The future will be decentralized | Charles Hoskinson | TEDxBermuda

Hello, I'm Charles Hoskinson and today I would like to talk a little about the

future

, that is, the

future

that gives us something that could decentralize it. I'm a mathematician, and as a mathematician, we like to do things like Venn. diagram everything you know, we like to build our models, so let's divide the world into two cubes, let's look at the banked world and the documented world, and let's look at the unbanked and undocumented world, so the green cube has about 4 thousand millions of people living in some places. like the United States, the European Union and then we look at places like China, we look at places like India and Brazil and we start moving towards the unbanked and undocumented world, places like Sudan, places like Afghanistan, well what's the point?

Well, the point is if you were looking at every significant metric, from infant mortality to literacy rates, quality of life tends to improve with more financial services and the more access to documentation you tend to have, so let's get this straight. a little bit with one example, let's look at two. people, let's meet Jeremy he likes cereal he's about 30 years old and was born in the United States he has access to a passport driver's license birth certificate he has credentials he went to a not very good university but he still has a university he has a good work history he is an owner of a house you have a car you are probably someone that everyone knows now let's look at your financial history well you have a bank account you borrowed money before and you had to pay for that house and that car you have several insurance policies so that if he hits you with his car, if his house burns down, if he gets sick, he has the means to cover it through powers of attorney and he is a very good son, he sends money to his mother in Indiana every month, so we like Jeremy . and currently he has several contracts, you can have them as you want and he buys a lot of things on Amazon and eBay, okay, now let's meet Hamid Khan, he is a slightly different person, he is in the other circle, so Khan was born in Afghanistan. between 45 to 44 years old we are not entirely sure he does not have any formal documentation Khan has learned several trades but it is very difficult to understand his work history and he also lives on untitled land which means that where his house is where he lives he does not have documentation that really owns, let's say you've lived there for two decades, you still don't use a bicycle for transportation and you have a very difficult criminal record to verify, what does it mean for the Taliban, for example, to say you?

You're a criminal, so let's take a look at your financial life. Live in a cash economy. Everything is effective. All your money is taken with you. Your credit comes from friends and family. Obviously all your assets are not insured. Receives money from his brother. India and that cost 15 cents on the cost of remittances in dollars. All of his agreements are verbal and he has absolutely no access to the Internet. This is the reality for around three billion people around the world. It's a very harsh reality, so what are the differences we should focus on? First, what should we learn from this example?

Jeremy, he sends his money at a very low cost, it only takes a few days, maybe it's a few percentage points, on the other hand, it's 15, so let's look at the numbers for everyone in the global remittance business. around $540 billion, 192 million people living outside their home countries send money home and that total amount is around $400 billion and the cost of moving that money is between 8.6 percent cent and 12 on average. It's a World Bank estimate but it can be much higher depending on where you live try sending money to Syria for example let's look at Jeremy you have access to low cost credit when you get a loan you can get a long term loan five years 10 years 15 years depending on the asset and interest the rates are quite decent, say now five percent to ten percent, even if Hamid Khan had access Cross-cultural inclination to borrow money if you look at global microfinance rates, they are around 35 percent to 40 percent interest according to a c-gap estimate and Ezra Bashan is at the top Afghanistan is at the top and even 35 for South American nations is just terrible if you look at Jeremy he has the ability to objectively link contracts, assets and properties such as land when you own a house, you own it. his deed has his car if he goes to prison for five years he still has assets they are there waiting for him when he comes back the other way Ahmed is completely off the grid so let's imagine something, think about the outbreak of a war and the land you live in you have You have to flee and you return five years later and there is someone living on that land who owns it, it is yours, it is theirs how that dispute is resolved, that is a reality that three billion people must live with.

If we look at the economic cost of this, Hernando de Soto Pilar is a Peruvian economist, good friend of Bill Clinton, in fact he sat down and calculated that there is around 10 trillion dollars in wealth that has just been locked up due to this lack of documentation. all the wealth that we can unlock we could exploit we could do things with people could grow economically but unfortunately they can't and ultimately this is incredibly important, especially for Bermuda. Jeremy can manage his risk through insurance, while Amakan has very limited tools at his disposal.

will

ingness to protect yourself from disaster as a risk if you get sick if you die there is simply no one to cover you so these are the problems that you live these are the problems that billions of people around the world have to deal with on a daily basis like this that it's very natural to ask how do we solve this, what do we do, let's come up with something good, I think this technology, this Bitcoin thing that everyone seems to be talking about, actually has some solutions in it and I have my nice little cryptocurrencies in there . let's go to cryptocurrency, yeah, okay, so I call it the transformative triumvirate, a big fan of Roman history, and there's really three things here, blockchains, centralized transaction systems, and smart contracts, how about what do I mean, let's go over them, let's talk about blockchains first, so basically, what? a blockchain is just a big database, if you're going to store something like who owns what you need for that database to be secure, you need it to be tamper resistant, you needed to be distributed and it turns out that Bitcoin actually has probably The best distributed database in the world, has solved a very difficult computing problem just to exist and here is the key, once you put something on a blockchain like Bitcoins, it is there forever, it can't leave, we have all transactions since Bitcoin was invented, it's there. since January 3, 2009.

