brewster

[00:00:00.000 --> 00:00:07.760]   I was very impressed with Prague last year.
[00:00:07.760 --> 00:00:12.960]   I was very impressed because there was a lot of thinking going on about what should we
[00:00:12.960 --> 00:00:14.500]   do?
[00:00:14.500 --> 00:00:16.080]   What's the point here?
[00:00:16.080 --> 00:00:18.200]   How could this thing go wrong?
[00:00:18.200 --> 00:00:22.400]   How could we learn from the .com guys that seem to have screwed things up?
[00:00:22.400 --> 00:00:28.320]   The internet guys, or those guys in the financial crisis, how did they screw things up?
[00:00:28.320 --> 00:00:31.320]   How can we learn from to grow from?
[00:00:31.320 --> 00:00:37.160]   I'm taking that as the starting point for this talk to try to suggest something you
[00:00:37.160 --> 00:00:41.440]   might want to think about and look at anew.
[00:00:41.440 --> 00:00:46.080]   I'm going to talk about money, debt, and smart contracts.
[00:00:46.080 --> 00:00:49.360]   The internet archive, you think, well, gosh, what is this internet archive?
[00:00:49.360 --> 00:00:52.360]   It's a nonprofit in San Francisco.
[00:00:52.360 --> 00:01:00.600]   Kind of Wikipedia-ish, but a lot smaller, and the idea is to bring universal access to
[00:01:00.600 --> 00:01:01.600]   all knowledge.
[00:01:01.600 --> 00:01:08.960]   So that's probably, if you know of me at all, I started and run this organization and you
[00:01:08.960 --> 00:01:12.080]   should please come and visit us in San Francisco.
[00:01:12.080 --> 00:01:15.920]   We have open lunches, all sorts of fun things.
[00:01:15.920 --> 00:01:20.080]   But if you don't know about the internet archive, you may know of the Wayback Machine,
[00:01:20.080 --> 00:01:27.840]   which has old web pages and to try to preserve the memory that has come before on the internet.
[00:01:27.840 --> 00:01:33.040]   I may be here because I hang out with smart guys and sort of internet pioneers sort in
[00:01:33.040 --> 00:01:38.800]   terms of the internet hall of fame, and that's probably why I got an indoor.
[00:01:38.800 --> 00:01:41.120]   Maybe it's the decentralized web.
[00:01:41.120 --> 00:01:47.080]   Can we make the worldwide web work without having a reliance on any particular piece
[00:01:47.080 --> 00:01:48.720]   of hardware being up or down?
[00:01:48.720 --> 00:01:51.800]   Can we make a peer-to-peer back end for the web?
[00:01:51.800 --> 00:01:57.040]   So it really helped trying to support the promotion of locking the web open.
[00:01:57.040 --> 00:02:01.360]   But I'm expert in all of those things, so I'm going to talk to you about something I'm
[00:02:01.360 --> 00:02:05.240]   not an expert in, and actually I know who I'm talking to, the experts in this, but I'm
[00:02:05.240 --> 00:02:10.480]   hoping I'm going to give you a new perspective in the area of debt.
[00:02:10.480 --> 00:02:14.120]   My story starts by my having won the internet lottery.
[00:02:14.120 --> 00:02:20.040]   I sold companies, I became artificially wealthy, and I was trying to figure out what the heck
[00:02:20.040 --> 00:02:22.040]   is money.
[00:02:22.040 --> 00:02:29.000]   So I started reading books, and my favorite book from that era was called Frozen Desire.
[00:02:29.000 --> 00:02:33.720]   So this guy, James Buck, and he goes over the history of money, and he goes and says,
[00:02:33.720 --> 00:02:35.400]   what is money?
[00:02:35.400 --> 00:02:40.840]   It's frozen desire, and it talks all about money, money, money, and how it works, and
[00:02:40.840 --> 00:02:45.000]   how you finance debt wars, and on and on.
[00:02:45.000 --> 00:02:47.200]   It's a very interesting book.
[00:02:47.200 --> 00:02:51.000]   It occurred to me, it's like, no, no, maybe it's not really money that's the important
[00:02:51.000 --> 00:02:52.000]   part.
[00:02:52.000 --> 00:02:54.200]   Maybe it's debt.
[00:02:54.200 --> 00:02:56.080]   Maybe it's debt.
[00:02:56.080 --> 00:03:03.040]   And it turns out that money and debt mostly create each other.
[00:03:03.040 --> 00:03:06.280]   And I'm going to stay on this for a moment because I think it's going to be important
[00:03:06.280 --> 00:03:09.520]   in our crypto world.
