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GARY GENSLER: So payments part two

we're going to chat a little bit about the overview today.

Readings, of course as we always do.

And then what was yesterday?

Does anybody want to tell me what yesterday was?

Kelly?

AUDIENCE: The 10th anniversary.

GARY GENSLER: 10th anniversary of bitcoin.

What else was yesterday?

It was Halloween.

No, it is not my birthday again.

Stop that, Tom.

So we're going to chat a little bit,

we're going to have some fun about happy anniversary

or birthday.

Would you call it a birthday or anniversary?

Anniversary?

OK.

Birthday, all right.

There's no established vocabulary really

in this field.

So--

AUDIENCE: Birthday comes in January.

GARY GENSLER: What's that?

AUDIENCE: Birthday comes in January.

GARY GENSLER: The birthday--

Hugo, why's the birthday come in January?

AUDIENCE: Birthday marks [INAUDIBLE]..

So the music is [INAUDIBLE].

GARY GENSLER: Riham?

AUDIENCE: Birth means death at a point in time in my mind,

so anniversary [INAUDIBLE] is better.

GARY GENSLER: You got--

did you get that?

Birth also connotes death.

Did I have that?

And so Rahim was saying she would go with anniversary.

But we have birth over here.

We're going to chat a little bit about that and try--

the existential.

Then we're going to talk about payment systems and the sort

of some of the pain points.

And we'll have a lively discussion.

What do you think the pain points

are in the payment system?

I, of course, will have listed some,

but your input's the most important.

How does blockchain fit into this payment system,

and why so far haven't there been any really economy-wide

or system-wide adoptions yet?

So one might even say what are the pain points of blockchain

technology that there has not yet

been some of those adoptions?

We're going to chat a little bit about some blockchain payment

companies, and there are not many.

I mean, there are many white papers

but there are not many that have actually taken off.

And then wrap it up.

So the study questions which we're

going to sort of dig into rather than right now

but just what lessons can be taken.

So for my layer two help us.

We're going to come back to these when we sort of dig

into the paint points.

What are the opportunities in cross-border and so forth,

and the trade offs of using permissioned

versus permissionless systems.

So happy anniversary, happy birthday

for some, 10 years ago.

It's remarkable.

Actually, some people say it was November 1st because I think

when it actually got on the website it was November

1st in parts of the world.

So what do we know about the 10th anniversary?

Just some fun statistics.

This has all happened in 10 years.

So the price is around $6,300 to Bitcoin out

of nothing, Satoshi Nakamoto.

And it's $110 billion in size.

We might not all know each other in 10 years,

but write down for yourself on a piece of paper--

this is a real exercise I'm asking you to do for yourself.

Write down for yourself and put this piece of paper

somewhere or put it on your laptop.

You can put it down, where do you think the price of Bitcoin

will be 10 years from today on the 20th anniversary?

And remember this course in 10 years,

and look back, and laugh at yourself.

Just we won't all know each other.

Maybe there'll be a group chat, but--

what's that Alit?

You don't want to guess where it is-- you

don't need to share it with me.

No, no, but write down and think about it.

Where do you think this will be in 10 years?

Is this a hard question?

[INAUDIBLE]

Alpha, do you want to share your number with the class?

AUDIENCE: We're even just debating directionally,

it's really going to be higher or lower.

GARY GENSLER: Well, how many people

think it'll be lower in 10 years?

OK, I'd say it's about 30%, 35%.

How many higher?

Yeah, that's 60%, 65%.

Alin, you-- you did two Alin split, right?

AUDIENCE: Think it's going to be 0.

GARY GENSLER: I think that would be lower.

[LAUGHTER]

AUDIENCE: It is, because in 10 years

the system might change so dramatically

it might be unfair to even call it bitcoin.

GARY GENSLER: Fair enough.

It might have evolved into something else.

Back here please.

AUDIENCE: I just want to comment.

Isn't the real question market cap,

because that's what people are actually using the currency

for?

Because the question of what's the price going to be

presupposes a set number of shares of coins or tokens.

So the way that people are mining coins in the future also

depends on the price.

GARY GENSLER: So I think you raise a really good question.

If you're writing something down you

could write down the market cap rather than the price.

You could say--

I mean, in the Leeds case you would still say 0 for both,

but you might say that-- of course.

