Bitcoin Is More Than a Bubble And Here To Stay

so we are delighted that you are here and we are delighted about this partnership so what we want to do now is bring to the stage to the people who helped organize this one of them of course is our founder Robert Rosencrantz who started in intelligence squared about a hundred and fifty debates to go and he's the primary reason that this organization exists and is doing so well so please welcome to the stage Robert Rosencrantz hi Bob and your senior director a senior director of the Adam Smith society who's been fantastic for us to work with please welcome Alison Manjaro hi Alison thanks very much you can take a seat we'll just chat for a couple of minutes about about us all being here together and Alison I'll start with you as I was just explaining to the audience a debate is debate is actually real debate is actually a rather unusual thing so for Adam Smith why this partnership why turn this topic towards a debate so we like to sort of informal motto at the Adam Smith society is free markets open minds and so what we try to do really debate and discussion as part of our mission and so we want both sides to be represented but what we find is if you actually don't get both sides in the same room together on the same day and talking about the same point then the conversations can kind of go past one another so it was kind of important for us to engage in this format that you all obviously do because that's what debate does is it gets two sides into the same room on the same day and how rarely we see that well it's it's a pleasure to be working with Adam Smith and thank you for making all of this happen and Bob Rosencrantz you've been to a lot of these debates now you know what we do but but you hope so at this point you you you actually wrote a piece about Bitcoin you began pondering this you published piece in Forbes 2015 and and and you know nowadays things move so fast that three years ago that's like three centuries ago so what were you thinking three centuries ago about Bitcoin in 2015 well I was looking at it as a potentially very interesting financial product one that had the anonymity of cash one that potentially had a way of transacting where people didn't have to know each other in order to establish trust that had potentially the convenience of digital transfer and as a potential store value and a financial product that had all of those attributes I thought would be extremely interesting and looking back now what were the kinds of questions that what were the push back questions for you well the the biggest issue for me then was the store value question because it was not legal tender it didn't have any physical or other claims behind it it was the value was all in people's psycho psycho logical appraisal of it and so I doubted it frankly as a store of value and and now again three centuries into the future to the present where we are now as you look back how do you rate the your assessment how good were you well considering that the price then was two hundred and fifty dollars and the price now is about eight thousand dollars I think I was either wrong or early what's the difference there is none bought Rosencrantz Allison Manjaro thank you so much for bringing us here and bringing us together on this stage it's been a pleasure up and down Bitcoin goes and where it ends up well if you do know that would you mind sharing with the rest of the class Bitcoin the first cryptocurrency has been called a bubble a fad a scam a tool for terrorists and crooks that is doomed to disappear and yet some fiercely smart people believe in Bitcoin believe in it because they say it takes vision to see how this first-of-a-kind digital currency will thrive and soar once everybody else recognizes its utility that it will liberate us from the corrupting influence of central bank meddling and currencies like the US dollar itself and from a system where the middleman is always taking his cut Bitcoin they say is the solution and just getting started wild price swings notwithstanding so which is it well to us this sounds like the makings of a debate so let's have it yes or no to this statement bitcoin is more than a bubble and is here to stay I'm John Donvan I stand between two teams of two experts in this topic who will argue for and against that motion as always our debate will go in three rounds and then our audience here at the Adam Smith society's 2018 National meeting in New York will choose the winner as always one side wins unless there's a tie and if all goes well civil discourse will also win our motion is Bitcoin is more than a bubble and is here to stay let's meet our debaters first on the team arguing for the motion please welcome Patrick Byrne Patrick you are CEO and co-founder of overstock.com which was the first major retailer to accept bitcoin as a payment method you're also CEO of t0 that's an IC o---- trading platform that you found it Wired magazine has called you the Messiah of Bitcoin you have also been called the scourge of Wall Street Messiah and scourge do you and do you embrace these terms this strong language well I'm reminded of a line of Oscar Wilde's when a play opened at the Abbey Theatre you got this rousing ovation and one man stood up and said you're a fraud and Wilde stood up and said frankly sir I'm inclined to think you're right but in the face of so much acclaim who are we to disagree Thank You Patrick Byrne and your partner here today is Tim Draper ladies and gentlemen Tim Draper Tim welcome to intelligence squared us you're a venture capitalist you're the founder of Draper associates and dfj and Draper university you were an early investor in companies some people may have heard of Tesla hotmail Skype how does Bitcoin compare then all of those combined this is bigger than the Internet it's bigger than the Iron Age the Renaissance it's bigger than the Industrial Revolution this affects the entire world and it's going to be affected in a faster and more prevalent way than you will you ever imagined I wish we knew what you really thought thank you Tim Draper and again the team arguing for the motion and with the motion bitcoin is more than a bubble in here to stay we have two great debaters arguing against please first welcome Eric Posner Eric you're an entire intelligence squared veteran welcome back you're a professor at the University of Chicago you are one of the most cited legal scholars in the United States author of a lot of books including radical markets uprooting capitalism and democracy for a just society which is going to be released next month in a sentence in a sentence what is a radical market in a sentence innocent professor well radical market is a market that is designed so as to promote both welfare and equality and many of our markets need to be improved and this book suggests very various ways that that can be done you know with the punctuation you use that actually was one sentence well done thank you Eric Posner and your partner right here also a returning debater to intelligence squared Gillian Tett Gillian welcome back to intelligence class Gillian you're a best-selling author you're an award-winning journalist you have the u.s. managing editor of the Financial Times where you oversee global coverage of the financial markets you at an intelligence squared debate back in January in which we were debating the nation's economic outlook you happen to mention that your 14 year old daughter had friends who were buying Bitcoin would those friends vote against you if they were here for this debate well if anybody here in the room has got a teenager in their lives you know two things firstly if an adult said the sky is blue they will say it's red and secondly you do not ask a teenager for advice about anything let alone your investment portfolio so I am sure that whatever I say they will say the opposite yep well I get that they end up in the team arguing against the motion thank you to all of you and so we move on to round 1 round 1 will be opening statements by each debater in turn those statements will be six minutes each Tim Draper you can start making your way to the floor speaking first for the motion bitcoin is more than a bubble and here to stay here is Tim Draper venture capitalist and founder of Draper associates and DFJ ladies and gentlemen Tim Draper well thanks everybody for coming to this and thank you intelligence squared and in the Adam Smith society and our makeup girl who tried to make me look better I I wanted to say that this is sort of the perfect audience it's a bunch of Millennials and and and it's this is all going to be in your hands it's what happens to the world do we have a world that you kind of grew up in where you are deeply in debt you are coming out with with a bunch of facts that don't help you get employed and you're coming into this world that's this your grandfather's Fiat world that's very controlled and constrained and you're saying does this make any sense and you have a major opportunity right now all of a sudden this amazing thing happened satoshi nakamoto came up with a new kind of currency and now let me take you through a history of currencies we used to use shells and we'd carry around shells but then they got too bulky and then we moved to gold and then gold got too bulky and we kind of ran out of it and then it was the promise of gold or the promise of silver and that was like a silver certificate and then it was like The Full Faith and Credit of the US government and that's the Federal Reserve Note and you're you're looking at it you're kind of going okay well what is this it's just paper and they say the full credit of the US government there's there was a huge debate much like this huge battle about should we go off the gold standard and and people said no it's just paper we can't do that we have to be on the gold standard because gold is really what this country is built on and but paper it's just sort of abstracted things and then it got further abstracted currency what what did currency become and all of a sudden there's this currency it's awesome because we we have like a Federal Reserve Note you are relying on a third party to hold your currency right you rely on a bank i when you're whenever you walk down a street of a city look at the biggest buildings in the world they're all banks that's your money that's gone into their buildings think about yeah I mean when you go to Las Vegas it's like you know why are all these beautiful buildings here well it was your money it's the same idea so now you've got this new currency and your trusted third party is a hundred thousand computers that are all focused on making sure that every single transaction is done perfectly so now do you think that humans are gonna make sure that every single transaction is done perfectly I've had 15 times where a bank statement was wrong in fact the bank actually gave me two million dollars at one point just hear it it was there in my statement I had to call them talk to fifteen people figure out where that why I why I had this extra two million dollars in and what and you know to give it back I had to go through about 15 people so in this case you've got a new currency and it's virtual and it's and it's something that that transcends Geographic borders so you don't have to