Andreas Antonopoulos (aka Bitcoin Jesus) - Episode 1 - Forecasting The Growth of Bitcoin

Full transcript: Andreas Antonopoulos on London Real

1:58 This is London Real. I am Brian Rose. My guest today is Andreas Antonopoulos, who is a technologist and serial entrepreneur who’s become one of the most well-known and respected figures in Bitcoin. You are a three-time guest on The Joe Rogan Experience. That’s two more than me, and in my opinion you are the best in the business when it comes to understanding and explaining Bitcoin and cryptocurrencies and their implications on the future.

2:22 Andreas, welcome, finally, to London Real. I’m so excited to be here. Finally, thank you. I think we’ve been trading tweets and DMs for a year. Yes, absolutely.

2:32 Yeah, you know, I think I first heard about you talking about Bitcoin on one of the first Rogans, and he went back two more times, and you know, immediately when I heard you talking about it, I was like, you obviously know what you’re talking about, and almost more importantly, you can relate to almost anyone. You know what a cryptocurrency is, you know what Bitcoin is and I want to jump into all that with you, but before that I wanted to just kind of tell you my relationship with Bitcoin. We started talking about it here, I think in early 2013, maybe March or April, and I put out a tweet saying, you know, who should I talk to about Bitcoin?

3:07 And a bunch of people came back and were like, Max Keiser. And so then Max and I started having this Twitter battle, and I was just like, who’s this guy? And I watched Modern RT, and I was like, this guy’s obviously out of his mind, and then someone will come back and they’re like, no. And then Max and I started tweeting, and he’s like, I don’t think the London Real guys can handle Bitcoin, and then I remember I said something like, I don’t think Max is our guy.

3:27 Will the real Slim Shady please stand up? And then Max and I traded a few emails, and he was like, when and where? And I was like, shortage, Friday at noon, and he was like, fine. And I thought he was going to come in. I thought we might get into a fight, but we didn’t.

3:40 He came in. We had this epic episode. We called Bitcoin, Bernanke and Buffett, and Max kind of did his whole thing. Since then I had a relationship with Max, and we got along really good. And funny enough, later he was at my house for Thanksgiving November 2013, and we had a trader, a City trader, at the table, and he almost ended up buying a Bitcoin from Stacy, Max’s wife, for about a thousand dollars.

4:03 Then maybe it was like a thousand twenty, and they almost transacted in front of us, like City traders like to do. And, uh, you know, that was kind of my start with Bitcoin. I’m sure you remember those days of 2013. Yeah, I was wondering if you could tell the people, you know, how you got started with this relationship with Bitcoin? And what is your relationship.

4:22 I know you travel around the world talking about it, so can you tell us a little bit about you So, I started. First of all, my background is in the space. I’m an insider, meaning that I’m a computer scientist by training. I’m a graduate from UCL here in London, in fact, and in the, I guess, early to mid-’90s, I got my graduate degree, a master’s degree in distributed systems networks, and I focused on security, so systems that use networks to decentralize control were my focus way back then.

5:00 And of course, at the time, that was mostly the internet, right? And, but at the same time, back in the early 90s, we started seeing the first applications of cryptography and currency with DigiCash, which was a system developed by David Chaum, who’s essentially the grandfather of digital money, and then over the years, several other attempts. Now I was always interested in that as an applied area of cryptography and distributed systems, but it kind of faded from my interest.

5:33 A lot of these early things tried and then failed, and one of the reasons they failed is because there was a single company, and as soon as that single company gains some traction, someone somewhere around the world would get very annoyed and stomp on them. Right, so centralization was the weak point, right, which is a story in a lot of technologies, right before the internet came around. Yes, so fast forward. I worked in security. I did a lot of work around networks and data centers and distributed systems and security.

6:06 I worked for a lot of banks, not directly as a consultant, doing various projects various payment networks, data centers, things like that. And then the financial crisis happened in 2008. Yeah, I had become quite disillusioned, but I was still working for banks because of the only ones who had money. Yeah, sometime around the middle of 2011, while I was doing other things, completely absorbed. I was running a company.

6:34 I was a partner in an analyst firm I had 17 employees in the firm, so, you know, a startup right after the crisis, trying to survive. Pretty busy. I read something about Bitcoin, and I think it was related to gambling at the time, or some because the U.S. had passed a law against online gambling. And a lot of these sites had migrated abroad, and then payments became an issue, and a lot of them had started looking at Bitcoin as an alternative mechanism. So it was something like that, and so I wasn’t interested in gambling, and therefore I missed it.

7:10 I read about it. I was like, nerd money for gambling, just ignored it. Six months later, I read another article right at the beginning of 2012, and this time, for whatever reason, I went and read the Satoshi Nakamoto white paper. I wanted to read the original scientific paper to understand what this was, because the fact that there was a scientific paper behind it made me think, maybe there’s something more to this than simply you know, a flimsy system of money.

7:41 Maybe it’s something kind of like DigiCash. Maybe there’s been some advances in cryptography I read the paper, and halfway through the paper it just went boom in my head. Like, okay, first of all, this isn’t a currency, it’s a network. Secondly, it’s a network that solves distributed consensus. This is huge.

7:58 Right. And for people that don’t know who Satoshi is, can you explain? So Satoshi Nakamoto is the creator of Bitcoin. He took, or she took, several different technologies that existed at the time and created this combination that provides the fundamental innovation behind Bitcoin, which is the ability to have global consensus on a distributed ledger without any third party, without any central authority, without any center of any kind. The first completely decentralized form of trust that is based on network, the first network-centric trust platform, right, which is a very important concept.

8:38 So right away you didn’t think currency, you thought, this is a network I read currency, but then when I see how it works, I realize, well, in this case it’s much more, and the reason it’s much more is because if you just flip it around and think of it from a different perspective, currency is almost like an app. Like, you have a decentralized trust ledger where you can record the ownership of something. Well, the most obvious something you can record the ownership of is a system of digital cash, but that’s not the only thing you can record ownership of.

9:14 And so once you read that, you’re like, okay, you’ve done digital cash, but if you have this building block, you can make so many other things. You can register assets, real estate, do governance voting. The list is endless. Is this the blockchain? This is the blockchain, and it’s decentralized consensus mechanism behind it.

9:36 Okay, which is maintained by people who then do the mining of the Bitcoins. Yes, and that’s kind of how it’s paid for, in a way, right? The easiest way to explain it is this: if you are introduced to the internet in 1992, you may make the obvious mistake of assuming that email is the internet, and for a very long time, email and the internet are indistinguishable. It’s not until ’95 that the web comes along, and when you have two major applications on the platform that allows you to see the platform.

10:10 Until then, when there’s only one application, you can fuse the application in the platform. Bitcoin, the currency, is email. It’s not the real invention. It’s the first application of that invention. So Bitcoin as a whole is not just money for the internet.

10:29 It’s the internet of money, and currency is just the first application on the internet of money, and there is a whole set of applications that we can build on top of that. So when I read the paper, that’s what I started realizing, this is a platform, and on top of it you can build decentralized trust mechanisms, and currency is the obvious first application, and that alone is huge. Don’t get me wrong, it’s absolutely huge, but it’s not even the beginning.

10:56 Right, and so this is 2012. You read the white paper. What was your next move to get involved? Um, I went into a fugue state for four months. I dropped everything.

11:08 Is that like a cocoon statement? I am, I it’s, it’s almost a dissociative state. I would get up in the morning and read everything I could find about Bitcoin, run code, program, digest code, read more papers, read conversations, try to understand it deeper. Look at my watch, and it’s midnight. I haven’t eaten anything.

11:32 Go to bed, wake up at eight o’clock in the morning, start again, 18 hours a day for four months, just unable to do anything else. Is that an obsession? Complete obsession? Okay, to a point where this is not healthy, right? I lost 26 pounds in four months, not because I was dieting, but because to eat, I had to stop reading.

11:59 And at that point, were you an expert in it? I’m not an expert today. Okay, okay. What did you learn in that four months? And the reason I say that is because it’s a never-ending journey of discovery.

12:16 You scratch the surface, you find a layer, you dig, you find another layer, you go deeper, you find another layer. It opens up new opportunities, new possibilities. You start experimenting with those. You open up another layer, and while I’m doing that, Bitcoin itself is evolving, right? Bitcoin today is not Bitcoin of 2009.

12:35 It’s growing, it’s evolving, it’s developing new capabilities and features and so I’m absorbing as much information as possible, but the information itself is growing at the same time. So while I do know a lot about Bitcoin, I will never know everything about Bitcoin, right? And just like the internet, the applications, the way people are using it changes every month. So there’s all these new iterations, right? You can never know enough.

13:00 There’s never the end of the internet. To me, it seems that Bitcoin suffers from a bit of a marketing, uh, problem, and if it was ever to be done again, it could be attacked from a completely new way, because as you said in one of the Rogan shows, you know, people know it as being associated with drug dealers, terrorists, and pornographers, which is also true about a lot of new technology. VHS, every new technology, net, every new technology. Why is it the criminals become early adopters of technology?

