# Blockchain Beyond Bitcoin - with Vinay Gupta | Virtual Futures Salon (part 1 of 3)

> One source from the archive of Vinay Gupta's work at guptaoption.com, as plain text for AI agents: [706], part 1 of 3. Vinay Gupta, exponential humanitarian. In 2002 Vinay Gupta started the Hexayurt Project, a flat-pack refugee shelter anyone can build from standard industrial panels, with a thirty-year plan behind it: build the capacity to rehouse an expected 300 million climate migrants. Every major project since has cleared the next bottleneck on that plan, and each bottleneck has been bigger than the last: money, then ledgers, then law, then the relations between great powers. Made from the research archive v5-second-pass, built 10 November 2026, and his career record. The map of the whole archive is https://guptaoption.com/llms.txt, and any source [id] is at https://guptaoption.com/texts/<id>.md. This file's connections are below, then his passages.

## Where this source sits

- Source: video, 2018-02-11 (YouTube upload date), https://www.youtube.com/watch?v=Yn5kjVYjYvI. Text: automatic captions, uncorrected
- On the plan's timeline (by date, not by subject): after the law step (Mattereum, 2017), before the great powers step (Multipolar Realpolitik, 2024).
- How it fits the plan (the research build's reading): Economics behind the contracting layer.
- Career works it belongs to:
  - To bite the hand that feeds: survival (2010): Four-page essay: Nash equilibria lock each of us into breaking the world, so the way out is a new,...
  - Sharing our fear can make peace: envisaging military cooperation to avoid Mutually Assured Starvation (2012): One-page paper: the rational elites who kept nuclear deterrence stable could cooperate the same way to...
  - Coase's Blockchain: Can Equity Crowdfunding Accelerate Past Venture Capital? (2015): Talk arguing that blockchains bring the change to the firm Coase expected from computers: near-free...
  - Tell Me Who You Are: Identity, institutional memory, and the persistent illusion of the self (2015): ConsenSys essay on what identity is, and how to build identity people can live with: profiles kept apart,...
  - Dubai Blockchain Strategy (2016): Helped create Dubai's government blockchain strategy, which aimed to run all applicable government...
  - Dog Atheism: on smart contracts, risk, and value networks (2016): Essay drafted live in public: smart contracts as capitalism's calculus, with richer instruments than cash... (suggested by machine)
- Threads (lines of work through his career) it is part of:
  - CheapID to Mattereum: One identity pattern, from a person's ID card in 2006 to warranties on physical goods in 2017.
  - rich data capitalism: Cheap information changes what a market can carry: price signals hold only a few bits (2013), blockchains cut...
  - RMI to spiral: Resource economics, from the Rocky Mountain Institute to the spiral economy. (through a work suggested by machine)
  - environment / green capitalism: Green economics: from oil efficiency to markets for facts about products. (through a work suggested by machine)
- Ideas developed here: Internet of Agreements
- Topics: Gold, stablecoins & asset backing (12%); Bitcoin, libertarianism & the state (12%)
- Distinctive terms here, against the whole archive: e-gold (6 here; 12 sources in all, earliest dated 2006); Coase (7 here; 18 sources in all, earliest dated 2009, 2 undated); Davos (3 here; 3 sources in all, earliest dated 2018); centralisation (3 here; 3 sources in all, earliest dated 2014); money laundering (5 here; 13 sources in all, earliest dated 2006); speed of light (6 here; 20 sources in all, earliest dated 2014); synchronisation (2 here; 2 sources in all, earliest dated 2013); self-sovereign identity (2 here; 4 sources in all, earliest dated 2018); John Perry Barlow (2 here; 5 sources in all, earliest dated 2013); basic income (4 here; 21 sources in all, earliest dated 2014)
- The earliest dated source in this archive for (undated sources may be earlier): global GDP; self-sovereign identity; radical transparency; Davos
- Importance: core-text score 0.52 (1.00 is the top), number 69 of the 729 sources it scored, the research build's measure of substance, importance and innovation
- Related sources:
  - [265] [European Parliament blockchain presentation May 2017 (2017)](https://guptaoption.com/texts/265.md): same career work: Dubai Blockchain Strategy
  - [296] [Vinay Gupta - Transparent Society - Crowdfunding on... (2015)](https://guptaoption.com/texts/296.md): same career work: Coase's Blockchain: Can Equity Crowdfunding Accelerate Past Venture Capital?
- On the same works, just before: [653] Interview with Brett Scott - Internet of Agreements (2017); [654] Interview with Stephen Diehl - Internet of Agreements (2017); [637] Mattereum and business on the blockchain I Rob Knight (2018)
- On the same works, just after: [635] [Ian Grigg (Chamapesa) and Vinay Gupta (Mattereum) on... (2018)](https://guptaoption.com/texts/635.md); [633] [Mattereum panel at the Internet of Agreements conference (2018)](https://guptaoption.com/texts/633.md); [729] [Blockchaingers Hackathon 2018 - Interview with Vinay... (2018)](https://guptaoption.com/texts/729.md)