That means it's the perfect place to put identities, it's the perfect place to put property rights agreements, this kind of thing, and it's totally censorship-resistant, even if it's inconvenient data for a government and data convenient for an individual. Don't take it out once it's there, so let's look at some examples of what's already been done. Namecoin is a project that wants to replace the entire Internet DNS system. Do you ever wonder why when you go to microsoft.com or google.com? how does all of that work out who owns it what is icann's DNS system is it a centralized solution they are based in the US a lot of international involvement namecoin says let's completely eliminate everyone it is a fully

decentralized

network where we actually have a new blocking sign The DNS system actually allows you to take contracts like confidentiality agreements, anything you can think of, and actually verify and sign them using the Bitcoin blockchain at an incredibly low cost, less than a cent.

Now let's look at the trading system that is near and dear to me. heart, I started two companies in the Bitcoin space, both were distributed funded, the second was ethereum, so this brilliant kid named vitalik buterin last year came up with this idea, wrote this white paper, he's 19 years old and I. I read it and I was like, damn, I have to help you guys start this because it's brilliant and we decided to have a fundraiser so we posted a little address and said send a transaction and over the course of 42 days, 9011 transactions we raised 18. million of dollars and the cost to raise that money was only 350 in transaction fees, a price of 0.002 percent.

This is the magic of a college dropout living in Canada being able to write a whitepaper, assemble a team on four continents, and in a matter of months, raise over $18 million in funding to get the resources he needed. to do something and this is accessible to everyone, no one controls it. Now let's look at smart contracts, this is where the magic really happens. So, a contract is basically an agreement that has a legal object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between them. That's why I'm not a lawyer.

I don't like reading those things. a smart contract says that's cool and all, but you still have to have third parties involved in the verification process, the facilitation process, the compliance process, what if we could do this algorithmically? What if we could take a contract and write it in some kind of specialized programming language? Play around with this and this can actually be done over a

decentralized

network and we could have the same immutability and censorship resistance and certainty that we have with our transaction system. Well, it's not a new idea that David Chom and Nick Sabo first thought of.

In the 1980s and 1990s, that brilliant guy, Vitalik Buterin, and another brilliant guy who works for us, the competitor Ripple, came up with a way to do this using Bitcoin, Ethereum and the CODIS projects, so what is it? What does this really accomplish? of any centralized service that is online like eBay, you can think of Dropbox, you can think of exchanges and you can basically create a decentralized equivalent, you can also think of services like hosting, so you have Amazon ec2, you have Rackspace, you pay some money and you can use it. their servers, which is like folding at home, where they fold proteins instead of doing that, we can actually tokenize hosting web services and people can just leave their laptops on their desktops on and make a little money and the aggregated network becomes the largest web server in the world combined with the centralized DNS system, you actually have a completely new Internet and all this is actually possible thanks to smart contracts, so let's put all this together, let's explain again why we care, we care about Hamid Khan, so what are they? your problems again you need reputation you need credit you need to be able to manage your risk you need low remittance costs and you would love to be able to prove that you own the land you live on, especially if you have to flee it well blockchains allowed you to build a digital history resistant to censorship and always accessible.

Everything he does, if done through a blockchain-based solution, is there forever and is completely disintermediated from the government of him, so it doesn't matter who is in charge of what is happening at the political moment. in particular. whims, it's there and I can see it and I can start building things like credit metrics and risk metrics in that good second, just like me, his brother can now send things for much less than a cent if you think about that remittance market of 540 billion dollars with 12 going to brokers is less than a cent, less than one percent, that is a beautiful thing and finally, because we have these smart contracts, we can start talking about building decentralized microfinance networks and microinsurance.

What does that mean? Think Kiva. Lending Club think about Grameen bank and imagine if they had some kind of son of Frankenstein, but that son of Frankenstein is completely peer-to-peer, anyone can access it, they can use it at low cost and now anyone can go ahead and make click on someone sends them a hundred dollars and they actually get paid through that network and they have a payback of 90 or 95, which are the beautiful emerging properties of having reputation combined with a monetary transaction system combined with programmable finance, that's what Therefore, you get the same treatment for microinsurance.

You can take a lot of innovations that have been done recently for poor nations and have fifty or hundred dollar insurance policies and make them profitable and once you have a set of these things you can securitize them, so it's a very promising option. . emerging field, so there's one last problem and this is kind of the kicker: only 40% of the world's population is online, which seems a little low, but when you think about the Internet age, it's actually quite surprising that something has grown so quickly. How can we bring Internet to AhmedKhan? In the same way we can build a decentralized lending network.

In the same way we can build a decentralized insurance network. We can also build a decentralized ISP so you can use technologies like CJ. DNS combined with old hardware like Wi-Fi routers and cell phones and just a little bit of hacking and manipulation and people can become micro isps just like they can mine Bitcoin, they can now provide internet services to their local community and there are several others solutions. to obtain it without necessarily having to use the Internet, for example, bit PESA, based in Kenya, is trying to find a way to distribute Bitcoin solutions via cell phone, which makes sense because they have a digital currency there called m-pesa and finally bit nation. is probably the most ambitious: they are actually building a Global Network of ambassadors who

will

provide a full set of services, so it is a very rich field, there is a lot of work to do, but one thing I do know is that the future will be decentralized as Ted, thank you.