be reliant on your country I had this great guy came up to me and he said his name Sebastian Serrano and he said you know I lived in Argentina on my life and my family fortune disappeared three times and I'm only 30 years old and it's just disappeared - currency manipulation and you know as you know the Argentinian peso has dropped 30% a year same thing with Nigerian naira or whatever anyways Sebastian said I'm gonna start this business and I'm gonna build it all on Bitcoin and he did and and it was and it's an enormous success he has since created a new currency called ripio and and it's one of the top currencies of the world crypto currencies of the world now people ask things like is it a bubble I the whole premise of is it a bubble is ridiculous because our last bubble what was that the internet bubble was that a bubble you guys still use the Internet I see some of you actually using it right now that was no bubble that was an amazing transformation of our world it affected many different industries it affected information communications banking it affected it well didn't really affect banking banking had a way of kind of slipping through it affected gaming all sorts of things were affected by the internet car or taxis so so now we've got another currency that has the ability to change enormous industries and it will change it can change banking insurance real estate and government itself no matter time's up thank you very much I want you to borrow make sure that you vote vote for no bubble or whatever yeah III am dying I am really anticipating and enjoying the idea of hearing from these two because let's let they have no idea let's do it II would vote no here thank you Tim Draper well our next debater is gonna make that argument the motion is Bitcoin is more than a bubble and here it is here to stay here to argue against that motion Eric Posner law professor at the University of Chicago ladies and gentlemen Eric Posner thanks very much I'm gonna start with a quotation when the prophets of trade happened to be greater than ordinary over trading becomes a general error' now I assume you're all familiar with that quotation it's from The Wealth of Nations by Adam Smith he was talking about the Great South Sea Bubble of 1711 to 1727 smith the great theorist of the free market was also a keen observer of the world around him he understood that bubbles occurred and they existed the South Sea Bubble which was a kind of a speculative mania in the stock of a company that was supposed to invest in South America destroyed many fortunes damaged the British economy significantly and continued to reverberate up and to through the rest of the 18th century when Smith was writing The Wealth of Nations now what exactly is a bubble many people are skeptical despite the long historical record of bubbles culminating in the most recent bubble in your lifetime the real estate bubble of the early 2000s which led to the financial crisis in the Great Recession a bubble occurs when the price of an asset deviates from its underlying value and the deviation is maintained for a significant amount of time and the question is why does this occur isn't the market price supposed to reflect the actual value and the explanation is complicated usually there's some kind of accident sometimes a new technology that's what happened in 1711 people get excited the early movers make big profits everybody else sees this and they think well that's easy they just bought this thing we can do the same as people chase their tails or their neighbors trying to get rich the the price the price spikes now the price can go up in the NASA just because that asset it's very useful so we have this pattern already of the of the prices of Bitcoin going up and then down a little bit and the question is does that reflect the bubble mentality the speculative mania or something real so what I want to do in this opening statement is just to give you three reasons to think that a bubble is taking place now and the key idea I want to convey with you is that the very elements of Bitcoin that its supporters cite as support for their view that bitcoin is this great new thing is also the greatest vulnerability for Bitcoin so first anonymity okay so bitcoin transactions are anonymous or more accurately pseudonymous people use codes that are difficult to trace back to them and this of course is attractive people want to keep their financial transactions private two problems with this the people for whom this is most attractive is criminals that's why there's a great deal of criminal activity in the Bitcoin market bitcoins are very good for money launderers drug criminals human traffickers and many other criminals and then there's another problem which is that bitcoin is only anonymous for very sophisticated people sophisticated criminals especially ordinary people can't master the technology and as a result ordinary people have come to rely on intermediary ins to institutions a bit like banks wallet companies for example exchanges and you don't get a net anonymity with those companies those companies typically insist on the identity of their customers so ordinary people don't really get an anonymity ultimately if the government believes that they're engaged in criminal transaction sophisticated people sophisticated businesspeople and criminals do second feature of of Bitcoin the fixed money supply there can never be more than 21 million bitcoins because of the way that the program was designed this is said to be good because national currencies sometimes are subject to inflation which it can be a nuisance and an extreme case is a terrible cause terrible problems the problem though is that a fixed money supplies good either fixed money supply leads to deflation which is just as bad as inflation people will hoard the currency as they are with Bitcoin because they believe that I'll be able to buy more goods and services in the future a currency that is not used is dysfunctional bitcoin can't be successful as long as there's a limited money supply but even more important than that the government's control of the money supply is absolutely essential for addressing financial crises like the one we lived through in 2008 and addressing recessions like the one we lived through in the years after the financial crisis if the money supply is truly fixed the government has helpless back when the United States was on the gold standard in the 19th century there was an endless cycle of speculative manias crashes and terrible depressions far worse than anything we've experienced since the Great Depression now this leads to a third point which is in fact the money supply is not really fixed that's actually a bit of a myth and it's connected to the third element of Bitcoin that its supporters cite which is the decentralization the idea that nobody controls it and so we don't have to worry about manipulation okay now that is false and it's important to understood that understand that it's that's false it's true that Bitcoin isn't like the dollar which is controlled by the central bank a bunch of political appointees but it is controlled by the Bitcoin miners the so-called miners the people who create bitcoins as a part of the transaction confirmation function that they serve in this in this currency network it turns out that a very small number of people on the vast majority of bitcoins in the way that it works is when the Bitcoin protocol needs to be changed and that has to happen and it has happened several times it's the Bitcoin miners the people with 51% of the computing power who determined that who are they we don't know probably a lot of foreigners possibly foreign governments I'll have another Adam Smith quote for you but I'm out of time so I'll just say Bitcoin is a bubble vote no on the motion thank you very much thank you very much Eric Posner we've heard the first two opening statements and now on to the third to debate in support of the motion bitcoin is more than a bubble and here to stay here is Patrick Byrne CEO of overstock.com ladies and gentlemen Patrick Byrne bitcoin is more than a bubble it is here to stay you should vote yes here's why first of all for six thousand years humans who engage in consensual exchange have had to go about it one way well we have this trouble of this problem of trust how do we solve trust I'm trading you a camel for your gold coin how do I trusted you to base the coin or not so we there are people who create business models in that case a mint the guy who has monopoly on violence in an area creates a mint puts his face on the coin says if you debase this I kill you that's a business model way to monetize his monopoly on violence there's lots of business models and but that enables us to engage in our trade lots of business models lots of institutions I should say have that same feature land titling for one thing visa cards for another you come into my store I don't know you you know if you can trust me I don't if I can trust you we each just trust visa just like we each just trust the land titling office so we each just trust the mint so for 6,000 years that's the way we've been going about solving things we create these central institutions that since we can't trust each other we just trust them for the first time in 6,000 years we can have consensual exchange among strangers that is trustworthy in other words we have a way to do something that for 6,000 years humans have done by creating these institutions we can now and those institutions have accumulated like barnacles on the hull of civilization some of them are private corporations some of them are functions of government but remember we you know they didn't come out of a burning bush we created them so we can go about achieving our ends it's now possible to achieve those functions without institutions and we can see we will see many of them this is why TIF Tim is correct this is I heard somebody snicker when he said this is bigger than the Internet it's much bigger than the Internet the internet disrupted publishing I've been in a Silicon Valley company where there's a hundred and sixty institutions on the wall by institutions I mean everything from notary con notary Republic notary publics to Wall Street to many of the functions of lawyers and judges can all be reduced to smart contracts and such so are a lot so we will not have to rely on those central institutions nearly as much going forward here's a big one that's really important to us and I'm going to here's a big one that's really important I some of the old-timers here may remember the Soviet Union and there was this country that tried to run itself setting prices 23 million prices on 23 million things the screws on this stand would have been sent by some bureaucrat in Moscow and a big ledger book at such events run on computers and we think that's ridiculous see how silly these people were to try to run a society with them setting prices on 23 million things but here in our society what's the single most price what's the single most important price any society faces it's the price at which we discount the future against the present which is to say interest rates and currently those are that price is being sent in a central department of central planning and call the United States Federal Reserve now my