Andreas Antonopoulos Quotes

Code talks. Talk walks.

There are a billion people, right now, with access to the internet and feature phones who could use bitcoin as an international wire-transfer service.

Bitcoin experts argue that deflation is not bad per se. Rather, deflation is associated with a collapse in demand because that is the only example of deflation we have to study.

As the adage of the entire internet once went, “I just replaced your entire industry with 100 lines of Python code,” that’s exactly what we’re doing with bitcoin.

This isn’t about nation-states anymore. This isn’t about who adopts bitcoin first or who adopts cryptocurrencies first, because the internet is adopting cryptocurrencies, and the internet is the world’s largest economy. It is the first transnational economy, and it needs a transnational currency.

Six and a half billion people on this planet have no connection to the world of money. They operate in cash-based societies with very little access to international resources. ​ ​They don’t need banks.

There are almost 200 currencies of the world, but there’s only one international currency. There are almost 200 currencies controlled by central banks and governments, but there is only one mathematical currency today, and that is bitcoin. We are going to build more of them. Cryptographic currencies are going to be a mainstay of our financial future. They are going to be a part of the future of this planet because they have been invented. It’s as simple as that. You cannot un-invent this technology. You cannot turn this omelette back into eggs.

At the end of the day, bitcoin is programmable money. When you have programmable money, the possibilities are truly endless. We can take many of the basic concepts of the current system that depend on legal contracts, and we can convert these into algorithmic contracts, into mathematical transactions that can be enforced on the bitcoin network. As I’ve said, there is no third party, there is no counterparty. If I choose to send value from one part of the network to another, it is peer-to-peer with no one in between. If I invent a new form of money, I can deploy it to the entire world and invite others to come and join me. Bitcoin is not just money for the internet. Yes, it’s perfect money for the internet. It’s instant, it’s safe, it’s free. Yes, it is money for the internet, but it’s so much more. Bitcoin is the internet of money. Currency is only the first application. If you grasp that, you can look beyond the price, you can look beyond the volatility, you can look beyond the fad. At its core, bitcoin is a revolutionary technology that will change the world forever. Join

One of my favorite words is a French word: sousveillance. It is the opposite of surveillance. Surveillance means to look from above; sousveillance means to look from below. In their dream of nation-states controlling all of our financial futures, they made one major miscalculation. It’s a hell of a lot harder for a few hundred thousand people to watch 7 1/2 billion. But what do you think happens when 7 1/2 billion of us stare back? When the panopticon turns around? When our financial systems, our communication systems, are private, and secrecy is an illusion that can’t be sustained? When crimes committed in the names of states and powerful corporations are vulnerable to hackers and whistleblowers and leakers? When everything eventually comes out? We have a great advantage because the natural balance of the system is one in which individuals can have privacy but the powerful cannot have secrecy anymore.

Bitcoin is often mistakenly characterized as “anonymous” currency. In fact, it is relatively easy to connect identities to bitcoin addresses and, using big-data analytics, connect addresses to each other to form a comprehensive picture of someone’s bitcoin spending habits.

Bitcoin consists of: A decentralized peer-to-peer network (the bitcoin protocol) A public transaction ledger (the blockchain) A set of rules for independent transaction validation and currency issuance (consensus rules) A mechanism for reaching global decentralized consensus on the valid blockchain (Proof-of-Work algorithm)

Bitcoin creates digital assets that have intrinsic value and can be stolen and diverted to new owners instantly and irrevocably. This creates a massive incentive for hackers.

What bitcoin gives us is a hard promise: the program will execute exactly as specified.

The purpose of mining is not the creation of new bitcoin. That’s the incentive system. Mining is the mechanism by which bitcoin’s security is decentralized.

Transaction fees are calculated based on the size of the transaction in kilobytes, not the value of the transaction in bitcoin. Overall,

Fake news" has happened because the basis for producing truth has been removed from the very institutions whose job it was to produce truth.

The genesis block contains a hidden message within it. The coinbase transaction input contains the text “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This

The higher fee is not because Eugenia is spending more money, but because her transaction is more complex and larger in size — the fee is independent of the transaction’s bitcoin value.

Bitcoin isn’t a digital currency. It’s a cryptocurrency. It’s a network-centric money. I really like the idea of a network-centric money. A network that allows you to replace trust in institutions, trust in hierarchies, with trust on the network. ​The network acting as a massively diffuse arbiter of truth, resolving any disagreements about transactions and security in a way where no one has control. ​ ​

By the time you look a few hundred feet down, you are looking at a snapshot of the past that has remained undisturbed for millions of years. In the blockchain, the most recent few blocks might be revised if there is a chain recalculation due to a fork. The top six blocks are like a few inches of topsoil. But once you go more deeply into the blockchain, beyond six blocks, blocks are less and less likely to change.

The digital keys in a user’s wallet are completely independent of the bitcoin protocol and can be generated and managed by the user’s wallet software without reference to the blockchain or access to the Internet.

The concept of a balance is created by the wallet application. The wallet calculates the user’s balance by scanning the blockchain and aggregating the value of any UTXO the wallet can spend with the keys it controls. Most

When you’re thinking about a killer app, it’s not simply the set of applications that might be implemented. It’s also about what can be implemented with what you have today. What requires the least infrastructure investment? What requires the least density of users and yet provides a viable solution to a real problem?

