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.
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.
0:53You 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 --
1:37and that I can't send it to you. This has been called the "double-spend"
problem by cryptographers for a long time.
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.
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.
3:16So 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?
3:49Well, 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
4:56So 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
5:21Now, 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.
6:21And 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.
7:22So the Bitcoin blockchain is just one. There are many. The Ethereum blockchain was developed by a Canadian
named Vitalik Buterin. He's  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, performanceand
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.
8:13So 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 bitstream 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
9:14Now, 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.
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.
10:15Number 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.
10:56So 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.
11:13Secondly: 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. So,
the big sharing-economy disruptors in Silicon Valley could be disrupted, and this would be good for prosperity.
12:37Number 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. It's remittances. This is the global diaspora; people have left their ancestral lands, and they're sending money back to their families at home. This is 600 billion dollars a year, and it's growing, and these
people are getting ripped off.
13:05Analie Domingo is a housekeeper. She lives in Toronto, and every month she goes to the Western Union office with some cash to send her remittances to her mom in Manila. It costs her around 10 percent; the
money takes four to seven days to get there; her mom never knows when
it's going to arrive. It takes five hours out of her week to do this.
ago, Analie Domingo used a blockchain application called Abra. And from her mobile device, she sent 300 bucks. It went 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 interface, there's Abra "tellers" moving around. She clicks on a teller that's a five-star teller, who's seven minutes away. The guy shows up at the door, gives her
Filipino pesos, she puts them in her wallet. The whole thing took minutes, and it cost her two percent. This is a big opportunity for prosperity.
14:08Number 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 an 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.
14:52So today, there are companies working to
create an 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.
15:19And then this avatar is sweeping up all of 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 identityand manage it responsibly.
15:51Finally, number five: there are a whole number of 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 were a songwriter, 25 years ago, you wrote a hit song, it
got a million singles, you could get royalties of around 45,000 dollars. Today, you're a songwriter, you write a hit song, it gets a million streams, you don't get 45k, you get 36 dollars, enough to buy
a nice pizza.
16:31So Imogen Heap, the Grammy-winning singer-songwriter, is now putting music on a blockchain ecosystem. She calls it "Mycelia." 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 a few micro-cents that 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 has a payment system in the sense of bank account, all
the money flows back to the artist, and they control the industry, rather than these powerful intermediaries. Now, this is --
17:26This is not just songwriters, it's
any creator of content, like art, like inventions, scientific discoveries, journalists. There are 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.
are five opportunities out of a dozen to solve one problem, prosperity, which is one of countless problems that blockchains are applicable to.
18:02Now, 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 solve some of the world's most difficult problems, if we will it.