All right, welcome from my side as well to the talk on the digital money revolution.

Well, yeah, whether digital money or standard fiat money is good or bad is something that you all have to decide for yourself. But I hope that my talk will give you some insights so you can make a better decision for yourself.

So let's just jump right in. What's actually so cool about money in general, no matter what type of money we actually talk about. Money enables cooperation. Why is that? Imagine you're a producer of shoes and you want to buy some groceries and there is no universal good as money.

You come to the grocery store and fill your basket with groceries and then come to the cash register and offer them your pair of shoes that you produce. And when they are not interested in shoes, because right now they don't need any, you can't buy the groceries. You would have to first trade your shoes for something else that the grocery store is interested in. So if there is no money, transaction costs and trade are really, really high.

And a lot of trades simply won't happen without a universal good like money. So the really cool thing about money is that it enables cooperation. And economists usually define three functions that a certain good needs to fulfill in order

to actually be regarded as money. And these three functions are, it must be a good store of value. So it must have a certain kind of stability. If you take apples for instance, apples get rotten after a while, after a few weeks, they don't preserve value really good, so they couldn't serve as money. Money needs to be a unit of account, which means that it needs to be divisible to

some extent and you need to be able to calculate with it. Then the next and third function is, it needs to be a medium of exchange. If you take houses for instance, they preserve value fairly well. You can calculate with them, but a house is not a medium that you can exchange and therefore a house wouldn't serve very well.

So some things serve good as money and some things don't serve that well. And if you look back in history, what has served as money historically, people started with very simple things they could find, like little stones or pearls or shells that were used. They fulfilled these three functions, even though the people didn't really think about

these functions explicitly, they fulfilled these functions. They were rare, they were exchangeable really well and they preserved value. Then at some point, people were able to extract precious metals and they started to mint coins. This coin here that we can see on the picture for instance, that's a Greek drachma from around 700 BC.

And the interesting thing about that era is, that there were many different kinds of currencies. Almost every city minted their own coins, which means that there was a competition of these coins. If there were traders or merchants that didn't like particular coins because they

thought that a certain city is printing or minting too many of these coins, they could simply switch to another one. The banking business actually also started this way. The first bankers were money changers because they were changing between different currencies. And also one interesting aspect about that time is, that exchange rates fluctuated pretty much, so

the volatility of the value of these currencies was pretty large. So now we make a big jump, how does money look like today? If we look at today's money and today's currencies, like the euro or the US dollar, they work fairly well, but they have a couple of problems.

And one of the main problems that I personally and people who like digital currency see is the problem of centralization. And there is a centralization in two different respects. One respect is the issuance of currency. If you have only one central issue of a currency like the euro, which then is the European Central Bank,

you have to trust this entity very strongly. Because they have the power to devalue this currency by printing more and more of it, and this is actually currently happening. Inflation rate is still pretty low, but there is some inflation. And inflation, at least from my point of view, is not a good thing because it's just an additional tax.

Then there is a second type of concentration, and that's when you want to transact with the money. So when you make a money transfer, for instance, this is usually done electronically today, and as I said, it works pretty well. But you have to trust third parties. There is always a couple of third parties involved when you send money from your

account to a merchant's account or to your friend's account. And these parties, theoretically, if they want to, they can exploit you. Because they might say, well, we don't want to transact this money transfer for you, for whatever reason. So they have a certain power. And also technically, there is not much redundancy in the system.

So to sum it up, today's money requires a lot of trust towards third parties. So how could we improve the system? We could improve it by making it decentral. And also we could make it decentral in many respects.

First of all, we could have different types of currencies, right? Imagine you come to a grocery store and all you can get is one certain type of drink, only one. But usually you have different occasions where you want different types of drinks. When you go out for dinner, you maybe want to have a glass of wine or a beer. After sports, I think you wouldn't prefer wine, but

you'd rather want a glass of water. So, but in money terms, there is only one currency that we can choose from. So there is a monopoly. And if there was a decentral system where everybody could start their own currency, there would be competition. And maybe we would have currencies that work well for some applications and other currencies that work well for other applications.

Now another advantage of a decentralized money system is that if it really works peer to peer, if I could send money directly from myself to one other person, I wouldn't have to rely on third parties, which would also be an advantage because I wouldn't have to ask for permission for this transaction.