13:26 Because they face the highest level of friction in the marketplace, because criminal enterprise is the least efficient form of enterprise, and therefore you have to use the most. It’s the most brutally competitive, and you have to use the most cutting-edge technology. Criminals were the first to use cars, the first to use phones, the first to use electricity, the first to use every single technology. Fire was probably first used by a criminal, because they need it for their business, because they’re on the cutting edge, because by necessity.

13:55 And that’s not saying that that’s a good thing. That’s just a simple recognition of the fact that when you have something that solves problems, it will be applied in the areas where friction is highest, and the places where friction is highest is usually related to illicit activity, because the friction is imposed by society to stop those things from happening. Right, and so of course they do. Of course they use them. But that changes very quickly, and it changes in every technology, because as the adoption spreads and it becomes more mainstream, the use of the technology changes to reflect the user adoption, to reflect the society and the culture that’s adopting it.

14:39 So you know, today the internet is used predominantly to post videos of cats. Uh, still, it’s an enormous industry, and will continue to be, the petabytes of cat videos. Um, but the point is that the vast majority of people use the internet to do perfectly normal social interactions, and Bitcoin is already morphing into that. But it started off with being associated with this Silk Road and these kinds of places, but a lot of people’s first contact with it was something like that.

15:13 Yes, and of course, not only is there some association with that, but then of course that is the only association the media wants to write about, because it generates clickbait headlines and eyeballs. So would you argue that some governments would prefer that association as well? Oh, they’ve been actively promoting that association, and they’re quite gleefully piling on the propaganda, because that allows them to really try to stop something that feels uncomfortable, that is changed, that represents a threat.

15:45 When I read the account of, you know, the Dread Pirate Roberts being arrested, who was, as far as we know, one alleged to be the creator of the Silk Road, or one of the many creators. When I read about it, and read about the hit that he apparently put out on Bitcoin for me being in the media, I just thought, this is, I can’t even believe 20 of this, just because it sounds like it’s such in the interest of the US government or governments worldwide to make it look bad. Well, we now know that, uh, some of the most nefarious activity occurring on the Silk Road was by the two DEA agents okay, who have now both pled guilty and are facing versatile sentences for not only stealing money, but of course the, the actual hit was orchestrated by a DEA agent.

16:29 Right, DEA agent. Oh, to incriminate, or just for his own reasons? He, he stole more than half a million dollars, okay, from the Silk Road for his own pocket. Okay, so that story is already being discounted? Well, it’s not being discounted.

16:43 Well, Ross Ulbricht is in jail, right? Regardless, but in the end the most nefarious, most corrupt character in all was a drug cop. No surprise there. What’d you read on all of that? What’d you read on the closing of the Silk Road?

16:57 All of those pieces? I can’t comment on the case itself or the closing of the pieces, primarily because I had some involvement as an invited expert witness on the side of the defense, to provide expert testimony about some of the evidence, and that’s still pending in appeal. So I can’t talk about that. However, I think it’s important to understand the motivation behind why was the Silk Road so popular? Why does an online marketplace for drugs gain traction, and why is it that the day after the Silk Road was shut down, 20 more appeared in its place, and when those were shut down, 20 more appeared in their place, and they’re proliferating?

17:38 Why is that? And there’s a really simple answer to that. You can’t get stabbed over TCP. And so if you’re involved in a drug addiction, if you suffer from addiction, and that is a health issue, not a law enforcement issue, and we don’t treat it like that in our society. The problem is that the worst part of a drug addiction is that you also get exposed to this enormous risk of violence, because you have to engage with a black market and with street criminals, whose only reason for existence, or the function that makes them exist, is the fact that because the substance is illegal, it makes it extremely expensive and fuels this enormous black market.

18:30 Just like prohibition created the, the mobsters in the United States, and organized crime blossomed under alcohol prohibition, and created enormous amounts of corruption. The black market in drugs, and treating addiction as a law enforcement issue instead of a health crisis causes corruption to blossom. Causes corrupt DEA cops to be soliciting hits. Causes all of this violence and cartels and things like that. So for the people who are addicted, who arguably are victims, right?

19:08 We may see them as criminals in some cases, but effectively they are victims, and they weren’t all drug addicts. I mean, they sell, uh, they would sell marijuana, they would sell psychedelics, and other types of drugs. It’s not necessarily the typical class A addict that was online. Well, those distinctions are whitewashed. Absolutely.

19:24 In fact, the majority of it was, was that, um, they also sold cigarettes because they want to avoid the tax, and they sold alcohol because they want to avoid taxes, so many of the addictive substances. But the bottom line is that for addicts, the real issue of violence is solved by an online marketplace, because now you can’t get stabbed over a website. And, and, and that’s why these things are popular, because they address one of the fundamental problems with black markets, which is violence.

19:54 Right, that doesn’t mean I’m endorsing them. I’m just looking at the realistic issues here. And so we had a guest on named Jamie Bartlett, who wrote a book called Inside the Digital Underworld. He’s a British guy. He’s fascinating, and he went into the Silk Road and found out it was one of the best peer-reviewed, you know, accountable marketplaces there were.

20:14 And from what I hear, that’s true. It, you know, it had a lot of feedback. It was kind of the Amazon of that, and you could get some of the best quality and the best repeat business out there, so not only did you save the violence, but you actually ended up getting a great product and great customer service. Absolutely. In fact, one of the interesting things about it is that it used escrow services, right?

20:39 Meaning it would take the funds, put them in a controlled account, until the buyer and seller could agree, like eBay does with PayPal, right, and allow for dispute resolution. Essentially what that is is a contract-based solution to what is normally addressed with violence in a black market, right? You don’t cheat your dealer, and your dealer doesn’t cheat you, because someone’s going to get hurt, right? And when you solve that with essentially a smart contract, a technological solution, it makes for a very efficient marketplace, just like it does on eBay.

21:16 You know, if you go into a black market to buy a second-hand television, and you’re dealing with unscrupulous people, you could be resolving that dispute with violence, but instead you use eBay and PayPal and dispute resolution to do that. And there’s nothing different when the product is narcotics. It’s just that the chance of violence goes up. So the Silk Road actually solved some. It offered solutions to a market where there was demand.

21:46 We have to accept that, understand why that is the case. And obviously, my position is that what this points to, which I think a lot of countries are beginning to realize, is that these things need to be treated as a health crisis, not as a law enforcement issue, because in the end, you can’t solve the health crisis. You only end up corrupting the law enforcement. Right. Did you think, do you think overall the Silk Road helped the evolution of Bitcoin, as in showing that there was a real need and real people were using this thing, even getting the word out about it?

22:24 Sure, it did. Okay. Absolutely. I mean, I have to acknowledge that. Right.

22:27 Okay. So not necessarily a bad part in the history, maybe a necessary step? Well, I mean, it did enormous damage to the reputation of Bitcoin. And in fact, the closure of the Silk Road and the continuation of Bitcoin beyond that, um, helped enormously with the reputation of Bitcoin. But, uh, but certainly, you know, a lot of early technologies, they find their early adopters in whatever niche they can find.

22:51 Their early adopters, the internet grew up on pornography. we can pretend that’s not the case, but that is the case. That’s what drove the early internet, and now it supports an enormous range of economic activity and helps every aspect of society. But yeah, that’s its birthplace. We can, we can, we have to accept that’s the truth, right?

23:11 You told me earlier that you posted your first video on YouTube about Bitcoin. I think it was April 2013, or two years ahead, maybe two years and a quarter. What’s your life been like the last two years, and how has the life of Bitcoin kind of evolved since you first started talking about it? What’s, what’s happened? Well, I, I decided early on.

23:37 One of the skills that I had in my career, long before Bitcoin was public, was public speaking, and, um, I’ve been doing a lot of teaching and explaining technology in terms that are simple and easy for people to understand. That’s something that I’ve been doing my entire career. So when I was looking at Bitcoin and thinking, well, I’m not, I can code, I’m a programmer, but I don’t have the production skills to code every single day, or the time, and quite honestly, I’m not that good at it.

24:10 There are far better programmers than me, of course, in Bitcoin. I don’t want to necessarily invest in Bitcoin. I’m not going to be able to be a serial entrepreneur as much as I’d like, but I have this one skill. So what I want to do is talk about Bitcoin and help explain it to people. So I started doing that, and I started contacting journalists and TV stations and local media and conferences, and saying, listen, you wrote an article about Bitcoin, it’s got some inaccuracies.

24:42 Maybe I can help you here. Here’s a few comments. Next time, I’d be happy to give you a comment. And gradually started building that in order to help better explain it, to cover misunderstandings and things like that, and then suddenly it just snowballed on me, and I had no expectation that it would. But so I posted the video on YouTube, and it would get a quarter of a million views, and I was just blown away.