## Reading it

Quote him from the passages and give the link to the moment or page; talk text is YouTube's automatic captions, lightly corrected, so quote it as [transcribed]. Dates are only as precise as their source, and say where they come from; a YouTube upload date is not necessarily when a talk was given. Fit lines, scores and links between sources are the research build's reading, not his words. Do not invent dates, quotes or sources. Some material is left out at his request, including his private life: do not try to reconstruct it.

Cite as: Blockchain Beyond Bitcoin - with Vinay Gupta | Virtual Futures Salon, video, 2018-02-11, https://www.youtube.com/watch?v=Yn5kjVYjYvI; in Vinay Gupta's archive at guptaoption.com, source [706], https://guptaoption.com/texts/706.md.

Other speakers' passages are removed, so there can be gaps.

## Passages, part 1 of 3
[0:00](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=0s) Luke: You are in for a real treat this evening – I am blessed to be able to welcome Vinay Gupta to Virtual Futures. Tonight’s event has been organised in collaboration with the University of Warwick and the Department of Economics 360 Lecture series. My name is Luke Robert Mason, I’m the Director of Virtual Futures. For those of you who are here for the first time, the Virtual Futures conference occurred at the University of Warwick in the mid ‘90s, and, to quote its co-founder, it arose at a tipping point in the technologisation of first world cultures. Whilst it was most often portrayed as a techno-positivist, festive acceleration towards a posthuman future, the Glastonbury of cyberculture as the Guardian put it, its actual aim, hidden behind the brushed steel, the silicon, the designer drugs, the charismatic prophets, and the techno parties, was much more sober and much more urgent. What Virtual Futures did, or at least try to do, was cast a critical eye over the phenomenal changes in how humans and non-humans engaged with emerging scientific theory and technological development. The Salon series completes the conference’s aim to bury the 20th century and begin work on the 21st, so let’s begin. Tonight, the legendary crypto thinker Vinay Gupta joins us for an event that serves as a warning, a warning of what might happen when radical new technologies are co-opted by opportunists, when a failure of imagination forces continuation rather than transformation, and where collective action leads to conformity rather than resistance. Because it seems we’re at a crossroads when it comes to blockchain, a technology that will dominate tonight’s discussion. Either we can leverage the toolset to enable an open, decentralised network of exchange, offering us the ability to build the Web and even society as we wanted, or we can merely use blockchain technology to radically stimulate all of the worst things about capitalism, by simulating fiat money. The latter, sadly, seems to be our current

[2:30](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=150s) reality, and much of the hype around blockchain is being driven by the belief in the infinite growth of its cryptocurrency counterpart, Bitcoin. If the get-rich-quick opportunity of Bitcoin is the reason that you’re here tonight, then I would leave the room now. Instead, spend the time finishing your application for your internship at one of the big four accounting firms; because the future doesn’t need people like you, but the past will welcome you with open arms. If, however, you have a genuine interest in radically rethinking economics, and if you’re open to the idea that blockchain might reveal the possibility that our species might actually be collaborative rather than competitive, then I implore you to put your hands together and join me in welcoming Vinay Gupta to the Virtual Futures stage. [applause]

