[AUDIENCE] Hi, I’m just wondering… Let’s say that 5%
of the total population get out of their comfort zone… and they move to cryptocurrencies. When do you think that this gentrification will come,
[a push toward] mainstream user friendliness? [What will the effect on the crypto] community be then? Will [we] say, “This is gentrified, I’m [leaving,”
because it [has become] too [mainstream-friendly]? [ANDREAS] It is already happening. At the moment,
it is primarily [in the form of] things that people call… “blockchain” [when it really isn’t], “enterprise
blockchain,” “blockchain” proof-of-concept, “blockchain alliance,” and [other] projects using
blockchain to do blockchain blockchain blockchain… And yes, this is Consensus “Blockchain Week”
in New York. I must have forgotten to go there. I came here instead. [Laughter] [Applause]
They will say that word a lot. Gentrification is already happening, the attempts to
wrap all of this in a sanitized corporate environment. The brilliant thing about it is, that doesn’t take
away the core principles and values anymore. They have built their own little neighborhood and
it is boring. They are doing their own little thing. The consultants are making fantastic money The funny thing is, I predicted this in 2013. I suggested that they (banks, large software companies)
would start blockchain projects [and gather] funding. With this funding, they would train software
developers to work on “blockchain” [applications]. How will they train software developers
to work on “blockchain” [applications]? They might buy my book, or do some courses online,
and start learning from the existing Bitcoin code base. They will to copy existing code, learn about cryptography
fundamentals and elliptic curve [mathematics]. They will learn about private-public key [pairs],
hash algorithms, and consensus algorithms. They will learn about proof-of-work. So, [at some point], these developers will
discover Bitcoin [during their training]. [Laughter] People thought that was a funny [suggestion].
How could they possibly do it [in that order]? Then I went to a conference in Singapore. Vitalik Buterin
and I were both doing presentations for the meetup. A young kid in his early 20s came to me and said,
“Mr. Antonopoulos, I have been watching your videos.” “I have been in the blockchain space for a year and
a half. A couple of months ago, I discovered Bitcoin.” [I responded], “What? How can you be in
the blockchain space for a year and a half, but only discover Bitcoin in the last two months?” He said, “I went to a Bank of America presentation.” “A consultant talked about this new technology
called ‘blockchain,’ Hyperledger and Ripple.” “They talked about ‘distributed ledger technology,’
federated ledgers, proof-of-authority, proof-of-stake.” “All of that. They didn’t say the word
‘Bitcoin’ once. It wasn’t on the slides.” “Then I was hired, got involved in a project, started
working with Hyperledger, and reading [more online].” “But every time I would search for [something
related to what I was working on], I would [end up] in these weird
open-source communities on GitHub.” “I found things I had never heard of.
I started noticing that ‘Bitcoin’ came up a lot.” “I thought, ‘What is the relationship
between blockchains and Bitcoin?'” “‘Does Bitcoin use a blockchain too?'” [Laughter] The entire time [he is telling me his story],
I’m sitting there [amazed and trying not to laugh]. “Really? Uh-huh… Then what happened? Really? Uh-huh.”
I’m listening, but on the inside, I’m screaming. He said, “And then I discovered your videos, watched
them, and now I’m really excited about Bitcoin.” “I came here to learn about Bitcoin.”
I thought, ‘Oh, this is it! [This is great!]’ The beauty is that Bank of America paid to train
this guy, and now he is working for us. [Applause] And they [will] keep doing that. If you are trained on the boring corporate dime and
then one day — [after] doing [work] with Hyperledger… and ‘distributed ledger technology,’ etc. —
you come across Bitcoin and it blows your mind. It blew my mind and it blew your mind.
We are all here because we had that epiphany. We had that same experience of,
‘Wow, this is very different. It is weird and exciting!’ When you get involved and start reading,
you go down the rabbit hole. We [will continue to] see that happening. I think
that is one of the most exciting parts of this space. Neeraj asks, “Hi Andreas. After a lot of investments
and extensive research in the blockchain space, it is clear that private blockchains do not have any
advantages over existing database [structures].” “But I still see a lot of major tech giants working on
their private blockchains, offering them as a service.” “They are investing a lot of money in development,
as well as in marketing. Is there anything I am missing?” “Do private blockchains offer [something]
over [other] database [structures]?” “These tech giants have great talents. [Why are they]
still investing a lot [of money] in private blockchains?” [ANDREAS] Yeah. There is one important consideration
[as to why they are investing in private blockchains], which is the hype factor. Private blockchains, and [especially] the word
“blockchain” itself, come with so much hype. People automatically make incorrect assumptions
about its characteristics and capabilities just because… it has the word “blockchain” in it. People assume that if it is a blockchain, then
it must be immutable. That is not the case. [They assume that] if it is a blockchain, then you
have decentralized control. That is not the case. [They assume that] if it is a blockchain, then it is
censorship resistant, neutral, able to “track truth,” or no one can cheat the rules. None of these things are true.