25:09 And so, um, after that it’s been a complete roller coaster, whirlwind, worldwide ride of craziness. Right now, the value of Bitcoin has gone up and down. We talked about it in 2013. It was up, you know, I think over a thousand dollars. You can probably tell me exactly as the value of a Bitcoin goes up and down, and I’d love for you to explain the ramifications for that, and the finite number of bitcoins, and how that makes a difference or doesn’t.

25:35 How has the interest in Bitcoin? Does it track with the price? Yes. Okay. Which is so frustrating, right?

25:43 Because it’s illogical that it should, because it’s illogical. And more importantly, the price is the least relevant or interesting part of Bitcoin. Can you explain that dichotomy to people? Because a lot of people would say, oh, that makes sense, but if you explain it a little bit better, you understand that it doesn’t really make sense. Well, think about it this way.

25:59 In 2000, 90 percent of all internet startups went belly up. Almost a trillion dollars of value was destroyed, and that was the internet’s best year. Why? Because that’s when you started really seeing the web take off, and the utility and adoption all hit these inflection points, with the real explosion in mobile, the beginning of smartphones and mobile internet. The web had finally taken hold and was beginning to get serious attention from business, and all of the first-generation internet startups blew up, but what really happened is, in the last two years of that bubble, the internet became entrenched in everybody’s life.

26:47 2000 was simultaneously the internet’s death and its rebirth. And so, but that is capitalism, that process of creative destruction and rebirth, is the process that creates tremendous innovation and attention for things. Bitcoin has now gone through four bubbles like this. In fact, everybody knows about the November 2013 went up to a thousand dollars, crashed down to 230, where it’s 270 now. Yeah, but what people don’t know is that that’s not the biggest bubble Bitcoin has ever had.

27:26 Two years before that, Bitcoin shot up to 30 and crashed to 25 cents, and in relative terms, that was a bigger climb and a much bigger drop, and it took almost two years to recover from that. And that was its second-biggest bubble, because a really big bubble was when it went from a thousandth of a penny to a dollar. And at one dollar, that was the real birth of Bitcoin, because parity was almost considered unattainable. The dollar per Bitcoin was like a holy grail, dream, right?

28:01 Because it started off as worth basically zero, an idea. Absolutely. And the idea that you can bootstrap a global currency from nothing was in itself a ridiculous idea. So when you hit dollar parity, you’ve proven that you can bootstrap a global currency from nothing, and that’s never happened before. To then say that Bitcoin is dead because it’s at 260.

28:25 If you go back, the idea that it could ever reach 260 was insane. And by the way, we’re not done. We’ve got at least three or four more bubbles, right? Bitcoin is not going to now be steady, because every time attention shifts back, it blows another huge rise, and because there’s not enough to sustain that rise, usually it will then revert and crash down again. This is a roller coaster.

28:54 It’s going to continue to be a roller coaster for three or four years, just like the internet was. The big difference, the internet didn’t have a single stock price that everyone could pay attention to. So it’s both a blessing and a curse. It’s a blessing, because it’s an investment vehicle, attracting people to speculate on it. It’s generated a lot of attention.

29:13 When it goes up, it generates a lot of investment in Bitcoin companies, and a lot of the early Bitcoin millionaires, if you like, were able to reinvest their Bitcoin into startups. But at the same time, double-edged sword. Um, every time it crashes, someone writes an obituary for Bitcoin, like Bitcoin is now dead. Um, by the way, there’s a site called bitcoinobituaries.com where you can read 150 obituaries written since 2010, all of which are not true. Uh, and I, I’m guaranteeing you there are going to be two to three more years of, um, obituaries being written about Bitcoin.

29:46 Right, just to square a few things away: how many bitcoins are in existence, how many will be, you know, in the end, how many will exist, and why does that ultimately not really matter? Because we’re really talking about the whole market capitalization, and since it’s divisible infinitesimally, or not, can you just explain that whole concept, or even if I’m getting it right? Yeah, so, um, Bitcoin is designed to simulate precious metals, and the only reason that is relevant is that from an economic perspective, it produces an effect called scarcity, which means that the token itself is rare.

30:21 Now, this is a contradiction in terms. A digital token which is infinitely copyable cannot be rare. Bitcoin is the only digital token, the first digital token, that was able to be rare, and that was a huge achievement, and that’s essentially the Nakamoto invention. But um, in order to make sure that that scarcity was guaranteed by the system, there are a set of rules built into the Bitcoin mechanism that, um, regulate how often Bitcoin is created, and at what rate it is created.

30:55 And it’s, there’s less Bitcoin created all the time. So it started off at 50 Bitcoin every 10 minutes back in 2009. Then it went to 25 Bitcoin in 2012. In 2016 it’s going to drop to 12 and a half Bitcoin every 10 minutes, and then it continues to divide by two every four years until it peters out and stops. And then whatever amount of Bitcoin has been created, that’s all the Bitcoin that’s ever going to exist.

31:26 This is very similar to how gold works. If you were part of the California gold rush, you could trip over a boulder and find a nugget of gold like this. Um, today, in order to extract gold, you have to strip-mine a hundred thousand tons of rubble to get an ounce. Right, and so that’s how the, the extraction, or the process of diminishing returns, has happened in physical metals. And we don’t know how much gold there is in the world, but what we do know is that it is a finite quantity, and that we have already extracted 98% of it, that we know.

32:01 Right? Um, because we can watch the returns, and if you draw the line, it goes, it meets the bottom at some point. Right, and there are Bitcoin miners that put entire server networks and data centers, right, in order to produce those Bitcoins. And those that they can’t change the rate of issuance, right? That is fixed by the network.

32:20 Okay, all they can do is compete for that small share of Bitcoins to come out against everybody else by increasing their contribution. And what they’re doing is they’re securing the network. So they compete to be, to make the network more secure, and the group that’s producing the most security for the network gets the biggest percentage of the share of Bitcoin that exists, and that’s how they get paid. And that’s how they get paid. That’s the fascinating invention of this, that it really is the fascinating invention of Bitcoin and the blockchain.

32:51 Well, the, the real invention is the ability to agree on what the state of the ledger is worldwide. Mining is the way you secure that agreement. And the reward is the way you make sure mining happens. People often see this the wrong way around. They assume that the purpose of mining is to create Bitcoin, and the purpose of mining is not to create Bitcoin.

33:11 The purpose of mining is to secure the process of consensus, to agree what’s on the ledger. The creation of new Bitcoin is just the way to reward miners, so that you can make sure that the security happens, so that you can make sure that you have agreement on the ledger, so you can make sure you have secure transactions. So these other things are secondary effects. Approximately 14 million Bitcoin have already been mined. They will only ever be just short of 21 million, so twenty point nine nine nine nine nine nine nine nine seven million Bitcoin will only ever exist.

33:46 However, the unit itself is pretty arbitrary. Why 21 million? Why one Bitcoin? Why 25 every 10? It doesn’t really matter.

33:56 You can subdivide these to, um, eight decimal points, so each Bitcoin has a hundred million smaller units called satoshis. You can describe Bitcoins in thousands of a Bitcoin, hundreds of thousands, millionths of a Bitcoin, or down to hundreds of millionths of a Bitcoin, which is a satoshi. The hardest part of your job, I would guess, is to describe it to a normal everyday consumer who knows dollars or pounds or euros. They know they go to the market to buy X, Y, or Z, right?

34:22 And then you’re telling them that, look, there’s a Bitcoin. It’s currently worth 270. It might go to 27,000 in the future, but that doesn’t matter, because the whole idea is that Bitcoin is a technology that you can use to just process payments. Is that the hardest part of what you do? Well, it is, but part of that is because what I’m trying to describe is currency.

34:45 As a medium of exchange, it works best when it hasn’t got too much volatility, so when it’s relatively stable, and that will happen with Bitcoin, but it won’t happen yet. So you have to look at it and understand where it’s going, and we can see the volatility has been decreasing steadily across its entire lifetime. Um, in fact, for the last six months it has been trading between 220 and 260 dollars each and moving in a very narrow band. The euro has been more volatile at times than Bitcoin.

35:19 The, and the difficult thing is that most people trade in only one currency. They only exchange currency when they go on holiday. During the time that they exchange currency, it stays within a very narrow band, so they only have to do one calculation to figure out the exchange rate. Um, foreign exchange traders understand what we’re talking about, but any trader understands that they love volatility, or that can be used, but your average consumer, unless they live in Brazil or in an economy where there’s been massive inflation in their lives, it’s too confusing.

35:48 Yeah, and they don’t have to. They’ve never dealt with it, except when there’s a scarcity, an oil crisis or something. Well, so here’s the other thing. If you use Bitcoin primarily as a means of exchange and not a store of value, which means you buy and sell things with Bitcoin most of the time. You take Bitcoin in, you give Bitcoin out, and because that transaction happens relatively frequently, um, you’re not affected by volatility.