Currency is the email of blockchains. Payments are the fundamental infrastructure that will enable density of adoption. It’s very, very enticing to say, "This is about more than money!" It absolutely is, in the long term. The vision of this technology is far beyond money, but you can’t build that unless you first build the money part. That’s what creates the security. That’s what creates the velocity, the liquidity, the infrastructure. That’s what funds the entire ecosystem. In the end, when we do deliver these services to people, it won’t be so they can open a bank account. This isn’t about banking the unbanked; it’s about unbanking all of us.

Bitcoin today, and all of the currencies that are built using that recipe, are at the same stage that the internet was in 1992. Only now we have the internet, and so the rate of exponential growth has already started. The innovation is growing at an astonishing rate. I spend every single day, full-time, trying to keep up with bitcoin and it’s almost impossible. ​

Bitcoin represents a fundamental transformation of money. An invention that changes the oldest technology we have in civilization. That changes it radically and disruptively by changing the fundamental architecture into one where every participant is equal. Where transaction has no state or context other than obeying the consensus rules of the network that no one controls. Where your money is yours. You control it absolutely through the application of digital signatures, and no one can censor it, no one can seize it, no one can freeze it. No one can tell you what to do or what not to do with your money. It is a system of money that is simultaneously, absolutely transnational and borderless. We’ve never had a system of money like that.

Do not underestimate this. Do not listen to the people who tell you that bitcoin is just for pornographers, terrorists, drug dealers, and gamblers. Remember that they said the exact same thing about the internet. But when 2 or 3 million people got online, we found out that they are not interested in those things—they are interested in sharing cat videos, and now we have an internet of a billion cat videos.

smart contracts use three technologies in bitcoin. One is multisignature technology. Another is timelock: CheckLockTimeVerify and CheckSequenceVerify—mostly CheckSequenceVerify, which is relative time from the previous transaction. And finally a new invention called Hashed Timelock Contracts or HTLC, which is a way to forward a promise that can only be unlocked by a secret. These are smart contracts using bitcoin.

If you read anything about bitcoin, you’ll see the very same things that they said about the internet in the early '90s. It is a haven for pedophiles, terrorists, drug dealers, and criminals. How many of you in this room have bitcoin? How many of you in this room are terrorists, pedophiles, drug dealers or criminals? Audience laughs You see the thing about bitcoin is while they push this story, every now and then someone who has never heard of bitcoin notices an important thing: it’s still not dead, which is always surprising because every two or three months there is an article that says it’s dead. That’s great marketing. Because every time someone hears it’s dead and three months later they hear it’s still not dead, they think, "Huh, this thing really tends to survive." I call bitcoin "the internet of money,” but perhaps we should call it “the zombie of currencies.” It is the currency that is the undead. The

Bitcoin is a dumb network supporting really smart devices, and that is an incredibly powerful concept because bitcoin pushes all of the intelligence to the edge. It doesn’t care if the bitcoin address is the address of a multimillionaire, the address of a central bank, the address of a smart contract, the address of a device, or the address of a human. It doesn’t know. It doesn’t care if the transaction is carrying lots of money or not much money at all. It doesn’t care if the address is in Kuala Lumpur or downtown New York. It doesn’t know, it doesn’t care.​ It moves money from one address to another based on a simple locking script. And that means that if you want to build a new application on top of bitcoin, you can upgrade the devices and you can build an application. You don’t need to ask for anyone’s permission to innovate. ​ ​Write the app, launch it on your endpoint, and bitcoin will route it, because bitcoin is a dumb network. That is the power of innovation on the internet. It’s innovation without permission. It’s innovation without central approval. It’s innovation without a broad network upgrade. And that means bitcoin is not a specific financial network. It’s not a financial network for large transactions or small transactions, fast transactions or slow transactions. It’s whatever you want to use it for, based upon what you choose to do at the endpoint.

Elliptic curve multiplication is a type of function that cryptographers call a “trap door” function: it is easy to do in one direction (multiplication) and impossible to do in the reverse direction (division). The owner of the private key can easily create the public key and then share it with the world knowing that no one can reverse the function and calculate the private key from the public key. This mathematical trick becomes the basis for unforgeable and secure digital signatures that prove ownership of bitcoin funds.

The word “mining” is somewhat misleading. By evoking the extraction of precious metals, it focuses our attention on the reward for mining, the new bitcoin created in each block. Although mining is incentivized by this reward, the primary purpose of mining is not the reward or the generation of new coins. If you view mining only as the process by which coins are created, you are mistaking the means (incentives) as the goal of the process. Mining is the mechanism that underpins the decentralized clearinghouse, by which transactions are validated and cleared. Mining is the invention that makes bitcoin special, a decentralized security mechanism that is the basis for P2P digital cash.