Then another advantage of a decentralized system is its redundancy. If you don't have one central party that fulfills transactions, you don't have one single point of failure. In a decentral system where you rely on different nodes that do the transactions for you, if one node disappears for whatever reason, others can jump in.

And there is not one single point of failure, but the system is more robust. In order to do such a decentralized currency system, you have to solve one very big problem. It's called the double spending problem. Imagine everybody could create as much money as they wanted to.

Probably people would print a lot of money, right? And if they spent some of their money, they would just pretend that they still have it and didn't spend it yet. So what would happen? There would be a huge inflation. There would be a lot of currency units, and the money would become worthless and

nobody would use it anymore. So you have to solve this double spending problem. And in the electronic world, this is really difficult. Imagine you're a musician. You write your own song, you record it on an MP3 file, and then you send it to a friend or you sell it to somebody. You have no control whatsoever if this MP3 file gets distributed

all around the Internet. I know there is some digital rights management products, but also with these products you have to rely on third parties. So in order to have a truly decentralized money system, you have to solve this technical problem of double spending.

And the good news is there is a solution to it. And the solution is you create a distributed public ledger. And this public ledger actually really fits well to the name of this conference, to Republica, because the word republic actually means the public thing.

And the public ledger is one that can solve the double spending problem. And how does it do it? The public ledger is a very simple list of balances and transactions. So if we take this address, for instance, you can also think of an address as an account number, or a location where a certain balance is stored.

This particular balance, just as an example, has a balance of 2.0 currency units. And now comes the clue. Everybody who participates in this payment network knows that this particular address has this particular balance. So once the person who has access to this address spends these two

currency units, everybody knows it because it's public. And when the person who has access to this address wants to spend a third currency unit, which they don't have, nobody would accept this transaction. Because everybody can see that this address has two currency units. They are spent, so there is no way to create out of the blue

a third currency unit, and nobody accepts this transaction. So this is the solution to the double spending problem. And who did this first? It was Bitcoin. I assume that most of you who attend this have heard of Bitcoin already. And the really big thing that Bitcoin achieved was creating this public ledger.

And in Bitcoin it's called the blockchain. So when I talk about the blockchain now, I'm speaking of this public ledger where every transaction that is being conducted in this currency system is recorded. And since Bitcoin solved the problem of double spending in the way it did,

Bitcoin can serve in three functions. The first is Bitcoin can be a currency. So you can transact with it as money. The second function is Bitcoin can be an asset. And this is also quite normal because every money is also an asset.

You can invest in it. There was a lot of FX trading going on in the world already. And then there was a third very interesting thing, and that is a protocol. And a protocol is actually just a set of rules of how computers exchange data in a certain network. And the remainder of the talk we will look at each of these three functions in a little more detail.

So let's look at the currency function. Why is Bitcoin such a superior currency? There are a lot of very good advantages. I just want to highlight the most important ones. With Bitcoin, you can conduct instant worldwide transactions at almost zero cost.

And I can really just recommend to you just try it out. It's a free app that you can download on a phone or on your computer. And you can send money to the person who sits right in front of you or to a person that sits in South America, for instance. And the money is there within seconds, which is a huge advantage because it's fast and it's low cost.

Try to send money from your German or other European or American bank account to a country overseas. It takes very long. It's very expensive. And then there was a third really big advantage about Bitcoin. And this is the bank independence. So with Bitcoin, you don't have to rely on third parties

because Bitcoin is a network of nodes where you don't have to ask for permission. If you can prove via the blockchain that you own one Bitcoin or a fraction of a Bitcoin, you can do the transaction. And you don't have to ask anybody for permission. Now since Bitcoin is such a good currency, it's also being used as a currency already.

There is around 200,000 merchants worldwide that accept Bitcoin. And everywhere where you see the Bitcoin accepted here sticker, you can pay with Bitcoin. Most of them are online. But here in Berlin, there is also a lot of physical stores that accept Bitcoin as a currency. You just get there with your phone, you can buy a beer or something else, and pay with Bitcoin.

