[ORGANISER] How would you solve the blockchain
size / storage issue once widely adopted? [ANDREAS] There is a couple of ideas about that. The main one is that Moore’s Law is very helpful;
it gives us greater capacity to store things on personal devices, on smaller devices, every year. The second answer is that, very much like the
internet, this will not evolve as a single layer. With the internet, we’ve seen the evolution of
multiple layers above [the base layer of] the internet, that give us greater and greater capacity. If you wanted to transmit a movie or [music] in the
early 1990s, you didn’t have the capacity to do that. What was the greatest invention that increased the
ability to send video and audio across the internet? Was it greater fibre optic capacity? No. It was an invention at the Fraunhofer
Institute of a technology called .mp3, perceptual encoding and compression, which allowed us to shrink video and audio
by two or three orders of magnitude. That invention allowed us to scale the internet. There are two schools of thought in engineering. One is to make the “pipes” bigger.
The other one is to make the content smaller. In cryptocurrencies, we’re doing both. [ORGANISER] .mp3 is an interesting example. It was encumbered by intellectual
property (IP) until 2 years ago. [ANDREAS] Yes. [ORGANISER] So not everybody
could use it in open projects. [ANDREAS] People had to develop Ogg Vorbis. Which is why it is interesting that, in our space right now,
the patents are not yet quite developed. We have this rare opportunity; this is the very early days,
the golden age, the honeymoon period, where you can work in a space that
is truly unencumbered by patents. If you experienced the internet in the early
’90s, you know what I’m talking about. There was this perfect moment
where everything was possible. That’s how I feel about the cryptocurrency space today. [ORGANISER] Excellent. Being that you helped write ‘Mastering Ethereum,’
what do you think about the future viability for scaling versus current blockchain
application platform competitors? I think you’re positive about this, right? [ANDREAS] I think it’s important to note
that a platform like Ethereum, which is a smart contract / open-source law platform, is actually much more difficult to scale
than a money platform like Bitcoin. But it’s always the case in engineering
that there are trade-offs. When you create something that’s
cheaper, faster, and more efficient, often it has some kind of negative trade-off. Maybe it is more centralised.
Maybe it is not as open as it was before. I think you’ll see a lot of the competitors
in the cryptocurrency space… kind of hand-wave at these trade-offs. They will say “we’ve solved all the problems,”
but if you look more carefully, what they’ve done is traded efficiency for centralisation. That trade-off is [technically] easy to make.
It’s almost impossible to reverse. You can’t buy more decentralisation later by
giving up efficiency. That is a one-way street. All of these systems [may] start at their
most decentralised form and gradually get less and less decentralised, until
we have to disrupt them again. That’s what happened on the internet and on the Web. That is what [could] happen with Bitcoin,
Ethereum, and all the other cryptocurrencies. It is not an easy trade-off. In terms of scaling, there are many
simple solutions which are all wrong, and then there are a few very hard, complex
solutions that are all being researched. [ORGANISER] We’re almost out of time.
Let’s do a quick last question. Will blockchain technology replace [trusted entities]
like banks completely, or will they use it… to be prepared for the future even better? Do you think there is a consensus on working
with banks, or do you think they will be replaced the way they are right now? [ANDREAS] I think they’re going to be able
to use this technology about as successfully as newspapers have been able to use the Web. [ORGANISER] By putting ads in front of our faces?
[ANDREAS] They’re still around, but nobody cares. [Laughter] [Applause] More seriously… There are certain applications that
you can’t do with blockchains. For example, you can’t create money out of nothing and just give it to the very rich,
corporations, and banks for free. For that, you need the euro. For that, you need quantitative
easing and a national currency, where you can steal from the people through inflation. That’s how quantitative easing works. You cannot do fractional reserve
banking with cryptocurrencies. You cannot create money out of nothing.
For that, we’ll need banks. If you want a debased currency, there’s only one place
you can get that: the traditional banking system. But the fundamental application of a ‘checking account,’
a payment network, the ability to pay bills, do commerce and transact with others… That is now a protocol. When you have a protocol competing on zero marginal
cost against a sclerotic, slow-moving institution with massive costs and security problems… Guess who wins every single time?