the technology likely to have the
greatest impact on the next few decades
has arrived and it's not social media
it's not big data it's not robotics
it's not even AI and you'll be surprised
to learn that it's the underlying
technology of digital currencies like
Bitcoin it's called the blockchain block
chain now it's not the most sonorous
word in the world but I believe that
this is now the next generation of the
Internet and that it holds vast promise
for every business every society and for
all of you individually you know for the
past few decades we've had the Internet
of information and when I send you an
email or a PowerPoint file or something
I'm actually not sending you the
original I'm sending you a copy and
that's great
this is democratized information but
when it comes to assets things like
money financial assets like stocks and
bonds loyalty points intellectual
property music art of vote carbon credit
and other assets sending you a copy is a
really bad idea
if I send you a hundred dollars it's
really important that I don't still have
money and that I can't send it to you so
this has been called the double spam
problem by cryptographers for a long
time so today we rely entirely on big
intermediaries middlemen like banks
government big social media companies
credit card companies and so on to
establish trust in our economy and these
intermediaries perform all the business
and transaction logic of every kind of
commerce from authentication
identification of people through to
clearing settling and record-keeping
and overall they do a pretty good job
but there are growing problems to begin
there centralize that means that they
can be hacked and increasingly are and
JP Morgan US federal government LinkedIn
Home Depot and others found that out the
hard way they exclude billions of people
from the global economy for example
people who don't have enough money to
have a bank account they slow things
down
can take a second for an email to go
around the world but it can take days or
weeks for money to move through the
banking system across the city and they
take a big piece of the action
10 to 20 percent just to send money to
another country they capture our data
and that means that we can't monetize it
or use it to better manage our lives and
our privacy is being undermined and the
biggest problem is that overall they've
appropriated the largesse of the digital
age a symmetrically and we have wealth
creation but we have growing social
inequality so what if there were not
only an Internet of information what if
there were an Internet of value some
kind of vast global distributed ledger
running on millions of computers and
available to everybody and where every
kind of asset from money to music could
be stored move transacted exchange and
managed all without powerful
intermediaries what if there were a
native medium for value
well 2008 the financial industry crashed
and perhaps propitiously a unknown
anonymous person or persons named
Satoshi Nakamoto created a paper where
he developed a protocol for a digital
cache that used an underlying crypto
currency called Bitcoin and this
cryptocurrency enables people to
establish trust and do transactions
without a third party
and the seemingly simple act set off a
spark
that's ignited the world that has
everyone excited or terrified or
otherwise interested many places now
don't be confused about Bitcoin okay
bitcoin is an asset it goes up and down
and that should be of interest to you if
you're a speculator more broadly it's a
cryptocurrency it's not a fiat currency
controlled by a nation-state and that's
of greater interest but the real pony
here is the underlying technology it's
called blockchain so for the first time
now in human history people everywhere
can trust each other in transact
peer-to-peer and Trust is established
not by some big institution but by
collaboration by cryptography and by
some clever code and because Trust is
native to the technology I call this the
trust protocol now you're probably
wondering well how does this thing work
fair enough assets digital assets like
money to music and everything in between
are not stored in a central place but
they're distributed across a global
ledger using the highest level of
cryptography and when a transaction is
conducted it's posted globally across
millions and millions of computers and
out there around the world is a group of
people called miners these are not young
people they're Bitcoin miners and they
have massive computing power at their
fingertips ten to a hundred times bigger
than all of Google worldwide and these
miners do a lot of work and every ten
minutes kind of like the heartbeat of a
network a block gets created that has
all the transactions from the previous
ten minutes and then the miners get to
work
trying to solve some tough problems and
they compete and the first miner to find
out the truth and to validate the block
is rewarded in digital currency in the
case of the Bitcoin blockchain with
Bitcoin
and then this is the key part that block
is linked to the previous block in the
previous block to create a chain of
blocks and everyone is timestamp kind of
like with a digital wax seal so if I
wanted to go in and hack a block and say
pay you and you with the same money I'd
have to hack that block plus all the
preceding blocks the entire history of
commerce on that blockchain not just on
one computer but across millions of
computers simultaneously all using the
highest levels of encryption in the
light of the most powerful computing
resources in the world that's watching
me tough to do and this is infinitely
more secure than the computer systems
that we have today bought Jane that's
how it works
so the Bitcoin blockchain is just one
there are many the etherion blockchain
was developed by a Canadian named
metallic boot Aaron he's 19 years old
and in this blockchain has some
extraordinary capabilities one of them
is that you can build smart contracts
it's kind of what it sounds like it's a
contract that self executes and the
contract handles the enforcement and the
management performance and payment the
contract kind of has a bank account to
in a sense of agreements between people
and today on the etherium blockchain
there are projects underway to do
everything from create a new replacement
for the stock market to create a new
model of democracy where where
politicians are accountable to citizens
so to understand what a radical change
this is going to bring let's look at one
industry financial services recognize
this Rube Goldberg machine it's
ridiculously complicated machine that
does something really simple like crack
an egg or shut a door well kind of
reminds me of the financial services
industry honestly I mean you tap your
card in the corner store and a bit
stream goes through a dozen companies
and each with their own computer system
some of the being 1970s mainframes older
than many of the people in this room and
three days later a settlement occurs
well with a blockchain financial
industry there would be no settlement
because the payment and the settlement
is the same activity it's just a change
in the ledger so Wall Street and all
around the world the financial industry
is in a big people about this wondering
can we be replaced or how do we embrace
this technology for success now why
should you care well let me describe
some applications prosperity the first
era of the internet the internet of
information brought us wealth but not
shared prosperity because social
