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Bill Barhydt | The Evolution of Bitcoin | Global Summit 2018 | Singularity University

Bill Barhydt
Founder and CEO at Abra
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Singularity University Global Summit 2018
August 20, 2018, San Francisco, CA, USA
Singularity University Global Summit 2018
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About the talk

A short history of why all government-issued currencies have failed, why Bitcoin will succeed, and real-world examples of the new forms of commerce this digital currency enables.

About speaker

Bill Barhydt
Founder and CEO at Abra
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I'm going to give you my take on where this is all going crazy year. This has been if you had told me three months before we launched the average the beta that the price of Bitcoin would gets almost 20,000 and then fall down to you know, $5,000 wherever it was and you know there be a 454 to Victorian. I did it would make sense. But yet here we are stopping to give you my take on the next 2 minutes and where it's all going and then I'm happy to make it interactive and I know we're going to have a longer discussion after

the next presentation as well. Okay. So using my exponential technology-based time machine, I was able to fly 4 years into the future before before this talk and I was able to see a couple of really interesting press releases that I want to give you some insight song because maybe you want in Destiny's companies now. So this is Samuel in the light in his home for the first time because his family has purchased a new solar system that basically uses their Kenya and Tanzania and bass and paste a wallet to make monthly

lease payments on a new solar panel. It's really cool. They now sold for years later over a million of these installations. The repayment rate is like 100% because people want the lights nobody steals them cuz they guard them really well. It's the company is doing phenomenally. Well the challenge up until now 2022 is then how do we do this outside of these markets? Because in Kenya Uganda Tanzania, everybody has that in peso wallet so they can make that $5 weekly payments on a solar panel. What we really want to do is he wanted to play them globally, but how does somebody in Indonesia pay

how does somebody in India pay or to Royal China? So they finally figured out That using cryptocurrency technology. They could bring this service Global for make the service Global so that it make a deployed it over a hundred countries. So effectively what they launched his is the world's first pay as you go solar service live in over a hundred countries really cool. This is Angelica. She's a farmer in in rural Philippines that I met also in my time machine and she actually takes money that she makes and puts it in

his micro investing Services. He actually buys exposure to US Stock indices all the way from the Philippines in tiny pennies at a time and overtime. It's it's it's balloon to a very significant value. The challenge for them has been the same this company that provides the service right? We have to go on the ground and partner with lots of banks to make the service work in just a couple of countries, but now we figured out that using cryptocurrency technology. We can actually make this service work live globally in an in actually more than a hundred countries in the

Nave done that now it's really fascinating. So how is it possible? Like I have tried to deploy mobile banking services in like 15 countries and gave up because I was I had a headache perpetually for years, right? But here we are right for years later and they been able to figure out how to deploy these services. But how is this possible? Right? So I figured out what their what they're doing and the service has two obviously by definition be globally accessible, but the payment mechanism will come back to that the second obviously it has to be internet-based. But

the pain of mechanism not only has to be stable preferably in a current to the consumer understand the average consumer doesn't know what Monero is but but if they're if you're in if you're in Indonesia, they say no roof is so how do you reconcile the fact that I want to put money in the system in rupiah's but in order to make that solar panel work in a hundred countries, right? I probably can't use local banks in other countries to make the payment the closest don't work. So let's take a step back and talk about how not to do this. I think

so probably can plants at this for about 5 seconds and find a Common Thread. These are all currencies that have effectively failed to actually I think it's the fact every country every currency of history at some point had failed. Either that or it's going to fail at some point, right? These are the ones that have failed spectacularly with the most recent One Imports being the boulevard which Morales capitulated this week. Overtime I have counted it was just go back a hundred years, right? There's about 30 currencies that have failed due to hyperinflation and currency inflation over the

last hundred or so years. I want to show you because it's going to paint a story as to where I think we're going what happens when you start printing money as if it didn't matter, right? So most people focus on inflation as the cost of goods and services. Make a little bit differently about it. Look at the green line. That's simply the amount of money in circulation. Now. My mother has a 1950 something Mickey Mantle baseball card. I think it's worth a lot of money. I'm not sure how much it's worth. But what it's worth is dependent upon how many there are so what station has the only one in

