Bridging Blockchain & Traditional Economy | BEF SF 2018

Summary

The transcript discusses the transformative potential of Bitcoin and blockchain technology, contrasting the views of traditional financial figures like Warren Buffett and Jamie Dimon with the emerging decentralized systems. The speaker argues that Bitcoin’s volatility is temporary and emphasizes its future role as a global, frictionless currency. Blockchain is seen as a tool to reshape governance, allowing virtual governments to compete more effectively by offering more efficient services. The conversation also touches on the regulatory risks faced by startups versus established institutions, highlighting the disruption blockchain is causing in finance and governance.

Takeaways

• 😀 Bitcoin's potential to rise significantly in value is debated, with some predicting it could reach $250,000 by 2021.
• 😀 Prominent figures like Warren Buffett and Paul Krugman oppose Bitcoin, fearing its impact on traditional fiat currencies and banking systems.
• 😀 Bitcoin's decentralized nature and global accessibility offer advantages over government-controlled fiat currencies.
• 😀 Bitcoin's volatility is not necessarily a problem; the true value is in its ability to serve as a stable, decentralized currency.
• 😀 Governments and traditional financial institutions are facing competition from blockchain-based currencies, which could reduce the size and power of government operations.
• 😀 Blockchain technology can support services like income redistribution, tax collection, healthcare, and insurance, potentially making governments more efficient and cost-effective.
• 😀 Virtual residency programs, like Estonia's, are enabling people worldwide to access government services without being physically present in the country.
• 😀 As blockchain technology develops, governments are forced to adapt and compete with each other to provide better services, such as healthcare and pensions.
• 😀 Regulatory hurdles for startups in the blockchain space can be overcome by taking risks and innovating more freely than traditional incumbents like banks.
• 😀 Small countries with fewer regulatory constraints are more agile and open to adopting virtual governments, with tax incentives to attract global commerce.
• 😀 The U.S. government, as a large entity, faces difficulties in changing course, but it will eventually have to adapt to the competitive pressure of virtual governance.

Q & A

What is the predicted future value of Bitcoin discussed in the transcript?

The transcript mentions a prediction that Bitcoin could rise from $64,500 to $250,000 by 2021.

Why does the speaker mention Warren Buffett's views on Bitcoin?

The speaker highlights Warren Buffett's preference for fiat currency and his resistance to Bitcoin, suggesting that Buffett's stance comes from his vested interest in dollars and his control over them, which Bitcoin challenges.

What is the key difference between Bitcoin and traditional fiat currency according to the speaker?

The speaker emphasizes that Bitcoin is a decentralized, global, frictionless currency, while traditional fiat currency is controlled by governments and central banks, which makes it subject to their policies and whims.

How does the speaker view Bitcoin's volatility?

The speaker acknowledges Bitcoin's volatility but argues that the value of one Bitcoin remains constant, suggesting that other currencies are more volatile and that Bitcoin's long-term potential outweighs short-term fluctuations.

What role do smart contracts play in government services as per the transcript?

The speaker proposes that many government functions could be carried out via blockchain technology and smart contracts, such as redistributing income, collecting taxes, and providing services like healthcare and insurance, effectively reducing the need for large, traditional governments.

What is the concept of virtual residency mentioned in the transcript?

Virtual residency refers to the ability of individuals to be considered residents of a country and access its government services without physically being there. The transcript mentions Estonia's virtual residency program and how other countries like Malaysia and Kazakhstan are adopting similar systems.

How does the speaker view the competition between governments in the future?

The speaker predicts that governments will have to compete in the future by offering better virtual governance and services, as individuals and businesses increasingly seek the benefits of decentralized, digital solutions over traditional government models.

What is the potential impact of decentralized currencies on traditional banks like JPMorgan?

Decentralized currencies like Bitcoin are seen as leveling the playing field, challenging traditional banks like JPMorgan, which may lose market share as people move their money into more efficient, decentralized systems.

What advantages do startups have over incumbents in the context of blockchain and crypto regulation?

Startups can take more regulatory risks compared to established incumbents, as they can 'beg for forgiveness' after potentially overstepping legal boundaries, whereas incumbents have to 'ask for permission' and navigate stricter regulations.

What challenges do large governments, like the US, face in adapting to blockchain technology?

The speaker notes that large governments face significant challenges in adapting to blockchain technology due to their size and complexity, which makes it difficult to change direction quickly. They argue that smaller governments are more agile in adopting new technologies.