inequality is growing and this is at the
heart of all of the anger and extremism
and protectionism and xenophobia and
worse that we're seeing growing in the
world today brexit being the most recent
case so could we develop some new
approaches to this problem of inequality
because the only approach today is to
redistribute wealth tax people and
spread around more could we pre
distribute wealth could we change the
way that wealth gets created in the
first place by democratizing wealth
creation engaging more people in the
economy and in ensuring that they got
fair compensation let me describe five
ways so this can be done number one did
you know that 70 percent of the people
in the world who have land have a
tenuous title to it so you get a little
farm and Honduras some dictator comes to
power he says I know you've got a piece
of paper that says you're on your farm
but the government computer says my
friend owned your farm this happened on
a mass scale in Honduras and this
problem that exists everywhere Hernando
de Soto the great Latin American
economist says this is the number one
issue in the world in terms of economic
mobility more important than having
bank account because if you don't have a
valid title to your land you can borrow
against it and you can't plan for the
future
so today companies are working with
governments to put land titles on a
blockchain and once it's there
this is immutable you can't hack it this
creates the conditions for prosperity
for potentially billions of people
secondly a lot of writers talk about
uber and Airbnb and TaskRabbit and lyft
and so on as part of the sharing economy
this is a very powerful idea that peers
can come together and create and share
wealth my view is that these companies
are not really sharing in fact they're
successful precisely because they don't
share they aggregate services together
and they sell that what if rather than
Airbnb being a twenty five billion
dollar corporation there was a
distributed application on a blockchain
we'll call it be Airbnb and it was
essentially owned by all of the people
who have a room to rent
and when someone wants to rent a room
they go on to the blockchain database
and all the criteria sift through help
them find the right room and then the
blockchain helps with the contracting it
identifies the party it handles the
payments just through digital payments
are built into the system and it even
handles reputation because if she rates
of room as a 5-star room that room is
there and it's rated and it's immutable
so the big sharing economy disruptors in
Silicon Valley could be disrupted and
this would be good for prosperity number
three the biggest flow of funds from the
developed world to the developing world
is not corporate investment and it's not
even foreign aid its remittances this is
the global diaspora people have left
their ancestral lands and they're giving
sending money back to their families at
home this is six hundred billion dollars
a year and it's
growing and these people getting ripped
off annalee Domingo is a housekeeper and
she lives in Toronto and every month she
goes to the western union office with
some cash to send her remittances to her
mom and Manila it costs her around 10
percent the money takes four to seven
days to get there mom never knows when
it's going to arrive takes five hours
out of her week to do this six months
ago Annalee Domingo used a blockchain
application called Abra and from her
mobile device she said 300 bucks
my directly to her mom's mobile device
without going through an intermediary
and then her mom looked at her mobile
device it's kind of like an uber
interfaces Abra tellers moving around
she clicks on a teller that's a 5-star
teller in seven minutes away guy shows
up at the door gives her a Filipino peso
she put some in her wallet the whole
thing took minutes and it cost you 2%
this is a big opportunity for prosperity
number four the most powerful asset of
the digital age is data and data is
really a new asset class maybe bigger
than previous asset classes like land
under the agrarian economy or in
industrial plant or even money and all
of you we create this data we create
this asset and we leave this trail of
digital crumbs behind us as we go
throughout life and these crumbs are
collected into a mirror image of you the
virtual you and the virtual you may know
more about you than you do because you
can't remember what you bought a year
ago or said a year ago or your exact
location a year ago and the virtual you
is not owned by you that's the big
problem so today there are companies
working to create a identity in a black
box the virtual you owned by you and
this black box moves around with you as
you travel throughout the world and it's
very very stingy it only gives away the
shred of information that's required to
do something a lot of transactions the
seller doesn't even need to know
who you are they just need to know that
they got paid and then this avatar
sweeping up all this data and enabling
you to monetize it and this is a
wonderful thing because it can also help
us protect our privacy and privacy is
the foundation of a free society let's
get this asset that we create back under
our control where we can own our own
identity and manage it responsibly
finally finally number five there are a
whole number creators of content who
don't receive fair compensation because
the system for intellectual property is
broken it was broken by the first era of
the internet take music musicians are
left with crumbs at the end of the whole
food chain you know if you're a
songwriter twenty-five years ago you
wrote up a hit song it got a million
singles you could get royalties around
$45,000 today you're a songwriter you
write a hit song it gets a million
screams you don't get 45 K you get $36
enough to buy a nice pizza so imagine
heat the Grammy winning singer
songwriter is now putting music on a
blockchain ecosystem she calls it
mycelium and the music has a smart
contract surrounding it and the music
protects her intellectual property
rights you want to listen to the song
it's free or maybe it's a few micro
cents flow into a digital account you
want to put the song in your movie
that's different and the IP rights are
all specified you want to make a
ringtone that's different she describes
that the song becomes a business it's
out there on this platform marketing
itself protecting the rights of the
author and because the song is a payment
system in a sense of bank account all
money flows back to the artist and they
control the industry rather than these
powerful intermediaries now this is
this is not just songwriters it's any
creator of content like art like
inventions scientific discoveries
journalists there all kinds of people
who don't get fair compensation and with
blockchains
they're going to be able to make it rain
on the blockchain and that's a wonderful
thing so these are five opportunities of
out of a dozen to solve one problem
prosperity which is one of countless
problems that block chains are
applicable to now technology doesn't
create prosperity of course people do
but my case to you is that once again
the technology genie has escaped from
the bottle and it was summoned by an
unknown person or persons at this
uncertain time in human history and it's
giving us another kick at the can
another opportunity to rewrite the
economic power grid and the old order of
things and to solve some of the world's
most difficult problems if we will it
thank
you