The future will be decentralized | Charles Hoskinson | TEDxBermuda

foreign hi I'm Charles hoskinson and I'd like today to talk a little bit about the future namely the future given to us by something that could decentralize it so I'm a mathematician and as a mathematician we like to do things like Venn diagram everything you know we like to build our models so let's break the world up into two buckets let's look at the bank and documented world and let's look at the unbanked and undocumented world so the green bucket has about 4 billion people living in it in places like the United States the European Union and then we look at places like China we look at places like India and Brazil and we start moving into the unbanked and undocumented world places like Sudan places like Afghanistan well what's the point well the point is if you were to look at every meaningful metric from infant mortality to literacy rates quality of life it tends to get better with more financial services and the more access the documentation that you tend to have so let's elucidate this a bit with an example let's take a look at two people let's meet Jeremy he likes cereal he's about 30 years old and he's born in the United States he has access to passport driver's license birth certificate he has credentials he went to a university not a very good one but he still has a university he has a good work history he owns a house he's got a car he's probably like somebody everybody knows now let's take a look at his financial history well he has a bank account he's borrowed money before and he had to pay for that house and that car he's he has several insurance policies so if he hits you with his car if his house burns down if he gets sick he has the means to cover that via proxies and he's a very good son he sends money to his mother in Indiana every single month so we like Jeremy and he's currently engaged in several contracts you can just have them how you will and he buys lots of stuff on Amazon and on eBay okay so now let's meet Hamid Khan he's a slightly different person he's in the other Circle so Khan is born in Afghanistan he's between 45 to 44 years old we're not entirely sure he doesn't have any formal documentation Khan has learned several trades but it's very difficult to understand his work history furthermore he lives on undeeded land which means that where his house is where he lives he has no documentation that he actually owns that let's say he's lived there for two decades he still doesn't uses a bicycle for transportation and he has a very difficult to verify criminal history what does it mean for the Taliban for example to say you're a criminal so let's take a look at his financial life he lives in a cash economy everything is Cash all of his money he takes with him his credit comes from friends and family all of his assets are obviously uninsured he receives money from his brother in India and that cost him 15 cents on the dollar remittance cost all of his Agreements are verbal and he has absolutely no access to the internet this is the reality for about three billion people worldwide it's a very tough reality so what are the differences we should focus on what should we learn from this example first Jeremy he sends his money at a very low cost it takes only a few days maybe it's a few percentage points on the other hand that's 15 so let's look at the numbers for everyone the worldwide remittance business is about 540 billion dollars uh 192 million people living away from their home countries send money home and that total amounty is about 400 billion and the cost of moving that money sits somewhere between 8. 6 percent to 12 on average it's a world Bank estimate but it can be much higher depending upon where you live try sending money to Syria for example let's look at Jeremy he has low-cost access to credit when he gets a loan he can get a long loan five years 10 years 15 years depending upon the asset and the interest rates are fairly decent let's say five percent to ten percent now even if Hamid Khan had access Intercultural inclination to borrow money if you look at the Global Micro Finance rates they're about 35 percent to 40 percent interest according to a c-gap estimate and Ezra Bashan is sitting at the top Afghanistan sits at the top and even 35 for South American nations it's just terrible if you look at Jeremy he has the ability to objectively bind contracts assets and property like land when he owns a house he owns it he has his deed he has his car if he goes to prison for five years he still has assets they're there waiting for him when he comes back on the other hand Ahmed is completely off the grid so let's imagine something let's think about a war breaking out and the land that you live on you have to flee and you come back five years later and there's somebody living on that land who owns it it is it yours is it theirs how do you resolve that dispute that's a reality that three billion people must live in if you look at the economic cost of this Hernando de Soto Pilar is a Peruvian Economist good friends with Bill Clinton he actually sat down and calculated that there's about 10 trillion dollars worth of wealth that just locked up due to this lack of documentation this is all wealth that we can unlock we could exploit we could do things with people could actually grow economically but unfortunately they can't and finally this is incredibly important especially to Bermuda Jeremy can manage his risk via insurance whereas amakan he has very limited tools at his disposal to protect himself from disaster as a risk if he gets sick if he dies there's just no one to cover that so these are the problems that he lives these are the problems that billions of people around the world have to deal with on a daily basis so it's very natural to ask how do we solve this what do we do let's propose something well my belief is that this technology this Bitcoin thing that everybody seems to be talking about actually has inside of it some solutions and I have my nice little cryptocurrencies there we go cryptocurrency yay okay so I call it the transformative triumvirate big fan of Roman history and there's really three things here blockchains the centralized transaction systems and smart contracts what in the world do I mean let's go through them let's talk about blockchains first so basically what a blockchain is is it's just a big database if you're going to store something like who owns what you need that database to be secure you need it to be tamper resistant you needed to be distributed and it turns out that Bitcoin actually has probably the best distributed database in the world it's solved a very hard computer science problem just to exist and here's the key once you put something in a blockchain like Bitcoins it's there forever it can't come out we have every single transaction since Bitcoin was invented it's there since January 3rd 2009. so that means it's the perfect place to put identities it's the perfect place to put agreements property rights these kinds of things and it's totally censorship resistant even if it's inconvenient data to a government and convenient data to an individual you can't pull it out once it's there so let's look at some examples of what's already been done so namecoin is a project that wants to replace the entire DNS system of the internet do you ever wonder why when you go to microsoft.

com or google. com how that all gets sorted out who owns what that's icann's DNS system it's a centralized solution they're based in America a lot of international participation namecoin is saying let's completely disintermediate everybody it's a totally decentralized grid where we actually have a new DNS system block sign actually allows you to take contracts like non-disclosure agreements anything you can think of and actually verify them and sign them using the Bitcoin blockchain at an incredibly low cost less than a penny now let's look at the transaction system this is near and dear to my heart I've started two ventures in the Bitcoin space both of them were funded in a distributed fashion the second one was ethereum so This brilliant kid named vitalik buterin last year came up with this idea he wrote this white paper he's 19 years old and I read it and I said damn it I have to help them start this because this is brilliant and we decided to have a fundraiser so we published a little address and we said send a transaction and over a course of 42 days a 9011 transactions we raised 18 million dollars and the cost to raise that money was only 350 in transaction fees a price of .