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Getting Current on Crypto | Global Summit 2018 | Singularity University

Galia Benartzi
Co-Founder at Bancor
+ 3 speakers
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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

Are cryptocurrencies money, commodities, units of accounting for non-existent assets - or all the above? This session will bring together a range of perspectives on just what cryptocurrencies are, how they work - and how they are transforming our understanding of transactions.

About speakers

Galia Benartzi
Co-Founder at Bancor
Bill Barhydt
Founder and CEO at Abra
Mickey Costa
Co-founder & CEO at Atlas
Laura Shin
Podcast producer and host at Unchained and Unconfirmed podcasts
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We're going to be discussing what crypto assets are and why many people are interested in their 10x potential. But first, let's have each of you describe what it is that you doing this Faith. How you been in crypto? Hi everyone. I'm Galia ben-artzi co-founder of Bancorp protocol bank or launched currency the bank or network token BNT in June of 2017 bank or is a protocol that allows cryptocurrencies to be automatically convertible one for the other. So it's a mathematical exchange rate between all

currencies in the network which allows for the long tail of currencies to emerge will get more into that. Nikki Costa I'm the founder of Access Network and where a decentralized token economy dedicated to providing a better Financial Services to the unbanked. So basically it's a got two prong system. You have a this network of a human infrastructure for banking people and parsley flakes after for example today then just if the smartphone become ATMs tell her is to the people around them their community and they're earning tokens for increased activity there

other than using those tokens to vote and guide the incentives and rewards for Global at Marketplace of developers. Cuz his kind of just too much stuff to be done on top of it infrastructure and they're using the tokens to going to have access to those applications and get discounts on services. Hi, hun. Gobar. I think you saw me prison ever a few minutes ago average the cryptocurrency bank that globally allows consumers to make investments. Send money. I make payments all using Bitcoin. They smart contracts with customers in about 200 countries now

and we're one of the fastest-growing apps for doing crypto investing into another asset classes at all from the smartphone. We kind of started the succession already through the talks, but I still want to hear obviously from from Galia and Mickey how would you define crypto assets are cryptocurrencies? And also how would you differentiate them from other forms of money that people are already familiar with I'll even more technical answer for you. I'm always motivated by the kind of result of how this can change the world. So to me with crypto assets are as a way for us

to as its Global Citizens the coordinate together to solve any kind of problem Financial or otherwise rights, and now you have this ability to incentivize any kind of behavior. You want to know a person with the computer can have create a chocolate environment where people can coordinate to solve the problem. And the other exciting for me about token supposed to the old Financial world is is liquidity certain things today in the developed world like a car and apartment are you when you can't open eyes these things you can collateralize the more you

can share rights and then you can share and sell them themselves that can be applied also to where I work in West Africa where someone to do the same thing to a goat and that's just exciting for think all sorts of party is private and in public and even told us to some people that we Sometimes raagam because now you have a whole new ass to class from digital memes to tokenize apartment buildings that just didn't exist before so it's just allows for completely new things that didn't exist before. Answer that if we go back to what money actually

is money is a tool that we used to collaborate. Like you said, it's a tool that we used to create trust between large networks of people people. You might not know personally and most importantly money is a belief system. It's an agreement system. And so unlike some other inventions like the wheels are things that are more physical and more defined as the invention of money is actually very open to interpretation in terms of what we believe it to be and what we agree on and so Laura mentioned maybe you heard her say in the opening that there's this feeling that

you can create money out of thin air all the money that we use was created in a way out of thin air and these cryptocurrencies are created in a way out of thin air and it doesn't make them not valuable because they still represent some kind of agreement between people and that's what the money is. Meant to virtualize basically, so I work at bank or is basically around looking at a multi-currency world. We look at Bitcoin as the first user-generated currency of so that's a concept from the internet from consumer internet whenever you reduce the

