Cryptocurrency is the future of money, banking and finance

Ladies and gentlemen, we live in interesting financial times. In 2008 it became clear that our financial system isnt as robust as many people thought. In response to this credit crisis , president Obama launched a 700 billion stimulus programme. A global 2 financial meltdown was narrowly averted. Turns out this stimulus programme wasnt nearly enough. By december of 2011, the US Federal Reserve alone bailed out or insured banks to the tune of 30 trillion dollars. Thats about a quarter million dollars for 3 every US household. And the same is happening in Europe, here in the UK, in Japan, and in many other countries. And its not just the banks that cause trouble, it seems. In october of 2011, brokerage firm MF Global went bankrupt after a bet on Greek debt turned sour. Many clients today still fear never seeing back their assets, because they had been used as collateral for the greek gamble and for many other gambles like it. Actually, there is serious evidence that the practice of using customers financial assets as collateral to trade in the marketsin other words: the practice of misappropriating client assets is widespread 4 among large brokers. And what to think of the recent LIBOR scandal? This scandal made headlines during the summer of 2012, when it became public knowledge that the benchmark interest rates for more than $400 trillion worth of financial contractsincluding your mortgage agreementhave been manipulated consistently for at least two decades. Not that interest rates, the rates that govern borrowing and spending around the world, are natural anyway. For the past 100 years, interest rates have been set (manipulated, if you will) by central banks, making money cheaper than ever before and creating by now a very cruel no-win situation for savers globally, who are struggling to find something, anything, that will help them find protection against the rising inflation. In their efforts to prevent the financial system from going under, western governments have pushed up debt levels well over 100% debt to GDP, which, by any historical standard, is completely unsustainable. And so a different course is now being chosen: instead of bail outs, the new trend in mone tary policy is 5 that of the bail-in. Basically bail in is the Cyprus solution: instead of taking money from the tax payer, the government takes the money from the saver, to allow for a orderly resolution of the bank.
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See http://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers. See http://www.pwc.com/en_JG/jg/events/Lessons-learned-for-the-survivors.pdf. See http://www.census.gov/prod/cen2010/briefs/c2010br-14.pdf and http://www.levyinstitute.org/pubs/wp_698.pdf.

For more, I recommend reading the 2008 CITI bank report: are the brokers broken?. 5 For some more details on that, see the presentation I gave at the Bitcoin conference in San Jose.

So in summary: we are seeing structural insolvency in both banks and governments, a monumental debt bubble, shaky brokerage firms, manipulated interest rates, rampant money printing around the world, and a solution to the problem that isnt a solution at all. Nowhere to hide is truly becoming the expression of our day and age. How all of this is going to play out? I dont know exactly, and I frankly dont care all that much, because I own bitcoins. You see, Bitcoin is not just another fragile virtual currency, it is a global and decentralized hard money ledger which has all the qualities of becoming the foundation of a new financial paradigm. And that is incredibly exciting to me: whatever financial service out there that we think should be improved, today with Bitcoin, it can be! The basis is there, because Bitcoin as a currency possesses all the features that make for an ideal money: It is scarce (there will never be more than 21 million) It is secure: it cant be counterfeited or multiplied at will, and it allows for as much privacy as the user desires. It is extremely transportable: you send it virtually instantaneous, essentially for free, to anywhere in the world. Flexible: every single bitcoin can be subdivided into millions of smaller parts, and all bitcoins are interchangeable Extremely durable: the bitcoins in your wallet will disappear only after every single copy of the blockchain on the planet has been erasedand remember, the QT client alone has been downloaded already over 3 million times And finally, unlike that of fiat currencies, the supply of Bitcoin is steady and predictable. All these features make Bitcoin a downright exceptional currency, which is why we will see adaptation continue to increase in a parabolic fashion. But thats just the beginning. The properties of Bitcoin allow it to become the first layer, the ground floor if you will, of a new financial system all together. Heres why: First of all, the protocol is open source, allowing millions of brilliant programmers to build layers on top of it to make it more useful - just like what happened with internets TCP/IP protocol. Second, because it is a peer to peer network, Bitcoin truly is accessible from anywhere in the world: it doesnt care about arbitrary boundaries, capital contr ols, censorship or embargoes: anyone in the world that can reach the internetdirectly or indirectly, can pay and be paid with Bitcoin. This allows for the development of truly global financial solutions. Thirdly, the Bitcoin network is software based, so in theory any mobile device can become a device for Bitcoin banking.

Number four, Bitcoin is a pseudonymous network, which means that each participant can basically choose his or her own identity. We are seeing pseudonymous Bitcoin companies pop up already, daring initiatives that assist the network in clearing transactions, in exchanging property and information, and of course in trading goods back and forth around the world. Why is pseudonimity so important? Well, that is because it removes the fear to innovate in a context of overregulation, and that allows the Bitcoin network to become more sophisticated and accessible at a very rapid pacethis then, clears the way for more conventional, official businesses that make Bi tcoin really appealing and acceptible to the mainstream. All these characteristics together are telling us: Bitcoin and the cryptocurrencies are here to stay, and they are the way to the future of finance. And Im not the only one saying this, let alone the first one. In fact, the very title of this speech is a slight alteration from a 1995 quote by the late Orlin Grabbe: Cryptology represents the future of privacy [and] by implication [it] also represe nts the future of money, and the future of banking and finance. In light of the recent NSA spying scandal, these words have of course only become more visionary. In case you havent done so already, I invite you to read up a little about what is happening in the Bitcoin economy on a daily basis: this technology is attracting serious amounts of talent, knowledge, and capital from around the world. Of course, it should. Because Bitcoin, as a first rate pseudonymous, open source, and globally accessible money has everything it takes to compete in: - The $500 billion dollar remittance market - The $1000 billion dollar e-commerce market - The $7 trillion dollar gold market - The $16 trillion dollar offshore deposit market Thats not all though. Bitcoin even has the qualities to develop entirely new markets, such as - bringing international banking to the 1 billion smart phone users and the 5 billion users of ordinary cell phonesmost of the latter dont even have a bank account, let alone have access to global markets. Bitcoin can change that. - Furthermore, Bitcoin can get the promising market of microloans and micropayments off the ground, a market which is currently undeveloped because of the systemic financial bureaucracy that makes everything slow and expensive.
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http://news.cnet.com/8301-1035_3-57534132-94/worldwide-smartphone-user-base-hits-1-billion/

- And finally, because they can be used as a platform for the very cheap, efficient and secure transfer of property titles, Bitcoin and the cryptocurrencies even have the potential to revolutionize the accessibility and efficiency of stock markets, bond markets, derivatives markets, even real estate markets on a global level. The famous futurist and inventor Buckminster Fuller is quoted as saying: In order to change an existing paradigm you do not struggle to try and change the problematic model. You create a new model and make the old one obsolete. The entrepreneurs behind Bitcoin and the cryptocurrencies are building exactly that, a new paradigm for finance. And Im thrilled to be able to sit on the tip of the spear, which is where we are today with this conference. Thank you very much. Tuur Demeester