We’ve seen what happens with the development of the cell-phone technology that was deployed in Africa faster than any other technology ever in the history of humanity. We see small villages, where they have no running water, wood fires to cook with, and no electricity — yet there’s one little solar panel on top of a mud hut and that solar panel is not there for light. It’s there to charge a Nokia 1000 feature phone. That phone gives them weather reports, grain prices at the local market, and connects them to the world. What happens when that phone becomes a bank? Because with bitcoin, it can be a bank. What happens when you connect 6 1/2 billion people to a global economy without any barriers to access? ​ ​

There are 2 billion people who have no bank accounts at all. There are another 4 billion people who have very limited access to banking. ​ Banking without international currencies, banking without international markets, banking without liquidity. Bitcoin isn’t about the 1 billion. Bitcoin is all about the other 6 1/2. The people who are currently cut off from international banking. What do you think happens when you suddenly are able to turn a simple text-messaging phone in the middle of a rural area in Nigeria, connected to a solar panel, into a bank terminal? Into a Western Union remittance terminal? ​Into an international loan-origination system? A stock market? An IPO engine? At first, nothing, but give it a few years.

Today, I want to talk about dumb networks. I want to talk about smart networks. I want to talk about the value of open source when it meets finance. And I want to talk about the festival of the commons. ​ Bitcoin is a currency. Bitcoin is a network. Bitcoin is a technology. And you can’t separate these things. A consensus network that bases its value on currency does not work without the currency. ​You can’t just do the blockchain without a valuable currency behind it, and the currency doesn’t work without the network. Bitcoin is both. It is the convergence of a participatory consensus network and a global, borderless currency that is fungible, fast, and secure.

 Today, I want to talk a bit about the bitcoin network and focus on one concept that has some parallels to the early internet.

Paper wallets can be generated easily using a tool such as the client-side JavaScript generator at bitaddress.org. This page contains all the code necessary to generate keys and paper wallets, even while completely disconnected from the internet. To use it, save the HTML page on your local drive or on an external USB flash drive. Disconnect from the internet and open the file in a browser. Even better, boot your computer using a pristine operating system, such as a CD-ROM bootable Linux OS. Any keys generated with this tool while offline can be printed on a local printer over a USB cable (not wirelessly), thereby creating paper wallets whose keys exist only on the paper and have never been stored on any online system. Put these paper wallets in a fireproof safe and “send” bitcoin to their bitcoin address, to implement a simple yet highly effective “cold storage” solution. Figure 4-8 shows a paper wallet generated from the bitaddress.org site.

Bitcoin’s Test Blockchains You might be surprised to learn that there is more than one bitcoin blockchain. The “main” bitcoin blockchain, the one created by Satoshi Nakamoto on January 3rd, 2009, the one with the genesis block we studied in this chapter, is called mainnet. There are other bitcoin blockchains that are used for testing purposes: at this time testnet, segnet, and regtest. Let’s look at each in turn. Testnet — Bitcoin’s Testing Playground Testnet is the name of the test blockchain, network, and currency that is used for testing purposes. The testnet is a fully featured live P2P network, with wallets, test bitcoins (testnet coins), mining, and all the other features of mainnet. There are really only two differences: testnet coins are meant to be worthless and mining difficulty should be low enough that anyone can mine testnet coins relatively easily (keeping them worthless). Any software development that is intended for production use on bitcoin’s mainnet should first be tested on testnet with test coins. This protects both the developers from monetary losses due to bugs and the network from unintended behavior due to bugs.

​4.1.1. The Blockchain and Proof-of-Work Why is bitcoin immutable? What gives bitcoin the characteristics of immutability? ​ ​What is it that makes it unchangeable? The first answer that comes to mind for most people is "the blockchain." The blockchain makes bitcoin immutable because every block depends on its predecessor, creating an unbreakable chain back to the genesis block, and if you change something it would be noticed. Therefore, it’s unchangeable. That is the wrong answer, because it’s not really "the blockchain" that gives bitcoin its immutability. That’s a really important nuance to understand. The blockchain makes sure that you can’t change something without anyone noticing. In security we call that "tamper-evident": if you change it, it is evident. ​ ​ You cannot tamper with it without leaving evidence of your tampering. But there’s a higher standard in security. We call it "tamper-proof": something that cannot be tampered with. ​ ​ Not just “will be visible if it’s tampered with,” but “cannot be tampered with.” Immutable. The characteristic that gives bitcoin its tamper-proof capability is not "the blockchain”; it’s proof-of-work.

Sometimes I speak to various regional banks, the ones that are not afraid of bitcoin. They tell me things like 80 percent of our population is a hundred miles from the nearest bank branch and we can’t serve them. In one case, they said a hundred miles by canoe. I’ll let you guess which country that was. Yet, even in the remotest places on Earth, now there is a cell-phone tower. Even in the poorest places on Earth, we often see a little solar panel on a little hut that feeds a Nokia 1000 phone, the most produced device in the history of manufacturing, billions of them have shipped. We can turn every one of those into, not a bank account, but a bank. Two weeks ago, President Obama at South by Southwest did a presentation and he talked about our privacy. He said, ”If we can’t unlock the phones, that means that everyone has a Swiss bank account in their pocket." That is not entirely accurate. I don’t have a Swiss bank account in my pocket. I have a Swiss bank, with the ability to generate 2 billion addresses off a single seed and use a different address for every transaction. That bank is completely encrypted, so even if you do unlock the phone, I still have access to my bank. That represents the cognitive dissonance between the powers of centralized secrecy and the power of privacy as a human right that we now have within our grasp. If you think this is going to be easy or that it’s going to be without struggle, you’re very mistaken.

