Chris Skinner [Chris Skinner] - ValueWeb: How fintech firms are using bitcoin blockchain and mobile technologies to create the Internet

Serial entrepreneur Wences Casares created Argentinas first internet provider and later sold his online brokerage firm to Banco Santander for $750 million in 2000, when he was only 25 years old. Now 40, Casares is a star of the Silicon Valley bitcoin scene, but his Argentinian roots inform much about him.

Could you give us your view on bitcoin and its place in the market today?

I think bitcoin may very well be the best form of money weve ever seen in the history of civilization. Thats a super-bold statement, I understand. We were all taught that early civilizations first bartered and later invented money, because bartering was too hard. Well, thats not true.

The way we did commerce before there was money was that everybody in our tribe would know that you killed a big buffalo and I would come and say, Hey, can I have a little bit of your buffalo? And you would say, Sure, heres a bit of buffalo. And that was the end of the transaction. I had to remember I owed you. You had to remember everybody you gave buffalo to.

You had to carry a ledger in your brain for each counterparty. It was unreliable. But it worked for 25,000 years. And then, someone intelligent came up with an idea, a new technology. This person came to you and said, Can I have a bit of buffalo? And you said, Sure, heres your buffalo The Bitcoin Debate meat. And this person said, You know what? Here are some beets. You replied, I dont want or need beets. He said, No, no. Its not about that. Were going to use beets as the objective ledger in our tribe.

Instead of having to remember, you just let the beet keep track, right? It was brilliant. It was such a good technology that it took off. In some tribes it was beets; in others, salt. In other places, different things.

That worked from 25,000 years ago to 5,000 years ago. It just spread like firereally successful technology. And then, 5,000 years ago, when tribes began to trade with each other, they needed to use the same ledger.

Gold emerged as the universal ledger. Anthropologists say that they can predict whats going to emerge as money in any tribe because it always has six characteristics. Most of all, it has to be scarce. If its not scarce, you cannot trust it. People will create a fake. It also has to be divisible, transportable, durable, recognizable and fungible.

Those are the six things that characterize money. So gold emerged as the universal ledger and it was the best form of money weve seen for 5,000 years. Nothing has kept value the way gold has. Not the British pound, not the US dollar, not land, nothing. Not even close. Simply because of its scarcity. And some people believewronglythat gold has some form of intrinsic value. And the truth is, the only value is that its scarce and it makes a good ledger. Bitcoin, like gold, doesnt have intrinsic value. But in all but one of those six qualities, it is much, much better than gold.

In terms of scarcity, gold is scarce, but we still mine areas. Lets say you buy 0.01 percent of the gold that there is today. Next year, it will be a smaller percentage, because weve mined some more. Right? We have never seen something so perfect.

Same thing if you have some cash. With bitcoin, you buy something today, and it will be the exact same percentage of the 21 million coins that there can ever be. Its perfect. We have never seen something so perfect from that point of view. In terms of the divisibility, each bitcoin is made up of 100 million Satoshis. Its incredibly easy to divide. And in terms of the transportability, its also something weve never seen before. Whereas with gold, its a stupid transaction; youre dealing with coins and exact change. And we have to trust a third party. In the past, wed go to the Medicis or the Rothschilds, and they would write letters of credit and you would trust that that the gold was there.

Since then, every time we do a payment when were not physically together, we have to trust a third partywhether its a bank, Visa, MasterCard, PayPal, theres always a third party, I have to trust them.

Bitcoin. Its remarkable in that it allows me to send money to you anywhere in the world, in real time, free, without any third party. So in The Bitcoin Debate terms of the transferability, its revolutionary. But its better than gold in every way except in terms of fungibility. If someone offers you two identical gold coins, you truly shouldnt care which one they give you. Its exactly the same. Truly fungible. In the case of bitcoin, each bitcoin contains its entire history within, right?

So if someone offers you a choice of bitcoins, you should choose the one that has never been attached to Silk Road or that has some dubious history. It could be that it is eventually worth less. But in every other aspect, bitcoin is superior.

So, you know, we live in a world in which there are five billion people who have a phone but do not have a bank account or a credit card. So these banks that do so well have managed to bank barely one billion people. There are five billion people who get abused for not having a bank account or a credit card. They cannot participate in the global economy. This is the first time that we see a true, realistic hope that this could change.

Thats why I think bitcoin is important: its relevant, and I think it will take time, just like the internet took time. But it may have more impact than the internet. If you go to Africa or Latin America, parts of Asia, and you ask the average person, Look, what would you prefer: free access to information [which theyre getting now with their phones], or a secure place to store the fruits of your labour and to receive and make payment?

If they didnt have either, which was true until recently, they would choose the second because it is more relevant to them. So for five billion people, I think that bitcoin will be more relevant than the internet.

Thats amazing. How long until that happens?

A long time. I am maybe the most bullish person you can find on bitcoin. I think it will be much more powerful than people think, but it will also take more time.

Decades?

Yes. If it takes one decade, it will be incredibly fast. More likely, I think it will be two decades.

What are the big applications that need to be invented between now and then?

I think the applications will emerge organically once you have consensus around the legitimacy of bitcoin. I dont think bitcoin will or should ever replace money. I think the pound should be the pound, the euro the euro, the dollar the dollar, and so on.

But I do think we need a global type of currency, like a metacurrency. If Argentina is buying oil from Iran today, for example, theres no point in their using the dollar, right? I think it will make a lot of sense for all individuals to have some bitcoin.

Right.

So more than the applications, I think what has to happen is for people to take bitcoin for granted the way they take the internet for granted.

Let me tell you a story. When I was a teenager, my mom was worried that I was spending too much time on the internet. And back then, you know, there was no browserit was just a UNIX screen. So I remember trying to show her how this thing, the internet, would change the world. I showed her the CPU board, I explained the whole stack, the protocol, why it was free. You know, it was a total failure. She limited my computer hours anyway. And the funny thing is, if today I ask her, What do you think of the internet? She says, Oh, my god. Its great! It changed my life!