worthy opponent Eric Posner believes that we need government to manage that what did he say we need government that can needs to address the money supply to manage the economy people like this is uh you have to when you when you I I think of there was a great london school of economics professor who's described certain people's mentalities the economy is like this big engine and they're the workmen with the baseball caps and coveralls and the screwdriver and only they you know just how to fine-tune it just how to get the carburetor right inside he got it when you hear that remember the Dilbert strip the pointy hair manager in the corner who always he knows what's best he's in the corner he knows better than those people out on and the cubicles do he knows what's best you know what could possibly go wrong every day he's got a different solution to something and that is the mentality of the people who think that we need government to do all these things for us they need to manage our money supply force well here's a different way to think of it how we used to think of it we have to communicate with each other information about value and scarcity that's what a price is it's in from it's a packet of information about value and scarcity so we can all communicate to each other we want a form of money that we can communicate that information to each other without having to go through some field some form by which we send that signal through some field that any government Mandarin controls then we can really communicate the truth to each other the mandarins want to have their hands on the dial to be able to adjust that field and distort that signal to serve their own private political ends that's why they're against Bitcoin they don't want a form of money that would that that mandarins can't control it and in in and regarding that point you know we have seen in the last financial crisis that the oligarchs they have bought themselves some senators they bought themselves congressmen they bought themselves the esteemed regulators to whom mr. Posner bowels they bought themselves all kinds of things one thing that they can't buy is the laws of mathematics they can't buy the mathematics that underlies cryptography which is why she we should rebuild our social institutions on crypto and in particular Bitcoin thank you Thank You Patrick Bernie and our final debater against the motion bitcoin is more than a bubble and is here to stay as Gillian Tett best-selling author us managing editor of the Financial Times ladies and gentlemen Gillian Tett well thank you well I come last but not least to tell you why you should vote against this motion and I told you that not because I am an esteemed professor of law and Finance like Professor Posner but because I am both a journalist and trained as a cultural anthropologist and as an anthropologist I can tell you three things about money firstly that societies all over the world have used all kinds of things to create money over history there is nothing special about fiat currency secondly fiat currency has problems as you've heard I will admit that but thirdly and this is a key point the problems with fiat currency today are nothing compared to the problems with Bitcoin and to understand that you have to go back for a moment and think about first principles and think about what money does because if you believe that Bitcoin is so valuable you have to believe it's a fantastic type of money so what does money do well as you all know it's one a medium of exchange to a store of value and sometimes three and investment too so think about it bitcoin as a medium of exchange compared to fiat currency well I don't know how many of you in the room have actually got Bitcoin but any of you've got Bitcoin we'll know it's a pretty lousy medium of exchange right now you can't actually do very much with it yes you can buy stuff on overstock and I'm giving you a free promotion Patrick thank you I work on Commission but not in Bitcoin but right now the system can only process seven transactions a second that is nothing compared to the amount you actually need to make it a viable medium of exchange it's slow it's clunky it's expensive there ain't that many pieces places you can actually use it I mean some of you've made seen the great New York Times piece recently about trying to use Bitcoin in New York and guess what it's tough not a great medium exchange the other problem of course is its value has fluctuated dramatically so you might say well what about a store of value well if you think it's a great store of value you have to say what is underpinning that store of value and if Patrick says trust underpins money roots of the word credit come from credere meaning Latin to believe so what underpins Bitcoin it ain't crossing government it's trust in one computers those wonderful reliable hundred thousand computers that never break down never get hacked never have any kind of viruses you guys are ready to trust in computers forever you trust in the wisdom of crowds you trust in this idea there's always gonna be roaring demand for Bitcoin well maybe as you just heard before from Professor Posner bubbles manias come and go last but not least you trust in the fact that the supply is limited well yes right now those wonderful magicians of cryptography have created a system which has unlimited supply of bitcoins but what about aetherium what about Bitcoin cash what about all those other bitcoins that are coming up to who actually believes that the first move of Bitcoin is going to be the only Bitcoin I mean remember a time when we all thought that Sony Walkmans were the coolest thing out I'm here probably too young for that but think about it who actually thinks a Bitcoin is going to be the only idea like that why couldn't it be 20,000 more bitcoins in which case what is that gonna do the value then you might say well you know what yeah we see all that's wrong with Bitcoin but actually fiat currency that's even worse so as government's they cannot be trusted to which I say this okay maybe you don't like fiat currency maybe you think there are problems with government you don't like institutions yes I hear but what about this there is actually something else out there which has been around for thousands of years that doesn't require actually betting on a computer doesn't require betting somehow the first mover the first innovation on bitcoins gonna last there are something out there which is completely portable something out there which doesn't require enormous amounts of electricity and let's not forget the fact that to create one Bitcoin requires the energy usage of the typical American household over two years last year Bitcoin mining took up all the electricity consumption equivalent of Denmark next year will be Argentina but there's something else out there that doesn't need that and it's fairly simple it's called gold so if you don't like Bitcoin sorry if do like fiat currency okay fine I happen to think it's not so bad not ideal not so bad but if you don't like fiat currency go buy gold because did Bitcoin make a digital gold is a pretty lousy alternative and the great thing about gold is that if it all goes horribly wrong you can always wear it you can put it in your teeth so vote against the motion Thank You Gillian Tett and that concludes round one of this intelligence squared us debate where our motion is Bitcoin is more than a bubble and is here to stay now we move on to round two and in round two the debaters addressed one another directly and they also take questions from me and from you our audience here at the Adam Smith society 2018 annual meeting we have two teams debating this motion the team arguing for the motion Tim Draper and Patrick Byrne they have made the case that bitcoin represents a revolution and it's a good kind of revolution that it represents a major opportunity for anybody with the vision to get into it now they say that bitcoin is an antidote to human error in banking it's an antidote to a banking system that they describe as parasitic it transcends borders it is Unleashed from government if it's a bubble then the internet itself was a bubble there against existing and it takes that kind of that kind of vision they say currency requires a solution to the problem of trust and that a system based on secure solving of algorithms is the perfect kind of trust and also that it's a currency that perfectly communicates its value between two parties to a transaction without the corrupting influence of humans in the middle of it the team arguing against the motion Eric Posner and Gillian Tett they say of course it's a bubble that the bitcoins vulnerabilities are actually built into its design that's where it's demises they're saying that for one thing bitcoin tends to attract unsavory characters but that it is not really truly anonymous defeating one of its main purposes because most people need to go through a middleman it's with their opponents arguing that it's fixed supply is a virtue they say is actually to its detriment that a fixed currency will lead to deflation and hoarding and a currency that is not used is not successful as a currency the government would be helpless if it has to work with a fixed currency they also point out in this they challenge this question of trust asking do you really want to trust a system that depends on computers and upon decision makers whom you don't know because in the end they say bitcoin is something that can be influenced by humans just don't know who they're gonna be so there's a lot to unpack there a lot I want to go first to this question of trust which is one of the things we're very quickly a disagreement has surfaced between the two of you so Patrick Byrne you talked about the mathematics actually being the source of its security we have a we have an audience here that's larger actually than here we have an audience that may not understand what that means and so rather than debate the point for the next 30 seconds can you just explain what you mean when you say when you talk about the mathematics of a Bitcoin and why that's central there is a mathematics that underlies cryptography technically it's called non polynomial one way trapdoor functions this area cryptography harnesses this area of mathematics to make things unbreakable so they can be encoded one way but not decoded and that that mathematics and that cryptography underlies all the cryptography of and modern error from HTTP to you log on to your bank account to the mat the what's under Bitcoin it's the same general field of math so and so the bottom of given Bitcoin represents this a particular solution to a particular mathematical challenge that cannot be altered it cannot be changed and that the security is in the specificity of that number if somebody ever breaks this and there's talk about quantum computers and stuff this should be quantum resistant but it's the most hacked on thing in history Bitcoin is it's every day and more people hack on anything if anyone can break this they can break every government and Bank encryption system in the okay thank you for performing that service so your your opponent Julian Ted has said who are you crazy wanting to trust something that depends on the technology of computers because who's to say that you know our