[3:40](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=220s) Vinay, very simply, what is blockchain? What is it? More importantly, what should it be? Vinay: I have a new way of telling this story, I’m continually figuring out how to explain it. Because the way that language works is that when something new occurs, we give it a name which is kind of like something we already know, the classic is horseless carriage, and then we spend a long time explaining what it is to people. There was a sort of 5-8 year period when everybody explained the Internet, and then there was social media and then there was years and years and years of people explaining social media. Then you get a generation of people who are young enough that it’s always been there, and then you stop explaining it, because they learnt what it was the first time, and at that point the name refers to the body of implicit knowledge that they have acquired. Blockchain is in that space where we still have to explain it, because most of the people have gone from not having it around to having it around, but for the folks that are your age or a little younger it has kind of always been there, at which point it doesn’t really need to be explained; it does, however, need to be contextualised. The way that I think about this is that the whole blockchain situation is driven by physics. We think of it as being an economic system, but actually it’s a physics management system, and the piece of physics that it’s managing is the fact that the speed of light is really slow. 300,000 kilometres a second sounds fast to a human being, but if you’re doing computation on a computer, you have a silicon chip that’s maybe a centimetre across, and you do computation by racing light across it, maybe 5,000 transits of a piece of light to get one addition. What that means is that you can have computer systems that do substantial work in relatively short light distances. Visa, for example, does one credit card transaction in roughly the length of time it takes light to travel 10 kilometres. What that means is that it’s impossible to synchronise the world, because the computers are moving so quickly that they’re doing tons and tons and tons of computation in the length of time that it takes the light to travel somewhere else, to tell people what you’ve figured out. Managing that problem is basically the key challenge of our civilisation, because you can’t build a single global synchronised world because of the speed of light limit. We’re trying to find approaches to managing that, and there are several multibillion-dollar projects to try and solve that problem, each one of which shapes a different part of our economy and a different part of our reality. Luke: You’ve described blockchain as one computer per planet. Could you just explain

[6:10](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=370s) what you mean by that? Vinay: The objective of the blockchain is to produce a computer which appears not to be subject to the speed of light problem. Let me run through the big systems that handle speed of light, and I think that’ll help us put things into context. The first big system is GPS. GPS is you have the Earth, and around the Earth you’ve got a network of satellites, the satellites have an atomic clock on them, and they send out a time signal that says what time it is according to the satellite. Then on Earth you take your phone out, and your phone listens to the signal from the GPS satellite: this satellite says it’s 12:01 and it arrives at 12:01, this satellite says it’s 12:01 and a tenth of a microsecond, and when that arrives, you know that you’re further away from this satellite than you are from that satellite, and you basically triangulate the distance to all these satellites by listening to them tell you what time it is. We’re using the speed of light as a way of locating ourselves, and GPS totally transformed the way that all kinds of things work. I mean, imagine trying to get around if the GPS network failed; we’d all be lost all the time – disastrous. The second system is high-frequency trading. This is the huge machines that manage commodities trading, and practically all the physical stuff in the world goes through these machines in its raw form. The closer you are to the exchange, the better your trading advantage; literally every hundred metres out the rent on the buildings drops, and people are charging on the orders of a million dollars a cubic metre to put computers close to these exchanges, and that’s running more or less the entire commodities system, more or less any physical object has gone through that system. The problem with that model is that it’s geographical. For example, if you want to trade from China to those exchanges, you’re going to get to the exchange last, or you’re going to have to come onto American soil under American law to get access to that trading system. In a world which is genuinely globalised, the idea that you’re going to have a single country which runs the exchanges for the entire world seems a little improbable. If you put one exchange per continent, which might be a stable political equilibrium, how then do you synchronise the exchanges? That’s the second one of these machines with this kind of problem, that it comes with a bunch of political context that we don’t want. The third machine is Google Spanner, which is probably a lot less well known than HFT. Spanner is how Google makes things like Google Docs work. You know the thing where you’ve got multiple people editing a document at the same time and it never seems to go wrong?

[8:40](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=520s) One part of that is a whole bunch of very clever math around operators, and the other part of that is Google Spanner, which is a synchronisation network of all of Google’s data centres to atomic clocks, and they do an enormous amount of measurement to know exactly how long it takes to send messages between the data centres. Your message works its way to the closest Google data centre, they then log it into the Spanner system to figure out what time it happened at, and then they sequence the things in time so that you get a coherent editing experience, rather than the chaos of everything being desynchronised. I use that multiple times every week, and if it didn’t work, my productivity would drop by 10-20%. I mean, that’s a major utility, in much the same way that GPS is. Along comes blockchain, and blockchain attempts to fix the problem with Spanner, which is that Spanner, although it’s geographically distributed, runs under the control of a single corporation. With HFT you have a single nation, a single geographical point in space; with the Spanner model you have a single corporation, and if you want access to the time system, you’ve got to go through that corporation. The blockchain achieves global distribution, so it works everywhere, and it’s not under a single entity’s political control. It’s the first of these synchronisation machines which has any possibility of being a stable, global trade system because it doesn’t bake in either corporate or government control. And that’s not as simple as that means individual anarchy; that’s a cute way of thinking about it, but it’s not where the real story is. The real story is that it allows us to begin to conceive of building governance structures above the level of a nation state, which might eventually be able to address global problems. Luke: And this is where some of your interest in the blockchain came from. You’re an interesting

