re divisible
by up to 8 decimal points, so, they’ll be something like
four quadrillion units if this ever becomes
very, very big. So, the whole system is secured
by super advanced cryptography and mathematics,
and I won’t go too much into that today, because that gets really boring. But this is a moment for us to think a little bit about
this time in space where we are today. You know, human beings have invented
all kinds of things to improve our lives; we used to live in caves and
we used to dig holes with sticks, and then we invented shovels,
we built roads and we paved them. You know, we can improve
and optimize our environments, why can’t we make a better
form of money? What properties would we
want our money to have for the age of the Internet? Well, I submit you need your money
to be easy to divide and combine, it would need to be
counterfeit proof, it will need to be highly durable,
so it shouldn’t corrupt if it gets wet or burns. It should be digital, so you can
send it anywhere in the world, instantly, basically for free,
and lastly and most controversially, maybe it would have a scarce
and known supply, like oil or gold. We know that things that have scarcity
and are useful have value. Bitcoin has all of these properties
designed into it, and it’s such a nice
form of money the people are using it without any coercion at all,
which is why more and more people every single week
are transacting on the Bitcoin Network. So, where are we today? Well, it’s only been a few short years and this is still very early on
in the project. You’re quite seriously
some of the first people in the world to be hearing about these ideas. So, what you’re looking at there
is the volume of transactions. A lot of people want to hear
about what the price of Bitcoin is, and I find that to kind of be
an exhausting conversation. I’m far more interested
in the number of transactions that are happening on the network,
and you can see there that the number of them is growing. So, what? Why is everyone
curious and interested about this? Well, we have for the first time the world’s first scarce
digital commodity. It’s borderless and frictionless
and it’s purely digital and it’s the world’s first payment network
with zero counterparty risk. So, what is the scope
that this project is starting to tackle? There are 7.7 trillion dollars
in annual credit card fees and credit card transactions globally. This costs consumers
hundreds of billions of dollars. Did you know that last year
the rate of online fraud outpaced rate of online
e-commerce growth? This is kinda surprising to people; credit cards are an atrocious
security design for the internet. They are a pool-based system,
every single year we hear more and more about how centralized
data repositories get compromised. When you pool
a lot of personal data for people or collect a lot of valuable information
or their credit card details, you increase the incentives
to breach those services. So, we need a new system. Just a few weeks ago
I was in New York City, in Bryant Park, which is when the wealthier districts,
and there is a pond there, and there were some children
throwing quarters, making wishes, and I hope that they were thinking
about their futures. There was also a homeless person
picking up those coins. You know, in the United States,
one of the wealthiest countries in the world, 20.1% of US households
are actually under banked. It’s a surprising figure. You know, we talk about
financial inclusion, there are 2.5 billion people
on Earth that don’t have access
to financial services whatsoever. Goldman Sachs recently produced a report
that said that 33 percent of millennials do not expect have a bank account
in the next five years. Combine the millennials
with 2.5 billion people and everybody that’s getting access
to the Internet on their Smartphones, and you can start to see
where we’re headed. What if the parents
of two young Thai children had access to a better financial system that was more open and more equal
than the hedge fund managers in Canary Wharf? So, I like photography, and a few years ago
I used to have to develop my pictures. Now, no one who’s born on earth is going to ever
know what that means anymore, because I can just take a picture
with my camera, on my phone, instantly broadcast it
to all of my followers, and we know that Kodak
is now bankrupt. I used to have to drive my car
to go get a VHS tape and put that in the machine
and hope that I could get a movie that wasn’t corrupted.