computers break all the time basically is what she was saying take on that I may get hacked all the time as well and they get hacked all the time so take the happy hacks already with Bitcoin well this has been hacked at more than anything in history and has never been defeated now there are companies that spring up in the Bitcoin community that get hacked these different exchanges they get hacked but the last I checked you know banks get hacked too and yeah bitcoins used by unsavory characters last I checked you know they used u.s. dollars - yeah but when banks get hacked eventually you have a big enough pool of money that's separate from the thing that they've just hacked to be able to repay the customers well now Jillian you said that you you said oh do you really want to trust computers computers are running all your banks it's just those are weaker security systems and then Bitcoin I am so much more secure in my Bitcoin than I am in the money that's sitting there in Wells Fargo but Tim Tim you'll say I'm not saying do you want to trust computers I'm saying do you only well yes sir do you want to yeah Tim do you only what do you only want to trust computers the point is this if you go into your bank you're not only trusting your computer for the value of your money your trust in the computer but you have a backup and the backup is called a central bank with Bitcoin you are only trusting computers okay no no I'm gonna let you answer I want to say something to the audience I'm getting these little smatterings of you know I'm you're gonna applaud then you stop go for it just go for it go ahead Tim so you mentioned the central bank central bank always gets it wrong so when you're in recession they shove you further into a recession when you're in a boom they push you higher in a boom because they move so slowly typically and they move in and they never react and then they react too late and too strongly and in the government regulations the same thing happens with government regulations they add more regulations when you're already you've already got both hands tied behind your back and you're trying to feed your family okay Tim the Reds our reason guess what I agree with you but there is a reason why the US Constitution is based on checks and balances there's a reason why investors do not put all the eggs in one basket essentially money is not just your eggs in one basket putting your money in a bank it's not your eggs in one basket but having some fate in a central bank is not all your eggs in one basket the problem with Bitcoin is you're betting entirely on the sanctity and the durability of those computers okay there's nothing else backing it up you said no check-and-balance sense either if you have Bitcoin wallets I heard that earlier right you probably shouldn't keep all your eggs in one basket there is another basket yes what I have several currencies governments and I also have gold and I also have other types of it how do you know the Fed your bet hang on one other thing one of the service that can be performed for people who may not be up with this with the terminology fiat currency Eric we haven't heard from you so tell us what Fiat car it comes from the Latin let it be done it's just currency that the government creates the central bank creates and then it guarantees that it will retain its value and and just in response to Tim every advanced successful economy has had a central bank for the last several centuries they've done quite well the economies have done quite well the central banks have generally been pretty good at dealing are we satisfied with that good yeah my other Adam Smith quote the government of an exclusive company of merchants is perhaps the worst of all governments and I and I'm quoting him because despite what Jillian said she was speaking loosely Bitcoin is not entirely controlled by computers it's controlled by the programmers and the miners all right so the code that was created back in 2009 the guy who created it this mythical person Satoshi Nakamoto he knew that he could not create a system that will work forever and that will never have any problems and so the code provides for its own amendment by human beings those human beings are the company of merchants there though they're the Bitcoin holders they're the miners and also they're the programmers the the people who are trusted by the miners and other people in the Bitcoin community to revise the program as necessary as they have done several several times these are the people quite a bit I let Patrick learn respond to some of that so what you're basically hearing is that the again your opponents are arguing that the trust and the security the anonymity etc a lot of the virtues that you cited actually aren't built in to Bitcoin well I think that's false I think that it's an open source project and sometimes people don't get open source but it is collaboration among a lot of people creating this code but that Culebra collaboration is all transparent and the records are all transparent and some of us find it a more trustworthy process than the current sausage-making we see in the political machine around us an open-source project you know if there's any monkey business in the code everybody can see it it's it's a much more transparent process than the current political process transparent but under the patrol of a small number of individuals do you have to do you need to condemn at that point is that actually accurate yeah well it's complete you mean what I assume you mean like 1% of the hashing power is necessary to it to change the the code and a small number of people possess that power as of 2014 that those people collectively were on the stage at a conference I think in New York just a small number of people who can act in concert if they want to those are that that's the central bank of Bitcoin that's the Fed of Bitcoin very concentrated I'm glad Eric brought that up because he's spreading fear would you serve what you get from the news and whatever any of us can set up a Bitcoin mining system and there are hundreds of them beings they're all trying to get pitched they're all pitching me and saying hey put money into my Bitcoin mining system right anyone here is that way yes that anyone is going to have more than 50% control of this it's spread out all over the place and then you talked about criminal activity okay they're catching everybody who's using Bitcoin because there's a perfect ledger there's the blockchain and people are looking at that block chaining the US Marshal's Office started by saying you've got to make this illegal and then they said no not so fast because they are catching every single Bitcoin criminal and they're doing it by by going ahead you they they're allowed to get that Bitcoin but as soon as they start spending it it's on the Block Tim and they know Tim hang you I'm gonna come back to you you I just you've made a very holistic point if you want to be a criminal use fiat okay it's so much easier so I want to thank you for pushing back I actually want to take that specific point so your argument about the criminal use has just been refuted by your opponents in a very coherent and logical way I'd like to hear your response to that 25% of people who use Bitcoin are criminals according to a study that just came out a couple days ago the money laundering a hundred billion dollars or more a year most of it is Bitcoin the the reason why so bitcoin is as I said sue nonnamous this public ledger just has codes it doesn't have your actual name so very sophisticated criminal can use those codes in a ways to maintain their anonymity now it's true what Tim says is that ordinary people who are not very smart and don't know what they're doing can make mistakes which makes it very easy for the government to track them down has happened with the Silk Road exchange but the really smart people say the foreign government a smart guy this the the Florian Silk Road have you read the book it's unbelievable how smart that oh it's not smart enough but not as smart as a knot there aren't any smarter he got busted so don't even try it let's go by the first principles reason why people are buying Bitcoin investing and it's not because they think it's gonna be this incredible useful thing for criminality per se the reason why most people buy it is because they think it's either gonna keep going up and up and up or because it's gonna become a mainstream currency that will be useful and the question I still have is why on earth do we think the Bitcoin is going to become this incredibly widely used useful currency compared to all the other alternatives why do we think the first is there any technology in the world any big technological advance we've had where the first mover advantage ensured that that stayed dominant all the way through there are always copycat Patrick Byrne pleased to respond to that well here's here's a reason they could be switching to Bitcoin they're on the streets of Venezuela and starving and they want a form of money where they can still function or they're in created by what's wrong with God as well in government though wait they were liked by your government yes he's the government hater right and so this cryptocurrency is gonna be created by the Venezuelan government it's not based on oil they're created in an oil backed currency but the great adoption of Bitcoin you look where it gets its spikes it's in places like Crete in Greece and then as well as everything collapses and Bob we people want someplace they can go and get rid of this fiat everybody something Fiat you know anyway they get rid of their Fiat into Bitcoin that's where the big spikes a Bitcoin is Patrick have you ever been in a war zone did I can tell you that I've been in war zones I started off as a war reporter if you're in a war zone if you're in that kind of stress situation you don't start fiddling around with a computer you want to get a bag of gold or emeralds and certainly your clothes and run okay so my key point is this I hear what you're saying about the shortcomings of Fiat government-backed currency guess what it ain't perfect but it's probably the least bad system there is today and actually if you don't like fiat currency don't start messing around with computers go to gold but can you beam gold and in South Park they describe Bitcoin as space cash and that's a good thing you can you can seem it across the universe can you beam gold right Bitcoin is just let me tell you if the government's collapsing I don't want to be boomed across the earth by the way I saw a recent calculation that if I so it has all the it has all the advantages of gold which I'm happy to hear that you admire has all the advantages of gold plus 1 you can beam it across the universe and it has all the disadvantage that if the computers collapse and suddenly you're left high and dry so you're penetrated your argument is this kind of razor's edge argument that civilization will collapse enough that the central banks will cease to function but not so much that the internet in the computer system will also stop functioning he keeps going and somehow we all get enough electricity to keep mining ELISA Patrick respond I'm imagining something like Greece or Crete comes when the US dollar goes the way of lots of other fiat currencies