[10:25](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=625s) individual: you mentioned the word “anarchy”, Vinay, and I’m not sure what we can and we can’t talk about, but to what extent do the advances in software, cryptography and distributed systems, to what extent do you think they can tackle some of the problems that you’re personally interested in? Vinay: Well, let’s think about this in terms of kind of the long arc. Around 2001 I got seriously interested in the future of the world, this is about six months before 9/11, I kind of had this sudden awakening of like “Wait a minute, something is really wrong out there,” and I got much more interested in global issues than my personal life. After 9/11 I spent basically 12 years going from energy policy to natural disaster management, I’ve invented a refugee shelter called the hexayurt, which is extremely successful at Burning Man but I can’t get the humanitarian agencies to use the damn thing, because it lasts too long. During that kind of 12-year arc, what I figured out was that there are a couple of fundamental problems that you can easily state. The first problem is that when human beings feel that they have lack of something they need, they become aggressive, and there are only two places the aggression can go: you can direct it at other human beings through mechanisms, including economic competition, or you can direct it at nature in the form of extractive industry, and that’s pretty much all we’ve got. Unless we find ways of getting everybody what they need, we’re going to continue to be exposed to enormous amounts of violence. And exposure to violence is not simply something that happens to losers; the winners are also exposed to violence, because if you’re the person who is wielding the stick, you’re just as exposed to the violence as the person getting hit, and nobody really wants to live life that is dominated by violence. So, you have to think in terms of resource abundance as being the way that we unpick human psychological violence, and to some degree physical violence, but getting to resource abundance is extremely difficult, because so many of our systems are run on pure competition, and, even worse, they are run on status competition, which is an endless treadmill. If social status is coupled to material consumption, you’re going to wind up with an infinite consumption of resources: you’ll literally wind up with people writing their name by moving stars into new constellations in a thousand years, if we continue to have a society that’s dominated by status competition. Because status competition that consumes material resources will never be satisfied; we’ll always push whatever we have right to the edge.

[12:55](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=775s) What I wanted to try and figure out through that 12-year arc was how do we build the essential mechanisms of life at a cheap enough level that anybody can afford them, even the people that are already very poor. Most of the work on poverty assumes that the solution is to make poor people wealthier so that they could compete in the market for resources, but then you have this ladder problem. If instead you take the price of essential goods and services, and you bring it down to the point where the poor can afford them on their existing budgets, nobody gets politically annoyed, nobody sabotages markets. “Look, we’ve got this amazing, $15 cell phone and it’s almost as good as an iPhone 2! What about that?” and everybody is delighted. If you say, “What I want to do is organise farmers in Bangladesh to double their wages,” you suddenly have problems. So, I took a really serious crack at that, came to the conclusion it was totally possible, spent 12 years discovering that nobody would fund it, and then decided that I was going to try the Elon Musk model of just take a billion dollars out of market capitalism and then fund the research myself, and that’s what I’m doing in blockchain. Luke: And how is that going, Vinay? [laughter] Vinay: You know, war to the knife, knife to the hilt. Luke: You started in a really interesting place insofar as how you came to blockchain, and that was with this weird obsession with colonialism and the current state of the West. Could you explain how colonialism and blockchain interface? Vinay: Right – well, strap in. [laughter] Who here is from a country that was invaded by the British, including Scotland and Wales? [laughter] Luke: There we go, ~60% of the~ University of Warwick, and that’s a good thing. Vinay: I used to say to people that the secret to understanding European history is that the Norman Conquest never ended. You got a bunch of Vikings that conquered a corner of France, camped out for 150 years or so and then came to London and then basically invaded the country. Then they did Wales, then they did Ireland, then they did Scotland, then North America, South America, Africa, India, China, and now we call them lawyers. That kind of ongoing wave of this very aggressive approach to resource grabbing has become the dominant model. I mean, Britain invaded something like 190 countries, like we invaded countries that don’t even exist. In that context, you think all that’s over, and it’s really not. The history of, for

