Bitcoin, the gold of the 21st century | Ferdinando Ametrano | TEDxLivorno
-
0:18 - 0:22We are at the dawn
of the digital civilization, -
0:23 - 0:27we have probably already figured that out
because our mail has become digital, -
0:27 - 0:30music and movies have become liquid,
-
0:30 - 0:34and all those things
that used to sit on our shelves, -
0:34 - 0:38like encyclopedia, have gone,
replaced now by Wikipedia. -
0:39 - 0:41Nowadays we expect, correctly or not,
-
0:41 - 0:43that an entire banking
and financial system -
0:43 - 0:46will fit in our smartphones.
-
0:46 - 0:50The Nobel Prize in Economics,
Milton Friedman, had already predicted it. -
0:50 - 0:53In 1999 he said: "What we are missing now,
-
0:53 - 0:55and will be certainly created
in a short while, -
0:55 - 0:58is a digital currency -
-
0:58 - 1:02mind you, not a digital coin
linked to an individual; -
1:02 - 1:04but rather personal cash
-
1:04 - 1:08that can be used anonimously,
by anyone, online. -
1:08 - 1:13This prophecy has been fulfilled
by the creation of Bitcoin, -
1:13 - 1:17which absolutely is
pole position in the race. -
1:17 - 1:19Why?
-
1:19 - 1:22Not so much for being,
quite obviously, digital: -
1:22 - 1:25our euros and dollars have been digital
for quite a long time too. -
1:26 - 1:29Rather, it's because it is decentralized:
-
1:29 - 1:33there is no organization,
no government behind it -
1:33 - 1:38that holds the power to manage it
and supervise its functionality. -
1:38 - 1:40And this, albeit a bit scary,
-
1:40 - 1:46it’s a very strong guarantee
that Bitcoin cannot be manipulated. -
1:47 - 1:50It's that type of innovation
-
1:50 - 1:53known in the English-speaking world
as "permissionless innovation". -
1:54 - 1:57What does that mean?
-
1:57 - 2:01It’s a type of innovation
that has no centralized safety mechanisms, -
2:01 - 2:03no entry checks,
-
2:03 - 2:07not even an editorial
content control system. -
2:07 - 2:11If you're getting scared
by this seemingly anarchic plan, -
2:11 - 2:13there's no need to worry.
-
2:13 - 2:16We've already witnessed
this type of innovation in action, -
2:16 - 2:19and it proved to be
both effective and gentle. -
2:19 - 2:21The e-mail, for example:
-
2:21 - 2:24it was not invented
by a consortium of post-offices, -
2:24 - 2:27the Internet was not invented
by a telcos consortium, -
2:27 - 2:31So why should a transactional
network of value -
2:31 - 2:34be built by a consortium of banks?
-
2:34 - 2:38I can't really wrap my mind around it.
-
2:39 - 2:41I came across Bitcoin in 2014 -
-
2:41 - 2:43I studied physics,
-
2:44 - 2:47and I worked for more than 20 years
in the field of investment banks, -
2:47 - 2:49finance and so on.
-
2:50 - 2:55But I had never asked myself,
not even once, what money is. -
2:55 - 2:57The first time I thought about it
-
2:57 - 2:59was when I stumbled upon Bitcoin:
-
2:59 - 3:03up to now, that's the best gift
that Bitcoin has ever given me. -
3:03 - 3:06So I'd like to play a game with you,
-
3:06 - 3:10let's try and go over the history
of currency in only three minutes. -
3:10 - 3:11Here we go!
-
3:11 - 3:14The earlies form of currency
we find in history is gold. -
3:15 - 3:16Why?
-
3:16 - 3:19It might seems weird,
but gold had two peculiar characteristics: -
3:19 - 3:22there wasn't much of it, and it shone.
-
3:22 - 3:26Turns out, human beings
love shining things. -
3:27 - 3:29Gold was also quite malleable,
-
3:30 - 3:34and it is fairly easy
to determine its purity. -
3:34 - 3:37Take a pot, put it on the fire,
let the gold melt -
3:37 - 3:40and then wait for it to cool down.
-
3:40 - 3:43If it's still shining
after this thermal shock, -
3:43 - 3:47it's definitely gold, trust me:
any other material would stop shining, -
3:47 - 3:52But if for every business transaction
the process needed to be repeated, -
3:52 - 3:55it would have been difficult.
