The topic of this conference is “fintech”
(financial technology), but Bitcoin is not “fintech.”
That may surprise many of you. I hope, as you learn
more about Bitcoin, you will continue to be surprised.
I’ll start [this talk] with what Bitcoin isn’t.
Bitcoin isn’t a company. Bitcoin isn’t an application.
Bitcoin isn’t “fintech.” Bitcoin isn’t banking.
Bitcoin is a protocol, an internet system.
It does not belong to any one company.
It doesn’t belong to any one organization,
just like the internet doesn’t belong to any company.
It is a system for conducting transactions
and commerce on a global basis,
[along with] many other trusted applications.
Bitcoin isn’t what you expect.
Bitcoin changes our expectations of what money is.
It changes the foundation of how
money and payment systems work.
This isn’t just a little [disruption] that will affect
a few companies. This [will be] a [big disruption].
It will be as big as the internet,
perhaps in some ways even bigger.
It will not just affect finance. It will also affect politics
and governance. It will affect societies as a whole.
I’m a technical person, so I’m interested in how Bitcoin
works. After five years, I still discover new things…
and understanding it in even great depth.
Let me start with something
that happened two weeks ago.
Two weeks ago, president Barack Obama stood up
on stage at South by Southwest (SXSW) conference.
He talked about surveillance and said,
“If [law enforcement] can’t unlock the phones,
that is if every person is carrying a
Swiss bank account in their pocket.”
This [example] was supposed to provide a view
of a terrifying future where everyone has privacy.
Now, I’m sure some people in this room
might think that is not such a bad idea…
for everybody to have a Swiss bank
account in their pocket. [Laughter]
You see, [the American] president was wrong.
There won’t be a future in which everyone
has a Swiss bank account in their pocket.
[It is a] present [and future] in which everyone
can have an entire Swiss bank in their pocket.
I have a system in my back pocket that
can generate two billion “account numbers,”
and wire money anywhere in the world
[in minutes or even seconds].
It can be the point of origination for loans and mortgages, for international finance and trade.
[It can be used for] import-export business,
or for a remittance business.
I can build novel financial applications and
trading instruments, install them on my phone,
I have mobile banking, not as
a customer, but as a banker.
Even if you unlock my phone, my “Swiss bank
account in my pocket” [could still be] secure.
The terrifying future of privacy that president
Obama sees is actually already part of our present.
On January 3rd 2009, the world changed.
Few people noticed that [someone had]
invented a system of money that allows…
everyone in the world to have financial
privacy, security, and [powerful] capabilities.
That will have important implications
throughout [the rest of our] history.
People [often] ask me, “Will Bitcoin one day become the
currency of a country? Will it be adopted by the banks?”
To ask that question is to miss the point.
Bitcoin is not a national currency.
Bitcoin is now the de facto currency of the internet.
We have already seen more than a
thousand other similar [cryptocurrencies].
[Bitcoin] is not just a new system of [payments],
but a network-centric system of money.
The major change with Bitcoin is not simply
that we can ’email’ money across the world,
but that we can change the organizational
structure behind money from hierarchical…
to a flat, network-centric model.
This is the same type of model that changed
centralized publishing and [media] broadcasting…
into a [more distributed], networked
communication system of the internet.
It brought us social media; now we will have social
banking one day, a system that is person-to-person.
[There is a] need for disintermediation.
There will be [less] need for financial intermediaries.
The role of intermediaries in most transactions
is not necessary when you can transact directly.
That doesn’t mean people who use bitcoin won’t have
intermediaries, but they don’t [need them like today].
They can choose to add a third-party into
their transactions, or they can choose not to.
This is the choice that [becomes available]
when you have this new currency of the internet.
It brings with it so many implications.
On my flight into Zürich, I flew with Swissair,
in an aircraft with a flag painted on its tail.
What an anachronism that is. Swissair is owned
by Lufthansa. It is no longer a national carrier.
But I remember a time when every aircraft had a flag
on its tail, when every airline was a national airline…
that had exclusive and monopoly access
to the skies and airports of [their] countries.
I remember a time when phone companies
had flags and belonged exclusively to countries.
Those anachronisms are gone.
The idea that, in a few decades, money will still have
a flag or queen on it, and belong to a single nation,
will also seem like a silly anachronism.
It won’t go away completely, of course.
There will still be national money.
But there will also be hundreds, possibly thousands
of [cryptocurrencies] that have no flag, no allegiance…
to any country.
More importantly, money that is neutral to geopolitics.
There is enormous power in a system
of money that is neutral to geopolitics;
a system of money that [is regulated by] mathematical
functions which can be inspected by everyone,
and doesn’t change its nature according to the
latest alliances or hostilities between nations.
A money that remains a stable and
neutral backdrop to global trade.
A money of the internet,
for the internet, and by the internet.
That can sound quite terrifying, honestly.
If you’re terrified, you are probably also worried about
how the internet [enabled] free expression for everyone.
But I can tell you, there is a generation growing up
right now who, when they hear of a money that is…
of the internet, for the internet, and by the internet,
think it is a natural [progression] and how it should be.
The internet has been giving them freedom
[of expression] for as long as they remember.
By the time the next generation reaches the age of 16
and finally acquires the right to open a bank account.,
they may have been using digital, network-centric
currencies like bitcoin already for a decade.
Two-year-olds, six-year-olds can open a
Bitcoin [wallet]. You don’t open an account.