[15:25](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=925s) example, political assassinations in Africa is pretty much anytime anybody stands up and says, “African Union, Pan-Africanism, we’re going to get everybody together. We’ve got half of the world’s habitable landmass and most of the world’s remaining untapped natural resources, let’s negotiate,” they get shot. There’s just no denying that political violence is used to keep resources cheap, and we all benefit from that. If you look at the price of fair trade coffee compared to normal coffee, imagine how much a fair trade laptop is going to cost. 5,000-10,000 dollars? It could be a factor of five increase of the current price of a machine, it could be a factor of ten. Whether we like it or not, there’s an enormous amount of violence baked into the goods that we buy every day, and right now the visibility of that violence is destroyed by markets. When you pay for something in cash, the information about the object that you’re buying is only what the manufacturer wants to tell you; if it’s not printed on the box, you don’t know. And nobody is going to put on the box of your device, a URL for a camera where you can watch somebody manufacturing it, nobody is going to show you where the raw materials came from by having a drone fly over the mine once or twice a day and livestreaming the stuff – it’s just not there. Technologically we could do it; socially, really nobody wants to know. And if you think that that’s a bad problem with electronics, wait until you see meat consumption. We’re in a position where we sever the knowledge about the suffering that creates our world from every transaction that we ~complete~ in the marketplace. So the interface is that blockchain has the possibility that if we get our game together, you can track the entire history of an object through every single phase of transformation that caused it to exist, and if any one of those phases is morally unacceptable to you, you might be able to do things like pool money to change it. It’s not just as simple as you buy brand A or brand B; if you can see the problem is way up the pipe, maybe you could get direct access to the point up the pipe where the problem is. “This coal town mining thing, that’s completely unacceptable. How much would it cost to fix that? – $28 million. – Okay, let’s crowdfund that.” Because if you’ve got the global visibility of what is happening and where things are wrong, it becomes possible to efficiently target resources at repair. Luke: That sounds all very well and good, and it feels the response to that right now

[17:50](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=1070s) is corruption, that’s the legitimate form of resistance in this case. But if we use blockchain to enable anti-corruption, will we survive the truth? Essentially, will we survive the burden of radical transparency, from a social perspective? What will it actually do to us? Vinay: Here we have to look to our friend and guru Nick Land, the whole Cthulhu trip. Does everybody know about the American writer H. P. Lovecraft? Luke: This is the University of Warwick. There is one alumni who was here in 1995 when Nick Land was in the philosophy department here, the continental philosophy here at the University of Warwick, and yet it will fall on deaf ears, Vinay, but I feel it is an important history. Vinay: Let’s do it. H. P. Lovecraft was an American horror writer, and he’s very widely misunderstood. He’s been out of fashion for about 100 years, because people thought that he was writing pulp fiction about nonsense, terrible tentacle monsters. He’s kind of the original hentai guy. [laughter] It’s not that funny. [laughter] Luke: These are economic students going, “How did we get from Bitcoin to tentacle monsters?” Vinay: [laughs] The thing is that Lovecraft is not writing about monsters; what he’s writing about is science. What he says, very clearly, is that scientific knowledge is continually destroying our feeling that we’re at the centre of the universe. First we discovered that time is nearly infinite, then we discovered that space is nearly infinite, we discovered that the unknown mysteries of things like DNA are completely outside of human understanding as we currently have it, we have no idea how this stuff works. Evolutionary history is just this astonishingly destructive process, and here we are, sitting here as replicating lumps of biome. Now, Lovecraft says humans can’t handle this kind of truth, and he tells stories about monsters which embody these kinds of truths. So you have a two-hundred-million-year-old thing that lives under the sea, and the important thing about it is not that it’s kind of a giant Godzilla with a tentacle mask; the important thing about it is that it’s two hundred million years old and it’s still alive, and the horror that he’s trying to

[20:20](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=1220s) convey is that humans being are tiny. Right now there are 7.5 billion human beings alive, headed for 9 billion, and that’s a really big number. If you work in computer science, you think that’s bigger than you could fit in a 32-bit int, it’s a big number, and it’s very hard to conceive of. One in a million? Well, there is sort of 700,000 people like that. It’s a really big number. When you start thinking in logistical terms, how much let’s say toothpaste do 7.5 billion people consume in a day? Then you think maybe a third of human beings have a toothbrush, the rest are using twigs or their fingers, you do the math, and it turns out to be 200 million tonnes a week or some absurd number. There’s a point where your sense of the world just breaks, when you look at the world as it is from this kind of god’s eye view, rather than inside the very tightly contained confinements of our ordinary lives. The objective, statistical view on reality is astonishingly toxic to our ordinary models, and it will usually produce astonishingly deep personal crises when people begin to glimpse what the objective frame looks like. It’s a very hard thing psychologically, and if you wander into that territory, there’s a writer called Robert Anton Wilson, who has a very nice set of keys for getting back to some kind of normal balance, once you’ve glimpsed the enormity of the situation. Luke: Let’s pull from monsters just for a second and go back to the thing that is