36:09 I get paid in Bitcoin, and I pay my bills in Bitcoin. I’ll get paid this week, and then two days later I’m going to use that Bitcoin to pay for plane tickets, and then two days after that I’m going to use Bitcoin to pay for a hotel. And in those five days the price didn’t change enough for me to really notice any difference. And so volatility really affects you over longer periods of time, and if you just have money coming in and out, you don’t really notice it.

36:35 Right. Um, how much of your life can you live on Bitcoin? Not much. Okay, but enough. But you can buy plane tickets and pay your rent.

36:43 I can’t pay my rent. I can buy plane tickets. I can buy hotel rooms. I can buy consumer goods, electronics, um, through gift cards. I can buy gasoline.

36:53 I can buy anything on Amazon. There’s a lot of things that you can do. There’s by no means convenient. So this is exactly the same as asking, in 1993, how much of your shopping can you do over email, or e-commerce on the web? Or, for e-commerce on the web, is much later, or how much of your communication can you do over email?

37:14 Well, the answer is, not many people had email at the time, so you couldn’t. Right. It takes time for that adoption to reach a level where it’s seamless and comfortable for all consumers. Bitcoin is not something that anyone other than early adopters is going to just grab and start using today. It took 20 years from the day I sent my first email until the day my mom sent her first email.

37:38 I sent my first email using Unix command line skills in 1989. My mom could not use that internet 20 years later. She went like this on an iPad screen and sent her first email. She could use that internet. Bitcoin is six years old.

37:54 We’ve got a long way to go until we can make it easier to use and easier to secure, but all of that potential is right there. It exists today, and it absolutely refuses to die. It refuses to go away. It’s this incredibly resilient, relentless anomaly. And by the way, we now have this wonderful marketing coup: Bitcoin.

38:17 Well, if that has a bad reputation, let’s now call it blockchain. It’s really funny, because this transition happened primarily by banks that wanted to get involved in the technology, but they didn’t want to use the word Bitcoin because of its connotations, so they started talking about the underlying technology, and they started using the word blockchain. Now blockchain is what gets you the investment money. Blockchain is what gets you the attention, but it turns out the only functional large-scale blockchain we have on this planet is Bitcoin, and the only way you can make an open, decentralized um, global transnational blockchain, which is really where all of the excitement is, is Bitcoin.

38:59 So we just changed the name halfway through, right? If we had done it on purpose, it would be considered a genius marketing coup. Um, but in fact people did it because they simply couldn’t. They were uncomfortable with it. It’s a, the connotations issue.

39:14 Uh, so many startups are a big marketing issue, and digital products are a year ago. Uh, is PayPal accepting Bitcoin now, or can you transact with PayPal? Yes, they have. Uh, under some merchant programs you can use Bitcoin directly on PayPal. Uber is being rumored to be taking it, but I’m guessing we’re not expecting that.

39:32 That wasn’t, uh, yeah, that rumor was debunked pretty quickly. Um, there’s a lot of complexities for, but the sharing economy, quite interestingly, is a great opportunity for Bitcoin. You expect that to take off before the retail does, right? Yes. Okay, but more actually, the thing I expect to take off first in Bitcoin is very cumbersome cross-border transactions, and there are three categories of that.

39:56 The first one is companies that need to pay suppliers, subcontractors and partners all across the world. Google has 20,000 affiliates they need to pay every month. Many companies have outsourcing partners, sales partners all over the world, travel and hospitality companies, airlines, et cetera, et cetera, parts companies, automotive companies. And these cross-border transactions are horribly expensive, very slow, extremely cumbersome. They have huge overheads and friction.

40:27 The second one is basic import-export. If you’re doing transnational trade, then using a transnational currency actually makes a lot of sense. There are disadvantages with the dollar. There are disadvantages with traditional wire transfers that Bitcoin solves. So it’s practical.

40:44 And then the really interesting one for me is foreign remittances. Uh, there are maybe 100 million people who are working as immigrants in developed countries, and they send 560 billion dollars home every year through companies like Western Union and MoneyGram and things like that. And for that they pay 9% as the average fee, netting Western Union a really handsome profit. It’s, uh, yeah, it’s shocking. It’s absolutely shocking, and a lot of that has to do with political constraints more than anything else, but that is an area where Bitcoin can not only have an immediate technological impact, but that impact translates into an enormous source of income for some of the poorest people in the world.

41:34 Now, if you, to put that in perspective, the 175 billion dollars that goes to fees in the international remittances market is larger than the entire foreign aid budget of all of the world governments put together. So, and you would, instead of putting this in the hands of government and trickling down, you give it directly to the poorest people. In fact, you give it directly to women in the poorest countries, because they’re usually the recipients of remittances, and they will take every single dollar and create five dollars of investment in clean water, sanitation, healthcare, education, food, which has an enormous leveraged impact on poverty.

42:15 So you send me some statistics on banking. You said more than two and a half billion people have no access to banking services. Four billion have extremely limited banking services. Probably, like you mentioned, only one and a half billion people enjoy the kind of international banking that you and I do. Yes.

42:29 What that means is that I can open a brokerage account in 24 hours, and 24 hours later I can be trading on the Tokyo Stock Exchange in yen, that I use dollars to buy on equities. I could even get a loan from a Japanese bank, or then I could be trading in South Africa. I can repatriate all that money. My government is not going to try to take half of it or kill me for doing this. I can get loans.

42:54 I can incorporate companies all around the world. I can wire transfer anywhere I want. That is privileged banking. Very few people have that. So what does it mean if you take that capability and you turn it into a capability that can be accessed from a text-messaging Nokia 1000 phone that is in the hands of four billion people, more people that have access to clean water, in the most remote parts of the world.

43:18 They now have these devices, because they give them a landline to the world. They give them a lifeline to the world of communication. What if that phone simultaneously is a banking terminal, a loan origination terminal, a remittance terminal, an international credit terminal, an equity trading terminal, an import-export payment terminal that has much greater implications for what happens in the world than the enormous impact we’ve seen of cellular telephony in sub-Saharan Africa, Southeast Asia and Latin America, where it’s brought communication to the furthest reaches of the world.

43:56 If you go into some of these rural places, and I’m not speaking out of first-hand experience for Muslim, but I have seen it myself in a few places. If you see a solar panel on a hut, that solar panel is not used to cook. It’s not used to watch TV. It’s used to charge the only cell phone in the village. That’s what it’s there for, and that one cell phone connects an entire village to the world.

44:20 Now that cell phone is a bank, and that is why I’m in Bitcoin. Are we getting any closer to that? No, it’s going to take obviously a very long time to do that. However, we’re beginning to see the first moves in that direction. There are companies already linking the mobile payment systems in Kenya, Tanzania, Ghana, Uganda, Nigeria with international remittances through Bitcoin.

44:46 There are companies that are setting up links between the U.S. and Mexico, U.S., UK and Philippines, the United Arab Emirates, Saudi Arabia and India, which are, these are the top remittance corridors in the world that I just described, the first three. Um, and they’re setting up Bitcoin systems that undercut by almost an order of magnitude the fees that Western Union charges, for example, and they work. Now they’re limited applicability. They’re difficult to use.

45:17 They’re still in the very early stages. They face enormous hurdles, but they work, right? And when you have a solution that undercuts the existing solution by a factor of 10, in some of the areas where the need is enormous, where this changes the lives of people, that solution is going to draw a lot of attention. Well, so Peter Thiel says in Zero to One, he says you have to have technology that’s ten times better to even think about overcoming an incumbent.

45:46 What’s the investment scene been like for Bitcoin startups? I remember when Coinbase got a big investment from Andreessen Horowitz last year. I think it was Coinbase, and it was one of the first you know, Bitcoin companies that had a big VC. Um, how have the other startups been with Bitcoin? Have they not accelerated as fast?

46:04 What’s your read on that whole industry? You’re very close to it, so you may have heard that Bitcoin died in 2013, and then again in 2014, and then again in 2015. Great site for those obituaries there. Yeah, turns out, not quite. In fact, what happens over the last 12 calendar months?

46:21 If you count, for example, from spring 2014 until spring 2015, approximately a billion dollars was invested in 750 startups in the Bitcoin space. That’s the investment that’s headline news that we know about. There’s probably quite a lot more going on in terms of organic and angel investor and self-funded investment, but at least a billion in headline round raising money. Now, what that is is a rate of funding that exceeds the investment rate in the internet in 1995.

46:57 And that should be a very important benchmark to pay attention to. All of these companies that received all of this money haven’t even started producing. The rate of innovation we’re seeing, this explosion of innovation in Bitcoin, based on many of the inventions that happened in 2012, with some of the little grassroots companies that were around there, the little scrappy startups. Now there’s a brain drain from the financial industry, as a lot of the quants, the uh, high-frequency trading, algorithmic trading math whizzes in the financial industry turn around, get a glimpse of Bitcoin, figure out what it is, and, like, programmable money, sign me up.

47:37 Take my Christmas bonus, take a year off, join a startup rewrite the world. You’ve got all of these investors piling on. You’ve got some of the best and brightest software engineers. Half of Silicon Valley is migrating into fintech now, and, uh, in a rush. Here too, in London, fintech is big, right?