technical barriers to entry and you let folks approach tools at like WordPress or YouTube Banner that shows us that you eventually see millions and hundreds of millions of folks approach and use these tools in and use them to create content and so Bitcoin and the open-source nature of the technology isn't the first user-generated currency that we seen and the team at bank or believes that where you see one you'll soon see hundreds of millions of these user-generated currencies. Like Bill said, we today have hundreds thousands probably of currencies at and we don't see that slowing

down the real question with all of these currencies and end with any currency. What makes the currency money. Is it we agree that it's money is that someone else will accept it from you in exchange for something to date? We have outsourced this ability to governments are empowered our governments to create these monies for us. The money is of countries are accepted that recognized by people at some exchange rate or another and I put in a world with hundreds of millions of currencies. What will make any one of them potentially valuable is only their liquidity

to other currencies. It's only their fungibility as you said to either neither currency that you want or a good and service that you want. So to answer your question anything is money as long as we agree to it. So I think digital currency has been around for decades. It's just that what Bitcoin did is a change the narrative right up until now that the slogan for money has been in God we trust and ultimately Let the people in that secret room at the Port of the defect Board of Governors make the decisions now, the manttra is

trust. No one. Verify me the code and play your role in the incentive-based ecosystem. Now that's an able to be this cool technology to solve the problem, you know using every block but in terms of solving a problem, it's it's it's huge and it's a fundamental shift in the way. We should think about think about money because I think that's like a really concrete example that people can wrap their minds around the team or previously experimented with what we call user-generated currencies are Community currencies

Community currencies. You can think of like Monopoly money which you drop into a group of people and what we discovered shocking that when you give people money they use it and we ran Pilots all over the world with tens of thousands of users in each group and the one was talking about was called hearts and it was a currency issued for mothers and some others could join this They would get Hearts when they join their all these things they could do to get more Hearts like volunteer at the school babysit for other parents in the neighborhood all kinds of things that were relevant to that

community and then I could spend the heart with each other to all the mothers would upload into the mobile app things. They wanted to sell clothes bikes toys Services consultations really over 50,000 items. We saw at any given time and it was a fascinating experiment because in just under a year we saw over 20 million dollars worth of Commerce take place among 20,000 people only using heart. So no dollars no Fiat currencies exchange hand. How do we calculate? It? Just one heart was worth $1. That's what we told

folks. It wasn't worth that mean he couldn't cash it now, but for pricing for ease of pricing heart is a dollar if you're going to sell a cake for 20 bucks, you could sell it for 20 hearts in this network and what we realize. What was that when you look at a number like GDP for that year that we were in this experiment, you know GDP could be a 20 billion dollars in a in a small country and in this country was actually 20 billion + 20 million that no one was counting because that was economic collaboration that was happening between folks. I'm in a currency that that wasn't being

measured things got really interesting after that year when we started seeing usage a plateau and then to clients and what we understood in Pilot after pilot with mothers with children with vegans. I mean really a diverse onset of use cases in a different set of countries was that liquidity ultimately was the breaking point of these currencies. What does that mean? If you couldn't use the hearts to shop at the supermarket or if you couldn't use the hearts when you went out of your community or on a vacation to a different place the meaning of that money that collapsed In your

mind, right? It's like you can use Monopoly money in a game, but you can't use it anywhere else. We don't think of it as money. And that's actually how we backed into the solution. We work on it bank or which is how could you allow all of these currencies potentially hundreds of millions of currencies, like hearts and stars and and and things for communities all over the world. How could you allow folks to get the abundance that they were getting out of local Commerce and yet still have these currencies be globally relevant globally tradable and that's when we moved to essentially a

mathematical base solution, which as Bill said programmable money is the key here. You can now solve problems that the economist of of old newer problems but didn't know the solutions to and now it's very simple algorithms with very simple computer code. You could tell a heart how much it's worth in dollars at any given time based on a really simple formula that says, you know, if more people are using Hearts the value is Coming up in a few people are not using Hearts if they're selling out of them the values climbing down. Haven't you can make those formulas taken any kind of