existence and it was worth 10 to $10,000. Now she found out tomorrow there were two in circulation. It would stand to reason that card might actually not be worth about $5,000. But for some strange reason after hundreds of years governments refused to get that basic concept. Over and over and over they make the same mistake. So here is the US right look at what's happened to our money supply in the last 3 years. Let me just bring up this picture again right now. I'm not I'm not telling you what's going to happen. I'm just asking you to accept the fact that history

leaves Clues. Right, and he was cool number one. Alright enough of that. What happened to our money in the last? I don't know hundred years, right? Basically, the purchasing power of the dollar has fallen 90% in the last hundred years. The only reason that most of us aren't open arms around this about it is either one. We were here a hundred years ago or two. If we were here on JuJu's ago when I said, that's the only reason if we were living to be a hundred fifty to be riots in the streets because your money will be worthless and you would know it.

So the pattern here is very clear money was based upon a commodity standard up until the War and what happened after World War II is very clear. It is also equally clear. So now let's relate this back to my earlier research would said we need a stable some kind of stable store of value to make these global payment systems work. It it really finally time for new commodity standard. no, obviously this talks about Bitcoin so you can guess where I'm going but I tried to find a parallel to say you know, is is

there some kind of History lesson to be learned from what happened with the internet itself and actually did some research it was amazing what I found okay. Here's the quote for a friend of mine. I'm not picking on Karen she knows payments would claim. He was really no Bitcoin, but there's a lot of people don't know Bitcoin in the comments on bitcoin Bitcoin is only two proven use cases after 8-years criminal activities speculation so much. They saying hyperbole out there. I just take them whenever fairly randomly or or news about the unit itself and

found this I preheat the internet will soon go spectacularly Supernova and a 1996 catastrophically class in this is a person actually created ethernet basically said they can basically survive under its own weight. Obviously the right that the one on the right is easy to prove because it's already transpired that he was wrong and I believe that the queen of the left is mathematically proven. Wrong, which I'm going to show you now right that meaning I can actually show you probably use cases as to where it is. The only technology that can solve the problem today that don't involve criminal

activity in speculation. Now let's extended internet analogy. These are the businesses that have either died been transformed in some way because of the internet. Right again easy to prove it's already happened. These are the businesses that I believe. And the same thing will be either replace transform till door or dramatically changed in some way because of Bitcoin and its underlying blockchain technology when I say blockchain technology. I'm still talking about Bitcoin. Alright, let's get this out

of the way. Here's the market cap. This is an ethics class that did not exist 10 years ago write the fact forget about the volatility swings the most important feature of Bitcoin as it relates. The volatility is that one Bitcoin today is one Bitcoin tomorrow. Okay, it's not the price today because it was everything else I'm saying is true. It's the fungibility Bitcoin that matters not at the price in dollars, but the fact that it didn't exist 10 years ago, and we're all sitting in that second. You're sitting here listening to talk to me talk about this. I've been at this for 30 years have been

encrypted with the CIA Finance at Goldman Sachs that worked on the first credit card gate where the internet I can tell you. I've never believe more fundamentally in my life. That something is is here to stay that has a proven itself yet. Send it. Write this is about to change everything the same way. I believe in 95 that the internet was about to change everything. But what is really the killer after this? I'm going to give you three. We're going to talk about cross-border payments investing and asset finance and then related back to what I found when I traveled into the future. So let's

talk about cross-border payments. Must have you heard of the the remittance markets about 500 billion gets permitted on on the grid meeting via the traditional banking system where there is Western Union or just Bank wires equal amount of money gets remitted underground people carrying money back home people using ancient hawala type of solutions where they call a friend to give out money centers that accept a trillion dollars which generates probably 50 to 60 billion dollars in FX and and transaction fees for banks Western Union, etcetera, etcetera. Portal

calculations that ever if you were to replace not even the user facing aspect Avenida pain and payout would still be in dollars and pesos but just the rails right with Bitcoin. at least a hundred basis points would go back into the system meaning to the consumer right with the elected least, you know half of those fees today incredible amount of money that basically is completely wasted now the biggest challenge with that is I don't think Western Union was understand what I just said, but but eventually they will Right and at