that have come our way when our technicians when our fiat when our Dilbert managers have have been exposed as really not knowing how to fine tune that carburetor and when it all melts down you will be happy to have a robust alternative system that does not rely on any of these institutions or grandfathers came up have you know because the US dollar is not the only alternative out there if you don't like what the Fed is doing if you don't like Donald Trump if you don't like the way that America is going the great thing about the global economic system is you can hedge your bets ever had you can also leave which is what's happening a lot of people are leaving this country because they are not feeling like they're being heard all we're losing a lot of great Millennials because they're feeling like what we're not being heard look we have a new currency this thing is awesome and your government is getting a little heavy-handed and in China it's even worse they are fleeing China they're going to Japan where Japan said yes we are a we take Bitcoin and it is a national currency here and and they're going to other places where they feel like they're at least able to pursue their great visions but wait wait hold on exchange has just been half well done you said there are a whole bunch of problems with Bitcoin there are and there are and you said there are fewer with dollars there are but all the best engineers in the world are working on Bitcoin not on dollars okay I went there I'm never working and they're gonna make it better and better in five years you're gonna be you're gonna try to go buy coffee with fiat currency and they are going to laugh at you because you're not using crypto so so we're gonna have you back in five years and somebody's gonna be laughing at something I know no I I think we should we should test that in five years okay I went out I scheduled but I'm gay all right I want to I want to move the topic into another layer that oh and actually the other thing I want to say is normally I have to intervene a lot more to get the debaters to engage with each other you guys are off to the races you know although Tim you are the first debater in 150 who's ever touched me and it was electrifying so there was there was an argument also made and I don't want this to become a deep deep diversion to the issue of government control and regulation but there is this issue that Bitcoin represents a kind of decentralization and and of liberation from government manipulation that the four side welcomes and that the against side said what would leave government helpless government control of the government of the money supply is essential and Eric that was your argument just take one more minute on that because I'd like you to I'd like your opponents to respond to more of the specifics of your thinking on that sure you know since the advent of modern capitalism there have been periodic financial crises these are devastating events where the money money disappears people hoard their money economic activity stops banks fail over hundreds of years governments have figured out ways to address financial crises we're all familiar with for example FDIC insurance and then the Fed Ex is the lender of last resort so when that happens the government actually makes money pumps it into the economy gets the economy going again and then the money is returned to the government at the end the Bank of England has been doing this for hundreds of years the United States did this at the beginning of its history until Andrew Jackson shut down the National Bank after a devastating financial crisis in 1907 where Wall Street had to step in because the US government had no power to do it the Fed was created in 1913 and given this authority again it failed in the Great Depression and didn't use the authority that was given it but since then it's been quite effective and successful at maintaining financially and and Bitcoin would take if Bitcoin replaced the dollar that would that would be that would go away though well the government wouldn't do anything and people can hoard bitcoins not the way they so I see Patrick's been taking furious notes of speaking so he's ready to respond okay well that history is extremely selective that history is extremely selective we did have depression in the 19th century we had growth in 19th century we had banking crises it was legalized whatever you have fractional reserve banking you eventually have crises and things topple over and you need a central bank the fractional reserve aspect was legal and this in England and Robert Peel 1846 I think and then we adopted this in 1907 what bothered the progressives was that we got out of 1907 with just private action was JPMorgan went down organize do bankers went down and got the system I'm kinked that offended those who wanted more government they said we can't have private actors with this kind of power we need the government to have this ability and this was born the Federal Reserve the frenetic it was the banking system which created the Federal Reserve it wasn't the progressives it was the bankers the bet was the bank the banker the progressives kreega's that because the bankers what happened what happened anybody else did see the earth of a long in 1993 in the tooth and ready to get ready for a new session that system is not working in 1933 they had their big test they didn't just fail to present it prevent it they caused it they restricted the money supply a third and brought about the Great Depression there the Dilbert gods in the corner saying well what could possibly go wrong and they go from collapse to collapse to collapse they just it's the say it's old wine in new bottles they just keep reef lating and then we have a bigger crash and then you have the Greenspan put and then you have 2008 and they just reef it's this it's old wine in new bottles and eventually as me said you know all all expansions that come about from expanding the money supply and in a crash this is going to go on and on so we have a greek-style crisis so I want to I want to address one issue you you said Jilly and this has been fun you fly we have a bet in five years time you'll buy me coffee and the red and the reason and you said value fluctuation well there is always going to be value fluctuation but but bitcoin is not volatile at all one Bitcoin equals one Bitcoin as these fiat currencies fiat currencies are very volatile against bitcoin because they are floating and disappearing it's not too late where that Fiat bubble and into something solid like okay they drift away over time I can tell you there's only one thing recently that has looked as volatile as Bitcoin and that is something called VIX ETS and those went up and down and imploded I mean anything it swings you know 50 100 percent or whatever in a few months is volatile does this all suggests that regular folks well they're not on your perspective though because Ted coins very stable and all these fiat currencies are following Timmy you're repeating yourself let me bring you in I just want to make sure I mean $1 goddamn $1 has always been worth $1 are we are we at a point in bitcoins presidents development that that regular people are it's dangerous for them to get involved with it and you know you guys are very savvy investors you're sophisticated but regular folks get burned and what they're getting burned undermine the kind of acceptance you're looking for folk I don't know what these guys are talking about we're regular folk and and I'm always a little bit 'red whenever I hear people say oh I know better than you do what you should do with your money I'm looking and I'm saying well you know what to do with your money but we're giving you an alternative like hey you may want to move some of your money in - this thing because it like if a government collapses you can get go into another country and just pull it down so why couldn't that would go yeah and and well you can't because it's you're stuck in just the countries that the u.s. is friendly with the and they're fewer and fewer by the way I'm lost I think that people should be aware this is very risky and anyone who's giving you advice that go invest I mean you should may be holding five percent of your assets in the cryptocurrency may be prudent I don't know but you shouldn't be I hear about people all the time we're sinking a whole bunch of their their month money into it it's way too risky to do that okay I I want to go to audience questions I just want to point out the Tim Draper believe it or not from the Tim Draper we've seen here it's actually been quite modest about one thing and that is you a few years ago you when I think the coin was at $300 you predicted it would reach $10,000 and the world scoffed and you hit it within three weeks or so of the of the you said in three years and within three years it kind of ticked right up to ten thousand I was very satisfying for you was actually no it was just sort of like oh yeah okay well now what now okay 250,000 and now it's to 250,000 by 2022 but but I there's some I part of it is I sort of have seen these amazing transformations of the world from just the just the very beginning just from like there was just a two guys in a dog that started hotmail and all of a sudden we are all communicating through web-based email for free and there was just one to two guys and probably a cat that started Skype and all of a sudden we are all seeing each other when we communicate with each other for free and that all started just with this little thing and it spreads very quickly around the world and whence it once it spreads we all kind of go oh yeah that's obvious of course we can Skype each other oh yeah so to your opponents your your to the side are going against sounds like your opponents are saying you you lack the vision thing yeah yeah and you're good with that absolutely you sign up for that okay actually okay I'll say differently you said earlier Tim that basically you had the Internet boom and bust but the internet still here okay but guess what guess what much bigger pets don't they call that a bubble yeah Tim pets calm is not still here oh yeah Bitcoin bitcoin is like five hundred companies however there were a lot of first started a lot of internet darlings in 2000 that boomed that went as high as say Bitcoin house okay people look like a genius for a moment and they collapse and yes the internet survived yes blockchain will survive but will Bitcoin survive Bitcoin is the pet calm of the cryptocurrency world okay well it is very likely head stock oh my god likely that Bitcoin does end up winning this long-term crypto battle and it is sort of an internal battle but boy we're all out there for the right thing okay audience did Tim say that you two think it's gonna win or not gonna win Tim did you truly know your point cuz no I'm if I didn't go for it but Bitcoin the value of Bitcoin is tied to the network and how big that network is and according Metcalfe's law the the power of a network is the number of nodes in that network number of people squared and so Bitcoin already has like two-thirds of the of the they have a huge lead they have an enormous lead and new technologies will come up but just as Microsoft added those technologies as they they benefited from them Bitcoin is doing that