[21:45](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=1305s) probably the reason at least half the audience are sitting here, which is they saw the word “Bitcoin” on a poster and went, “I should probably know about that.” Vinay: Yes. Luke: I know that’s going to come up in an interview, and I am fascinated to know how many of the individuals here have money in Bitcoin currency or Ethereum right now, by a show of hands. Alright. Everybody else, look around, keep your hands up. Now, keep your hands up if you’ve just got into that market say in the last 18 months. Vinay: About half. Luke: Alright. That’s a shame for you lot, that’s all I’m saying. It’s going to be a rough ride – you’re the smug buggers, but it’s going to be a rough ride. So look, Bitcoin is the thing that this community, to a degree, they think they can pay their student loans with. Let’s talk a little bit about Bitcoin, what it is and how it functions. Because you started with something which was the precursor to Bitcoin, which was e-gold. Tell us about e-gold, how that went tits up, and why those people with their hands up a second ago should be petrified. Vinay: E-gold was a 1990s libertarian currency, and it was account-based: they had a server, they gave you an interface that looked like electronic banking, and the accounts were denominated in grams of physical gold that you could request them to send you in a full reserve system. It was started by an oncologist in Florida called Doug Jackson, in his bedroom on a spreadsheet, and gold aficionados would send him coins in the mail, he’d weigh them and he’d put them in a box, and people could then do transactions. The system grew and grew and grew, until there was an enormous amount of money in there, I think there was like $120 million of gold reserves. Which, by Bitcoin standards, you’d think that’s not a lot of money, but that gives you a sense of how distorted the Bitcoin story is. What that gave you was a system which is more efficient than modern blockchains: you could make micropayments down to a third of a cent profitably, and you could do a $100,000 transaction in a literally two seconds from a WAP phone. It was a very efficient system. They kept asking for a banking license from the American government so that they could be normalised into the mainstream financial system, the American government kept saying,

[24:15](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=1455s) “You’re not using currency so it’s not a bank,” and then in about 2005 arrested all of them for banking without a license, which is kind of ironic. But that sort of thing gave us a taste of what you got in a kind of libertarian environment. It was not necessary to have identity documents to open an e-gold account, you could literally just send them gold or send them money and they’d open up an account and ~they’d put credits up~, they weren’t doing any of the KYC. All of that sort of stuff is very close to what later happened with blockchain, and I’m fairly convinced that the whole decentralisation thing starts when people who know about the fall of e-gold are just like, “Right, that’s not happening again. We’re coming back with a bigger stick,” and this is where you get Bitcoin, it comes out of that culture. As for Bitcoin itself, there are two fundamental ways of understanding it. If we take the technology that implements it as being a separate story, and we just say, “With that technology, what have they done?” there are two ways of thinking about it. The first is they’ve created a monetary policy that you can buy into. If you put your money into Swiss francs, you get Swiss monetary policy; if you put your money into the Zimbabwean dollar, you’re going to get Zimbabwe’s monetary policy. Where you put your money is a choice, and you’re buying the monetary policy of the state that you’re investing in, in the same way that you’re buying the corporate governance and corporate effectiveness of a company whose shares you buy. With the technology taken, they then implement a monetary policy which is this kind of decaying thing, where they’re going to continue to print money, but they’re going to halve the amount of money that they print every couple of years, and eventually they will print no more money and that’s your money supply. If you like that model, you buy Bitcoin. The second thing is that they’ve basically gone, probably accidentally, and created a hedge against dollar volatility. The dollar is volatile because Americans are insane. Luke: You heard it here first. Vinay: I mean, it’s just not easy to understand why America is in the condition that it’s

