Placeholder Image

Subtitles section Play video

  • 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.

  • You'll be surprised to learn

  • that it's the underlying technology of digital currencies like Bitcoin.

  • It's called the blockchain. Blockchain.

  • 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, a vote,

  • carbon credit and other assets --

  • sending you a copy is a really bad idea.

  • If I send you 100 dollars,

  • it's really important that I don't still have the money --

  • (Laughter)

  • and that I can't send it to you.

  • This has been called the "double-spend" 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, they're centralized.

  • That means they can be hacked, and increasingly are --

  • JP Morgan, the 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.

  • It 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 a 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 we can't monetize it

  • or use it to better manage our lives.

  • Our privacy is being undermined.

  • And the biggest problem is that overall,

  • they've appropriated the largesse of the digital age asymmetrically:

  • 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, moved, transacted, exchanged and managed,

  • all without powerful intermediaries?

  • What if there were a native medium for value?

  • Well, in 2008, the financial industry crashed

  • and, perhaps propitiously,

  • an anonymous person or persons named Satoshi Nakamoto

  • created a paper where he developed a protocol for a digital cash

  • that used an underlying cryptocurrency called Bitcoin.

  • And this cryptocurrency enabled people to establish trust and do transactions

  • without a third party.

  • And this seemingly simple act set off a spark

  • that ignited the world,

  • that has everyone excited or terrified or otherwise interested

  • in many places.

  • Now, don't be confused about Bitcoin --

  • 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

  • and 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: 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.

  • They have massive computing power at their fingertips --

  • 10 to 100 times bigger than all of Google worldwide.

  • These miners do a lot of work.

  • And every 10 minutes,

  • kind of like the heartbeat of a network,

  • a block gets created

  • that has all the transactions from the previous 10 minutes.

  • Then the miners get to work, trying to solve some tough problems.

  • And they compete:

  • 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

  • and the previous block

  • to create a chain of blocks.

  • And every one is time-stamped,

  • kind of like with a digital waxed seal.

  • So if I wanted to go 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 resource in the world

  • that's watching me.

  • Tough to do.

  • This is infinitely more secure

  • than the computer systems that we have today.

  • Blockchain. That's how it works.

  • So the Bitcoin blockchain is just one.

  • There are many.

  • The Ethereum blockchain was developed by a Canadian named Vitalik Buterin.

  • He's [22] years old,

  • and 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, the management, performance

  • and payment -- the contract kind of has a bank account, too, in a sense --

  • of agreements between people.

  • And today, on the Ethereum 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 politicians are accountable to citizens.

  • (Applause)

  • 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 a ridiculously complicated machine that does something really simple,

  • like crack an egg or shut a door.

  • Well, it 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,

  • each with their own computer system,

  • some of them 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 upheaval 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 it 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 then ensuring that they got fair compensation?

  • Let me describe five ways that 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've got a little farm in Honduras, some dictator comes to power,

  • he says, "I know you've got a piece of paper that says you own your farm,

  • but the government computer says my friend owns your farm."

  • This happened on a mass scale in Honduras,

  • and this problem 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 a bank account,

  • because if you don't have a valid title to your land,

  • you can't 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 them.

  • What if, rather than Airbnb being a $25 billion corporation,

  • there was a distributed application on a blockchain, we'll call it B-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 onto the blockchain database and all the criteria,

  • they sift through, it helps 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 -- they're built into the system.

  • And it even handles reputation,

  • because if she rates a room as a five-star room,

  • that room is there,

  • and it's rated, and it's immutable.