You can download an app.
After a decade of using digital money on the
internet that is near instantaneous and global,
when happens [when those kids] go
and open [their] first bank account?
[They] have a conversation [with a teller], who explains
why the system only operates from Monday to Friday.
Why does it take three to five business days
to execute an international transaction?
Given that they have loaned money to the bank,
why will they be charged five Swiss francs a month…
for the privilege of [having a bank
account that earns] no interest?
[In the future], when you explain [banks] to a 16-year-old,
they will look at you as if you have just
asked them to send the fax. [Laughter]
The world has changed, but this
is not something to be afraid of.
This is a tremendous opportunity.
There are 2.5 billion people in the world
who have no economic access to banking,
according to The World Bank,
which is a very conservative estimate.
They only count the heads of household…
and the circumstances in which
no banking is available whatsoever,
those who are entirely in cash-based societies.
That is a very conservative [way] to estimate it.
I look at it from a different perspective.
I belong to a privileged elite who can open an online
brokerage account within twenty-four hours.
Tomorrow morning, I can be trading
in yen on the Tokyo stock exchange.
I can wire money anywhere in the world, in any currency
I want. I have the full capability of international, liquid,
multi-currency banking with no currency controls.
How many people have that? Maybe 1.5 billion people.
Then there is the other six billion, many of them
completely unbanked, most of them under-banked.
From a technological perspective, giving them
economic inclusion is now within our reach.
But we lack the political [will] to do that.
We have decided that it is more important…
to live in a world where every financial transaction, [from
anywhere and from anyone], should be fully identified.
We have created a system where
[we as] individuals have no privacy,
where every financial transaction
is subject to total surveillance,
and you must identify yourself in order to transact.
This [kind of system] has never existed in history before.
The fundamental advantage of cash is that you don’t
need to do a credit check when you exchange it.
If you give me ten Swiss francs, the money itself is the
bearer of value. It is independent of your credit [score],
or your identity.
I do not care, nor do I want to know, who you are.
I can simply transact [peer-to-peer with you].
That is a very fundamental [advantage which]
allows everyone to participate in the economy.
[But politicians and some corporations] are
trying to change that, where every endpoint…
is controlled and identity is part
of every financial transaction.
That is not a good future. That is a future
which worsens economic access and equality.
That is a future in which people are no longer just cut
off because they don’t have sufficient documentation.
[They use it to] cut off entire countries. In the era
of the internet, economic inclusion is declining.
But bitcoin brings a new model of digital cash,
where identity is irrelevant and unnecessary,
where privacy is the default.
In that model, security [is incentivised]
by the network-centric money.
The instrument itself bears value. It is unassailable,
unforgeable, and doesn’t require identity.
With that, we will break down the
biggest barrier to economic inclusion.
A simple text-messaging feature phone in the middle of
a village in sub-Saharan Africa, connected to a solar cell,
will have the same capabilities as a Swiss bank.
[It could] be an originating point or a destination point
for international wire transfers, remittances, credit,
with a bearer instrument of value that is cash, in an
electronic medium, without any concern for identity.
That is the vision I have. To me, it is very important
to re-discover the value of individual privacy.
Individual privacy is economic inclusion.
That is how we have always operated as a society.
The dream, [or rather nightmare], of creating a
completely controlled and closed system of finance,
where everything is under surveillance,
started in the 1970s.
[That dream] died on January 3rd 2009 with the
invention of Bitcoin. It will never happen now.
Now, every person in the world has
the option to trade in digital cash.
We will not bank the other six billion,
but rather we will de-bank all of us.
Banking is now an app. That doesn’t mean
that there will be no room for banks in this.
Quite the contrary in fact, [there will still be a need]
to coordinate lending, to deliver security services,
and offering other financial services
[may] become even greater.
The opportunity is to encompass the other six billion
into this new world of application-based banking,
to create a world in which borders are meaningless,
just like they [often] are on the internet.
This will require some very brave bankers.
You must go against an edifice of borders,
built over the last fifty to seventy years, which have
segmented the world into isolated islands of finance…
that cannot connect to each other.
The promise at the end of [the road] is this:
billions of new people, new customers who
now have access to a global financial system.
The era of currencies with flags is as
obsolete as the era of airlines with flags.
We must not fear this. We must welcome the fact that
this has now happened. It cannot be turned back.
It cannot be stopped. It is already happening.
Those who embrace it will have the
opportunity to enter this new world…
and create financial opportunity for many.
There is a difference between banking as it is executed
in America, and banking as a culture in this country.
I am very hopeful that I can bring this
message here [and you will understand].
In America, investment banking is where your banker
smiles to your face while helping you through an IPO,
yet is front-running transactions behind
your back and picking your pocket. [Laughter]
That is the truth.
[In contrast], Switzerland has a centuries-old tradition
of banking as a multi-generational relationship of trust.
A relationship that is as sacred as a relationship
with your doctor, your lawyer, or even your priest.
It is a relationship that aims to give individual power,
wealth control, and privacy to every customer.
If you really believe in that culture, if you really feel
the ethos of banking is that service to your customers,
then perhaps you can see that bitcoin is simply
a new means of delivering that relationship.
These new network-centric digital currencies
[can] deliver unassailable privacy and security.
They are a way to re-establish that ethos
of private banking, but not just for the few.
That is what I hope you will see in this new
post-national, international, network-centric money.
The money of the internet. Thank you. [Applause]