[00:03:09.520 --> 00:03:14.360]   Almost always, even in the crypto communities, they talk about money like gold and things
[00:03:14.360 --> 00:03:17.320]   like that, where it doesn't go into, there isn't debt.
[00:03:17.320 --> 00:03:23.880]   But if you take currency, the American currency, or any of the world currencies, about 5%
[00:03:23.880 --> 00:03:29.920]   is money, and the rest is money and debt create each other.
[00:03:29.920 --> 00:03:33.800]   The way that you get more money is you create debt obligations.
[00:03:33.800 --> 00:03:38.920]   If you go and say, well, I'm against being in debt, really what you're saying is I want
[00:03:38.920 --> 00:03:42.240]   somebody else to be in debt because I have money.
[00:03:42.240 --> 00:03:44.840]   If I have money, somebody else has debt.
[00:03:44.840 --> 00:03:46.240]   They create each other.
[00:03:46.240 --> 00:03:52.400]   They exist in a one-to-one relationship almost, except for about 5%.
[00:03:52.400 --> 00:03:54.600]   That is, I find, very interesting.
[00:03:54.600 --> 00:03:59.160]   So whenever I hear of these bankers, these economists going on and on about, we want
[00:03:59.160 --> 00:04:01.960]   to increase liquidity out there.
[00:04:01.960 --> 00:04:07.640]   What they really want to increase the money supply, just try out a thought experiment.
[00:04:07.640 --> 00:04:12.120]   Whether they say money, just insert the word debt.
[00:04:12.120 --> 00:04:16.160]   And you will also understand what they're saying, and actually much more precisely.
[00:04:16.160 --> 00:04:20.520]   When they say they want to increase the money supply, they want to increase the amount of
[00:04:20.520 --> 00:04:22.360]   debt supply.
[00:04:22.360 --> 00:04:25.680]   They want to go and liquidity more money out there.
[00:04:25.680 --> 00:04:27.160]   They want more debt.
[00:04:27.160 --> 00:04:32.800]   So what debt is, and it's always debt with interest, it's a slope.
[00:04:32.800 --> 00:04:35.920]   And money goes from debtors to creditors.
[00:04:35.920 --> 00:04:36.920]   It's a slope.
[00:04:36.920 --> 00:04:42.240]   You can change what the slope is, and you can change how much there is.
[00:04:42.240 --> 00:04:45.480]   And when they're trying to increase the money supply, they're trying to increase the amount
[00:04:45.480 --> 00:04:46.720]   of debt.
[00:04:46.720 --> 00:04:51.360]   So that just increases the amount that's going from debtors to creditors.
[00:04:51.360 --> 00:04:57.440]   And then there's interest rates where you can go and tilt it the slide more.
[00:04:57.440 --> 00:04:59.440]   But it's all going one way.
[00:04:59.440 --> 00:05:01.760]   I'm not saying that debt is bad.
[00:05:01.760 --> 00:05:03.600]   It just is.
[00:05:03.600 --> 00:05:08.000]   But debt exists, and it has existed for as long as there has been writing, which I'll
[00:05:08.000 --> 00:05:10.640]   get to in a minute.
[00:05:10.640 --> 00:05:14.600]   So if you're trying to look for lines of control and trying to predict how the future
[00:05:14.600 --> 00:05:18.760]   will behold, I always try to figure out what's the root causes out there.
[00:05:18.760 --> 00:05:23.960]   I would suggest don't follow the money, as they said in all the President's men, a famous
[00:05:23.960 --> 00:05:28.440]   movie about the Watergate investigation.
[00:05:28.440 --> 00:05:30.560]   Follow the debt.
[00:05:30.560 --> 00:05:31.560]   Follow debt.
[00:05:31.560 --> 00:05:34.000]   And obligated to whom?
[00:05:34.000 --> 00:05:39.760]   That's going to be the more important part of how all of this works.
[00:05:39.760 --> 00:05:48.720]   And this, I would suggest, be the most indicative of what's going to happen in the future.
[00:05:48.720 --> 00:05:54.700]   At that point, a book came out called Debt, the first 5,000 years by David Graeber.
[00:05:54.700 --> 00:05:58.640]   This is the most important book I've read in the last 20 years.
[00:05:58.640 --> 00:05:59.640]   It blew my mind.
[00:05:59.640 --> 00:06:05.880]   It basically chopped pillars out from underneath my whole belief system.
[00:06:05.880 --> 00:06:11.280]   This guy basically wrote, it's across the 5,000 years history across the whole world.
[00:06:11.280 --> 00:06:17.880]   It's kind of an amazing book, and tried to detail the history of debt, and how did it
[00:06:17.880 --> 00:06:20.000]   work in different cultures?
[00:06:20.000 --> 00:06:23.680]   And it works very differently in different cultures, and there's a lot more possibilities
[00:06:23.680 --> 00:06:24.680]   out there.