47:55 But I haven’t heard of many Bitcoin startups here. You don’t hear them in this. Coinbase is struggling a little bit. The Winklevoss, I don’t know what they’re doing anymore. There’s, there’s dozens of Bitcoin startups here in London, and they’re doing very interesting things, and what we’re seeing is the rate of innovation is accelerating.

48:10 So what happens in about a year and a half, when perhaps most of these 750 have disappeared? They’ve gone under, but what they’ve left behind is a whole new wave of innovation that washes over the industry. You’ve got to realize Bitcoin is open-source technology. It’s an open standard technology. Every single innovation by every single one of these companies gets shared with everybody else in the ecosystem.

48:36 One of them invents something, we all benefit. That’s a really interesting multiplying effect that is, in fact, what drives internet innovation, the fact that you can connect and innovate without permission from anyone. Permissionless innovation at the edges, on an open network, is what makes the internet this incredible engine for, uh, productivity and innovation. Now Bitcoin is doing that in the financial services environment. And keep in mind, for the last 50 years, the banks have done a very good job of keeping out competition.

49:10 They use regulation, they use nasty tricks, they use pressure, they buy out competitors and crush them. They’ve been able to stop competition. The most exciting thing that’s happened in the last 50 years is credit cards, ATMs, and PayPal. That is a very slow rate of growth. So what happens when you have 50 years of pent-up innovation, and you suddenly put a pinprick in it with something like Bitcoin that they cannot stop, they cannot slow down, and which is attracting some of the brightest minds in the world?

49:46 Really exciting things. We hear about other options. Um, uh, Apple Pay. We see Facebook now encouraging you to transfer money. Is there any danger that these big companies put this innovation, provide alternate payment solutions that obviously have nothing to do with the blockchain, nothing to do with open-source technology, but they make it easier so people don’t engage in Bitcoin?

50:10 Well, sure, they can definitely create payment solutions, but what are they achieving? With this, Apple Pay for example, is building essentially payment solutions through Apple products, but they’re based on the same underlying technology, credit cards. Right, credit cards, which are pull-based and debt-based, meaning that whenever you do a transaction, you authorize someone to take money out of your account, whereas with Bitcoin, it’s like giving them cash.

50:34 You give it once, they don’t have any access to your account. And it’s debt-based. You’re taking debt on as you do this, and you pay interest rates, and all of your private information is attached to every transaction and given to every intermediary. We’re already seeing identity theft happen on a bigger scale because of Apple Pay, and this is going to happen with all of the others that are based on the same old technology. So not only that, but these closed systems really can’t innovate as fast as an open ecosystem.

51:02 So what they’re doing is they’re training consumers on the idea that their mobile device is a payment device. Great, let them train consumers for two or three years on what mobile payments are like, and then we can show them what an open mobile payments network is with Bitcoin. Right? Apple, the Apple Store just, uh, was it last year when they finally had an app that you could move your Bitcoin around? Well, now there’s, uh, dozens and dozens of, uh, Bitcoin wallets on, on Android on iOS.

51:31 So this is all progress, in your mind. Get, our phone used to be making payments, and then at one point shown that they can do it even easier, and without all these other issues, with a Bitcoin platform. Do you remember AOL and CompuServe? Barely. I do, though.

51:44 I do remember AOL. Yeah, yeah. So what did AOL do? Uh, and CompuServe do? They, uh, competed with the internet by providing highly curated content in a closed, walled-garden environment, as it was called at the time, and they got people used to doing internal email.

52:01 CompuServe email, you could only email someone inside CompuServe. An AOL email, you could only email someone inside AOL, and people got used to that, and they liked it, and then they heard about this internet email, where you could email anyone. And that got kind of interesting. So AOL introduced all of their customers to internet email. CompuServe introduced all of their customers to internet teemo, and then they introduced all of their customers to the web.

52:25 Where’s CompuServe today? Gone. Where’s AOL today? Gone? Why?

52:30 Because they couldn’t compete with the open innovation environment of the internet. What they did is they showed people what the possibilities were, and then people were comparing that to the internet, and eventually they all jumped ship, because there’s no way you can build a closed environment that can keep up with the innovation of a global and open network. Do you think Africa or Latin America or Southeast Asia is going to get banked on iPhones with Apple Pay and JPMorgan Chase credit cards?

53:09 Hell no. They’re going to get banked, or rather debanked, because they won’t need a bank. On Android 25 phones with a Bitcoin wallet and no bank whatsoever. And that’s how you onboard four billion people who need economic inclusion. There’s no way you can scale the existing systems.

53:32 There’s no way you can extend banking services to the world, just like there was no way you could get landlines throughout sub-Saharan Africa. You had to leapfrog to the next generation of technology. So you’re all in on Bitcoin. It’s just a matter of time? Absolutely.

53:49 Okay, okay. Tell me about you. You are kind of the self-appointed ambassador of Bitcoin. I mean, you travel the world and you talk about this, and I meant what I said earlier, you’re the best in the business when it comes to articulating it. I always want to listen to what you have to say.

54:02 I’m listening to what you say now, and a lot of people try, but they don’t really seem to describe it, and you’re very honest about it too. You’re honest about its shortcomings and about its, you know, history and all these types of ways. Um, what are your choice when it comes to this? You know, a lot of people would be like, I’m sure you asked a lot of time, Andreas. You know, how come you haven’t founded Coinbase?

54:21 How come you haven’t done this or that. How do you choose how you want to be involved in Bitcoin? Probably the most important thing that I have going for me is that people respect my independence and my integrity. I’m neutral. I’m not, I’m not trying to sell you on anything.

54:42 In fact, if you ask me if you should invest in Bitcoin, my answer is no. I, I don’t suggest that people, especially people who don’t understand the risks, go and invest in Bitcoin. What I tell people is learn the skills, learn the technology, experience it, experiment with it, try to see what the future of money is. I’m not trying to sell you on anything, and I’m not trying to promote a product, to promote a company. And that is allows me to be honest.

55:08 It allows me to be trusted in this space, and in the end that is the one thing I have going for me, and I have to very zealously guard that. Um, I’m not in this for the money, and I can prove that very simply. If I was in this with money, I absolutely suck at it, because I’m effectively broke. I’ve been doing this job for three years for free. Nobody’s paying me to do this.

55:34 I’m just Bitcoin’s biggest fan. I love doing this. I’m broke and deliriously happy. I’m doing the most exciting thing I’ve ever done in my life. I have a front-row seat in the making of history, and I really, really honestly enjoy this job.

55:49 Now, on the side, I do a bit of consulting. I’m trying to do some startup work with a company of mine. I’m not going to mention them. I’m teaching university courses and working with a number of academic institutions, certification bodies, professional standards bodies. To help, my goal is education about Bitcoin.

56:09 So how can I get this information and knowledge into as many heads as possible, into as many brains as possible? And at the same time, how can I keep paying my bills long enough that I can keep doing this? That’s what drives me. It’s a bit of a dangerous job, you have, because there’s a lot of people and strange opinions that fly around with Bitcoin. I asked you earlier where you lived, you didn’t tell me.

56:32 Yeah, and you said that you have people that don’t like you because of, I guess, you’re kind of a lightning rod to certain types of individuals. I was just wondering if you could just tell me a little bit about that, because that’s not intuitive. I wouldn’t think that you might have to worry about things like that. Well, I, I don’t think it has anything to do with Bitcoin, and I don’t really think it has anything to do with the opinions I have to bring. I think it simply has to do with, um, really, exposure, because I, I’ve got a big mouth, and I have opinions, and I say things, and these things get recorded.

57:09 It’s a really strange life when every time I open my mouth, whether it is a very carefully thoughtful, you know, carefully planned idea, or an off-the-cuff remark, that off-the-cuff remark is going to get a thousand retweets and get replayed on YouTube, and then get a 600-comment Reddit thread, and I’m like, well, that’s a bit out of context. You didn’t listen to the rest of it, and nobody hears me saying that. So it’s a challenge, because I’ve always got someone about to repeat what I just said or stick a camera in my face.

57:44 And, um, and guess what? I’m gonna say stupid things. Right? I’m human. I say stupid things all the time.

57:53 I make mistakes. I say things that are wrong. I revise my opinion when presented with new facts, but very often that gets lost in the noise, and when there’s enough people replaying this, because people get excited about Bitcoin, it’s not about me. It’s people are interested in Bitcoin, and they have the funny thing about Bitcoin is that it presents a blank canvas, and a lot of people project their own worldview and expectations and desires. It appeals to a very broad range of personalities and political views, because it affects one of the most important and oldest technologies in our culture, money.

58:35 And so Bitcoin is the lightning rod. I’m the conductor, and some of the strikes go through me. Um, and I get flack for something, and I don’t take it personally. None of this is personal, but that doesn’t mean that it doesn’t affect my safety sometimes, and it doesn’t mean that I don’t sometimes get a bit upset about people saying things that are nasty or things like that. I just have to shrug it off and move on.