factor that you think is relevant or that folks in your community think is relevant. And that's what we call the long tail is really a world with hundreds of millions of currencies, like hearts that are relevant to communities, whether their Geographic or their local weather their Affinity base groups, you know, folks online and and in different networks were their corporate currencies and truly this idea of making money out of thin air is more like making a agreements online or in code between different networks of people

dislike user-generated currencies are user incentivize systems, and I know you talked about just providing but how do we get there? Because We start off right? There's like an identifiable group of people that are creating this project. So how do you get from kind of the original version which is somewhat centralized to an actual decentralized network is doing is really interested in creating us to call we look at kind of Bitcoin world as up when you're inside the Matrix in theory. You don't know about the outside world that have hacked in and then back into the Matrix and

that's how we use exchanges. Now, it seems represent kind of the Hardline back into the banking system to get money in and out. So phase one is is is that that Austrian play book that I mentioned before which is massive speculation, which is what should happen when you have a deflation react if that's been created out of nothing right and it's playing out that rule book and so Phase 2 says okay if the de Play Store Eventually gets up and to the right from a price perspective. The purse strings will be loosened because people are going to have massive amounts of wealth. They want to take

advantage of and people will offer lots of payment services because you know going to be incentivised it safe to use there their crypto to make payment and then the third is what I talked about earlier where you see true programmable money in the form of smart contract and other things enable things like micro contrast micropayments decentralised investing Network Hardware as a service. Applications that can't be done easily with a tour at all without cryptocurrency. But require the first two steps I did the Press doesn't understand when they write about the lack of usage of Bitcoin that

you simply can't bypass the first two steps in creating a decentralized system and it has to play itself out in order to get there in 20 years is not a long time for reunions last year with folks Netscape. We couldn't believe that it's been 25 years it has Song when you think about how many currencies have failed over the last 250 years to put the right pieces and tollways in place to make all this work in the decentralized model. I think the valley of decentralization on a long enough timeline is kind of everything. So I technical level you need to have more on chain

governance. You know, how do we coordinated make the decisions together but what interests me more I think we'll need to adoption more is is really more of a philosophical economic point right here of all things are equal in a centralized Legacy system. Looks like a Facebook, right and the service the network affected the same the value of Facebook and Facebook desensitize Facebook the same. The only difference is decentralized Facebook pages you automatically you know, $10 a month or $50 a year based upon your data in the things they're being monetized. You know, we would

think that you can honestly you would go and join the decentralized Facebook the thing that matters the most, you know, I think that this is it easy to get on board with the thing that matters the most to me is people talk about a long time long time when all the time and what's going to happen first, and I have a big believer that You look at the developing World, you'll see the value of a decentralized company or service have more adoption first because it's really hard to match the value of Facebook today or Uber in the US to do a pretty good job, right? So you go to the developing

World values were talking a lot about thankfully today still solar energy to go to the developing World in blank. Italy across the face like Africa, some people don't have energy or if they do they're saying about $10 a month on it. Right and there will be 10 5% of your monthly income. What's a lot? So now it would solar it completely work. So if you have neck has a fun solar energy grids a local community can pay continue to pay to use something $85 a month now have reliable energy. I think it's great. That is green. But maybe they don't care it's

way cheaper right now. They're beating Legacy value of the $10 a month government-run Legacy system. That often goes out for like hours. By the way, and the what's the result now compared to me at home where I have reliable and at a pro-rata level pretty cheap electricity with Con Edison in New York City on the corner of this network diabetes local networks. We have ourselves a real problem and people are co-owners and profit Earth as user to something that they use and I'll just down this note at a high-level cuz that model to be applied to pretty much anything else in infrastructure in a