-
3:55 - 3:58So we asked Julius -
yes, I mean Julius Caesar - -
3:58 - 4:02"Look, Julius, how about
putting your face on the gold coin -
4:02 - 4:05as a guarantee there's
that much gold in it?" -
4:06 - 4:10The first deflationay crisis
came about with his heir, -
4:10 - 4:12Augustus Caesar.
-
4:12 - 4:13Even the peasants realized,
-
4:13 - 4:17sestertia did not contain
the figure amount of gold. -
4:17 - 4:20But for the medioeval merchant,
-
4:20 - 4:22gold had even another problem:
-
4:22 - 4:23it was really heavy.
-
4:23 - 4:27Gold has a very high density, so it was
uncomfortable to carry it around. -
4:27 - 4:31And also risky, for you
can be robbed by bandits. -
4:32 - 4:35Almost at the same time in history,
London-based goldsmiths -
4:35 - 4:38and those who would later become
the Italian bankers, -
4:38 - 4:40they came up with the same idea:
-
4:40 - 4:44they suggested the merchant
to leave the gold in their vaults -
4:44 - 4:48in exchange for a certificate
that first was nominal, -
4:48 - 4:50and would later become
a bearer certificate. -
4:50 - 4:53It was a bank-note
-
4:53 - 4:58with which one goes to her pawn counter
and redeem her gold back. -
4:58 - 5:01That's how the banknote was born:
-
5:01 - 5:04a currency that represents
an amount of value stored elsewhere. -
5:04 - 5:07But both the Britons and the Italians
couldn't resist a temptation: -
5:07 - 5:11after noting that most of the time
-
5:11 - 5:15people did not ask for the gold back.
-
5:15 - 5:18So they had what we might call
a spark of genius. -
5:18 - 5:23They thought: "If we print more banknotes
than there's gold in our vaults, -
5:23 - 5:25who will notice it?"
-
5:25 - 5:27Do you know what the answer is?
-
5:27 - 5:28No, no one!
-
5:28 - 5:31So the fractional coin appeared:
-
5:31 - 5:32there are more banknotes
-
5:32 - 5:35that the redeemable gold.
-
5:35 - 5:37Jumping forward in history:
-
5:37 - 5:42in 1972, even in a regime
of fractional currency, -
5:42 - 5:48the redeemibility of money,
US dollars in this case, in gold, -
5:48 - 5:52was still a limiting factor
for those in charge of monetary policy. -
5:52 - 5:56But Richard Nixon had enough,
and he decided that -
5:56 - 5:58the US dollar couldn't be converted
in gold anymore. -
5:58 - 6:01From that point on, we have "Fiat money",
-
6:01 - 6:04and I do mean exactly
"Fiat Lux et Lux Fuit": -
6:04 - 6:07a currency whose value
is purely conventional, -
6:07 - 6:10its value it’s based on a social contract
that we all agree on. -
6:10 - 6:12And if someone does not agree,
-
6:12 - 6:16we can force that person
by using something know as “legal tender”, -
6:16 - 6:21which means that fiat money
must be accepted to pay back a debt. -
6:22 - 6:25Let me say it, this is a bad coin,
-
6:25 - 6:28actually, we could even say
that it’s a terrible coin: -
6:28 - 6:32we don’t need to recall
the most egregious examples -
6:32 - 6:34in the history of money.
-
6:34 - 6:37Our dear old friend US dollar,
already proves it: -
6:37 - 6:40its performance
it’s not exactly impeccable. -
6:40 - 6:44Starting from 1913, the year in which
the Federal Reserve was funded, -
6:44 - 6:49the USA dollar has lost
more than 96% of its purchase power. -
6:49 - 6:52That means, it’s a bad currency.
-
6:52 - 6:55It's the typical result
of a monopoly situation. -
6:55 - 6:58Friedrich von Hayek,
Nobel Prize in Economics -
6:58 - 7:01and founder of the Austrian school
of economic thought, -
7:01 - 7:04wrote an entire book
bemoaning the fact that: -
7:04 - 7:09"We deem essential the government's
monopoly of the currency. -
7:09 - 7:13We would accept the monopoly
over no kind of good, -
7:13 - 7:15in a market economy.