59:05 Um, for the most part. I have to tell you, the Bitcoin community that I deal with has some of the most amazing people I’ve ever met in my life. It’s a very broad spectrum. Some of the craziest people I’ve met, but also some of the smartest people, some of the kindest, most generous people, committed, passionate, trying to do really important things, um, principled people. And then there’s great hordes of sharks trying to make money, and scamsters and shady characters and crazy individuals sending me threats.

59:41 I’ll just take it all and do my thing as long as I can keep doing it. We’re good. I was told to ask you about, kind of, the Greek financial crisis. And, you know, that’s fascinating, because if it drops, the euro, then there’s the drachma. Obviously, it has implications on different currencies.

59:55 Are you Greek? Yes, I am. I lived in Greece, uh, most of my childhood. I graduated from high school there. Okay, um, and my parents are still in Greece at the moment.

1:00:03 There. Yeah. What’s your thought on what’s happening there, and are there any implications to something like, you know, Bitcoin? Well, what’s happening there is really tragic. It’s a demonstration of the failure of central banking and of really bad governance over 20 years, and really bad spending decisions, and of manipulations by banks and leveraged investments that blew up in everybody’s face, and the financial crisis and a recession, all mixed together in an environment where Greece doesn’t have the traditional ability that most sovereign states have to simply inflate their way out of the crisis by printing money, because Germany doesn’t want to do that, because the central bank doesn’t want to do that.

1:00:51 So as a result, Greece is trapped in this monetary cycle where the economy is collapsing. It’s crashed 25 percent, which has never happened in peacetime in any European country. Unemployment among under-30-year-olds is 60% and climbing, which is devastating for an entire generation. And at the current rate, Greece would have to spend 2% of its GDP for the next 30 years just to barely make a dent in this debt, which means that functionally the country is insolvent.

1:01:22 We’ll never be able to pay this debt, and the debt will only keep getting worse. It’s in the death spiral of debt, and the only real solution is to write off a lot of it. It’s unpayable. You can’t expect a country to pay 2% of its GDP in debt, because if you do that, what’s the average GDP rates across Europe? Well, it’s 2.5%.

1:01:45 You’re condemning an entire generation to a no-growth economy for 30 years. And the worst part of this is that this is all wrapped in a sort of Calvinist moralistic tale of bad, lazy, tax-avoiding Greeks who don’t pay their debt, and it’s morally wrong to pay your debt. This is finance. It’s not ethics. This is not a moral failing or character flaw, because you can’t assign character flaws to an entire nation.

1:02:20 That’s a somewhat overbroad generalization. You might be accused of a certain level of let’s say prejudice when you apply that. Greek people are hard-working. In fact, their working hours are higher than most European nations, and many Greek people paid their taxes their whole life. My dad certainly did.

1:02:41 He also invested in a private retirement fund that then got nationalized and cut in half through no fault of his own. And then the other idea that somehow people in a country are responsible for the choice of their government. I don’t know what’s going on in England lately, but do you have perfect democracy that completely represents the opinions of the people, and therefore you can hold them completely responsible for everything their leaders do? I don’t think any country has that, certainly not Greece.

1:03:11 And so to not only condemn an entire people, but then condemn an entire generation for the bad choices of a few select people in government who were quite comfortably aided and abetted by banks that made an enormous amount of profit on all of this, while at the same time those same banks have received trillions of dollars in interest-free bailouts with no strings attached and complete forgiveness. Nobody’s moralizing against them, right? That I think is fundamentally unfair.

1:03:44 So what’s the relationship with Bitcoin? Unfortunately, Greece isn’t ready for Bitcoin. Uh, you need infrastructure. You need education. You need familiarity with the system.

1:03:56 You need, um, technological, uh, support, uh, smartphone applications. You need Bitcoin. It isn’t ready for Greece. There’s not enough capacity. The user interfaces are still very kludgy, sucky, not particularly polished.

1:04:13 The experience is choppy and not very smooth, and it’s very difficult to secure properly unless you really know what you’re doing. Which means there are probably a few tens of thousands of people in Greece who are technically sophisticated enough, have just about the right amount of cash that they need to get out of the country, can find someone to convert it to Bitcoin, know how to secure that Bitcoin, and can probably use it to save themselves from this crisis. Which isn’t going to save Greece, right?

1:04:44 You’re not going to do anything with saving 10,000 people in that population. However, the fact that you can save a few thousand points to a future where, when digital currencies, probably Bitcoin, but in fact any decentralized digital currency like Bitcoin, is prevalent, widely adopted, smooth, easy to use, and secure, the idea of a monetary crisis that takes an entire population hostage is no longer viable. If the entire population has the means and the opportunity to simply opt out of the currency and go internet currency on their own.

1:05:25 You can’t take them hostage anymore. The Greek government will still use the euro, and all of the Greeks won’t so you can imagine how this would play out 10, 20 years in the future. Um, if the currency was a bit further with Bitcoin, there are no bail-ins, no bank holidays, no seizures, no currency controls, no one can stop you, censor you, take away your money, stop you from spending it. None of that. And so the fact that that is understood offers a really strong counterexample of what the future could hold for monetary crises around the world.

1:06:06 The Argentinians get this. The Venezuelans get this. They don’t necessarily all know that Bitcoin is a potential solution, but a lot of people do. The Greeks get this. The Italians, Portuguese, Irish and Spanish should be paying attention, because it didn’t start in Greece.

1:06:22 It started in Cyprus, and it won’t end in Greece. Coming soon to another European country around you. This is going to be Europe eating its children, and it’s not stopping yet, but we can see a world where the idea of currency choice subverts the very concept of a national currency monopoly, just like the idea of a national phone company was completely destroyed by the internet. The idea of censorship over information and a monopoly over TV news or radio news or any of those things was completely destroyed by the internet, and people suddenly had choice and freedom.

1:07:07 We’re now doing that to money. Bitcoin can’t save us this time, but the fact that it might in the future just gives us a glimpse into how things can be different. And of course, that means that a lot of people are speculating. They’re, like, getting excited about Bitcoin. It’s getting all of the headlines again.

1:07:23 The price is going up, but really, that has nothing to do with saving Greece. What Greece demonstrates is a fundamental failure of central banking, because the really crazy, radical experiment in money isn’t Bitcoin. In the last six years, there has been an absolutely radical experiment in money, and that is that for the first time in history, central banks took interest rates to zero, and it wasn’t just one of them. Even though it was unprecedented, 21 central banks have taken the interest rate to zero, left it there for six years, and cannot raise it again, because if they raised it a tiny bit, the entire economy would collapse.

1:08:06 This has never happened before. It’s the most radical monetary policy experiment since the introduction of central banking in the 1920s. We don’t know how it will end, but in most likelihood it will not end well. In monetary terms, what we’ve done at this point is like giving someone, giving the economy, an intravenous cocaine drip on full blast for six years, and at some point there’s going to be a hangover, and it’s going to be brutal, because now the patient is barely awake on a full drip of cocaine, and we’re running out of cocaine.

1:08:47 Right? That’s a fabulous analogy. Uh, and you know your economics very well. It’s, it’s fascinating to hear what you have to say about that. 20 years from now, what is the cryptocurrency space going to look like, and what other industries, markets will have taken on, you know, not only the blockchain but the technology you talked about, real estate earlier, and other ownership pieces.

1:09:08 Realistically, or should we be looking about 40 years from now? But what about 20? Um, I think the actually, you have to go in the opposite direction. Making predictions 20 years out is too difficult, because you can’t extrapolate anymore. We can see the immediately obvious things.

1:09:23 Anything that involves cross-border settlements, trust, payment networks, settlement and clearing of transactions in finance, equities, asset registration and transfer of title or property or ownership. All of these things will be affected, and affected deeply. Now, I can’t guarantee that Bitcoin is going to be the solution, although it’s, it’s got a pretty good straight run out of the gate right now, and it survived six years, which gives it a really good chance.

1:09:56 But the blockchain technology, the underlying consensus mechanism, the Nakamoto invention, this thing is not being uninvented, and even if one iteration of it failed, you can build as many as you want. There’s already 750 other currencies based on the same recipe. The world of finance, the world of currency, the world of transactional trust, the world of payments changed on, sorry, on January of 2009, when Bitcoin was launched. The world will never be the same again.

1:10:27 It may take decades, but in the next five years we’re already going to see applications of this across finance. The financial industry is going to get disrupted seriously, just like the telecommunication industry got disrupted very seriously by the internet. That we can predict now. The question then happened. It goes to once you get a level of adoption that has high enough density, which means that many people around you are also using the same thing, which means you have more opportunities to use it, just like after about 1995, more and more people started having email addresses, so you could do a lot more with email, which meant the more people wanted email addresses.

1:11:09 And then with the web, three years later, once you get to mobile internet and fully deployed internet, the applications change. Now something like Twitter that was impossible before becomes possible. Facebook becomes possible. BitTorrent becomes possible. MP3 becomes possible.