But now I can download any music or any content
or any film I want instantly to nearly any device
and many times for free. And we know what happened
to Blockbuster. So, I travel quite a bit
and sometimes I forget important birthdays like my mother’s, but now,
thankfully, I have a calendar reminder and I can send her an email and make
sure I keep that relationship intact. So, whether we’re consuming content
or sharing experiences with our loved ones or keeping in touch with friends and family, the digital world
is part of our DNA now and I submit its probably best
not to have our head stuck in the sand on this issue,
because money can be digital too. So, this is a quick overview
of the places we’re doing business. Every blue shaded country
has at least 10,000 wallet users where people have basically
built a bank on their phone, and, on a peer-to-peer basis,
they’re sending value back and forth between each other. When people ask me
what is Bitcoin all about, I say and tell them that Bitcoin
is honestly an open opportunity to participate in a financial protocol
than anyone can choose to innovate on. Completely permission-less innovation. You know, you’ll hear
a lot of fantastic stories, some of them are pretty exaggerated,
in the media about what the Bitcoin is
and how it can be used, and there’s been
some pretty insane stories. But I like to say that really
things are coming at me from a different light
and a different perspective. There is so much opportunity
to do a better job. The fact that it’s faster for me
to probably collect all these chairs and FedEx them to New York, than it is for me to send a wire transfer
from Dubai to New York, is kind of indicative of how
poor the problem is today. So, we can build something better. Here’s kinda where we are. In the very early days,
we had the pioneers, the computer scientists
and the people with expertise in cryptography that built this system, then came some builders,
they created commercial companies to create software that would make it
easier for people to use Bitcoin, and now that we have a Blockchain that allows us to track
the provenance of digital transactions, we’re gonna be able to innovate
and build some incredible applications. And I’m going to talk a bit more
about those now. So, once you have a transaction network
with immunity of record-keeping, so, the Bitcoin Blockchain
can never be reversed; once a transaction is written to it,
it’s there forever. You can build all kinds of other things
on top of it other than digital money. Let’s talk a bit about a few of those. How about an identity
management system that allows people to have custody
of their personal data on maybe a smartphone,
like a passport, and they credential into systems
but only share the specific things that the other party needs.
So, for example if I want to download a song from Apple,
all they need is payment information, they don’t need to know
anything else about me. And using a system like this,
you’d be able to do that. In fact, in governance
this is really exciting, you could build
fully transparent voting systems and instantly be able
to pulse your citizenry on different topics and issues. We expect voting and identity management
systems to be very, very exciting. Asset tracking
seems like a really obvious one. There’s a company that is registering
millions and millions of diamonds onto the Bitcoin Blockchain, so that when you sell them
on third markets, you’ll be able to know, with 100% certainty,
that that diamond was sourced ethically, that the geological fingerprint
of that diamond is true, and that the person who has a certificate
for it has the authority to sell it. But it’s not just diamonds,
it might be artwork, it could be properties,
it could be a lease to your house, it could be stocks and bonds. This is why Nasdaq is experimenting
with Blockchain technology. Supply chains. You know,
we have all kinds of problems today because we don’t know
where things are coming from, and we don’t know that during
the course of their trip to market that things came in the right way. We could actually
use the Bitcoin Blockchain to timestamp the delivery of goods
and services and foods, and make sure that we have
transparency in our supply chains. Payment rails
are kind of the most obvious one, but here is a map of every single
place in the world where someone has a smartphone
and is using Facebook. In every single one of those places,
if someone has a smartphone, they can also download
an app that allows them to financially transact
with anyone else in the world now. Store value. So there are many places
that don’t have financial systems quite as nicely as the ones
we kind of participate in here in Dubai and in the West. There are places with high inflation, with weak trust in institutions, where peoples’ savings have been
wiped out time and time again. As a hedge,
people can use Bitcoin in places where currencies are collapsing, like Argentina
or Cyprus or Greece or other countries, and simply store some value
and protect it against the corruption of financial services. Now, this is probably
one of the most fantastic ideas, but remember,
once you have digital money, you have programmable money. So, smart contracts
are very, very exciting. Let’s look just a little bit
into the horizon and into the future. Imagine a world where
you’re running late to the airport, and the Hyperloop isn’t quite yet built,
but it’s coming, and so, you pay your self-driving,
autonomous car a little bit extra so that it can negotiate with
all the other cars on the road and get out of the way, so that
you can get to the airport on time. Or, maybe, you get home
and your refrigerator is out of milk. Well, no problem,
your refrigerator has a Bitcoin wallet, it calls up Amazon,
it negotiates for the cheapest value of the best organic milk possible, a drone, that is sitting
on someone else’s roof, goes and picks it up,
it drives over to your house, flies rather,
it drops off the milk, and a geolocational trigger triggers,
the payments are all made, and everybody gets compensated. This is kind of getting
to the Internet of Things. Before you can have
an Internet of Things, you have to have a payment network
that can do micro transactions, you have to have a payment
network that can facilitate not a few dozen transactions
a minute or a few hundred, but hundreds of millions
of transactions a minute. You need a global,
open payments platform. So, where are we today?
Nearly a billion dollars has been invested by venture capital and growth funds
across the range in the industry, some of the largest technology companies
in the world are using and accepting Bitcoin
as a form of payment, and I anticipate that that
will continue to grow this year. So, in passing in short, I know
there’s a lot of curiosity on this topic, and I’m hopeful that you were able
to learn a little bit more about something that is keeping me awake
every single night and I’m very grateful
to come here and share with you a little bit more about what
I’ve been learning. So, thank you.

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