-
7:15 - 7:18Yet we do accept the monopoly
of that syntethic product -
7:18 - 7:22that has half of the power
in any business transaction: -
7:22 - 7:23the currency.
-
7:23 - 7:26Like any type of monopoly,
not only it delivered us a bad product, -
7:26 - 7:30but it forbid us
from looking for a better one.” -
7:30 - 7:32Therefore, Hayek did conclude:
-
7:32 - 7:35"If we ever want to have
a good currency again, -
7:35 - 7:37we have to take it away
from the control of the States. -
7:37 - 7:40And since we cannot do that using force -
-
7:40 - 7:44he was a good man,
and I comply with his invitation - -
7:44 - 7:50we should do it with a clever gimmick,
something they wouldn’t be able to stop.” -
7:50 - 7:54Bitcoin is exactly that clever gimmick.
-
7:54 - 7:59Now let’s try to dive deeply
into what a currency is. -
7:59 - 8:03Money is, in it's essence,
a tool for social relationships. -
8:03 - 8:06I know that this might not be
the definition you were expecting; -
8:06 - 8:08but if you think about
your own experience, -
8:08 - 8:11we were all born in a gift economy.
-
8:11 - 8:13I hope that none of you had to pay
-
8:13 - 8:16for all the parental care you received:
-
8:16 - 8:19otherwise I would feel
very sorry for you all, -
8:19 - 8:21and quite happy for your therapist,
-
8:21 - 8:24who will certainly have
a lot to work on with you. -
8:24 - 8:29But this gift economy
doesn’t only encompass our family, -
8:29 - 8:32our friends, our neighbours,
-
8:32 - 8:36what we could call “our tribe”.
-
8:36 - 8:38It’s an economy that doesn’t scale,
-
8:38 - 8:42because sooner or later
we will run into people we don’t know, -
8:42 - 8:44and that is why we don’t trust them -
or maybe, sometimes, -
8:44 - 8:47we don’t trust them
precisely because we know them, -
8:47 - 8:48which is more or less the same.
-
8:48 - 8:53But we are inherently social animals,
-
8:53 - 8:57that’s what we are anthropologically,
-
8:57 - 9:01so we want to cooperate
even with those we do not trust. -
9:01 - 9:03So, at first, we invented
the practice of bartering: -
9:03 - 9:08I give you my eggs, but it just so happens
you’re going to give me your milk today. -
9:08 - 9:13Alternatively, in order to barter
anywhere and anytime, -
9:13 - 9:14we invented the currency:
-
9:14 - 9:20a syntethic good that allows us
to cooperate with people we do not trust. -
9:20 - 9:24I'm not sure about you, but I hope
for a moment of intellectual upheaval, -
9:24 - 9:28because I reckon this remark
as hugely important: -
9:28 - 9:33a currency is a tool we use to cooperate
with people we have no trust in. -
9:34 - 9:36So it's quite clear that, today,
-
9:36 - 9:40in what it’s for the first time
a digital and global information economy, -
9:40 - 9:44the need arises
for a supranational currency, -
9:44 - 9:48a digital coin, not controlled by states,
-
9:48 - 9:51a global currency,
a currency of the Internet. -
9:51 - 9:56The problem is, it is insanely hard
to create an Internet currency. -
9:56 - 10:01The biggest problem is known
as “double expense problem”. -
10:01 - 10:05Every time that we have a digital artifact
that represents a value, -
10:05 - 10:08we've always needed
a centralized authority -
10:08 - 10:10in order to prevent its duplication.
-
10:10 - 10:14Digital as it is, it’s easily duplicable.
-
10:14 - 10:17It’s easy to grasp:
consider your current account balance. -
10:17 - 10:20If I transfer my current balance account
to your account - -
10:20 - 10:23don’t get your hopes up,
I don’t have that much money - -
10:23 - 10:26and then I try to transfer it again
to the gentleman here, -
10:26 - 10:29my bank, which controls the updates
of the ledger, is going to tell me: -
10:29 - 10:32"No Ferdinando, you cannot do that.”
-
10:32 - 10:37How are we going to create
a valuable digital asset, -
10:37 - 10:39that is to say an non-duplicable asset?