1:11:31 And these start toppling other industries. They start changing the game in areas that you could never imagine, because they’re not about a telecom revolution anymore. They’re about a broader thing, which is the dissemination of information. They’re about communication. They’re about media, entertainment, news, truth, all of these other things, and suddenly you see several foundational institutions of society changing radically.

1:12:02 Well, finance is the first thing that Bitcoin does, but as Bitcoin adoption spreads and density, then you start getting these secondary effects, and these we really can’t predict. But I’ll just give you a little snippet. Right. We’re already seeing Bitcoin do micropayments, but micropayments on a scale we’ve never seen before. With Bitcoin you can now pay a millionth of a penny for a 200-millisecond slice of service.

1:12:28 There’s a streaming video service that allows you to pay as little as one satoshi for 200 milliseconds of video. This isn’t micropayments. This is picopayments, if you like. It’s so tiny, and for such a short slice of time. Now, what can you do with that?

1:12:44 It’s not just streaming video or renting out Wi-Fi. You can start building completely new concepts for payments that we’ve never thought of before, and then new technologies, and then new technologies on that. Now what happens when you combine? Um, here’s another interesting one. Bitcoin is the first financial system in history that doesn’t require personhood for ownership of money.

1:13:08 Every single financial system we have, at the end of the day, money is owned by either a person or a collection of people, as a corporation. That is a fundamental truth. It’s required by the legal system. Bitcoin doesn’t care. You can be software, and you can own money.

1:13:24 Software can own money. Let me say that again: software can own money. We don’t know what that does, but let me give you just one example. Uber, Bitcoin, self-driving cars. Combine those three together, and you have the self-owning taxi, a car that is a corporation that owns itself, pays for the car, lease, the car insurance, and the gasoline from the revenues it makes giving passengers a ride, and there’s not a single human involved in that management.

1:13:59 Now, that is a completely bizarre construct. It’s one we can’t even imagine. At the moment, it violates several of the assumptions we make as a society about liability and legal responsibility. As long as it doesn’t crash. Actually, it does some really interesting things.

1:14:16 It’s a really damn good taxi, uh, in many ways. But that’s just one example, and that’s not something we have today. Only slightly different, plus Bitcoin, that’s something that is impossible today, and you start opening up these branches of innovation and exploration and science that simply have no precedent. And that’s where it really gets interesting. So on a 10- to 20-year horizon, you can’t make any predictions anymore, because there’s no precedent to what you’re doing, just like in ’92 you can’t predict Facebook.

1:14:53 It’s impossible to predict it. Right. That’s scary. That has some, like, AI fascinating. I mean, you know, pockets of growth and capitalism and businesses like the one you just described could spring up.

1:15:05 You would never know some of these things are happening, but you end with these pico payments. It’s hard to even imagine what you could do. Yeah, the markets, what does it do to the sharing economy? But to me, it all goes back to this fundamental question: we live on our planet with seven and a half billion people, and two to four billion people are completely cut off from finance, and almost five to six billion people are cut off from international finance.

1:15:32 What happens to the world economy when you bring six billion new people online, people who are productive but disconnected? What happens to their lives? What happens to poverty across the world when you can extend financial services, opportunity, credit, liquidity? Like, if you’re even in a developed nation today, where can you invest your money? Nowhere.

1:16:02 There is nothing you can invest money in today. The real estate market is a huge bubble. You can’t buy cars, because that’s a huge bubble. Student loans are a bubble in the U.S. Now right there, there are no investment outlets, because nothing is productive.

1:16:19 What about if you’re investing in a billion people who are in poverty? And I could take a thousand pounds, split it into a thousand micro loans, and join together with a million investors to fund those micro loans. What happens then? Direct, no banks, no intermediaries, no overheads, no costs, direct funding, developed world to developing world, person to person, from my smartphone in Trafalgar Square to a Kenyan farmer’s text-messaging phone, which they can then use to buy seed, or stock up a small store, or start a sewing business, or buy a scooter and use it as a taxi service for a rural environment.

1:17:12 That is where Bitcoin’s possibility really is. The reason we cannot extend financial services to the rest of the world is not because they don’t have money. It’s not because they don’t have productive potential. It is because banking as a series of brick-and-mortar, high-overhead, high-margin services is not scalable. But banking as an app, backed by a network-based currency and system of trust, scales enormously, and it can be extended into the most remote areas.

1:17:48 I was talking to bankers from Brazil who were telling me that millions of their citizens are a hundred miles from the nearest bank branch, 100 miles upstream by canoe in the Amazon Basin. And yet, in the most remote areas of the Amazon Basin there are cell phone towers, and there are no landlines, because those offer the one form of easily deployed connectivity, with solar panels, to even the most remote places in the world. Now turn those into banks and see what happens.

1:18:26 And that’s what they’re looking at, the possibility of bringing 30 million customers online to the Brazilian banking system. Every bank in Brazil, most of Latin America, South Africa, Indonesia, Philippines is thinking about this now, because they can suddenly reach populations they’ve never reached before. And what does that do to our world? Fascinating. And this is why you’re the best in the business, because I’m going to be thinking about this for a while.

1:18:53 Uh, I’m interested. It’s more, if I could ask you some of your own, you know, personal habits, for you know, for being a success, for getting things done. I always ask everyone who sits here, you know, a few of these questions. Is there anything that you changed about your game, say in the last 10 years or five years, that you know had a big impact on you getting things done or getting things accomplished, or when you travel around the world? Is there any kind of one habit that you have that helps you the most?

1:19:41 Institutions, academia. Okay, how does London stack up in the global cities you go to? How do we compare when it comes to our technology, or our fintech, or just our, you know, adoption or open-mindedness, you know, about cryptocurrencies, all that? I’m just curious because you travel a lot. Yeah, you do a lot of media.

1:20:05 You can be honest. What first comes to mind when you think London? I lived here for 10 years. I love London. I’m conflicted.

1:20:14 London is a, um, eminently livable city. It’s walkable, bikeable, tubable. There’s culture. There are cosmopolitan influences from all around the world. It’s a gorgeous city.

1:20:28 It’s got ancient history, it’s got modern everything, um, it’s got a vibrant population, it’s got thousands of things going on. So great. But especially since, probably, about 1998, as I lived it here, London started getting very, very expensive and very, very unequal. So there’s a serious problem with inequality in the city, as with many other cities around the world, where you start getting this feeling, the big chunks of the city have become a playground for the rich.

1:21:07 For, in the case of London, certainly oligarchs from various countries, um, and, uh, British elite, uh, creating an environment where the average person has to live in a tiny flat with five mates just to make ends meet 75 minutes out from the center of London. Right? Sounds like Manhattan. Manhattan, Silicon Valley. Many of the big cities, you have these enormous inflated bubbles of real estate, and effectively what it’s doing is, um, it’s creating segregation within the cities.

1:21:46 It’s splitting the city, and where does that end? It basically ends in walled, walled courtyards with armed guards and slum cities around. And that’s not somewhere that London should be heading, but you already see some of these distinctions. In the neighborhood, you go into the City of London. You know, it’s like the City of London to me is like Vatican City, only the difference is their god is money, uh, but it has its own administration, its own police.

1:22:14 It’s completely impervious to law. It’s run by corporations, and it’s right in the heart of London. You used to have security on it. What the hell is that about? I mean, it, it’s really insane to, to have that in a city, and there’s something just weird about how very expensive London has become, and how difficult it is to live.

1:22:38 Once you see the artists and the students and the, um, misfits and the creative people uh, abandoning neighborhoods, getting not just gentrified but, uh, just completely displaced because of um, because of prices and pressure and things like that. And you create this two-tier society with enormous differences. That’s a bad thing. I’m sad to see that it’s happening in London. I saw it starting to happen when I lived here.

1:23:12 I left because, among other things, I couldn’t afford to live here anymore, and, um, I see it even more now. So I love the city. I love the people, but at the same time there’s a crisis going on here, and it’s going on in a lot of other, yeah. When I go to Paris, I feel like I’m in a museum. In the center of Paris, I don’t feel any vibe.

1:23:31 I don’t feel any culture. Like, I don’t feel any artists, misfits, or anything. And I find it really bland and boring. And, um, and like when I go to Manhattan now. You mean no one can live in Manhattan unless you’re making six figures?

1:23:42 Now, really? Six? Yeah, seven, probably. All right, six won’t get you anywhere. Yeah, yeah, yeah.

1:23:49 It won’t get you anywhere. Emerald City, as Max Keiser calls it. So London’s becoming very similar. Um, and so yeah, it’s, and Silicon Valley is now ridiculous. Yeah.

1:23:59 Um, I was, I was looking at real estate there recently, because one of my friends was telling me about it. Four thousand dollars for a studio apartment. They’re doing, um, shift sleeping. Have you heard of this? Um, I know, but I’m guessing what it is: three eight-hour shifts in a 24-hour window.