too you said but it brought Fitbit Lightning Network sped it up pretty fast and that had to do with another technology that came from another cryptocurrency and they brought you're just saying that bitcoin is the myspace of the crypto bitcoin come sir so my name is Nick little of the University Chicago Booth School of Business and my question is on sophistication so in the blockchain world a customer can be entirely responsible for the security of their transaction on purpose now people use visa for a reason I assume is it better for individuals to be entirely responsible for security other transactions Thank You Patrick I actually time as small as Milton Friedman would say small l libertarian but you have to admit some degrees of paternalism and in that case now you have to have I think there have to be companies with wallets that perform the KYC AML and the customer service so when Grandma forgets her password it cannot just be a pure you're on your own system so there have there have to be a ring of companies that build up that attached this system and provide that extra layer of service and trust these companies are going to be if Bitcoin tends ends up dominating currency when you walk down the street in a small town and you look at the biggest buildings in the street they're gonna be owned by these big companies they're the banks of the futures which will act as intermediaries and they'll skim off the profit will be little storefronts that let you come in and that's all they need why don't have a bank well no we can't I have happen to have just been with regulators in Washington the other day in time talking about what we're doing with Wall Street you could you can eliminate the role of exchanges you have decentralized exchanges that's not a healthy first step I think that we ought to take an incrementalist approach I remind the young bucks like Tim I run into in this field remember Frankenstein the lesson of Frankenstein was that the scientist has to be thinking about the effects that he's maybe not thinking about anyway no we we want to replace the system incremental II - go ahead sir thank you Daniel Shakman MSD partners - Patrick in your side isn't it a colossal almost debate ending concession on your when you said before that of course you know Bitcoin is only suitable for you know three five percent of your assets I mean you know this is a speculative thing my god you wouldn't wanna you know risk so much beyond that in this currency I'm happy to back them up there I do understand that that with your own money you want to make sure that you're set and that this is a risk we all know it's a risk but over time I think your your Bitcoin ownership should continue to increase and I believe that there will be a point at which you will no longer really want any of the fiat currency and to my to my answer is I'm not completely sure I'm right I'm not completely sure I'm right and I don't want to tell grandma to go put her savings into this let's see how it evolves debate ending concession Patrick what patrick is saying is that bitcoin is a speculative investment the way the south sea stock was maybe if you have a lot of money you want to put a little money a little a little bit of money in it but a currency has to be used by everybody that's the idea gotta be a hundred percent I consider that an asterisk I'm speaking with to the investors to this specific question of date do people go and invest now I try to say someone like nos think about that but on the question of is this here to stay is this gonna reorganize of civilization yeah I think so I just but that doesn't mean I want to tell briamont ago and further savings in that question for this okay Kate Rooney from CNBC we talked about this moving really quickly do you think regulators are keeping up how do you think US regulators compared to the rest of the world and is there a risk that some of these assets or this innovation goes abroad if the US isn't moving fast enough i I'm gonna toss it to Eric after I make my point just so Haven then I'm sure he'll tossed it down they the regulators have the point of view from what I can tell that Clinton the Clinton administration did regarding the internet if we regulate this it may go abroad we don't want the center of gravity to be in Beijing and so they have had a relatively hands-off attitude and I think that that's smart and this absolutely will there is enormous concert Beijing China has named a new five-year plan his name for technologies they want to dominate the world and at the end of this five-year plan therefore they're one year into it one of the first of those four is blockchain so this we absolutely have to be afraid that some other country gets the jump on us and this research to the opponents either of you well regulators are extremely skeptical about Bitcoin and they're cracking down on it but they're also worried as Patrick says about losing a competitive edge and destroying a nascent technology that might be helpful in some in some way but if Bitcoin ever became a currency if it took over then regulators at all developed countries at all countries would destroy it because it's you you need to have a national concern currency that's controlled by the central bank Bitcoin currency would not be tolerated unless it's that kind of a Bitcoin succeeds it will fail if it will attract by then I'll be too late for them to stop it just before it gets too late for them already in China where the Chinese Authority feels threatened by this and so they're clamping down which means to pay an Indian Japan said guess what the value of Bitcoin goes down ironically something which was created as a howl of protest against government is still very affected in its price by the actions of government but the other thing is that in terms of if you look at Bitcoin you know we mustn't confuse blockchain and Bitcoin because they're not the same many central back many central banks and governments are saying you know what blockchain yeah it's the useful technology there are many different applications but Bitcoin this was the first thing that sprung up out of blockchain and for all the reasons we said it looks like the MySpace or the cryptocurrency world and just because governments feel skeptical about that doesn't mean they're saying no to blockchain so I like of Tim Tim this is this sort of a hot one for me because I I had the prime minister of Estonia came to Draper University to speak and said just by instituting digital signatures they see save 2% of the GDP and all the young people started to vote when they did digital voting and then they did digital identity and the crime rate went down the business climate went up and then they gave he gave me this virtual residency card and he said and governance can now compete across border virtually and it got me thinking that ultimately we're gonna have the terrestrial part of governance and then we're gonna have the virtual part of governance and the virtual part will have to in effect compete for us I'm Tim and complete and they'll be accountable to their constituents yes I think that's a whole new way of thinking I think it's gonna change all of our thinking and and so regulators are gonna say we'll wait okay we have all of these ro point at me on regulators point oh yeah we're gonna have all these rules and and we're stuck with them and all of a sudden there's this new thing and it's virtual and so we've got to figure out how do we separate our virtual piece and have that piece really compete our terrestrial pin that can be a monopoly Julian I hate to pour cold water on your vision of Estonia as being this happy place of virtual what came out of that well it's called Russian hacking have you seen what happened in Estonia when the russians hacked into estonian computers happened here it's called belts and braces it's called having checks and balances not putting all your eggs but that's one good another question from hip-hop here my name is noni I'm from MIT Sloan this is mainly a question for mr. burns and mr. Draper so let's say we played a long-term game Bitcoin has significant uptake what does a financial crisis look like at that point in time and when you're balancing this difference between virtual and sort of terrestrial government what are the fail-safes we haven't place for regulating the environment at that point in time Henry on the first one the Austrian answer is you don't get the financial crises you use interest rates no longer get set by pointy-haired dilbert guy in the corner and the Federal Reserve who thinks he can fine-tune the US business cycle interests become a way that the crowd we can coordinate our preferences about time and interest and and what's the real value of money and such with each other and you have stable steady growth and the reason we have booms and busts is because we have that guy with his hand on the rear stat subject to political pressure who when things get a little rocky takes political pressure and floods the economy qe1 qe2 qe3 whatever and that's why we have these booms and busts and if we switch to an economy that was gold based or based on some form of money through which we can communicate that no Mandarin can can distort we get rid of the financial crises that's simply not so there are booms and busts long before there was government intervention there are booms and busts under the gold standard in the 19th century the financial crises aren't caused by currency they're caused by excessive lending against weak assets bad assets assets that people overvalued they'll continue to exist fracking an economy dominated by kept quick and can I start to that there were booms and busts back in Mesopotamia the reason why you have the phrase wiping the slate clean was because in the old days many thousand years ago there'd be too much lending in Mesopotamia they'd record it on the slates they'd wipe the clay the clay tablets and clean every seven twenty fifty years and guess what you go back to zero so booms and busts have been everywhere Tim sure I I don't know the booms and busts could go could they could continue or maybe not but one thing's for sure governments that are forced to compete with each other for you are gonna do a lot better than the ones that are that think that they have a monopoly they can do whatever they want right now we have a government in the US that's 51% of the GDP is government spending and we're stuck with it and they're deciding fit mortar for every person that's out there pulling a sled there's one standing on the sled saying telling him you know that he's got to keep one hand behind his back you brought up the government's competing for you as an intriguing idea can you put it into 30 seconds what you mean by that sure this glass this the company that created this glass had to compete with all the other companies that create these glasses and those who can't see this he's holding up his drinking and they make they make them better and better and better so then cheaper and cheaper and cheaper so that they provide a really good product or really good service so any company out there that is alive today is doing what they can to compete for you to try to get you to be a customer of theirs governments don't feel that way historically they've thought we control everything that we