real-world level. It's a lot cheaper using back-of-the-envelope math to build a hyperloop somewhere then to rebuild the New York City subway system siding places where they have real pain points and they don't have a legacy system is a kind of blank canvas to build things. You'll see using crypto economics and decentralized models. A lot of this idea of users co-owning things that they use any of the mix of this kind of free market. Libertarian ideals that have this kind of more utilitarian. How come by the way

so she was first releasing Bitcoin. He actually talked about where she talked about whether Bitcoin was being released then to a as a result of the financial crisis that was happening at the time and they said no we're actually trying to prepare for the one that's coming next in 10 or 15 years because like clockwork it is coming right and so let's get ready for that by laying down the rails and the ground work but to be protected at now. You're up. I guess they call it the escape hatch game was with exposed. So can you talk a little bit about that? I know you guys are probably thought

a lot about that centralization vs. Decentralization pain Point. Sure. So I'll add that we think decentralisation is a journey and not a destination. What do we mean by that? If you you know, go to the essential nature of what it is, we're trying to do and different people have different definition of this but trying to create systems that are more inclusive that are more fair that are more accessible and that hopefully make living together as that humans on this planet a nicer experience a better experience and decentralization is a legitimate

cause right because when we see centralization when we see governments when we see central banks when we see it over time, if we going back in history Kings and Empires and and all of the formats that that we've taken our own governance, Centers tend to abuse the power right? That's the problem if the centers were not abusing power. We might not be on his March for decentralisation. And so the question becomes not must we decentralized but how do we prevent centers from abusing power decentralizing is certainly one of the tools that we have in the toolbox, but no thanks to programmability.

We also have other tools like a open source like transparency. If you could see every single dollar that was printed by the fed and where it went in that moment there be much less abuse probably if I ain't nobody like the FED they might still do do some bad things, but they would have to account for a lot of the things that they do do it. Right? It's it's the the call for transparency until to Laura's question recently at bank or we use a what you would call a centralized control within are smart contracts which allowed us in this situation to retrieve over 10

million. Hours of stolen tokens from the network. There was a security breach. There was a hack of the system and millions of dollars of cryptocurrency or stolen RS central control was used to return the part of that currency that we had control over. And so this this conversation ensued about decentralization versus centralization and we came out with a few additional points that we think are really important when looking at decentralisation is a concept is like I say open source and transparency. Can you see when an emergency control

is being used? Do you know who has the ability to use it are there clear statements around who can use it when they will use it how that will be announced pay so that the transparency of the network is a big factor, whether it's too centralized or decentralized. The second one is for Camilla tea if the code of a network is easily forkable because it's open source. And because all the data is owned by the users then again you a few extremely prevent abuse. If bank or knows that when we abused our controls folks can make their own bank or take all

the code and leave that's going to make us highly unlikely to abuse our own system because the next thing that will happen is it will collapse and the third thing is really the custody of the users do users in the network like in a decentralized Facebook example or in the bank or network do users maintain control of their own assets and their own passwords and their own private keys at all times with bank where the answer is. Yes, even during a security breach when the whole network was down and user could access their own wallet could access their own tokens could take them all could move

them somewhere else at any moment even while our network was down and so again whether the central Troll that we had to activate in an emergency situation makes the network not decentralized is something that we would say look at look at these other parameters if users always have access to their own assets and we think that is a huge step towards decentralisation. And the last thing I'll say is that we think it takes some trust to get to trustless. Right? So you're talking about the crisis that will come in 15 years will we have products and services

will we have teams at working in the space that are able to provide progress in this timeframe or will we keep waiting for the perfect solution to materialize perfectly in and Technology environment that is incredibly unknown until again some of the tools that we offer to the community has kind of Pathways right in the thing about progress is it's Progressive and it goes step-by-step often are things like on ramps. So we As an example a gay bar, smart contracts three years before it moved to its upgradeable and immutable State we