-
10:39 - 10:41Because – think about
the painting "Gioconda". -
10:41 - 10:42Gorgeous, no doubts about that.
-
10:42 - 10:45Its market price is incalculable.
-
10:44 - 10:47But if the painting
could be duplicated without control, -
10:47 - 10:50for an unlimited number of perfect copies,
-
10:50 - 10:51it would still be gorgeous,
-
10:51 - 10:54but its market price
would drop down to zero. -
10:54 - 10:57That’s what is happening with Bitcoin,
-
10:57 - 11:01and it's limited to 21 milion Bitcoins.
-
11:01 - 11:05Bitcoin, in a way, is as scarce
as physical gold: -
11:05 - 11:08gold on the physical level,
Bitcoin on the digital level. -
11:08 - 11:13Bitcoin is, or at least is aspires to be,
the digital counterpart of gold. -
11:13 - 11:17And now I'm going to hope
for a second moment of upheaval. -
11:17 - 11:22I’m pretty sure, you all today
came here in this theatre -
11:22 - 11:25believing every digital thing
can be duplicated. -
11:25 - 11:30This is the very intuition
that Bitcoin proves wrong: -
11:30 - 11:32It’s a digital gold
-
11:32 - 11:35and attached to it,
inside of the Bitcoin itself, -
11:35 - 11:39there is a transnational network,
which is both safe and not-censurable, -
11:39 - 11:43that can be used
to transfer this gold globally. -
11:43 - 11:46I know you are skeptical,
I can see it in your faces. -
11:46 - 11:48Let’s play another game, then:
-
11:48 - 11:50imagine that an alien
was going to land here, okay? -
11:50 - 11:53You have to explain
the traditional currencies to him, -
11:53 - 11:55and I’m going to explain Bitcoin.
-
11:55 - 11:58I will start right away
by telling the alien: -
11:58 - 12:01"Look, their currecies
have no inherent value." -
12:01 - 12:04At this point you might respond,
slightly irritated: -
12:04 - 12:07"The same goes for Bitcoins, Ferdinando!"
-
12:07 - 12:09And I will say, you serious?
-
12:09 - 12:11I’ve just explained to you
the shortage in the digital world!. -
12:11 - 12:13But your game is easy:
-
12:13 - 12:17What about the social contract,
centuries of history of the currency, -
12:17 - 12:18the legal tender -
-
12:18 - 12:21Alright, 1-1, time for the kickoff,
let’s start this over. -
12:21 - 12:24This time I’m going to start
by pulling your leg, -
12:24 - 12:28saying that the cash you carry around
is just a bunch of colored paper. -
12:28 - 12:31Yeah, right, special paper, special ink:
-
12:31 - 12:34but, let’s be honest, it's just the same
as the cash in the game of Monopoly. -
12:34 - 12:38My coin, on the other hand,
is pure math and encryption. -
12:39 - 12:43Not only that, I will also tell the alien
that while I am a kind person, -
12:43 - 12:47I’m not forcing my Bitcoin on you,
-
12:47 - 12:50you are instead rather coercive.
-
12:50 - 12:52I cannot refuse your euro.
-
12:52 - 12:54The legal tender tells me,
-
12:54 - 13:00if a debtor wants to settle
his debt with me in euro, -
13:00 - 13:02I can’t deny him that.
-
13:02 - 13:08I’m goint to let you figure out
how the alien is going to see all of this. -
13:08 - 13:10Oh, I almost forgot,
-
13:10 - 13:14maybe I should also tell the alien
that a gentleman, in Frankurt - -
13:14 - 13:17a very composed gentlemen,
the most serious of us all - -
13:17 - 13:23he can print as much of that colored paper
as he likes, whenever he likes, -
13:23 - 13:25and give it to anyone he likes.
-
13:25 - 13:26He was not elected,
-
13:26 - 13:30and he won’t need to take responsability
for how he carries out his duty. -
13:30 - 13:32Meanwhile I’ve already
explained to the alien -
13:32 - 13:35that Bitcoin’s monetary policy
is perfectly deterministic, -
13:35 - 13:38it can’t be influenced.
