#10 - Bitcoin's true potential, with Andreas M. Antonopoulos [Part 1]

From The Kevin Rose Show & Summarised by Untethered.email - capturing the uncaptured


I’m reading “The Lessons of History” by Ariel Durant and Will Durant. Don’t underestimate this 100 pages opinionated book on History.

Here is what I got in Chapter X. “Government and History”

The only real revolution is in the enlightenment of the mind and the improvement of character, the only real emancipation is individual, and the only real revolutionaries are philosophers and saints.

In this edition, I’d like to bring you a conversation between Kevin Rose and Andreas M. Antonopoulos. Andreas is a true Bitcoin believer and has educated a lot of people a ton when it comes to cryptocurrency and the technology that enables the existence of cryptocurrency - Blockchain. He will explain that why Bitcoin and Cryptocurrencies are so disruptive but not in ways that you might think.

TL; DL (Too Long; Didn't Listen)

“Financial service providers fulfill a feature of money that isn’t quite clearly discussed, which is using money as a system of control, a system of law enforcement whereby all financial service providers are basically deputized into law enforcement without due process.” - Andreas M. Antonopoulus

“The dream that the government had in the 1970s that they could reach a point of total control over financial flows where every end point is known, every transaction is logged, recorded and surveilled. That dream has now ended and I think that’s a good thing.” - Andreas M. Antonopoulus

“A society in which a financial system is completely controlled is a society where democracy cannot exist.” - Andreas M. Antonopoulus


Bitcoin v.s Paypal

  • Bitcoin is a combination of different technologies that for the first time ever allows us to implement trust as an internet protocol

  • Paypal and Venmo are just services.

  • There’s a very big difference between those two because Bitcoin allows you to do trusted transactions between people you don’t trust and to independently verify the authority of those transactions without trusting anybody else.

  • The magic behind Bitcoin is turning money and other trusted transactions into an internet protocol that opens the door for all of the internet-related goodies that happen like innovation of the edge, innovation without permission, open access, borderless and global operations, and inter-pairability -- none of which you could get with any of the other systems.

On Trust

  • Every other system we have and most of finance with a few exceptions requires trust in a third party and it’s built as a system of checks and balances, and oversight modern finances.

  • In such a way, that trust can be protected with multiple layers of oversight but the fundamental problem with all of that is the fact that you have to trust the third party, and that third party is motivated by a lot of things that has nothing to do with your particular security, or your freedom, your self-expression, or any other things that you care about.

  • e.g. when you trust Paypal, you’re not just trusting Paypal, you’re also trusting the American Justice systems, the US government, and all the other factors that can put pressure over Paypal.

Trust - case in point

  • This was probably most clearly demonstrated in the unlawful and extra-judicial blockade of Wikileaks in 2013 whereby the US government basically coursed every single payment provider to embargo and cut off Wikileaks without any due process, prosecution, or conviction.

  • They just cut them off the international financial system which forces Wikileaks to go into a neutral protocol which is Bitcoin that cannot be censored and does not require you to trust the third party that can be coursed.

  • Ironically, Wikileaks has now made 50,000% return on their Bitcoin from 2013.

The separation of State and Money

  • Money is used as a tool for exercising power which leads to corruption, money and state should be separated or that money should at least be a neutral system of commerce that obeys mathematics and neutral roles that have nothing to do with politics.

  • This is actually what Bitcoin delivers effectively at a very basic level -- it is a simple global protocol that simply doesn’t care about that stuff.

  • It operates on the same predictable rules and serves purely the role of commerce and not the role of surveillance or control.

A truly decentralized world, traceability and tax

  • The fear of government towards lack of control is directly proportionate to their level of freedom and their respect to human rights, self expression, and individual freedoms.

  • While the government may freak out about this but Andreas thinks that it is a mistake to assume that this scenario is something new.

  • For thousands of years, money has been untraceable -- we call that cash and it worked very well.

What is totalitarianism

  • The dream that the government had in the 1970s that they could reach a point of total control over financial flows where every end point is known, every transaction is logged, recorded and surveilled.

  • It is the government’s dream of total control.

How did Bitcoin become fully decentralized

  • Ideally, it is controlled by a balance between participation and competition by all the participants that keeps the systems honest by rewarding those who play by the rules and essentially punishing those who don’t play by the rules by making them loose the investments that they’ve made in security.

  • Bitcoin has a built-in market based competitive system in it that ensures security by requiring the participants in that consensys systems to put money down.

  • That money is almost like a bond that says ‘I will follow the rules and do the security and validate transactions correctly”.

  • If they follow the rules, they earn a reward but if they don’t then they will lose their bond.

Is buying Bitcoin like keeping cash under your mattress?

  • We need to add two perspectives and add it to this mix

  • First is to consider the idea that because it’s a system of programmable money, you can do many interesting things with Bitcoin that you can’t do with cash.

    • He said we really need to really think about this because a lot of conversations happens for and from the perspective of middle class americans and that is entirely the wrong perspective to use because americans only represent only less than 5% of the global population, the most privileged 5% with greatest access to banking and financial services with the least amount of constraints and controls with among the least corrupt government in the world and most of the banks except for the few are not downright organized criminals.

  • Second is to consider who the average consumer is - average consumer in a planetary perspective

    • The average consumer in a planetary perspective is a 23 year old Chinese male who lives within a thousand miles in the Southeast Asia who is facing a corrupt governments, dictators, and corrupt banks to say the least.

The Broader perspective on Bitcoin

  • Andreas mentioned that the broader perspective is a world in which two and a half billion people have no access to banking and are purely unbanked who lives in cash and barter societies.

  • A good number of four billion people are severely underbanked and less than a billion and a half of people have the kind of banking that is similar to what he enjoys where he can go and open a brokerage account online without the need to show anybody anything.

  • In which case he has access to ample liquidity, he emphasized how that reality doesn’t exist for most people.

To be continued in Part 2 …

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