that point right? Here's everything everything is going to change from money transfer perspective because it will be incident it will be practically free. Here's an example of a service. We've been testing in the Philippines that uses what we call a cat tellers on the ground that effectively are buying and selling legally Bitcoin. Now the most half of the consumers know they're buying Bitcoin cuz they're using the tellers to invest in crypto. The other half are using the tellers to actually get money on and off the phone in a foreign exchange transactions. They only know that they're

holding digital pesos. They don't actually know that the transaction is happening between the teller makes a small fee, which is a fraction of the Western Union Swifty's and everybody's happy and under us side. They can put the money in the ACH just like you do with venmo and to effectively you have a simulated cross-border wire that actually doesn't even need the Bitcoin Network. Decentralized investing. What does that mean? Let's go back to the original example of micro investing. What if I wanted a way to invest in anything

in India, I wanted to invest in Apple stock us ETS gold but I wanted to do it in $1 chunks. It would be very difficult today very very difficult. But what if I could give you away using Bitcoin base more contracts to hold the value in a very secure mathematically guaranteed way on a smartphone that would solve a few problems one. No Central company would be holding the money because if you're using Bitcoin correctly, you're actually holding the keys. How can I capture the value of Apple stock in in in a Bitcoin private key that's

on my phone. What what I'm telling you is is not only is that possible if you use a Bro you've been using just that to the tune of hundreds of millions of dollars in transaction volume that we've conducted exactly that way so if you hold anything but Bitcoin in the abarat Bitcoin is just the word to the Bitcoin private key anyting dollars Euros, pesos Ripple Monero Dash any other currency what you're actually holding it is a multisig Bitcoin smart contract at pegs the value of Bitcoin to that asset, right? How many doing is Tibet?

So know what I'm really saying is is that I just basically did the digital equivalent of handing you a bunch of gold to that you're holding the gold and then gave you a derivative contract that tied the goal to anything. Whatever I said you chose all in the Bitcoin blockchain. This is effectively what's going on to accomplish that it doesn't matter what the asset is I can do this with baseball cards. So long as there is a liquid market for baseball cards. Why does this matter? Well, this now makes it legal in 150 countries to invest in something

because there's no third-party managing custody. There's no third-party broker. We're simply acting as the counter party to the contract and no assets have to change into this all happening on the Bitcoin blockchain. You break. I showed you how many transfer can be made Global cheap near free via Bitcoin. How investing and by the way, you can do this evening with mashup of assets. So if you take a Apple stock in Google stock and you match them up, you can actually create a new coin right doing that that was actually built this stuff sounds a lot like necf, right? So now I

showed you how you can enable global investing in a way that's not possible without this technology and how you can do money transfer in a way that's not possible without technology. Bring an end screen is the basis for both of those solution. Let's bring those together in another real world example that completely hide all of this to the consumer but solves a big problem. Let's go back to that solar panel example. Remember I mentioned 1 million + homes East Africa, etc, etc. All get using the local banking system being Pacer works great. I've tried it. It's really a breakthrough for those

countries in the penetration is astounding right but what about the company's and Pope want to do is everywhere but can't because there's no single easy way to pay credit card networks are out of the question because in rural areas the fees are going to be 10% + x when they have to settle right and happy as consumers want to thank accounts to begin with. Probably going to want to play with cat will using a tiller model. I described where I can easily get crypto on a smartphone. Write a break and not only solve that problem for solar panels. I can solve it for any consumer electronic

device washing machine refrigerator anything that you can basically put a SIM chip in the crate internet connectivity. I can now remotely control to say if you've made that lease payment using a simple crypto wallet. You can then use the device. So we've actually started building the South we call it infant on leasing in in in Europe day. They refer to sometimes as pay go for a local services like in Copa and our intent is to build a stack that we open up to the world where anyone can basically turn a device into a hardware as a service business that will work locally

Foxconn made an investment in a burlesque here explicitly for this reason. so now I'm just showing you three applications of Bitcoin that actually work with Bitcoin today. Bitcoin does not need to be upgraded changed in any way whatsoever for all three of these to work now next Generation Tech lightning to help it scale are going to be great. They're going to help this work even better, but this works even without that. So let's go back to our to press releases Global

availability of micro investing pay-as-you-go, sir solar service in hundred countries. It's now clear to me that the coin solve these problems. Even if the consumer doesn't know they're using it which is probably the key. I also think it is very likely to be the case. Just like your mother doesn't know what he's a Gip is when she watching Netflix, but she still watching Netflix. All right, that's how fundamental Bitcoin is to the Future Commerce. But because it addresses all three of these issues Global accessible stable store value and its internet-based.