-
13:38 - 13:41You might say: "Right,
but no one is using Bitcoin. -
13:41 - 13:44there are no business transactions
carried out using Bitcoin." -
13:44 - 13:46That’s for sure:
those who bought, in 2010, -
13:46 - 13:49two pizzas, paying them 10.000 Bitcoin -
-
13:49 - 13:52which at the current rate
woul be 40 milion dollars - -
13:52 - 13:55Well, let’s just hope that
those pizzas were really, really good, -
13:55 - 13:59because I wouldn’t have been able
to digest them in any way. -
13:59 - 14:03Bitcoin is a safe-haven asset,
so it's stored. -
14:03 - 14:06Therefore it makes much more sense
not to compare it to a currency, -
14:06 - 14:08but to actual gold.
-
14:08 - 14:10Gold has been accepted
by all civilizations -
14:10 - 14:15as the earliest form of currency,
without any type of centralized planning. -
14:16 - 14:19It was for centuries
the most successful currency, -
14:20 - 14:24it set off the development
of all the monetary systems we know, -
14:24 - 14:27it was overtaken by forms of currencies
much more sophisticated -
14:27 - 14:29without it becoming outdated.
-
14:29 - 14:33What happened over the centuries
to physical gold, -
14:33 - 14:35is happening in these ten years,
-
14:35 - 14:38and will probably happen
in the upcoming decades, to Bitcoin. -
14:38 - 14:40The Bitcoin's most scary trait
is the value volatlity: -
14:40 - 14:42it goes up and down.
-
14:42 - 14:44There isn’t much to fear, to be honest.
-
14:44 - 14:47I mean, every time
someone talks about Bitcoin -
14:47 - 14:50you should fasten your seatbelts,
-
14:50 - 14:52because the ride tends to be quite bumpy.
-
14:52 - 14:54But Bitcoin's volatility is physiological.
-
14:54 - 14:57When market mechanisms
of supply and demand -
14:57 - 15:00try to assess the value of a certain good,
-
15:00 - 15:02if the product is controversial,
like digital gold, -
15:02 - 15:05the process is going to be
just as mush controversial. -
15:05 - 15:08We’ve seen it already happen,
in history, with e-commerce: -
15:08 - 15:13take a look at the history
of Amazon’s ratings, its volatility. -
15:13 - 15:16The worrying part about Bitcoin
is the so-called "drowdown": -
15:16 - 15:18highest to lowest point,
-
15:18 - 15:23it managed to lose
more that 93 percent of its value. -
15:23 - 15:25So my bottom line is,
-
15:25 - 15:27if you ever plan to invest in Bitcoin,
-
15:27 - 15:31do it with a small percentage
of your savings, -
15:31 - 15:36small enough that you would be able
to reasonably sustain its complete loss. -
15:36 - 15:39The good news is that
Bitcoin is not correlated -
15:39 - 15:42to other investment asset classes,
to other investment opportunities: -
15:42 - 15:47It doesn’t move with them,
it diversifies the risks. -
15:47 - 15:51So, if put it in an investment portfolio,
even if it sounds counterintuitive, -
15:51 - 15:54but it draws dawn
the risks of that portfolio, -
15:54 - 15:56expected rate of return being equal,
-
15:56 - 16:00or, given the same risk,
it increases greatly the expected return. -
16:00 - 16:04So it is a good idea
to invest a small amount in Bitcoin, -
16:04 - 16:07and this gives us a cue
for some final considerations. -
16:07 - 16:11Let’s imagine that 2 percent
of the assets under management - -
16:11 - 16:14I’m not referring
to 2 percent of the global wealth, -
16:14 - 16:17but 2 percent of those assets
that are professionally managed - -
16:17 - 16:20let’s imagine that they invest in Bitcoin
over the next few years. -
16:20 - 16:21Well, if we do the math,
-
16:21 - 16:24the value of a Bitcoin is going to be
a hundred thousand dollars. -
16:24 - 16:29But if Bitcoin is, or proves to be,
the digital gold - -
16:29 - 16:34I say if because it’s a bold experiment
and it might fail, let’s not forget that, -
16:34 - 16:39but it’s an experiment substantiated
both culturally and technologically - -
16:39 - 16:41again, if it proved to be
the digital gold, -
16:41 - 16:44well, ladies and gentlemen,
it would be better than actual gold: -
16:44 - 16:49extremely light, instantly transferable,
low transactional costs, -
16:49 - 16:53no logistic problems,
non-censurable and unstoppable. -
16:54 - 16:59Therefore, if Bitcoin was to capitalize
the same amount as gold today, -
16:59 - 17:02its value would raise to 400.000 dollars.