Bitcoin is not a currency. Bitcoin is the internet of money. As a technology, it can bring economic inclusion and empowerment to billions of people in the world. I’ll give you one example of a specific application that is going to fundamentally change the lives of more than a billion people in the next five to ten years. ​ Every day, an immigrant somewhere cashes their paycheck and stands in line to wire 50 percent of that paycheck back to their home country to feed their extended family. Here in the US, 60 million people have no bank accounts, yet they cash their paychecks and send them abroad. Overall in the world, $550 billion is transmitted every year as remittances from first-world countries. Much of that money is sent to five major destinations: Mexico, India, the Philippines, Indonesia, and China. In some of these places, remittances represent up to 40 percent of the local economy. Sitting on top of that flow of $550 billion are companies like Western Union, and they take, on average, a cut of 9 percent of every single one of these transactions out of the pockets of the poorest people of the world. Imagine what happens when one day one of these immigrants figures out they can do the same thing with bitcoin — not for 15 percent, not 10 percent, not 5 percent, but for 5 cents. Not a percentage; a flat fee. What happens when they can do that? They can, right now. There is a startup company that is handling remittances between the US and the Philippines. They’re doing a few million dollars right now, but they’re going to start growing. There’s $500 billion sitting behind that dam. When you’re an immigrant and you can change your financial future by not paying 9 percent to send money home, imagine what happens if every month, instead of sending 91 dollars home, you send 100 dollars home. That makes a difference. There are a billion people, right now, with access to the internet and feature phones who could use bitcoin as an international wire-transfer service.

Freicoin was introduced in July 2012. It is a demurrage currency, meaning it has a negative interest rate for stored value. Value stored in Freicoin is assessed a 4.5% APR fee, to encourage consumption and discourage hoarding of money. Freicoin is notable in that it implements a monetary policy that is the exact opposite of Bitcoin’s deflationary policy. Freicoin has not seen success as a currency, but it is an interesting example of the variety of monetary policies that can be expressed by alt coins.

The private key must remain secret at all times, because revealing it to third parties is equivalent to giving them control over the bitcoins secured by that key. The private key must also be backed up and protected from accidental loss, because if it’s lost it cannot be recovered and the funds secured by it are forever lost, too.

Jing’s mining node then fills the rest of the block up to the maximum block size (MAX_BLOCK_SIZE in the code), with transactions that carry at least the minimum fee, prioritizing those with the highest fee per kilobyte of transaction. If there is any space remaining in the block, Jing’s mining node might choose to fill it with no-fee transactions. Some miners choose to mine transactions without fees on a best-effort basis. Other miners may choose to ignore transactions without fees.

Bitcoin is not a company. It is not an organization. It is a standard or a protocol just like TCP/IP, or the internet.

We need to get used to a world where we have to judge currency not by who issued it, but by who uses

Approximately 1 billion people currently have access to banking, credit, and international finance capabilities—primarily the upper classes, the Western nations. Six and a half billion people on this planet have no connection to the world of money. They operate in cash-based societies with very little access to international resources. They don’t need banks. Two billion of these people are already on the internet. With a simple application download, they can immediately become participants in an international economy, using an international currency that can be transmitted anywhere with no fees and no government controls.

Today, if you go to an ATM machine and you put in your card, the bank may decide to give you your money. One day—as the people of Cyprus, Greece, Venezuela, Argentina, Bolivia, Brazil, and a list of hundreds of countries over the last several decades and even centuries have discovered—one day, you go to the bank and the bank does not want to give you the money, because they don’t have to. That’s the essence of a master-slave relationship. Bitcoin is fundamentally different because in bitcoin, you don’t owe anyone anything and no one owes you anything. It’s not a system based on debt. It’s a system based on ownership of this abstract token. Absolute ownership.

What I loved about cooking is that it is the perfect combination of art and science. If you fundamentally understand how the ingredients work, how they behave, and how the chemistry changes when they’re combined or when you add a catalyst like salt or when you apply heat to them, then you can create. You can create almost anything. As long as you understand how the ingredients work, you can execute and deliver anything you want to create.

At its very basic level, money isn’t value. Money represents an abstraction of value; it’s a way of communicating value. It’s a language. Therefore, money is as old as language because the ability to communicate value is as old as language and money. In many ways, it has characteristics that make it a linguistic construct. It’s a form of communication.

In a world of tinkers, of experimenters, of makers, open wins. The reason it wins is that it allows innovation to flourish at the edges.

Bitcoin is a dumb network supporting really smart devices, and that is an incredibly powerful concept because bitcoin pushes all of the intelligence to the edge.

bitcoin is open source, open standard, and open network.

I can deliver the solution fast, cheap, or great. Pick two. I can do it fast and cheap, but it won’t be the best. I can do it cheap and it will be great, but it won’t be fast. I can do it fast and it will be great, but trust me, it won’t be cheap!" That is the essence of a trilemma we face every day in life.

Every time you use crypto, you are exercising sovereign power that is diverting money from a corrupt and broken system of central banks, investment banks, and governments, into a system that is giving people hope.