One other great thing about Bitcoin is that it's open source. And open source is good for one thing. Everybody can review the code. So if you don't really trust this and you think the code is not good, you can simply take a look at it. It's available online. And the other good thing is that you can take this code and build your own blockchain

and therefore build your own currency on top of it. And as of today, there is already 260 altcoins, as they are called, alternative cryptocurrencies. And these few symbols that I put on here are just examples, even though they are one of the larger altcoins.

So the first one here is Litecoin, and there is Ripple, Namecoin, Dogecoin, and Primecoin, and many, many more. What's their attraction or their adoption yet? Well, Bitcoin is still by far the largest. Bitcoin has a market cap of $5.5 billion. So if you take all Bitcoins together and sum them up, they are worth $5.5 billion.

And if you take all other cryptocurrencies and sum them up, their total value is $0.6 billion. So they are still very small, but the good thing is that there is a competition, and everybody who wants to use digital currencies has a choice. They don't have to use Bitcoin, they can use any of the other ones as well. So open source is another big feature of Bitcoin.

Now let's take a quick look at Bitcoin as an asset. Bitcoin has a market price, and it's traded on exchanges. So when it started, it was basically worth nothing, because nobody knew about Bitcoin when it came out in early 2009.

And then some people started to transact with it, and then the first exchange in July 2010 started to make Bitcoin available for trading. And since then, its value rose quite significantly. So if you invested early into Bitcoin, the return that you could have made is quite big. It's gotten down in the last days, but that's what happens with assets, right?

Sometimes they go up, sometimes they go down. Okay, now since Bitcoin already works very well as a currency and as an asset, there is a whole ecosystem being built around it. And these are just a couple of startups that provide Bitcoin-related services.

There was many more, but I had to make a selection. So you've got wallet providers. When you want to use Bitcoin, you need a digital wallet either on your phone or on your computer. So you've got many providers that do this. Most of them are for free, by the way. Then you've got payment service providers.

If you want to accept Bitcoin as a currency and you are a merchant, you don't need any additional infrastructure. But if you want to get paid in Euros or dollars or any other local currency, you can cooperate with a payment service provider. And it is still much cheaper and much more secure than accepting credit card payments, for instance.

Then you've got Bitcoin brokers. They simply sell Bitcoin for commission. And you've got exchanges where people buy and sell Bitcoin directly over the exchange. And you've got financial services providers which either are on the debt side or on the equity side. I run, for instance, Bitbond, which is a peer-to-peer lending platform for Bitcoins.

Alright, so far we've looked at Bitcoin as a currency and Bitcoin as an asset. And then there is a third function that Bitcoin has. Bitcoin is also a protocol. It defines how data is being exchanged. And in this specific case, how data is being exchanged over the blockchain.

And Bitcoin actually allows you to own a digital asset, the Bitcoin. And this is quite revolutionary as we've seen with the example of the MP3 file. Another good thing is that the blockchain can also be used for other applications.

And we will look at them in a minute. And some people believe that the power of the blockchain and the applications that you can run on top of it is even more and bigger than Bitcoin as a currency itself. Fred Wilson, for instance, who is a very famous venture capitalist from New York

believes that the potential that we will see in the future years that come out of the blockchain, out of this public ledger is even bigger than Bitcoin itself. If you currently have certain doubts about this I would like to make one remark before we jump into the applications.

Bitcoin and especially the Bitcoin blockchain applications today are maybe like email in 1985. So it's really just at the beginning. Some of them work, some of them are still being built and there is still a lot to do. But as we can see, email became a very widespread tool for communication and I and many other people who deal with Bitcoin

believe that Bitcoin will take a similar trajectory to email. And the good thing is you won't have to understand the protocol if you don't like to. Of course you can, everybody can look at it but probably everybody of us serves the internet every day and only very few people actually understand the underlying protocol which is HTTP.

At least I don't understand HTTP in its details but I can browse the internet with my browser. So I expect the same development and evolution for Bitcoin as well. Alright, enough talking about the protocol. Let's look at some applications that could be done.

One thing that I find particularly interesting are distributed markets. Today if you own a stock of a company for instance you own one share of BMW stock if you want to sell it, you need to go to a centralized exchange you would probably go to Deutsche Berse or to Nice wherever BMW is listed.

And now these exchanges work well but the point is they are quite expensive they have a legacy, huge infrastructure and only larger corporations have access to the stock market. With Bitcoin you could do the stock transactions over the blockchain and you would have a real peer-to-peer transaction.