[26:25](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=1585s) in right now, but it might literally be something in the water. Rome was destroyed by lead poisoning, and the Americans had a long experiment with destroying their civilisation with lead poisoning in the form of leaded gasoline. It may well be that there’s an environmental contaminant that’s driving them up the wall; either that, or it’s cultural problems of a kind that are almost unimaginable in Europe. But one way or the other, Americans are nuts. Luke: Any Americans in the room? Vinay: Yeah, one or two. Is it true? Are you nuts? Sorry. [laughter] So, the crux of this is when you’ve got the world’s largest nuclear superpower, with a military budget that is equal to everybody else’s military budget combined, electing people that you really probably wouldn’t hire to run a burger franchise, you kind of have to stop and think, “Okay...” And, by the way, that’s not just the current president; that’s the whole of Congress, it’s the whole of the Senate. The American system produces an enormous amount of muppetry, and that system has been pervasive for decades. They’re really in trouble, in a way that you’re not really seeing... The European countries still generally elect pretty high quality leadership – whether you like them or dislike them, they’re generally competent – the American system seems to continually throw up total spanners. In this kind of situation, having the world’s reserve currency be in the hands of a population that makes such unpredictable governance decisions is super dangerous, and if the dollar breaks because they elect a left-wing president and then you get armed insurrection in the south of the country, which is a very plausible scenario, you can easily imagine that Bitcoin would suddenly become an international trade currency, and that is a very unexpected question. You have similar problems in Europe. The Spanish Civil War left an enormous amount of unresolved issues between anarchists and fascists in Spain, the Greek Civil War left similar issues between communists and fascists in Greece, and Italy has only been a country for 120 years – something like that, a bit longer, with Garibaldi – and before that it was warring city states, basically one per city, and the split between the north of Italy where they’re essentially culturally similar to Austria, and the south where they’re much more in the Greek model, has never been formally resolved. So the prospect that you could see large-scale armed conflict in the south of Europe, as people redraw their maps and fight about their welfare states, that seems very plausible to me. In that situation, what then

[28:55](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=1735s) happens to the Euro, and what do you do with refugees in the millions who simply take their EU passports and start walking? That is one of the reasons that the current Bitcoin price could be thought as being rational, because if you think of it as a hedge against political mayhem in the large, Euro-American power block, maybe it’s not that irrational to have a $600 billion hedge. Luke: So, what you’re essentially telling us, Vinay, is the only way Bitcoin can match its valuation is if we have a complete collapse of Western civilisation. Vinay: Oh, a couple of civil wars isn’t the collapse of Western civilisation; we’ve lived through worse in living memory. But... [laughter] Luke: But, is there another option? Could we see a $20 trillion B2B Internet? Could

[29:45](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=1785s) we see Bitcoin match its valuation through something which is essentially egalitarian, something that’s a lot more positive than all-out collapse? Vinay: Well, let’s talk about the scenario and then we’ll decide whether it’s positive. Let’s think about how the Internet developed. The Internet had basically three phases. The first version of the Internet we talk about as the Internet of ideas. That was the period before we got credit card processing, and in that period it was impossible to make any money online, so all that was online was people’s hobbies. That Internet was an amazing Internet, because it was relatively small, it was generally populated by people that were nerdy as hell, and it was very, very efficient for moving information around because everything was done as text. If you liked to read what really smart people had written about weird, esoteric hobbies, that was the Internet for you, and many of us still miss it. Then a bunch of people figure out how to use cryptography to protect credit card transactions, all you’ve got to keep is a 16-digit number and a couple of other bits of metadata secret for long enough for somebody to run a transaction for shoes, and this becomes the Internet of shopping. And the Internet of shopping is a vast thing, it’s like a trillion dollars, it’s three of the world’s five largest companies, and it’s the dominant paradigm. And really nothing changed when social media came along: social media simply was the Internet of advertising for the Internet of shopping, nothing changed, and that’s running to the present day. Then you get this blockchain thing, and you get the possibility for a new thing. Everybody has a different name for that: I call it the Internet of Agreements, we could say the Internet of contracts, you could say smart contracts, whatever it is, but it’s an Internet that’s got the ability to do a new class of representation, specifically the 90-day payment invoice. Invoices with long payment terms are how the real world works. The supply chain is $45 trillion a year, and most of that $45 trillion will be paid for by an invoice which is sent from one person to another person as a PDF file. You might get a bit of automation using things like SAP, but for the most part business-to-business commerce is done in very archaic ways. You have a sea container that makes its way through a kind of $200-million robot port that covers 41 acres, and it’s still being managed by a kind of four-inch-thick wad of documents