La moneda es ahora un medio de expresión. Pero si todo el mundo puede ahora crear un moneda, ¿Cómo adquiere su valor y que significado o utilidad tiene? ¿Cuál es la diferencia entre la moneda como una expresión de popularidad, como una expresión de deseo, como un meme, una moda, una marca? Ahí abajo ahora mismo, Andreas señala fuera del auditorio, se está celebrando un concurso de ídolos adolescentes canadienses. Uno de los concursantes, Amir, cuenta con un gran grupo de fieles seguidores. Tal vez quiera crear AmirCoin para que sus fans puedan expresar su deseo de verle bailar. ¿Por qué no? La gente me ha sugerido crear AndreasCoin. Creo que es un poco tonto. Pero, ¿Por qué no? Pienso que en algún momento veremos cosas así. No tendremos cientos de altcoins. No tendremos miles de altcoins. Tendremos cientos de miles, y después, millones de altcoins. Entonces, habrá miles de altcoins que se crearán cada día para organizar comunidades locales, para expresar modas, para crear concursos de popularidad, para codificar el último meme de Internet.

Debemos acostumbrarnos a vivir en un mundo donde tenemos que juzgar las monedas no por quién las emite, sino por quienes las aceptan y aprecian.

esas monedas, al final, son realmente otra forma de lenguaje. Un lenguaje por el cual comunicamos nuestras expectativas y deseos de valor, y ahora que podemos hacerlo a escala global, ahora que cada uno de nosotros puede crear innovadoras monedas, nuestras opiniones realmente importarán.

If you read anything about bitcoin, you’ll see the very same things that they said about the internet in the early '90s. It is a haven for pedophiles, terrorists, drug dealers, and criminals. How many of you in this room have bitcoin? How many of you in this room are terrorists, pedophiles, drug dealers or criminals?

The issue here is that we’re now creating a system that is threatening the largest industry in the world, and that is finance. They are going to object. They are going to push back, and they’re going to use the most common and effective emotional tactic there is, which is fear. They will treat you in such a way as if you are idiots and try to persuade you that this is something to fear. When people hear that message, maybe the next day they come to one of these meetups and they meet a dentist who owns bitcoin, an architect who owns bitcoin, a taxi driver who uses bitcoin to send money back to their family—normal people who use bitcoin to give themselves financial power and financial freedom. Every time that message is broken by cognitive dissonance, bitcoin wins. All bitcoin really has to do is survive. So far, it’s doing pretty well.

devices and you can build an application. You don’t need to ask for anyone’s permission to innovate. Write the app, launch it on your endpoint, and bitcoin will route it, because bitcoin is a dumb network. That is the power of innovation on the internet. It’s innovation without permission. It’s innovation without central approval. It’s innovation without a broad network upgrade. And that means bitcoin is not a specific financial network. It’s not a financial network for large transactions or small transactions, fast transactions or slow transactions. It’s whatever you want to use it for, based upon what you choose to do at the endpoint. Compare that to the current banking system. The current banking system is built around very smart networks, absolutely and tightly controlled to deliver very specific applications to very dumb endpoints. Even with your most sophisticated online banking, all you can do with your bank is access some HTML that delivers a set of services that they decided they were going to give you. You get no APIs, no ability to run additional applications, no ability to upgrade or innovate or change anything unless the entire network changes to support your new application. The current system has networks for large payments, small payments, or fast payments, but it’s not all of the above. Bitcoin is all of those things because it’s not discriminating, it’s neutral, it doesn’t care, it’s dumb. The power of pushing intelligence to the edge, of not making decisions in the center, moves the innovation into the hands of its end users and gives those end users the ability to build applications that are so niche that only a handful of people around the world need them. And they can build those applications without asking for anyone’s permission.

Some users experience a terrible situation. They do a transaction with a 0.1 millibit fee like they’ve always done, and it takes three days to confirm. During that time, they’re freaking out, especially if they’re new users. Because new users assume that the money has left their account (there are no accounts in bitcoin) and is en route to the destination account (again, there are no accounts in bitcoin), and therefore is somewhere in limbo in between. The money is really still in their account; it’s just that their wallet says it hasn’t been confirmed yet. It’s either at the source or at the destination, atomically with one transaction. There is no intermediate state. It can’t be in limbo because bitcoin doesn’t transmit, it settles.

In fact, we can teach primates how to use money. There have been several studies where chimpanzees are taught how to use money. They are taught that a specific type of stone can be exchanged for bananas. Researchers then watch the monkeys to see what they will do with this new information. They very quickly invent armed robbery. They figure out that if you beat up the other monkey and take its stones, you can exchange them for bananas. Surprisingly, the second thing they invent is prostitution. They figure out that sexual favors can be exchanged for stones, which can be used for bananas. What does that tell you about the nature of money?