-
17:02 - 17:07100.000 dollars, 400.000 dollars -
I’m not here to sell you Bitcoin, -
17:07 - 17:12I’m just saying,
if Bitcoin is digital gold, -
17:12 - 17:15it's currently greatly underestimated.
-
17:15 - 17:17Someone might object saying that:
-
17:17 - 17:19"I've read that it’s not Bitcoin,
-
17:19 - 17:22It’s the blockchain,
the technology underlying it, -
17:22 - 17:24the real deal".
-
17:24 - 17:28When it comes to this,
I love to paraphrase Confucio, he said: -
17:28 - 17:32“When a wise man points at the moon,
the fool looks at the finger”. -
17:32 - 17:35The moon is Bitcoin,
the finger is the blockchain. -
17:35 - 17:41You can’t overlook the relevance
of the Bitcoin phenomenon. -
17:41 - 17:46If you have the slightest understanding
of the role that gold played -
17:46 - 17:51in the history of civilization,
finance and currency, -
17:51 - 17:53the rise of gold's digital counterpart
-
17:53 - 17:57in the digital civilization
and in the future of finance and currency -
17:57 - 17:58is going to be explosive.
-
17:58 - 18:04I would like to end with a thought:
25-27 year ago, -
18:05 - 18:12I used the e-mail and surfed the web,
but I'd never imagine -
18:12 - 18:15that on top of the TCP/IP protocol,
-
18:16 - 18:19the technology underlying
the web and the e-mail, -
18:19 - 18:25would be used to organize our weekends
in digital clubs – Facebook, -
18:25 - 18:30or buy liquid, digital books and CDs
from online shops, -
18:30 - 18:33or we would ask questions
in natural language -
18:33 - 18:36to a computer, a digital assistant,
-
18:36 - 18:38expecting a meaningful answer.
-
18:38 - 18:40I can’t tell you, 20 years from now,
-
18:40 - 18:44what we will be able to make
on the value's TCP/IP protocol, -
18:44 - 18:48which type of incredible apps
we will have managed to create: -
18:48 - 18:52that’s exactly the adventure
that is waiting for us over the horizon. -
18:52 - 18:54Thank you.
-
18:54 - 18:55(Applause)
- Title:
- Bitcoin, the gold of the 21st century | Ferdinando Ametrano | TEDxLivorno
- Description:
-
Imagine for a second that you had to explain to an alien what money is, using Bitcoin as a benchmark for national and supranational currencies.
What would he choose, between cash printed on special paper with special ink and a digital coin built on encryption and math?This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at http://ted.com/tedx
- Video Language:
- Italian
- Team:
- closed TED
- Project:
- TEDxTalks
- Duration:
- 18:59
Muriel de Meo approved English subtitles for Bitcoin, l'oro del ventunesimo secolo | Ferdinando Ametrano | TEDxLivorno | ||
Michele Gianella accepted English subtitles for Bitcoin, l'oro del ventunesimo secolo | Ferdinando Ametrano | TEDxLivorno | ||
Michele Gianella edited English subtitles for Bitcoin, l'oro del ventunesimo secolo | Ferdinando Ametrano | TEDxLivorno | ||
Michele Gianella edited English subtitles for Bitcoin, l'oro del ventunesimo secolo | Ferdinando Ametrano | TEDxLivorno | ||
Michele Gianella edited English subtitles for Bitcoin, l'oro del ventunesimo secolo | Ferdinando Ametrano | TEDxLivorno | ||
Michele Gianella edited English subtitles for Bitcoin, l'oro del ventunesimo secolo | Ferdinando Ametrano | TEDxLivorno | ||
Michele Gianella edited English subtitles for Bitcoin, l'oro del ventunesimo secolo | Ferdinando Ametrano | TEDxLivorno | ||
Michele Gianella edited English subtitles for Bitcoin, l'oro del ventunesimo secolo | Ferdinando Ametrano | TEDxLivorno |