So how does this work? Imagine you have a fraction of a Bitcoin it is possible to attach another asset to this fraction of a Bitcoin and then Bitcoin does not serve as a currency anymore but it serves as a token. It simply allows you to sell something that is attached to it from one person to another over the blockchain

and everybody can see in the blockchain that I sold this share of BMW stock and it exchanged hands and now it has a new owner. So we could have a real peer-to-peer exchange and this is something that is already in the making. One other interesting application is called Smart Property.

Imagine you have a car and this car has a digital key so it doesn't have a physical key like we are used to from today's world but it has a digital key. Now the power that you can have is you can grant and refuse access to this car via this key over the blockchain without actually being physically present at the car.

Where could this be useful? In a loan for instance. If somebody takes a loan and the loan is collateralized with that car and you are only allowed to use this car as long as you make your loan payments on time then somebody else could control the access to this car

via the blockchain and refuse access once certain conditions don't apply like paying the loan payments on time. So therefore you wouldn't have to be physically present and you could transfer the ownership of the car which basically the key is to somebody else via the blockchain without actually having to be physically there.

One other thing that already works is Namecoin. Namecoin provides decentralized web addresses. Namecoin is exactly built on top of the Bitcoin protocol or is actually a copy of it with additional features. You can register .bit domains

via the Namecoin blockchain and then nobody can shut you down. If you are living in a repressive country and you have a website and the regime doesn't like what you are saying on this website they can shut down this address because it's on some centralized server but if you run a .bit domain they would have to shut down Namecoin entirely

which is very difficult because the Namecoin blockchain has many copies many thousands of copies around the world so you would have to shut down all these computers that run the Namecoin protocol therefore this is a very powerful tool for free speech. Also one other interesting application which is in the development

is related to identity. Think of how many different accounts you have online with many different providers. I think I myself have around 200 accounts and on all these websites I left a lot of data. I put up my name often I put up my address at least I put up my email address sometimes date of birth and all this data

and even if I want to shut one of these accounts down the provider still has my data I have no way to make sure that the provider erases my data if you shut down for your Facebook account for instance you don't have access to it anymore but Facebook still keeps the data and there is a certain development

which tries to make or incorporate your data in the blockchain so you can actually control and grant access to somebody to that data but you can also refuse access and this would be an extremely powerful tool because then the user would be the one who actually controls what happens

with that data and not the provider whom you have granted access to this data so to sum this up Bitcoin is a very big start Bitcoin invented the blockchain a public ledger where every transaction is stored but many applications can be run on top of it and we've just discussed some

and I can only recommend you if you're interested in this topic to research yourself which applications you find interesting we've talked about namecoin a little bit and then there is Ethereum we haven't talked about that yet and maybe just a few remarks Ethereum was not built as a currency in the first place like Bitcoin was but Ethereum was mainly

built to be a protocol where other people can invent new applications that run on top of it and it's optimized so that these blockchain applications run very well and very efficiently so there might be even many more applications than what I have just shown to you that might change many things and empower the user

especially when it comes to access and when it comes to data control thank you very much this was my talk and now we have Christian who is going to show you one application which is based on a cryptocurrency called Dogecoin that I also mentioned in a talk

alright so you heard the name Dogecoin before and just to explain a little bit

what Dogecoin is Dogecoin is like the little meme brother of Bitcoin so when Bitcoin was gaining traction people a little bit inspired from the 4Chain sites they were thinking come on we want to make also a cryptocurrency and put this cute little doggy on there and a little bit

in contrast to Bitcoin where it's a lot about what is the price how much profit do I make what can I make Dogecoin is more like having the idea trying it out, playing with it giving it forward, tipping other users and for example on the reddit

the community is online on reddit a lot on the subreddit, Dogecoin subreddit and they tip a lot other people if you put great content in there there is a tip bot and people really like to throw their Dogecoins around and let people be a part of it

but I have to say you learn really what cryptocurrencies are and how they feel when you use them and I want to invite you today if you have an Android phone sorry iPhone users Apple is not allowing Bitcoin apps on their store so this is just Android

but our app here you see down there on the web page dogechain.io you have the link to the Play Store to our app and while you are installing okay I hear somebody already installed it, perfect so the idea