see and we'll just tell you what the rules are and we know better than you do what to do with your money what to do how do you live your life whatever now governments are gonna do that but then at their own peril because other governments are gonna step up and say hey we can provide a better healthcare program here hey we can provide a better pension system than these than your government and how does between those things can be completely separate well bitcoin is a natural natural for this free market in the world because because bitcoin is cross-border okay global and vision I just want to see if you respond to it coin has nothing to do with the size of the government the government will still be able to tax people it'll still be able to borrow in fact it will be able to borrow more effectively because people won't be worried about inflation they can spend as much as they want bitcoins that going to do anything about killing yeah and basically if you're worried about the value of the US dollar and what the feds doing that's a much simpler alternative just go and buy a wide basket of currencies buy a little bit of real estate buy some forests buy a bit of gold hedge your bets it's 101 investment principle okay another question sir thank you for this I will shake from NYU so my question is for Chairman Patrick so currently the value of Bitcoin is intrinsically tied to fiat currency on overstock.com I'm sure you measure the value of merchandise in US Dollars and that's how you decide how much Bitcoin to accept do you envision a future where your website but perhaps measure your merchandise in bitcoins irrespective of whatever happens to fiat currency well we do allow you to pay in Bitcoin now or we allow you to trigger something and then as you shop you see everything in Bitcoin so you see everything in Bitcoin prices I guess you know what happens the history of money is that it starts off as commodities and it's in the commodity in a society that is the one that is most useful and interchange miju's in barter and then the one that's most used toward it becomes the one that everybody adopts and becomes the currency and can I see that happening with Bitcoin I can see that happening in places as they collapse and if there's ever a currency crisis in the United States I could see it happening here Patrick you know when Bitcoin the revenue that Bitcoin take that over start takes in and Bitcoin does it keep it in Bitcoin we convert 50 percent ended fiat dollars and day and leave 50 50 percent in Bitcoin then every once in a while we build up the Bitcoin and we sell it and make a few million bucks so Tim you want to jump in on this question because I've just gotten to the two emails that were very interest to EEMA ecommerce emails and one was there is a bucket of Kentucky Fried Chicken that is only available in Bitcoin and it's in Canada and they've got a Bitcoin bucket we should be the only available you guys should concede period the other one is I got this this other email and it said here's this beautiful mansion and it's just it's a thousand Bitcoin and I pushed sort of thinking well what does that mean in dollars and then I realized no that's the only way that guy's gonna sell that house it's really interesting it's a new way of thinking and it's coming this is crystal from Yahoo Finance this is a question for Patrick and team because this debate is about Bitcoin and we know Bitcoin used to account for 80% of the cryptocurrency market and now is only one third and even Patrick erupts I started to accept other all coins like cerium like coin and - last August so I wonder why do you guys believe becoming to maintain his first move advantage in the cryptocurrency yes I think that's a good question that's one point first so let's take that that's a great question well Bitcoin does have a unique place because everybody is confident of its fairness and how it came about and everything in terms of Satoshi and the dates he chose and so forth that and no one is disputing there was any pre mining or any of these other things that you're on with coins what a lot of comfort Bitcoin the Bitcoin blockchain to Gillian's point is to slow seven transactions per second is too slow to support the modern world visa handles 30,000 per second what people do is they create what are called side chains other distributed Ledger's that they do the work to but then everyone sort of agrees generally then you anchor that work back to the Bitcoin blockchain so Bitcoin may not end up being the mechanism that underlies a bunch of other systems that evolved on blockchain maybe other blockchain companies are going to win there but what ultimately happens is they stamp they periodically stamp the truth back to Bitcoin blockchain that's what makes it immutable and and that they can prove that all their systems have integrity so Bitcoin will always to me will always have this foundational role in the crypto economy even if it's not what emerges as what you know the transfer mekinese it was it is this has this foundational sort of it's pretty as the protocol layer of this new world the fatal a lot of leaps of faith and I'm saying there's nothing wrong with leaps of faith but you've still got leaps of faith in Bitcoin world which I'd say even bigger than a leap of faith and central bank's no no no no leap of faith at all it's all transparent and immutable with central bank's you're wondering what these mandarins are doing looking into their crystal balls this is when somebody comes up with a system other side chains and in fact one has come out of the Bitcoin world called multi chains that we like but there's other things like that evolve like a Oh since actually knows anyway they're these other platforms you're hearing they all have ways where they can stamp back to Bitcoin that that so there is never a leap of faith the whole point is to try to create institutions where there's never a leap of faith you have to make on anybody and there are corporate models that come out that ignore that and the community shuns down if we the fatal for Bitcoin even if you accept the cryptocurrency as the currency of the future is the energy use which Jillian mentioned before so currently in a year Bitcoin users used as much energy as the country of Colombia which is a population of 50 million if Bitcoin became as successful as you guys anticipate the amount of energy use would be vastly more now there are other cryptocurrencies there are other crypto currencies that have been designed to use less energy so even if you believe the cryptocurrencies will be successful it's not gonna be Bitcoin Patrick I want to try to get to one more question if you can be really brief on that yes the Lord has delivered mine enemy into my arms there's a new coin called Ravan coin that is a fork of Bitcoin it's a fork of Bitcoin so it but no it's a thousand times more energy-efficient and it's it's an exact count err example of what you're saying Jillian because with Bitcoin unlike pets.com the system can evolve in this open organic open-source method and it has evolved the solutions okay what one more question no it's an evolution it's a forked Bitcoin the issue occurred Georgetown MBA this question is for both the panelists do you see the coexistence of Bitcoin and fiat currencies or do you see the complete replacements of one of the currencies in other words will $1.00 disappear well the pound disappear and Bitcoin come supreme Tim you want take that yeah it's never really one or the other usually the fiat currencies will try to adapt and they'll try to create a currency that well first they're trying to create currencies that are just tied to their government if they miss the entire purpose but they'll start thinking hey I want to create a global currency - and and those government's will probably survive but I in general it's a better currency it's it's just better it's as the engineers work on it make it so it's easier to transact business to do to buy coffee whatever this currency is going to be it's decentralized it is flexible its cross-border its global it it's sort of everything you guys want as Millennials you want a world that's open Kilian it's open Bitcoin will be like traveler's checks it would be like digital gold it would be something you know of interest part of the financial universe but a sight a sideshow and it's certainly not going to turn it into something that justifies the current bubble prices and that concludes round two of this intelligence squared us debate where our motion is Bitcoin is more than a bubble and here to stay and now we move on to round 3 round 3 will be brief closing statements by each debater in turn they will be two minutes each they will once again be standing to make their closing statements and here making his closing statement in support of the motion Tim Draper venture capitalist and founder of Draper associates in dfj so I have here statements that I think you guys should hear a rocket will never be able to leave the Earth's atmosphere at new york times 1936 when the Paris Exhibition of 1878 closes electric light will close with it no more will be heard of it Oxford professor Erasmus Wilson it'll be gone by June this is Variety magazine talking about rock and roll in 1955 the world potential for copying machines is 5000 at most that's IBM avoiding buying Xerox the wireless music box has no imaginable commercial value who would pay for a message sent to no one in particular that's the Associates of David Sarnoff responding to the latter's call for investment in the radio in 1921 there's no reason for any individual to have a computer in his home Ken Olson president of Digital Equipment Corporation which is now gone television won't last because people will soon get tired of staring at a plywood box every night 20th Century Fox Dave Darryl zanuck in 1946 the horse is here to stay but the automobile is only a novelty of fad didn't I hear that president of Michigan Savings Bank advising Henry Ford's lawyer x-rays will prove to be a hoax that was 1883 I think there is a world market for maybe five computers this telephone has too many shortcomings to be seriously considered as a means of communication and and then this is the real killer the head of the Patent Office in 1899 Charles dual said anything that can be invented has been invented so you know you're taking a tough position you do please vote for Bitcoin you don't want to be one of those guys thank you Tim Draper the motion again bitcoin is more than a bubble and here stay and hear to make his closing statement against the motion Eric Posner law professor at the University of Chicago so I hope you also have Tim changed the terms of the debate he was talking about technologies rather than particular companies or particular instantiation of technology so we're talking here about Bitcoin we're not talking about cryptocurrencies generally or the blockchain will block blockchain technology now how about Bitcoin what should we think of it and it's helpful now to look at some data here the technical term here by the way is not lousy as Jillian said before the technical financial term is crappy I believe ok so the actual Bitcoin transaction how long does it take about 10 minutes when there was high volume back last fall it would take days a credit card takes five