embrace working with the government. As I like to say, go in through the front door—don’t go hide in the shadows.
The same thing goes with banks and auditors and insurance companies. We couldn’t get an accounting firm to do business with us.
X: When was this?
JA: This was in 2014, even into 2015. It was extremely hard. No public accounting firm was willing to do business with us.
It was incredibly difficult to get a banking relationship. The vast majority of companies in this space were completely unable to get banking relationships. We managed to build a really strong banking relationship with a significant global bank, but it was an enormous amount of effort.
Another thing about it is this is the first product I’ve been part of building where the day you launch the product, you’re under 24/7 attack by criminals. That’s just a new universe, and that is part of being an Internet-based financial services product where cyber criminals just live and breathe trying to access money and use stolen identities. It’s just brutal.
[It’s] everything from your petty hacker who’s trying to take over a customer’s account, to state actors who are trying to hack your exchange to steal huge amounts of money.
X: When you think about it, money is kind of weird as a concept. How does the fact that money is starting to flow more like information—open, without fees, and decentralized—how is that going to change society?
JA: I think you have to first step back, and I don’t want to get too theoretical, but at the end of the day, money is merely a record-keeping system. There’s no actual money. There’s not, like, a thing.
There used to be gold, but gold was originally money because gold was a good record-keeping system. You could weigh it and measure it. It was very difficult to counterfeit, so it had durability. It was immutable—you couldn’t change it. It could be divided into small units. It was portable. It spanned countries [and] cultures.
But does gold have any inherent value? It’s just a rock, right?
But we don’t do that anymore. We just make money out of thin air. We just say the money is this.
And the way we experience it, though, as consumers, is it’s a record-keeping system. There’s people who keep track of these records. There’s these banks that have databases, and the database is a record of what I have, what you have, what I owe, and what you owe. And payments [are] just a way of reconciling those different record-keeping systems.
But the actual dollar is a SQL database running on an Oracle server in a building at the Fed. That’s actually what the dollar is. It’s a record-keeping system.
I think what changes with cryptocurrency is you are able to have a global, open, record-keeping system that isn’t just for money—it’s a record-keeping system for anything. And that’s even more exciting and relates to what is possible for society.
You have this global record-keeping system that is tamper-proof, is immutable, that is very secure, that has a mechanism to have a unit that can divide to hundreds of millions instead of pennies on a dollar. And it has the advantage of being a kind of public utility that no one government controls or no one corporation controls. It really is like a public good the same way the Web is a public good or e-mail is a public good. No one controls the Web or e-mail. Those are open, public utilities that are distributed and decentralized and run over the Internet. [Of course, the Web and e-mail have their problems, some of which blockchain systems might be able to address. See next question.—Eds.]
Blockchain tech and crypto-commodities like Bitcoin make that possible. What that translates to ultimately is that when you have an architecture like that, you can get to a place where the storage and transmission and exchange of value is just a free service. And so, I could transmit value to anyone, anywhere, instantly, at zero cost, the same way I can share my opinion globally at zero cost or share content with someone instantly, globally. That reduces cost [and] returns value to the economy. There’s trillions of dollars of tax basically that are these fees and tolls and other time delays and other things that go on with how money moves around. That’s just a general benefit to society is we enable that.
But it also potentially connects the whole world to a common digital economy so that billions of people can participate in economic relationships with each other over that infrastructure, the same way that billions of people can now communicate with each other through things like WhatsApp and WeChat and mobile devices. And so, you have a more open, global, inclusive economy that’s made possible when this stuff gets delivered at scale.
X: How does blockchain technology impact the Internet?
JA: At some level, the Internet is this distributed system [that] was designed as a kind of trust-less, data-sharing infrastructure. And it really lacked … an identity layer, and it lacked a trust layer that could allow you to deal with people and not know who they are, but still have a trustworthy economic relationship or interaction.
And so, there have been these missing layers that have to do with everything from privacy and security to economic transactions and interactions. I think we’re seeing those layers get built. I think we’re seeing the Internet has run up against the constraints of the original architecture, which led to a lot of centralization in services, or a lot of power aggregated to hubs like Amazon or Apple or Facebook or Google. We’re running up against the limits of that, and I think we’re seeing this new infrastructure layer be created that is not just about information exchange—it’s about the exchange of value and economic relationships and really enabling transactions, where trust is really vital, to take place in a purely digital way.
To me, that just means that all these different current systems of society that are not run on the Internet will be run on the Internet. They’ll become run by software, by A.I. And that includes things like governance [and] much of civic society, [and] fiduciary industries like finance, accounting, insurance, [and] law. These paper-built industries will very likely see the guts of how they work move to software and blockchains and A.I. And that will be a massive, wholesale shift that affects many very large, multi-trillion-dollar industries—and hopefully improves things along the way.
X: Does it impact the Amazons and Googles and Facebooks of the world?