Bitcoin is not a smart network. Bitcoin is a dumb network. It really is a dumb network. It is a dumb transaction-processing network. It’s a dumb network for verifying a very simple scripting language. It doesn’t offer a complete range of financial services and products. It doesn’t have automation and incredible features built in. Bitcoin is simply a dumb network, and that is one of its strongest and most important features. When you design networks, when you architect network systems, one of the most fundamental choices is this: do you make a dumb network that supports smart devices, or do you make a smart network that supports dumb devices? 5.1.1. The Smart Network - Phones The phone network was a very smart network. The telephone at the end of that network was a very dumb device. If you had a pulse-dialing phone, that thing had maybe four electronic components inside it. It was basically a switch on a wire with a speaker attached to it. You could dial by flicking the hook up and down fast enough. 
The phone was a dumb device; it had no intelligence whatsoever. Everything the phone network did was in the network. Caller ID was a network feature. Call waiting was a network feature. And if you wanted to make the experience better, you had to upgrade the network but you didn’t need to upgrade the device. That was a critical design decision because, at that time, the belief was that smart networks were better because you could deliver these incredible services just by upgrading the network for everyone. There is one small disadvantage with smart networks. They have to be upgraded from the center out. And that means innovation occurs at the center, by one player, and requires permission. As a result of smart network design, innovation only happens when a feature is needed by all of the subscribers of the network, when it is compelling enough to disrupt the function of the entire network to upgrade it. 5.1.2. The Dumb Network - Internet The internet is a dumb network. It’s dumb as rocks. All it can do is move data from point A to point B. It doesn’t know what that data is. It can’t tell the difference between a Skype call and a web page. It doesn’t know if the device on the end is a desktop computer or a mobile phone, a vacuum cleaner, a refrigerator, or a car. It doesn’t know if that device is powerful or not. If it can do multimedia or not. It doesn’t know, it doesn’t care. In order to run a new application or innovate on a dumb network, all you have to do is add innovation at the edge. Because a dumb network can support smart devices, you don’t need to change anything in the network. If you push intelligence to the edge of the network, an application that only has five users can be implemented so long as those five users upgrade their devices to implement that application. The dumb network will transport their data because it doesn’t know the difference and it doesn’t care. 5.1.3. Bitcoin’s Dumb Network Bitcoin is a dumb network supporting really smart devices, and that is an incredibly powerful concept because bitcoin pushes all of the intelligence to the edge. It doesn’t care if the bitcoin address is the address of a multimillionaire, the address of a central bank, the address of a smart contract, the address of a device, or the address of a human. It doesn’t know. It doesn’t care if the transaction is carrying lots of money or not much money at all. It doesn’t care if the address is in Kuala Lumpur or downtown New York. It doesn’t know, it doesn’t care. It moves money from one address to another based on a simple locking script. And that means that if you want to build a new application on top of bitcoin, you can upgrade the

Here’s a little thought experiment: Let’s take three radically disruptive technologies and mash them together. Bitcoin. Uber. Self-driving cars. What happens when you mash the three together? The self-owning car. A car that pays for its Toyota lease, its insurance, and its gas, by giving people rides. A car that is not owned by a corporation. A car that is a corporation. A car that is a shareholder and owner of its own corporation. A car that exists as an autonomous financial entity with no human ownership. This has never happened before, and that’s just the beginning. Audience member gasps: "Oh shit!" I can guarantee you that one of the first distributed autonomous corporations is going to be a fully autonomous, artificial-intelligence-based ransomware virus that will go out and rob people online of their bitcoin, and use that money to evolve itself to pay for better programming, to buy hosting, and to spread. That’s one vision of the future. Another vision of the future is a digital autonomous charity. Imagine a system that takes donations from people, and using those donations it monitors social media like Twitter and Facebook. When a certain threshold is reached and it sees 100,000 people talking about a natural disaster, like a typhoon in the Philippines, it can marshal the donations and automatically fund aid in that area, without a board of directors, without shareholders. One hundred percent of donations goes directly to charitable causes. Anyone can see the rules by which that autonomous altruistic charity works. We are beginning to approach things we have never seen before. This is not just a currency. Now, let’s look at how the bitcoin community is addressing this incredible potential with their design choices and metaphors. Oh boy, it’s a mess.

What does the word “checking” mean? It means an account on which you can write checks. I know this is America and we’re 25 years behind on fintech. The rest of the world doesn’t do checks, I guarantee you. What is a check? A check is the device by which a grandma can make 20 people in line behind her in the supermarket simultaneously groan. I use it to pay my rent every month. I don’t know why. I can’t do it any other way. It’s insane that I’m signing a piece of paper and sending it through the postal system in 2015. So that my landlord can walk it through the bank and deposit it. So that it might clear three to five business days later, after they’ve charged him five dollars to own his own money.

I was invited to do a talk at the Bundesbank, the German Federal Bank. They were paying me for this speaking engagement, but they didn’t know how to do bitcoin, which is a real problem because I usually get paid in bitcoin. So, we agreed to do a wire transfer. It took 16 days. First, they asked for my account number. Then, the next day they said they needed the SWIFT number. By that time, my bank was closed, so I couldn’t get the SWIFT number. The next morning, I got the SWIFT number and I sent it to the Germans. By that time, their bank was closed. The next morning, they used the SWIFT number and discovered it was the wrong SWIFT number. It was the SWIFT number for US dollars, not for foreign currency. So, they sent me an email, but by that time my bank was closed. The next day, I got the other SWIFT number and I sent it to the Germans, but by that time their bank was closed. They sent me the wire. My bank took one look at this wire and said, "Bundesbank. Never heard of them. Sounds dodgy. Let’s freeze this for 14 days, just in case it bounces.” This is the third largest central bank in the world. This is the German Federal Bank. They do not bounce checks. 14 days later—and this is the great part—they said, "Money held. Money released." They released 80 dollars of the total amount, which was a four-figure amount. 80 dollars. Why 80? What the hell is that? What am I going to do with that? Just hold all of it. Are you teasing me? This makes no sense.