So I'm happy to answer a couple questions make me have a couple of minutes. So I don't know if there's a Mike putting around but if there's one in the back if we don't if you fast enough, we just got out of repeat, but anybody want to ask question got it out good. So what about regulator is that around the world are trying to figure out a way to I don't have to stop at to regulate the money transfers remittances across the world because they're actually de facto these drop the business of Korean band. So they have it figured out a way and these

these rails bypass a week ey CEO AML Brothers around bypass AML any money laundering or know-your-customer regulation when you touch the banking system you simply can't but what you can do is you can store software on a phone the government can stop you from storing ones and zeros on a smartphone which for example is what happens when you die, but it's actually a private key on your phone. There's no Central custodian. So they recognize that they keep the Chinese government doesn't stop people from snoring private keys on a smartphone to own

cryptocurrency, right? They don't allow public exchanges to access the banking system, but they don't stop people from only crypto. Most people simply buying it. Exchange for cash using local Bitcoin are the services. So the people that are causing that green line up into the right definitely are not excited a lot of them about this but the good news is they can't stop it a large-scale lips along the way but long-term. I have fought every crypto battle Under the Sun Equity expert export rules in Xscape in the mid-90s on weapon the great photography. We lost and the government will lose this

battle as well and have no choice but to embrace it and hyperinflation will finally be a thing of the past in my opinion. May take 25 years, but that's okay height. And is David. How do you why do you say that? It is a stables to revalue despite the volatility in that we notice in the graph for two reasons one because it's fungible meaning the most important quality of Bitcoin is is that one Bitcoin is always equal to one Bitcoin just like $1 is always equal to $1. That's just common sense. The second is via to Smart

contract. I can actually in a stable Manor store in equivalent value of any asset in a Bitcoin smart contract. That's how our app works today whether it's dollars or Apple stock or other cryptocurrencies makes no difference. Right? Most people don't realize that they pointed score. It's programmable money to go Abra simple using Using the crypto Bitcoin as programmable money the way it was intended to be used. I believe we're the first company to figure out how to do that. But but that's what it is at its core. Two questions. First one is not very fast

yesterday. Somebody mentioned Network like lightning. Is there any other currency like Bitcoin so low compared to Fiat what it is is limited in through foot which has the net effect of you can only process so many transactions any given time frame. There's a second will be called a second layer Technologies called lightning a lightning Network that basically has figured out how to on top of the Bitcoin Network processing near endless number of transaction and then settle those transactions on to the Bitcoin network, but do it in a way that

preserves the privacy and the best benefits of Bitcoin along the way. I'd like to network is now being deployed. There's thousands of these lightning node live all over the world with interesting about it actually could represent a an opportunity for banks to provide services in crypto, and I will see what happens. What was your second question again? Send a card to bitcoin. There are many cryptocurrencies summer. Actually Forks of Bitcoin Litecoin is a fork of Bitcoin who you know their properties are they

propped? They allow more transaction through points. There is other brand new the new currency. There's there's literally hundreds of cryptocurrencies out there all have different kind of Technology benefits and advances and think they're trying to do to compete with the coin wheel of the technology of having lots of different cryptos because it propels the whole Space forward right and you can go to either that, or other places in read about the differences summer trying to solve different problems privacy transaction volume throughput, you know, i o t e connectivity whatever

there's a million reasons to crate train city-states. Hello. our people fed Yep, Jack. Yep. B scale 95 Yep be questioned. So so stupid it's the two points made to address where how do we reconcile those a large holders of Bitcoin who may not be using the Bitcoin or just holding it as well. And how do we address this issue of Chinese space mining centralization? So both are related actually, so I don't know if any of you hear it if you're attending Singularity. I'm sure that would be interesting to you read some of the basic websites or whatever and read some very basic tenets of Austrian