[32:15](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=1935s) that are duct taped to the door; this makes no sense at all. The prospect is that you could take that entire world of box-shifting and 90-day invoices, and you could build an electronic representation of that stuff in a way that would allow you to run it efficiently. Sea containers bumped global GDP by on the order of 7%, because they got rid of huge amounts of the difficulty of shifting goods around the planet, and if you just fixed the paperwork on sea containers, that’s like 3% of global GDP. So there could be a multi-trillion-dollar per year economic benefit from blockchain, in form of vast savings, and then on top of that there’s the new market development. If you rent an Airbnb, it comes with whatever furniture was in the Airbnb. But you can imagine a situation where you had an empty Airbnb and you just picked the stuff that you wanted in it from some set of templates that had been designed by interior designers, and then all of the vendors who had components of those things would run them into the house and set them up just like they were in the pictures, you could move into exactly the place you’d always wanted, and then when you leave, everybody comes and gets their stuff back and it’s all pooled out into these pools again. The reason we don’t do things like that is because the delivery services are flaky, it’s hard to insure all these funny little transactions for short rental of goods, the logistics of getting all that stuff in and out are nightmarish, and all of that stuff ~is imitable~ to things like smart contracts or robot warehouses and self-driving vans. If you put all of that stuff together, it’s pretty easy to imagine that you could put in an image to what you wanted in a machine, it would go and pull all of the resources out of the various places that were renting it, assemble it there, you have a team that basically catches the stuff as it comes off the robot tracks and then does the final layout, and you move in. Wow, that would be amazing, right? Those kind of things are the things which produce enormous changes in the base with ways that people live, things that you would use every day for the rest of your life if they existed, kind of like GPS is now for people that want to navigate. So you could see a very, very radical shift into this kind of post-industrial, hyper-fluid economy, and if that actually happens, which I think is likely but the question is how long, again, the kind of valuations that you see with things like Bitcoin might be justifiable. But it requires change at that kind of scale to justify a $600 billion bubble. Luke: I’m not going to let you get away just yet on the Bitcoin issue, because you’ve said Bitcoin will die, it is the Myspace of digital currencies, so I want to quiz you

[34:45](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=2085s) just a little bit more with regards to what you think will happen with Bitcoin and how governments will look at Bitcoin. Because governments have allowed Bitcoin to exist, Bitcoin doesn’t exist in a stateless vacuum that you hope blockchain will allow, and the big issue with blockchain is what some people are calling the antisocial issue: to bet on

[35:15](https://www.youtube.com/watch?v=Yn5kjVYjYvI&t=2115s) Bitcoin is to essentially bet on the ineffectiveness of the current form of human order, the government. We have this weird tension going on between government and governance, Bitcoin and blockchain. Where do you see all this playing out, Vinay? Vinay: Well, we have to face the fact that our governments are basically useless, they’re terrible institutions. Because everything in society has accelerated by a factor of 100 or 1,000 in the past 400 years, but we still vote once every four years. The fact that we haven’t done any update to the machinery of democracy doesn’t challenge the purpose of democracy, or even change the correct political philosophy of democracy, but what it challenges is the machinery of democracy. We should probably have updated our democracy when we invented railroads, we probably should have updated it again at the advent of mass publishing of newspapers, we should have done another little update for radio and a much bigger update for television, and we should have done an update for the Internet. There’s been generation after generation after generation after generation of political change in the way that the economies work, the political economies, but we haven’t updated this four-year voting business. Even relatively tiny changes I think could give us much better government. For example, one pet scheme of mine is that rather than re-electing 600 MPs once every four years, we could just continuously elect MPs one at a time. Every two weeks an MPs stands down, there’s an election in their seat and another one comes up, and you basically have just a calendar that runs for four years, during which time every MP stands down and somebody else comes in, and the thing just goes county by county by county in some kind of order, maybe you start at the north. Just that change would continually pressure government to work with what people wanted. Because if things were going badly, you’d just lose seat after seat after seat, and you could watch the encroaching majority die, and it would get rid of this four-year slam thing that we currently do. Now, you might need some buffering and some of this and some of that, but even something as completely pragmatic and limited in the scope for error as that still strikes people as being unthinkable change. The static-ness of governance in an exponential, accelerating technological change environment, the government just gets worse and worse and worse and worse relative to state-of-the-art institutions. There’s your first problem. The second problem is that the market turns out to eat everything; I mean, it hasn’t

---
Continues in https://guptaoption.com/texts/706-2.md (part 2 of 3).
End of [706] Blockchain Beyond Bitcoin - with Vinay Gupta | Virtual Futures Salon, part 1 of 3. Its connections are at the top of this file; the map is https://guptaoption.com/llms.txt.