These are not characteristics of all blockchains. They are characteristics of some blockchains
with [certain] consensus algorithms. [Those are characteristics] of a blockchain which
are formed through decentralized consensus. People use the word “blockchain” in order to imply
all of these characteristics, whether they are true or not, because they can raise a ton of money. The consultants who sell this junk to
private businesses don’t care [if it is not true]. They will be funded whether or not [their
advice leads to a project that] succeeds. A lot of them [never go beyond the] proof-of-concept,
prototype, or minimum viable product (MVP) [phase]. So far, they have been failing in very large numbers. Developing on a blockchain is complicated.
It requires new knowledge, skills, and tooling. If you will spend all of that effort,
you need to get something in return. If all you are doing is making a software clone
of Ethereum and running it as a private network, [using] proof-of-authority instead of mining, with a few
nodes on the cloud via Amazon Web Services (AWS), that is not secure. It is not decentralized and therefore it is not immutable. It is not neutral or censorship resistant. [Even though] it has none [of those characteristics],
it will still be hard to develop that platform. It still requires the new tooling. It will have edge cases
that are often unpredictable, like the possibility of forks, attacks, problems with propagation of transactions,
nodes going out of sync, upgrades and maintenance. This means you have just exposed yourself to a whole
boatload of new, untested, experimental technology. [You will] get nothing in return, other than
a slow, inefficient, centralized database. There [may] be applications where
private blockchains are relevant, applications where the current status quo
is a centralized organisation. [For example], the clearinghouse function. In those cases, you have a bunch of banks, financial
institutions, or parties who don’t trust each other. They will want to implement a type
of federated, closed blockchain. The problem is, if they try to build their own,
the project will turn into a standards war. Design-by-committee [projects], where competing
parties within this coalition framework will try to… insert their own intellectual property. [Members of the] committee [will try to create] technical
standards on the front-end, while [all of their] lawyers… are securing patents on that technology [in the
background], to get an edge on [everyone else]. [Each party] will introduce their own pet projects and
protocol changes to get a competitive advantage. Effectively, [they will still have] the
same problem [they] originally had. The reason the parties chose to use something
like this is because they don’t trust each other. They end up sabotaging development efforts. One of the interesting [aspects] of open
public blockchain development is that… [decisions] are not, [and should not], be driven
by corporate interests within a committee. Instead, it is driven by a very large number of volunteers
who are developing with different motivations. Many of those motivations are neutral toward interests
of various corporations involved in development. Even if there are corporate-sponsored developers,
they come from so many different industries, representing a range of interests and applications
that they are not directly influencing the protocol. [They may try] to influence the protocol, but they usually can’t influence the protocol
[such as] to give advantage to any one party. It is very difficult, even in the case where you
want to build a federated closed system, which is [only] slightly better than
a completely centralized [database]… [used by] a clearinghouse or trusted third party. Even [if that might have] a use case the dynamics
of design-by-committee projects will undermine it. We have seen banks try to do
these projects again and again. I have worked on large projects like this in financial
services, with a coalition of banks trying to create… “the next open standard” for payments, for international
wire transfers, for credit cards or credit card chips, etc, These standards move very slowly, usually
[focusing on] the least common denominator, the least functional model, or in the opposite direction
by [including] everything in the kitchen sink, crammed with too features and capabilities. Everybody wants their little pet project
to be included, and so they fail. We saw this in the telecom wars in the ’80s and ’90s,
when they were trying to compete with the internet. [They organized] closed models of development.
We saw this with the standards for email that failed. Internet email was better and simpler. We saw this with standards for
directory services and identity which failed. Enterprise models were too complicated, developed
by competitors who were jockeying for position. We saw this in the development of protocols
like integrated services [digital] network (ISDN), which was supposed to be a
competitor to internet broadband. We saw this in the development of
messaging and video conferencing. In all of these cases, when the industry players tried to
[join] together and create a common set of standards, and protocols, they failed. Open blockchain development [is more effective
because it occurs] publicly and collaboratively… a set of mutual principles, outside the
purview of corporate interests that… [usually] drive the design-by-committee
development of private blockchains. Private blockchains are inefficient and don’t
offer any of the benefits of decentralization. The cost to implement them is too high. The chances
of competitors coming together and creating a neutral, open standard that serves the needs of the industry,
rather than jockeying for position, is pretty slim. But let them keep trying. As we saw with the
open internet, [many] companies [previously said], “We can’t be on the open internet; it is too
wild, insecure, and outside of our control!” Eventually [they] saw that, in fact, those are the benefits: being neutral, being outside of the control of any
[one] organization, having standards that are designed… for a broad variety of applications
rather than a specific niche.. [These are all features] that [were valuable] to
companies participating on the open internet, [instead of] trying to build their own [closed] competitor. I think the same [applies to] private blockchains. The intranet of money is a very narrow use case, with
[very few] benefits, and is actually still hard to achieve.