economics and they wrote about what happens when you have a deflationary asset long before the idea of Bitcoin existed sounding is his Bitcoin is playing out the Austrian Playbook to the letter they actually predicted exactly what's happening meaning massive hoarding. Right meeting the short-term volatility driven by the volume of fires since the whales aren't selling which is exactly what we're saying right now, but eventually the de prediction ghost the acid becomes so valuable that people have no choice but to loosen up a person drinks. It's hard to take

advantage of their Newfound wealth and I think we're three or four years away at least from that happening. But in the meantime applications, like what I showed you are viable using the tech even if even if the whales are in selling an app to someone someone's trading and selling that's all we need. The second issue has to do with mining centralization. This is a more complex issue. But but basically a couple of companies have figured out how to game the system by having Asic chips that are highly optimized for the proof of work algorithms that basically are the game you play in order

to win Bitcoin every 10 minutes. I think a few things are going to happen over the next few years won the crypto algorithms. Like a whipped Cur dog is going to have to change our we have to get away from sha-256 because one is going to become breakable whether it's via, you know, this guy stuff. We're just employees. I don't know eventually it's going to become easily breakable which all encryption eventually does and you move on to the next thing so that will hopefully address some of that. The second part is is that as the amount of computing power is growing exponentially.

Yes, the chips are becoming a centralized but the actual ownership of the hash power is not right. So if you actually look at the mining pools and break it down into actually who owns that has power it is not nearly centralized in any meaningful way. I don't like the fact that there's I don't care where they're from weather is China is real us makes no difference to me, but I don't like the fact that at one company that's got a monopoly on that. I don't trust one company to do anything even after by the way, I would like lots of that without there eventually. I just want to be the

biggest one right? But but I do think that this problem will be a non problem over time. The reasons that I mentioned and I think the crypto algorithm one is the bigger is is actually a much bigger concern than the mining ships because Bitcoin doesn't have centralized government by definition and that's been a challenge for Bitcoin in terms of actually moving detector words. So when it comes time to change. Scott 256, but we really have no choice. I hope it happen quickly enough to do not become a problem. I think we have time for one one more question, then we'll go back to the next.

and also to you Yep. All right, so you can stop because you asked three questions in one even though they're telling me to get off the stage. So, okay. So there's a hundred 50 live cryptocurrency exchanges now in different countries and so all of them access to banking system in some way. It's it's not often easy the amount of paperwork they put you through some of them. It's ridiculous making make a video of yourself speaking. It's crazy just pissed but also

to the Earth Defense team at a fraud and in the Bitcoin World, unfortunately as it relates to the banking system not the coin itself is very high. Okay, but I am aware of at least a hundred and fifty countries now where you can buy Bitcoin via the banking system and more coming online all the time. I think the key to that question simply time. Right. This second question was about an ETF. There are 12 applications pending to my knowledge for bitcoin-based ETS. None have been approved yet. I believe my opinion and the opinion of a bunch of insiders is one will be approved in the next 6

to 12 months. And I think that the reason that one will be approved is pretty much the same reason why one has been approved is that is people like my friends that are playing in the first batch and that's not who they want to approve they want to approve the old, you know gray hair suit guys who are already ready ETFs if they have comfort that they know these people right or wrong. I think that's what they're waiting for. And I think that's going to happen because that's that. Those are some of the applications that are pending. So you will see in a US based ETF in my opinion in the next 12

months for that reason. I need this nonsense, but that's what's going to happen. And I don't remember your last question. Custody, okay, so I can stop an hour and custody but I think custody is the key reason why institutional money is not coming into crypto. And yes and Wyatt about to buy used to work at Goldman. I can tell you for a fact that got a whole bunch of people working on building Kristen custody Services inside the firewall because they are not going to Outsource custody to coinbase or any other company. It's not going to happen but he's might you know, some of the

traditional players make it into it but that's the key right if the by Seda Coleman wants to sell crypto right now. They can't where they going to put it there no place to put it legally. So as soon as the address that which I believe they're doing right now you will see large amounts of institutional money coming into the crypto space in that 24 months time frame. I think that there are others but it's a big one. I think I have to stop cuz I'm getting weighed wave. So, I guess we'll see you in a bit in a few minutes. Thanks a lot.

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