To summarize, we’ve inverted the very basic and most fundamental equation of currency. For millenia, until the year 2008, sovereignty defined currency. Sovereignty was the basis upon which currency could be created, and that currency allowed that sovereignty to be expressed. The monopolistic control of currency is the basis of sovereignty. Now, the internet has a currency. The internet is going to use that currency to create sovereignty. After 2008, currency creates sovereignty. The internet has its own currency, which means that the internet has purchasing power. Which means the internet has economic freedom. Which means the internet can exert that economic freedom in a post-nationalist way, in a way that ignores borders and makes the nation-state not obsolete, but simply less relevant. When an Egyptian blogger can not only blog about the revolution but also fund that revolution in bitcoin, and they can connect with people from all around the world who share their ideas for self-determination and freedom, they are expressing their own sovereignty as an individual, and they are expressing the sovereignty of their community through the use of that currency. This is the world we now live in: a world in which currencies can coexist, and where currency and its user adoption create sovereignty. Thank you.

Bitcoin is digital money. But that doesn’t really capture it. It’s more like the internet of money. But really it’s a consensus decentralized network based on blockchain technology and a proof-of-work algorithm that allows a digital token to act as a reward system for a game-theoretical competition between decentralized miners who validate—and "Oh my…,” it immediately goes off the cliff.

heuristic.

Bitcoin creates an environment that is ripe for innovation, because it’s not just a currency; it’s a technology, a network, and a currency.

Writing DApps in Solidity is not like creating a web widget in JavaScript. Rather, you should apply rigorous engineering and software development methodologies, as you would in aerospace engineering or any similarly unforgiving discipline. Once you "launch" your code, there’s little you can do to fix any problems.

innovation that was pioneered by one of the big banks, I think in 2007. They realized that if you were close to the overdraft limit, if instead of running the big transaction first they flipped the order of the transactions and ran a lot of small ones, you’d pay a 25-dollar fee for every one of them, and they could maximize their fees. That’s the kind of innovation they were focused on.

At the time of this writing, the difficulty is so high that it is profitable only to mine with application-specific integrated circuits (ASIC), essentially hundreds of mining algorithms printed in hardware, running in parallel on a single silicon chip.

When bitcoin was created by Satoshi Nakamoto, the software was actually completed before the whitepaper reproduced in Appendix A was written. Satoshi wanted to make sure it worked before writing about it. That first implementation, then simply known as “Bitcoin” or “Satoshi client,” has been heavily modified and improved. It has evolved into what is known as Bitcoin Core, to differentiate it from other compatible implementations. Bitcoin Core is the reference implementation of the bitcoin system, meaning that it is the authoritative reference on how each part of the technology should be implemented. Bitcoin Core implements all aspects of bitcoin, including wallets, a transaction and block validation engine, and a full network node in the peer-to-peer bitcoin network.

Bitcoin is not simply a system of accounting; it is the first digital artifact that provides forever-history, that provides true digital immutability. There is no other system that provides digital immutability at that level. It is a planetary-scale, thermodynamically-guaranteed, self-evident system of immutability. ​ ​Planetary-scale, because in order to do it you need to marshal resources that only exist in a planetary-scale effort. Thermodynamically-guaranteed, because you can calculate the exact amount of energy it took to create it and there is no shortcut. Information theory tells us that to flip x number of bits, it takes this y number of joules, and there is no way to do it otherwise. Self-evident, because the number that is produced as proof-of-work tells you exactly how much work has been done cumulatively. It really is a monument.

Bitcoin uses mathematics to introduce the concept of unalterable, predictable outcomes into a payment system. This is totally alien because we’ve never done it in financial systems before, and the initial reaction to that is often, "Well, that’s broken.

They will tell you that we are traitors to our nation by encouraging people to use bitcoin. They will tell you that we are criminals, thugs, drug dealers, and terrorists. Don’t believe me? Look up what the Indian government has said just in the last two weeks about people who trade gold on the black market: "terrorists," "criminals," "thugs." ​ I’m just a coder, I’m just a talker; I’m not a terrorist, I’m not a thug. But if I have the opportunity to build an exit from this system, then I will take that opportunity—because I know who the real terrorists are. There is no greater form of terrorism than creating war against your own people, by deliberately disrupting the very lifeblood of an economy, when there is no crisis; creating a natural disaster of enormous proportions simply to fight a currency war against another country.

I’m using the lion and the shark as an example because I think that it illustrates one way to look at Ethereum and bitcoin, when comparing them. If Ethereum is a shark, it is the apex predator within its own environment. It’s a fast swimmer, it can breathe underwater, it eats anything that bothers it. ​ ​If bitcoin is a lion, it rules the land but it doesn’t swim very well.​ ​ You can never really put these two apex predators in a fighting ring together and say, "Let the best one win!" Because the outcome is decided entirely by whether you fill that ring with water or not.

Children born today will never have a bank account. They will have a bank _app_—not a bank app that gives them access to their bank account, but a bank app that makes them a banker, an international banker in an app. ​They will not be permitted to open a traditional bank account until they are 16 years old; by that time, I hope they will have at least six or more years of experience with digital currencies. I would like to watch them walk into a bank branch to have someone explain to them what “three to five business days" means.