[00:06:24.680 --> 00:06:29.000]   A brilliant man, a wonderful read, highly, highly recommend it.
[00:06:29.000 --> 00:06:37.440]   It basically goes on this structure of how does debt evolve, and how does obligation?
[00:06:37.440 --> 00:06:40.720]   Let me define debt precisely.
[00:06:40.720 --> 00:06:44.680]   Debt is quantified obligation.
[00:06:44.680 --> 00:06:50.160]   So there's obligations we all have to our friends, our mothers, but quantified obligations
[00:06:50.160 --> 00:06:51.160]   is debt.
[00:06:51.160 --> 00:06:55.200]   And another characteristic of almost all debt is it's transferable.
[00:06:55.200 --> 00:06:58.000]   So it's transferable actually by the creditor.
[00:06:58.000 --> 00:06:59.800]   The creditor can give it to somebody else.
[00:06:59.800 --> 00:07:03.040]   So you might be in debt to somebody, and then they suddenly put it to somebody else, and
[00:07:03.040 --> 00:07:04.560]   now you're in debt to somebody else.
[00:07:04.560 --> 00:07:07.320]   So a really peculiar device.
[00:07:07.320 --> 00:07:15.680]   But I highly recommend this book in terms of how does value exchange move among people.
[00:07:15.680 --> 00:07:19.080]   And you guys are all in this field, so recommend it.
[00:07:19.080 --> 00:07:23.760]   So basically I said, all right, if that's what's crushing our people, we now had the,
[00:07:23.760 --> 00:07:24.760]   it was 2008.
[00:07:24.760 --> 00:07:27.000]   There's a housing crisis.
[00:07:27.000 --> 00:07:30.000]   The people at the Internet Archive were having real trouble because of rent.
[00:07:30.000 --> 00:07:33.160]   I tried to figure out why was rent so high.
[00:07:33.160 --> 00:07:36.720]   It turns out it was debt service on the apartment buildings.
[00:07:36.720 --> 00:07:42.360]   If you could make debt-free apartment buildings, you could have rent that's one-third of market-based
[00:07:42.360 --> 00:07:43.360]   rent.
[00:07:43.360 --> 00:07:48.760]   I said, great, why don't we go and try to make debt-free housing happen by going, having
[00:07:48.760 --> 00:07:49.760]   a structure?
[00:07:49.760 --> 00:07:51.120]   I need to be able to create a bank.
[00:07:51.120 --> 00:07:52.960]   So I created a bank.
[00:07:52.960 --> 00:07:56.640]   I created a credit union called the Internet Credit Union.
[00:07:56.640 --> 00:08:02.400]   And we ran it for a while, and boy, the regulators really, really didn't like it.
[00:08:02.400 --> 00:08:06.160]   Boy, just go start a bank.
[00:08:06.160 --> 00:08:07.160]   Yeah.
[00:08:07.160 --> 00:08:09.560]   They basically didn't want us around.
[00:08:09.560 --> 00:08:11.840]   So they crushed us out of existence.
[00:08:11.840 --> 00:08:16.960]   And unfortunately, Trade Hill, which was a Bitcoin company, because we were the only
[00:08:16.960 --> 00:08:19.360]   credit union that would go and deal with them.
[00:08:19.360 --> 00:08:24.640]   We went when they crushed out us out of existence, they went out of existence too.
[00:08:24.640 --> 00:08:29.280]   So I learned a lot about how the banking system worked, and it is really that bad.
[00:08:29.280 --> 00:08:33.080]   If you think it's bad, you're right.
[00:08:33.080 --> 00:08:38.760]   In terms of how electronic funds transfers work, ACH transfers, it's insecure, it's fraud
[00:08:38.760 --> 00:08:41.920]   written, it's a real problem.
[00:08:41.920 --> 00:08:45.600]   So we tried to do a bank, and that didn't work.
[00:08:45.600 --> 00:08:47.080]   We're very early in Bitcoin.
[00:08:47.080 --> 00:08:50.600]   At the Internet Archive, we basically paid our employees in Bitcoin.
[00:08:50.600 --> 00:08:54.560]   This I think is a picture of the first Bitcoin ATM.
[00:08:54.560 --> 00:08:59.240]   It's an open cash box with a wallet.
[00:08:59.240 --> 00:09:03.600]   So you basically can just go and change your money back and forth to the Bitcoin.
[00:09:03.600 --> 00:09:04.600]   Okay.
[00:09:04.600 --> 00:09:07.440]   A lot of the Bitcoin people didn't like it because it trusted people.
[00:09:07.440 --> 00:09:09.760]   But anyway, it worked.