Because it depends on how many coins

there are, how many shares there are.

Does anybody want to take the other side from this--

the other Alin?

AUDIENCE: I think it'll have zeros--

it'll have zeros in the price.

GARY GENSLER: It will have zeros in the price.

Hugo?

AUDIENCE: Well, I just want to respond to the other comment.

Do you know exactly how many bitcoin there will

be in about 10 years from now?

GARY GENSLER: Do we actually know how many bitcoin there

will be in 10 years?

AUDIENCE: Yes.

GARY GENSLER: Hugo says you do because it's

written in the code.

Remind me your first name?

Isaac.

AUDIENCE: So I think one is mining.

I know that some folks may have a better technical background

on mining and the way you dedicate resources

based on price.

But I'm seeing a shake-up ahead, so maybe not.

The other piece of it, I think, is just

thinking about the flow.

Thinking about the bitcoin that's actually

being traded or transacted.

If there's a restricted market cap,

it's similar to looking at big cap stocks trading in China.

You know, you don't actually get a real price.

GARY GENSLER: While I agree with those,

there's one other reason we might not know the--

AUDIENCE: People could stop mining.

GARY GENSLER: People could stop mining.

AUDIENCE: In five years if it's zero.

GARY GENSLER: Oh, that's if it really just dwindles out.

Nobody wants to expand.

But what's one other reason why it could

be a different number that--

Shimon?

AUDIENCE: Fork.

GARY GENSLER: A fork.

There could be a consensus amongst 51% of the parties

on this node to change the what I'll call monetary policy.

We've seen that twice in Ethereum.

Ethereum was having a certain mining or block reward.

They cut it in half once-- or they cut it from 5 to 3,

and I think now they're going from 3 to 2.

It was not in the original Ethereum.

So there could be a consensus.

It's not written about a lot, but it

could be either what's called a fork

or it could be so almost unanimous that everybody

went for a change in the monetary policy.

All right, so that's just a little bit of fun.

Some other quick numbers and facts.

There's 17.3 million coins right now.

So 17 million coins have been mined so far,

550,000 blocks roughly.

189 gigs.

Transactions per day, quarter of a million transactions.

And then if I've got my decimals right,

the hash rate is 10 to the 18th times 50.

That's seven trillion times harder

than when it was in 2009.

There's seven trillion more computational power in Bitcoin

now than there was nine or 10 years ago.

It takes about 1/3 of 1% of the world's electricity,

and there were some nice comments overnight

in the discussion for this class about

whether that's a good thing or not.

And maybe it's not a good thing.

So that's Bitcoin anniversary.

A couple other things, unique addresses.

There's a little bit over 500,000 unique addresses--

Bitcoin addresses.

So if there's tens of millions of people

that have Bitcoin and only half a million Bitcoin addresses,

what does it mean about the probably 20 or 30 million

people that believe they own Bitcoin but don't

have a Bitcoin address?

Where do they own it?

James?

AUDIENCE: In an exchange?

GARY GENSLER: Yeah, on an exchange.

Or in some custodial--

in essence relying on somebody else

if there's a half a million unique addresses,

but it's thought there's 20 to 30 million accounts.

10,000 nodes.

And bitnodes is a website where you

can see where the nodes are.

And it's concentration of where the actual nodes are.

So pretty spread around.

There's not any alpha in Ethiopia yet.

In fact, I don't see--

what's that?

Do you see two in Kenya?

AUDIENCE: Yeah, there's two little dots.

GARY GENSLER: Anybody from Greenland?

No.

And of course, it's spurred this whole thing--

we've seen this map before, but initial coin offerings.

$28 billion roughly raised.

Again, we don't know if the numbers are right

but this is what this 10 year anniversary or 10

years since it all started.

This means there's a lot of capital

chasing this field right now.

So anybody want to write down whether they

think ICOs are still going to be around in 10 years?

How many people think initial coin offerings will be around?

About half.

And so the other-- oh, I know where Alin is,

but where are the rest of you?

I don't actually know.

I think they're going to slow down.

I think in 2019 and 2020 they'll slow down

because so many will have failed,

the market will sort of adjust and say,

well, we're not going to invest in these unless there is

a much better business model.

And so it's spurred, this is just a bucket of other coins.

There's 1,600 odd coins, probably 1,500 plus of them

will fail or maybe all 1,600.