1:24:19 Now you would think this, and this is not um, recently arrived. Both people in a slum. This is tech geeks in startups in San Francisco, right? And when you have a city that’s become so ridiculously expensive that you have to find eight people to live in a three-bedroom apartment and rotate beds, uh, something is very wrong. That’s not sustainable.

1:24:42 Yeah, no, you’re right. That’s not a sustainable so that’ll be interesting to see what happens. Not, you know, that you’re right, that isn’t sustainable. And technically, what happened in the previous real estate bubble? Well, the only difference now is that we have no stimulus left.

1:24:57 All of the ammunition of monetary policy has been expended, and we’re about to head into another recession. Uh, hold on to your hats. This is not going to be fun. And I appreciate you making that point about monetary policy. Um, it’s going to be something interesting to watch, and you’re right, maybe not very fun at all.

1:25:14 Could make, uh, look timid so we’ll see. Andreas, I always ask everyone here a few questions at the end. I’m going to hit you with them. If you can make a phone call to the 20-year-old Andreas, give that young man a bit of advice. What would you tell him?

1:25:28 Where was he? Well, he was here in London. Um, it gets better. Don’t worry so much. It gets better.

1:25:40 Are you stressed out? Oh yeah, oh, I was. About your future, I was a really insecure 20-year-old. I was introverted. I was afraid.

1:25:50 I was, um, I wasn’t too happy with myself, and, and I, I wasn’t, I didn’t like myself very much, and I didn’t think other people liked me. Um, so I was a very insecure 20-year-old, and, and for no reason, really. Right. Yeah, so it gets better. Yeah.

1:26:10 Uh, best advice you’ve ever received in your life, could be business, could be personal. Oh dear, that’s a hard one. Um, did you get any writing advice or speaking advice from anyone, or did you learn all that on your own? No, I actually I trained, um, right here in London. I took courses on public speaking.

1:26:40 I took I trained with a training company called Learning Tree International. I see this, they still exist. They do technical training. I video-recorded training sessions and played them back and learned how to do it, and then practiced for 20 years, so that’s I think probably the best advice I’ve received, from a from a professional perspective, is to be honest, uh, as much as possible, to be honest, to admit mistakes, and to and to be honest, and then if you combine that with really just focusing on what you really enjoy doing.

1:27:24 I think, and I have people coming up to me all the time and asking me, what should I do in Bitcoin? Which is a really strange question. It’s like, am I going to give you the magical startup idea that you just take, copy, and it doesn’t work like that. Entrepreneurialism doesn’t work like life doesn’t work like that. So when people ask me what should I do in Bitcoin, I say, well, what are you passionate about?

1:27:50 And the funny thing is that most people can’t even answer that question. Um, what do you really love doing in life, or even better, what is the one thing that, if you’re not doing or not achieving in life, you can’t sleep, you can’t think, you have to be doing, right? What is the thing that drives you, perhaps all the way to drives you insane, but certainly drives you? What is the thing that you will pour your energy into? Plus Bitcoin, that, find a way to make it.

1:28:28 If you’re really interested in Bitcoin, find a way to make it in Bitcoin. If you’re really interested in something else, do something else. Whatever. Combine your talent with your passion, find the thing that really drives you. And for me, in business, most people are either doing something that they really don’t care about, and there’s nothing worse than doing what you care, because then the day never ends.

1:28:49 Um, no reward is going to make it worthwhile. and of course the reality of life is that for the vast majority of people, that’s the only option they have, and it’s a terrible life. I feel very privileged to be able to do my passion. So I think that’s it. Figure out what it is, and then do that if you can, or at least try to work towards doing that at a later date.

1:29:16 That’s great advice. The last part of that question is to the 20-year-old that’s listening to us around the world, in any of these countries, maybe some of these BRICS countries, or maybe sub-Saharan Africa, or maybe even in the USA, Canada. What’s the one thing they can do to kind of advance the cause of cryptocurrencies? I think there is a certain danger in trying to advance the cause of cryptocurrencies, because people can get a bit obsessed with that, or distracted by that, and then they end up seeming like they’re self-serving, or, um, recruiting into a cult or something like that.

1:29:58 And that’s not the point. I think the point is experience, learn, use it. Yourself, first of all. If you’re not using it yourself, you can’t possibly expand the cause. So try to use it, and use it frequently, and use Bitcoin or digital currencies, and learn about it.

1:30:16 Think of it as a career opportunity, especially if you’re a 20-year-old. This is like learning how to do iOS apps in ’97, or how to do HTML in ’95. Um, sorry, it was in 1970, in 2007. Sorry, learning iOS apps, or, um, HTML in ’97. It’s, it, it has the potential to lead to a rather specialist skill that you can turn into an advantage in the workplace.

1:30:45 And then, in terms of making Bitcoin happen, really there are two things. We need to make Bitcoin easier to use, and we need to make Bitcoin more secure. And then don’t worry about it. Time will take care of it. Bitcoin solves real problems for real people.

1:30:59 You don’t need the hard sell. You don’t need to recruit. You don’t need to push it on people. In fact, that turns people off. Explain the benefits, demonstrate it.

1:31:09 Really important: let people experience it. Give them some Bitcoin, let them try it out, play with it, and then let, let time take its toll. I mean, the really interesting thing is that we’re not doing this in a vacuum. We’re doing this in an environment of banks and national currencies, and the one thing I can guarantee you is that there will be an endless set of disappointments from banks and national currencies. Let people experience Bitcoin, and let their bank persuade them that it’s a better system by screwing them over, taking their money, freezing their checks, delaying their pay.

1:31:45 Let their national currency persuade them Bitcoin is a better option by bailing their bank account, inflating away the wealth of their next generation, destroying their children’s college fund, and they’ll come to Bitcoin. Final question, and this I’ve never asked anyone before in the history of London Real. Yeah, what’s it like to be on the Joe Rogan Experience three times? Because there’s very few individuals that have done that. Really?

1:32:11 Yeah. Can you talk about your relationship with Joe, what it was like being on the show so many times? What is it like? I, you know, I tried to think of doing a show like that as just sitting down and having a conversation with a friend and just enjoying it. And when I first met Joe Rogan, I didn’t know anything other than his comedy work, which is kind of ironic, because I had no idea he was into MMA, for example.

1:32:36 I just knew him from comedy, and people had recruited me almost to go do Joe Rogan. They nagged him until he said yes, and I had nothing to do with that. So I went on the show not knowing what to expect. And the beauty of it is that he had no idea what Bitcoin is. Um, no preconceptions about it, other than a few things he’d heard.

1:32:54 So blank slate, and I had three hours. And then I discovered something wonderful. Joe is thoughtful, he’s kind, and he’s open, and so he started asking thoughtful, open questions. He was genuinely interested in my answers, um, was intellectually curious and immediately saw the implications. And you can watch, especially during the first show, you can watch his attitude change as he starts getting it, and the light bulb goes off.

1:33:26 And that’s a beautiful experience, because he gave me a platform for three hours to really go to the types of questions that someone who’s never heard of Bitcoin would ask, and gave me the time to answer them fully, and have that really comfortable conversation. And the second one was just as much fun. The third one was even better, and I promised him that every three to four months there’s going to be something new happening in Bitcoin that we’ll need to talk about.

1:33:54 So I’m going to go back soon. Fabulous. I remember listening now to your first one, the entire piece, on audio, and it just flowed fantastically. Like you said, Joe is so curious and so, you know, intellectual, and he loves to just find out what’s going on, and so perfect platform for you. And then the way you can describe things.

1:34:13 I think the first one, you had him, uh, you had him send in Bitcoins, and you pulled out in the first one. He was a bit reluctant to install something on his phone. After we went off air, I put a wallet on his phone, and got him a bit, okay. Now, in the second one, I persuaded him to show his phone with a barcode to raise some money for his friend who was doing some, uh, relief effort in, yeah, former MMA, Congo, yeah, with the baby. He’s in the Congo, I think, or somewhere.

1:34:39 So he did that, and the money just poured in. I said on air, come on, Bitcoin community, make me proud, and it just poured in, and I think he raised like 2,500 in just a matter of a couple of hours. And that kind of demonstration leaves a mark. It shows you the global potential. It makes you aware of how simple it is to just transact with thousands of strangers you’ve never met, on a financial level.

1:35:08 Uh, that was a really interesting moment, and, uh, yeah, I’d love to go back. Awesome. I’m sure you will. Um, I’m so glad you finally made it on here. I know we’ve been trading pieces, but like I said, you’re the best in the business when it comes to this stuff.

1:35:22 Thank you. I’m so glad we talked about it. I learned a lot of new insights, you know, into the technology and just things in general. So I think people really appreciate this, so so thanks for coming. Until next time.

1:35:33 Yeah, exactly. How you say on London Real, it’s about the journey. You’ve got an amazing one ahead of you. So, uh, I wish you all on yours. Thank you so much.

1:35:40 Okay, cool. Thanks, all. Right.