[QUESTIONER:] According to what you said,
Bitcoin is possibly going to be banned .. in the next year, or very strictly controlled.
[ANDREAS:] In some places, yes. [QUESTIONER:] For instance, one of these
places could be China. [ANDREAS:] Unlikely, but yes. [QUESTIONER:] Because they are really having
a lot of problems, with many people converting .. their money from bitcoin. And I think
70% of the mining facilities are in China. So do you think they are going to try to control
the mining facilities? What are the possible outcomes? [ANDREAS:] That’s a great question. So do I
think mining will be controlled in China or do .. I think that Bitcoin might be banned in China?
I think it’s extremely unlikely that Bitcoin would .. be banned in China. Just because every time
there’s a little blip in the yuan and we see .. $.5 – 1 billion flow into bitcoin doesn’t mean that’s
a large amount of money. For China, that’s nothing. It’s like you’re facing the imminent collapse
of a giant hydro-electric dam; you’re not going to .. worry about that tiny, little trickle of water
in the side there. That’s bitcoin. You’re worrying .. about the gushing outflows of the things
they are worried about. Right now they’re passing .. a new law to restrict mergers and acquisitions.
I heard this fantastic story of how Chinese companies .. are exiting money from the economy even
though there are currency controls. It came about from a conversation with a
lawyer. This lawyer had been asked by .. a Chinese company to participate in an
arbitration hearing. They said, “We want to do .. this arbitration hearing. Would you be
interested in participating and representing us?” [The lawyer] said, “Yes, okay. Who is the
other party?” “Well, the other party doesn’t exist .. yet. We would like you to create the other
party, represent both us and the other party, and then we would like to lose an arbitration
award of about $5 million to the other party, which you will set up in another country.”
[Laughter] When the need is great, it becomes .. the mother of innovation. Legal innovation,
corruption innovation, et ceterea. They have much bigger problems.
Now, you will see bans in some countries. In the countries where they can arbitrarily
effect a ban, they can’t actually affect that ban, in practice, on the ground. Because where
the rule of law is weak enough that a single .. individual – without any recourse, due process,
or opposition – can simply ban a form of money, their ability to actually enforce that is probably
pretty weak too. Because everybody below them .. is going to be taking bribes. Just imagine,
for example, the ruling comes down that says, “You can’t do mining in China!” That goes
down to the districts, from the districts to .. the smaller districts, to the cities, to the
towns. Eventually, some official sends a fax .. to the local village where they’re running a
mining farm off [hydro-electricity] that represents .. 40-50% of the municipal income of the entire area.
And they say, “You must close your mine.” What does the local official say?
“… We have no mines here!” [Laughter] Or, “[whispers] Guys, close it down for 24 hours.”
“[yells] We have eradicated mining in China!” “Long live China and our great leader!”
“[whispers] Turn it back on.” Right? The ability to actually affect change on the
ground is mediated by layers and layers of .. bureaucracy, which are more and more corrupt.
The bigger the crisis, the easier they are to corrupt. You’ve got to realise that these mines are quite
decentralised within China, and in many cases .. they provide a stream of “corrupt money”
throughout every official in the area: the police works for them, the mayor works for them,
the electricity company works for them… Now the electricity companies are the ones
who are mining. Good luck shutting that down! Again, it’s not as easy to do. The higher the need,
the more corruption & invention you’re going to have. [QUESTIONER:] What happens in the future
when Bitcoin becomes mainstream, governments or inter-governmental
organisations realise this, like the U.N., IMF, U.S., or E.U.? [What if they] decide to implement
their own cryptocurrencies, say “UScoin” or “IMFcoin”? And they make it a rule that everyone has
to use that coin, and illegal to use any others? They set up their own nodes and put a lot
of budget in that. Could they cut out cryptocurrencies .. in that way? [ANDREAS:] They going to turn a
lot of people into criminals, because a lot of people .. will then ignore that rule and break that rule.
You have to worry… if your government is setting .. up a system where they’re not willing to
compete on an equal basis, on merits, but instead have to pass a law that forces
you to use that system and makes it illegal to .. use the competing system of open-market
economics, what the hell kind of government .. did you just elect?! At that point, you’re
beginning to wonder: what kind of government .. is this? Let’s go through the words:
Democracy? Eh, no. Republic democracy? No. Constitutional democracy? Police state?
Fascism? Totalitarianism! That’s the kind. Okay. That sounds like totalitarianism. I never
signed up for that. Great. If your government .. starts doing crazy things… The question is:
can governments do crazy things that violate the .. rights of billions of people? Sure they can!
They do it every day. We have to resist and make .. choices, not only about which governments
we elect, but also sometimes make choices about .. using other systems. People in Venezuela
are making that choice today, by breaking the law. Because the choice is between feeding their
family and not feeding their family! At that point, whether you’ve broken the law is a
small issue, right? Again, I don’t expect to see that. The reason I don’t expect to see that is because
most governments in the world, when they see the idea .. of people being able to use a free, electronic
commerce system that is efficient, creates .. growth, opportunities, and jobs… An innovation
that gives access to the world of commerce across .. borders – What’s not to like? That’s something
you should encourage. If your government .. does not encourage that, and does not believe
in those ideals (that people should be free .. to associate, free to express, free to make choices), then your government is not free. Which is a much bigger problem than Bitcoin,
at that point. I would be less worried about their .. power over cryptocurrencies than by the
fact that they have all the guns.