Inexorably, the long downtrend of the news industry started. They gutted their foreign desks, they gutted their investigative journalism, they gutted their fact checking, they gutted their copyeditor desks. What was left was a bunch of interns, running around copying the press releases of powerful corporations and presenting them as fact, taking notes when someone who was seemingly important said something, not questioning any of it, just writing it down and publishing it—as truth. ​

Our ancestors said, "This is as good as written in stone." Our grandchildren will say, "It is as good as written on the blockchain.

Sometimes people ask me what my political positions are, and it’s very difficult to explain, but one word captures it, I think: I am a disruptarian. ​What that means is that every 30 or 40 years at least, things that have settled need to be disrupted. Because as they settle, power accumulates, they become centralized, and with centralized power, corruption happens. This isn’t a new concept. My ancestors—I come from Greece—figured out that corruption happens in systems of power, and absolute power produces absolute corruption.

​3.5. Net Neutrality and Non-Discrimination When you look at the internet, the fundamental misunderstanding is that people think that the power of the internet comes from the ability to transmit information fast. But the real power of the internet comes from net neutrality. Net neutrality is the concept that the internet does not discriminate based on source, destination or content. ​

In the new network-centric world, currencies occupy evolutionary niches. They evolve, like species, based on the stimulus they have from their environment. Bitcoin is a dynamic system with software developers that can change it. The question is, in which direction will bitcoin evolve? Which environmental niche will it attempt to fit in? And how will that be affected by the actions of the powerful? If they attack bitcoin, it evolves to defend itself against predators, just like any species. If they attack bitcoin anonymity, it evolves to become more anonymous. If they attack its resilience, it evolves to become more decentralized. In the end, despite all of the messages of fear, bitcoin is the cuddly little bear of currencies and you do not want to kick it. Because, as in evolution, if you stomp on the little gecko, it will evolve until it’s a Komodo dragon and then you can’t stomp on it. Sometimes

Here we are today, and bitcoin is taking on the entire banking system, the most powerful industry in the world. Guess what? Bitcoin’s going to win. It’s going to win for a very simple reason. It’s not just going to win because it’s better. It’s not just going to win because the banking system is run by gangsters, crooks, and some of the most immoral empty suits in the world. It’s not just going to win because the banking system has spent the last 50 years delivering just two consumer innovations — ATMs and credit cards — and then spent the rest of the time trying to figure out how to fleece you. It’s going to win because it’s open. In a world of tinkers, of experimenters, of makers, open wins. The reason it wins is that it allows innovation to flourish at the edges.

It takes a hierarchical system of international finance and turns it on its head. Up to now, that hierarchical system has achieved security by limiting access, because that is the main method of trust in our payment systems—you can’t get in unless you’re vetted. Bitcoin creates a completely flat and decentralized network where every node is equal, where the protocol is neutral to the transactions, and it pushes innovations to the edge of the network, allowing exactly the same phenomenon we saw on the internet: innovation without permission.

What does it mean to be unbanked? The World Bank defines unbanked as 2.5 billion people who have absolutely no access to financial services… and live in cash-based societies. Conveniently, they only count heads of household. Spouses and children are unimportant in this calculation; only the primary earners matter. Yet we know that in the vast majority of the world, day-to-day household finances are controlled by women. But they are not counted as the head of household.

Our regulatory system is actively excluding people from finance. We have reached a point where access to basic financial services has become a privilege. The average person must do a dance to prove themselves worthy in front of a banker, filling in reams of paperwork and application forms, to be granted the privilege of financial services. We are even condemning cash: the ultimate peer-to-peer, anonymous, fungible mechanism that has provided basic financial services to everyone for millenia.

A payment channel is a state channel where the state being altered is the balance of a virtual currency.

Fortunately, bitcoin also creates the incentives to improve computer security. Whereas previously the risk of computer compromise was vague and indirect, bitcoin makes these risks clear and obvious. Holding bitcoin on a computer serves to focus the user’s mind on the need for improved computer security.

From now on, if you see a multisig unlocking script, you should expect to see an extra 0 in the beginning, whose only purpose is as a workaround to a bug that accidentally became a consensus rule.

The bitcoin transaction script language, called Script, is a Forth-like reverse-polish notation stack-based execution language. If that sounds like gibberish, you probably haven’t studied 1960s programming languages, but that’s ok —

Although the Bitcoin Core client includes a Type-0 wallet, using this wallet is discouraged by developers of Bitcoin Core.

Deterministic, or “seeded,” wallets are wallets that contain private keys that are all derived from a common seed, through the use of a one-way hash function. The

the bitcoin network. Bitcoin users communicate with each other using the bitcoin protocol primarily via the internet, although other transport networks can also be used. The bitcoin protocol stack, available as open source software, can be run on a wide range of computing

outputs are discrete and indivisible units of value, denominated in integer satoshis. An

If an UTXO is larger than the desired value of a transaction, it must still be consumed in its entirety and change must be generated in the transaction. In

As a best practice, the level-1 children of the master keys are always derived through the hardened derivation, to prevent compromise of the master keys.

Serialization is the process of converting the internal representation of a data structure into a format that can be transmitted one byte at a time, also known as a byte stream. Serialization

BIP-39 was proposed by the company behind the Trezor hardware wallet and is incompatible with Electrum’s implementation.