told the community. We think it'll take about three years to monitor the early behavior of the network to make sure that the code is written appropriately to test some of the edge cases that are impossible to test until you go live in this three-year on-ramp to immutability is what we think is safe for everyone in the first three years of this network will be the most accountable and responsible for the network safety. We use the analogy sometimes of an infant and infant will be, fully self sustaining human eventually that can feed themselves and live on their own without their parents

not on day one and not on your one. There's a certain amount of care that it takes for that infant to become even potentially self-sustaining. I haven't we think networks, especially technology networks written on very new underlined blockchains like aetherium for Eos or whatever your building on written in smart kaun. Exeter a new type of programming Paradigm deploying immutable code to a blockchain. We think that these on ramps are another tool that the community has I'm in our toolbox to getting where we want which is more decentralized system not

decentralised are dying. So we're running out of time, but I want to ask one last question your we've been through this like major speculative phase. We're obviously coming down from that. But when I look at some of the uses Just Had Sex on the more popular project cryptokitties are auger, which just lost two kind of a lot of fanfare and they've all got you know, I like 50 or less muser 24-hour periods. And I mean, it's just there's just very little Lisa things we go from speculation to adoption. I think we need more real world use cases to Two Bills playing earlier

the best technology. You don't know how it works in my car at works. Why watch Netflix it works and I think with taking some time is what's a natural human behavior is Walter Global moving a lot of technologist. You're looking in their own backyard know how can my life be better and see what I said earlier than that just it's really hard to compete with like a C systems. I think if we look to places like the developing world where they have pain points longer than I can list than any amount of time you're going to see those real world uses happen and it

was really important is as we have a real-world user base. That's using crypto technology under the hood to solve. Problems. How is it including the rest of the world in the Gulf World users? Right? So back to the solar analogy. Can we find those things and then I'm not kidding with this napkin math in two months. Can we get a 2X investment? I'm outside before this conference today and there's an add-on like the garbage disposal for the paper or something in for a bank and it goes to lock in your money for 2% CD and inflation is about 2%. So, I think also has a lot

of the average people here. We're lacking any will happen to find Financial stuff first. We're lacking access to wealth Investments and people over here are great place individual and Community to invest your money and you just don't have an easy-to-use application for us to to connect to each other financially on a Windows PC to access the internet. Right most. I'm sure anybody here interview 230 doesn't understand what I just said so which is fine. You shouldn't have to look where we are 25 years later. My prediction

is that Bitcoin or its successor will become the payment and settle rail for for what become banking transaction to the future. Hopefully they have something like lightning on top and the average person is room or anywhere maybe less. So in this room could be people but the average person will not know that it's using Bitcoin or a successor will be using the mic on track stuff that I rambled on about before but the bottom line is Because it was a lot of liquid materials that have to be laid first. We need more hard-line into the Matrix and in developing markets to make it, you

know, really acceptable but there's a large-scale applications which may be Collectibles. They may be you know new tokens on aetherium. They may be just a coin that I take advantage with rails. I think are are 5 to 10 years out. Yeah, I think I'm on the shorter end of that Spectrum five years were already seeing at bank or we launched a project in Kenya where paper currency is that folks are using in rural Villages. They don't have access to the National money. One of the biggest problems with money that not everyone has it. That's that's the problem and the killer app for

blockchain is money. Lots of all kinds of money money that people can actually get in their communities and that they can actually use at to buy and sell goods and services right where they are. It's not financialization. Its Commerce its trade its living life with the people around you we've already seen this literally this week in Kenya. The first Tomatoes were traded on the blockchain and folks in a town where given cryptocurrency put it on their smartphone is true the App Store still, you know, a bit clunky a bit Advanced but that's changing quickly because we have the

underlying infrastructure the internet the smartphones I have and the things that came before and are using the currencies at the market so that they can trade amongst themselves. It's already happening. The moments of Village next door gets wind that this Village just made their own money and now everyone's using it and buying and selling from each other. We think it's going to catch like wildfire great. Well, we'll leave it at that. Thanks so much.

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Galia Benartzi
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