is maybe very simple you have your phone you have your Dogecoins on there on the phone it's an online wallet and then you start to swipe on your phone and you begin to make a Dogecoin rain so you build up a cloud and when you are ready you let it drop and other people having the app open

at this time can collect those coins and there's a little bit the selection goes the more you're nearby the more you will collect so anybody has the app already installed I want to okay

another one anybody needs a minute okay do we have a minute still yeah yeah okay cool just for this minute I will tell you a little bit more about the Dogecoin community they are very young it's about December I think they got funded

or they started, they're not getting funded they just decided to do it it's open source and during that time because there's already value there's revalue behind Dogecoin you can trade it for dollars if you want they were doing a lot of charity they were sending a sledge board team to the Olympics

the Jamaican ones and they were clean water for Africa last weekend they were putting a car on the NASCAR race so it's a fun community if you have half an hour check out the subreddit subreddit Dogecoin there's the community

they are welcoming you if you have any questions so who has the app open alright I think this looks quite good so I will now make a really big rain of about 10,000 Dogecoins and the idea you don't hear it because I muted it

okay this is 1,000 it's getting bigger 3,000, 4,000, 5,000 oh yeah

okay I hope the internet connection works okay I dropped it and there are some lucky winners okay so I just want to encourage you so some guys of you now have some Dogecoin on there just open it up sometimes

throw it around and if you have any questions about Bitcoin or Dogecoin we are here to answer your questions we will be around thanks very much are there any questions we have time for one and a half questions

please come over here ladies first I had a professor in college in environmental studies who said that we would be in the future dealing in currency based on how much

energy households or individuals produce so I was wondering if you've heard of any discussions on how to incorporate Bitcoin to that model for instance maybe I could harness the energy of my house to power my computer which would maybe make Bitcoin more valuable on the market

okay so the question is how to incorporate Bitcoin or digital currencies in producing your own energy and then getting a reward if I got it right and yes obviously you could do that and maybe one thing that would be possible

that I haven't heard somebody doing it but it would definitely be possible one good thing about Bitcoin is that it enables microtransactions so if you want to send money that's just worth maybe 0.5 euros like 50 cents then over the internet usually these transactions don't make sense because the payment cost

to do the transaction is higher than the actual amount that you want to send and I could imagine that in the example that you have just given where you maybe get rewarded for contributing energy to the network on a small level because you just have a small home wouldn't make sense with a

regular payment network whereas with Bitcoin if you try to incorporate that you could accept microtransactions and the transactions are still worth doing because the costs are still lower than the actual transactions so that might be an application that I can imagine Hello I have one question regarding privacy

and one question regarding security so you said that all the transactions are public so does that mean that everyone can see who trades with whom so that's true the point is I don't know if you remember these addresses you would need to know

which person, which identity owns this address and typically you won't know this so if you look at it from the first perspective it's actually really anonymous but then there is a second thing if you do really really large transactions at some point you become visible

on the blockchain as I would say it so Bitcoin is called pseudonymous because at some point it might be possible to actually find out which identity belongs to a certain address so it depends on how you behave on the blockchain I would say the other question is if for example as you said

a car, the ownership of a car is attached to Bitcoin then let's say someone breaks into my computer is he able to just sell that car to someone else for very cheap money so this question is a very good one

it doesn't just apply to the car example but to Bitcoin in general so the addresses that I have shown they are called public keys and there is a so called private key to each address and this private key you need to store safely and privately on your computer and if somebody gets access to this private key they can actually spend your Bitcoin

and it doesn't matter whether you have attached a car ownership over the blockchain to this Bitcoin or it's just the Bitcoin if somebody has access to this private key they can steal your Bitcoins and then they are gone just like cash, when somebody steals cash from you, you can't get it back unless you find the person so yes, you would have to secure it

but the good news is there are a lot of very good solutions by now to secure your private keys and to not lose them even if your hard disk crashes for instance Thank you, Rocco for this insight and for this overview because for me it was quite good to get also at the beginning to understand because I'm not a Bitcoin specialist

so thank you for all of this and yeah, I don't know who changed, who has his first Bitcoin account already alright, so it's a movement perfect, thank you if you have other questions, I'll be around thanks a lot