Internet Of Value
Speakers: Jeremy Allaire
Transcript By: Bryan Bishop
What are the lessons from the development of the internet that we can learn from? Why is there an inevitability as to what Bitcoin is doing?
At a high level, I like to explain that we are experiencing a fundamental transformation in how the world economy stores and verifies value. Bitcoin and these other projects that are being built are part of that arc. We have talked not just about payments. It’s about how ownership and fidicuiary trust in general can be managed. And development of standards of how entities interact in this digitzed world of fidicuiary trust.
The impact of this technology disruption and derivative work and work on Bitcoin itself will have a huge impact not just on finance. We focus a lot on finance. But also a huge impact on accounting, commercial law, civil law, property rights, insurance, and any intermediary industry built on the basis of disconnected ledgers. And human processes for verifying analog information. All of these fidicuiary trust institutions will be impacted.
The first use case that people have been focusing on is payments. I think there are others. I think we are in a similar place. This is an analogy that lots and lots of people use. We are in kind of that birth of the digital web phase of digital currency. We are seeing a similar scale of venture capital and enthusiasm from early adopters. Nobody knows what the big transformation will be.
What people may not remember is that in 1994 there were like 4,000 websites. It was completely insecure. The standards were immature. Using HTTP and HTML were really a joke. You could do almost nothing with them. There was a deep amount of skepticism from entrenched government, private and commercial interests. We will come back to that both historically but also the skepticism we see today around Bitcoin.
Bitcoin today is not useful for an average person. It is confusing. It is complicated. It is enormously challenging to use today. The web in 1994 you could do little with. We saw that we could do more if we improve the architecture.
What happened over the next 20 years we kind of know, we had the wholesle transformation in commerce and media built on open protocols. That work that it took, the technical work and the associated capital investments in software and improving protocols and capital expenses took many years to unfold. The $500 million in venture capital for Bitcoin should become billions of dollars of associated infrastructure. That might take 5 years until we start to see a single digit impact on the financial system. Online commerce is only 5% of retail sales today. TV is 96% of viewing hours even though it feels like youtube has had a huge impact.
What is it about the technologies and protocols that enabled these transformations? How can we learn from that with what is happening with Bitcoin?
I think the internet itself has encoded into its architecture a set of ideals. These ideals are what makes so many of things that we take for granted, work. The internet id distributed and decentralized originally conceived by the Defense Department, so that there was no single point of failure. That distributed architecture allows for scaling. Anyone can join. The internet has no.. there is no company that can say no. If you have a piece of software that speaks IP, you can get on the internet. You don’t have to ask permission. That is deeply democritizing.
This is always surprising to people when I say this. Nobody runs hte internet. Young people find that hard to believe. Older people don’t understand that the internet is not governed by a company or any corporation or any specific government. It’s a consensus-based environment that evolves with technical standards and protocols.
There are nuances to this. Simplistically speaking, it is not governed by anyone. A payment system not governed by anyone is also hard for people to understand. Modern society runs on infrastructure that nobody controls (the internet). So they are able to get their heads around this.
Fundamentally this architecture happens because there are public specifications, informal and formal standards bodies, there are open source projects where there is this enormous public good that everyone can take advantage of. These are really core ideas, if we didn’t have open source we would not have the internet that we know of today.
All of these ideals play themselves out. There are companies behind some of the efforts. It’s not koombiyah free culture driving everything. There are companies at the foundation of what gives Bitcoin to be the opportunity to be the HTTP of value transfer.