[AUDIENCE] Theoretically, is it possible to have
inflation within bitcoin or other cryptocurrencies? In that scenario, what would it look like? [ANDREAS] Bitcoin currently [has] a rate of inflation
of about 5% [per year]. It used to be 12% [and higher]. It’s gone down over time. Every ten minutes
[on average], new bitcoin were being generated, and there wasn’t enough demand in the economy to
absorb that [before], so it had an inflationary effect. As the reward diminishes over time, that inflation
rate gets closer to zero and even becomes negative. It becomes a deflationary currency, simulating
a very scarce or rare [resource] like gold. which is part of the design characteristics of Bitcoin,
but not all open public blockchains have that. Other open public blockchains have
more inflationary monetary policies. You could do any policy you want. You could
have a monetary policy that is very inflationary. You can have a monetary policy that is
not inflationary at all, or you could have… a monetary policy so inflationary, you have 4000%
inflation a month. We call that Zimbabwe. [Laughter] It wouldn’t be a good idea, but you can do it. [AUDIENCE] With all these cryptocurrencies
emerging and rising [around the world], would you- Is there a possibility for a currency war,
that we’ll actually see in the world [soon]? [ANDREAS] Well, whether they like it or not,
digital currencies are part of the currency wars. The reason is because they did the unthinkable —
they give people a choice to exit the currency wars. That is the worst thing you could
do during the currency war. For example, in some places like Venezuela,
it is [effectively] illegal to mine or use Bitcoin. As you can imagine, as soon as the government
says that something is illegal and cannot be used, everybody stops using it immediately… [or not]. [Laughter] The use of cryptocurrencies in Venezuela
quadrupled. [It’s because of] a really simple [reality]. You have a family; you need to feed your family. Your
government is giving you money that is worth nothing, is worth less than nothing tomorrow, and
much less than nothing the day after that. Or you can use this cryptocurrency,
which is illegal, but can feed your family. You [will] become a criminal [to feed] your family.
That is how humans make decisions. You’re going to break one more stupid
law by one more crazy government. The currency wars are happening because,
in many places, governments are failing in their role… of delivering the fundamental functions of currency. Most of us here don’t ever need to worry
about [the stability of our] currency. Currency is one of things that, when it’s working,
you can ignore it completely; it becomes invisible. It’s the fabric of society. You don’t
even know that it is a technology. I go [give] talks, I tell people money is a technology,
and they don’t understand what I’m talking about, because they’ve never thought of it that way. It’s a language. It’s a technology, and when it
works you don’t need to think about it at all. But when it stops working, everything fails,
everything stops working; even the most basic… of functions that worked before fall apart, because
[currency] is a very fundamental part of society. What is the government’s role in currency? Don’t print too much of it. If you print
too much of it, its value goes to zero. Pay the debts when they come
due, don’t default on that value. Allow it to be used and make it liquid so
that there’s enough of it in the economy. [Don’t create the] problem [where] I can’t find the
currency, even though I actually have the value. Allow me to use it [for] international trade and trade
with my neighbors. [These are] four very simple things. I can list two dozen governments that are
breaking all forms of those rules right now, and that’s why we have currency wars. When a government takes out 87% percent of all
the money in circulation, with four hours’ notice, and says “It’s not money anymore,”
that is a violation of those rules. When they print $100 trillion worth of debt in the
last ten years, that’s a violation of those rules. That is actively stealing from your
savings to pay the government debt. When governments do that, you have currency wars.
What digital currencies do is, they give people a choice. Until now, they only had two choices:
say “okay,” or fight the government. Now they have a third choice, which is really powerful:
[they can say] “bye-bye” and walk away [from the war]. That’s one of the most powerful choices. When people have the choice to walk away from a mess,
that makes it less likely a mess will occur. Yes, currency wars are going to continue to happen. The difference is that now we’re not talking about
currency representing a national identity, pride, religion, or being tied to a king, queen, or other important person. Now, currencies are constructs
that can be created by anyone. They may or may not have value,
may or may not have stable value. But they [are now a] choice. You can pick your currencies
like you pick your email providers and TV shows. Some of them will be better for some things,
and some will be better for other things. No one can stop you from making that choice now,
and that’s a really powerful change. It’s going to change the way currency wars are being
fought, by giving so many people so many choices… that the traditional approach doesn’t work anymore. When a government creates a situation of hyperinflation
and this dramatic spiral of collapse in the economy, what happens is they take
the entire population hostage. They close down the borders, the country
becomes a prison, and you go down with it. But what if you can exit? That changes everything. [ANDREAS] Bitcoin is not taking
a side in these currency wars. Bitcoin is going to be the Switzerland even when
Switzerland is no longer ‘the Switzerland.’ [Laughter] Bitcoin will be the only Switzerland left standing,
because eventually you will have gold confiscations. Modi has been very careful to keep repeating,
‘We won’t be confiscating gold.’ Yesterday, they announced that
they’re going to be doing tax audits. Anything over a certain amount of gold — even if it’s
hanging off the neck of a married Indian housewife, who are the holders of the majority of gold in the world —
will be confiscated and [taxed at] 60% What that actually means is, they [will]
be doing spot-checks on random victims, [who] are then going to be required to pay an
enormous bribe to those very corrupt officials… so they can simply walk away. And corruption marches on, [getting] bigger and bigger.
You do not take a political side in this fight. This is not about being pro-Modi or
anti-Modi, pro-Erdoğan or anti-Erdoğan . It is about being completely neutral.
Bitcoin isn’t taking a political stance here. The only political stance it is taking is,
individuals should control their own money.