seconds how many merchants accept Bitcoin well Patrick accepts Bitcoin according to Morgan Stanley quote Bitcoin acceptance is virtually zero and shrinking as if that were possible top 500 online merchants last year five this year three okay by contrast virtually all merchants accept credit cards and cash and all other forms of currency why don't merchants accept Bitcoin because it fluctuates so much right so if you're selling a valuable asset like a car that's worth $20,000 to you and you get a bunch of bitcoins which lose half their value unless you can get it off your hands as quickly as possible you'll lose a ton of money what are bitcoins good for they're good for illegal transactions as I mentioned before a recent study says the 25% of Bitcoin users are associated with illegal activity how much is a Bitcoin transaction cost it's not free it costs varies across time right now I think it's a ready dower per transaction if you may if you buy something that's very very big bitcoin is cheaper than a credit card but you can still pay with credit cut with a check the cashier's check cash which is free B and then the upshot here is the Bitcoin it's not really not that good what it's good for is illegal activity governments are obviously going to crackdown on it they've begun China India the EU South Korea the United States have all gone after Bitcoin therefore bitcoin is a bubble vote no on the motion thank you Eric Posner and the motion again his fit coin is more than a bubble and is here to stay in here making his closing statement in support of the motion Patrick Byrne CEO of overstock.com the great central banker of our time Paul Volcker said in the 2008 crisis the last financial innovation that actually added any value to society was the ATM machine what he meant was all of these insanely complicated instruments that people go to school and go to Wall Street you know they're they're insanely complicated bets that no one can figure out by them they've added nothing to society they've added no value Bitcoin does Bitcoin does the 19th century was a century of deflation and growth yes there were financial crises I believe the financial crises were brought about because of the legalization of fractional reserve banking and this way of letting our our elites and over stimulate the economy and then crash and get bailed out by the government the 20th century was a period of inflation and crises inflation so dollars worth about two cents of what it was a hundred years ago and we've had crises just as profound as the nineteenth century and one worse the the croucher a33 which was brought about by the central bankers the real thing that the real value that bitcoin brings to society reminded of John Maynard Keynes spoke of the bezel the bezel that in society there's a bezel and that is if you could freeze time and ask everyone what they thought they owned and then you could see what's there there's a difference and the difference is the amount that has been embezzled from society it happens in different ways there are different cheats build in to the system the institution's can't be trusted that periodically bubbles to light with with a Bitcoin based economy and a Bitcoin based financial system where everything ties to that and records are immutable it's going to be I think there's gonna be less illegality and by the way last time I checked the US dollar is used by Gun Runners and dope runners and all that kind of stuff too it doesn't know what he's saying we got a law that the Bitcoin will will reduce the bezel in our society and it's it's here you're gonna find if nothing else that has value because things will anchor to it and it's here to stay and we should be grateful for that thank oh yes Thank You Patrick Murray and our final speaker will be speaking against the motion Gillian Tett best-selling author and US managing editor of the Financial Times when Paul Volcker said that the ATM was an amazing innovation he said it was an amazing innovation because you could go to that hole in the wall and pull out dollars simple fungible you can take them anywhere you can spend them and on the dollar there is a face or a series of faces and a promise by the government and you might say you know what that promise has been severely compromised and undermined by what the government's done well yes maybe but the question is really about relative faith and the question is this at least you can pick up a dollar and you can see a face and you know what stands behind it which is the US government if you take a Bitcoin you're betting on computers you're bending on the idea that somehow in this period of technological change the first mover it's going to always be there unlike every single other period of technological change we've seen think of MySpace think of those Walkman but you're also betting on something else if you ask who created Bitcoin Satoshi Nakamoto well who is he or she or they could you put them onto a dollar bill could you actually even create something as simple and easy as an ATM that Volker loves so much No so the question is this would you rather bet on Volcker would you rather bet on something you can hold would you rather bet on the US government with all its flaws would you rather bet on the competition of governments if you don't like the US government go buy Swiss currency instead or would you rather find this Satoshi I'm better on them to me it's about relative trust and to me it's very clear you should reject this motion Thank You Gillian Tett and that concludes round three of our intelligence squared debate I'd want to just say a couple of things first of all I mentioned at the beginning what a pleasure it is to be here at this conference and also what just what a pleasure it was to work with the people at Adam Smith who made this so easy for us and so inviting and and actually I also feel put us in front of a really strong thoughtful reflective challenging audience so to to Adam Smith thank you so much for having us here and the last thing I would say is that this was a really really fiercely argued debate and I thought that the way in which you all handled each other and conducted it it was really respectful while robust and and that's really what we try to get going in intelligent squared to really want to hear the ideas interact with each other and you did it you brought it to that level so I want to thank all four of you for the way that you did this thanks so much we want to thank quantum for supporting this debate quantum advisor and longtime friend of intelligence squared us Jeffrey Wernick could not actually be here with us tonight but we wanted to recognize him and his partner Zuri Zhang for their support and their guidance along the way I just had a question for our debaters again given you know knowing how fiercely you both fought you both sides fought this I'm just curious and I'm not I'm really not trying to create a come by our moment at all I'm just curious we're just curious about whether you know the experience of hearing your opponent's idea is kind of stated rationally and coherently and respectfully gets through to you in any way in your thinking did you hear anything from the other side that you said yeah you know maybe they have a point maybe I need to think about that Patrick I almost felt that I heard you even sort of sharing that experience in this base what about that well I definitely I'm I'm open to the rate the regular regulatory point of view which is basically I mean when in doubt err on the side of status quo and that's okay because I actually think this is so disruptive I'm afraid I want to do Ford but I'm afraid of the transition so I'm the Conservatives over there who want to move slowly or who doubt this world we can live with a little bit of conservatism somebody on the other side anybody absolutely I mean as you know I'm an academic and the one thing you learn from studying history intellectual histories how frequently people are wrong so one has to approach these topics with humility and it's been quite valuable to hear these ideas from the from the others something I need to say to you Eric Posner is of all the debaters we've ever had you have said the most with the fewest words that had several times throughout the other way around you you you really found ways to pivot in interesting ways and say one or two words and they were paragraphs how about you Tim well I think I'm probably the least least good debater oh you're good but I think the vision is the right vision it's the optimistic vision it's the vision of a future that is better than what we've got and I think that's where and I did yeah it was it was fun I learned a lot about how to debate debate ever it's fun Gillian what about you well I'd agree I think it's probably the smartest not as a reefer speaker but the smartest speaker by far I would say that it's always great to be reminded afresh of the enthusiasm and passion that drives innovation yeah I may not necessarily agree that the innovation it's quite all it's presented as I actually think of anything Bitcoin will have a leapfrog effect which is why I think it's a bubble but actually hearing the passion and innovation so the passion and belief and innovation is always very refreshing in abeyance well thank you I had a great time with all of you and as moderator even even debating him with you about who was the moderator hi so we have the results I'd like to share the results and again I want to remind you there's an online vote that that continues this is the vote of those of you who were in the room here today in New York so the final results go like this and again it's the difference between the first and the second votes that determines our winner the motion bitcoin is more than a bubble and here to stay before the debate in polling the live audience 39% agreed with the motion 38% were against and 23% were undecided those are the first results again the difference the team arguing for the motion let's look at their first vote was 39% their second vote was 25% they lost 14 percentage points the team against the motion their first vote was 38% their second vote was 68% they pulled up there percentage points that means the team arguing against the motion but coin is more than a bubble and here to stay declared our winner by our audience here today but remember the debate is not over yet our audience is tuning in online on public radio and on our podcast still have time to vote you can see those results going online at IQ to us org from me John Donvan and intelligence squared us thank you to the Adam Smith society thank you to all of you and we'll see you next time [Music]

Channel: IntelligenceSquared Debates

Views: 179,573

Keywords: Intelligence Squared, IQ2, IQ2US, Intelligence Squared U.S., debate, live debate, I2, nyc, politics, conservative, liberal, bitcoin, cryto, cryptocurrency, ethereum, ether, blockchain, economics, Adam Smith Society, free markets, finance, investing, wall street, Goldman Sachs, JPMorgan, Patrick Byrne, Overstock, Tim Draper, Eric Posner, Gillian Tett, Financial Times

Id: ZceJMFXm57s

Length: 99min 2sec (5942 seconds)

Published: Mon Apr 23 2018

Reddit Comments

[u/TraditionalDeer]

just what I expected.

[u/sonicode]

Fun to watch. Thanks for sharing

[u/RevolutionaryCoach6]

It's coming