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  • GARY GENSLER: Welcome, welcome.

  • If you have a desire to learn a little bit about blockchain

  • and its intersection with the world of finance and money

  • and you're looking for 15.S12, you're in the right place.

  • If you're here to not do that and just

  • hang out and have a good time, I guess you still hopefully

  • are in the right place, because we're

  • going to have a good time this semester.

  • My name is Gary Gensler.

  • I'm a Senior Lecturer here at MIT Sloan.

  • I'm also an advisor over at the MIT Media Lab.

  • And I've spent a lifetime around the world of finance,

  • and money, and public policy.

  • And I've been at MIT this last eight months.

  • And we're going to learn a lot together

  • about blockchain and money.

  • We're going to have a little bit of fun

  • here and see what we're going to do.

  • So we're talking about blockchain and money.

  • That's where we are.

  • By the way, I do cold call.

  • I do call on you-- so if you want to leave now,

  • I understand--

  • because I want to have an interaction a little bit

  • about it.

  • So my first question for the class,

  • for everyone, whether registered or not, how many of you

  • have ever owned a cryptocurrency?

  • Wait, wait, let's see.

  • It seems like it's about 45% of you or so.

  • All right, so it gives me--

  • Alin you want to keep your hand up long?

  • And how many of you have ever worked

  • on any blockchain-related projects,

  • in an entrepreneurial setting, a corporate setting, anywhere?

  • All right, good, so about a third in the room.

  • All right, so you all know probably more than I do,

  • but I'm going to give it a shot.

  • I'm going to always start every week with what are the study

  • questions for the week.

  • How many of you actually got the syllabus?

  • This is not going to be graded assignment.

  • I just have to have a sense of who

  • actually got this syllabus-- so a good many of you.

  • And how many of you actually did the two readings?

  • It's not graded.

  • I've just got to gauge the class.

  • Oh, thank you, thank you.

  • Write those grades down, by the way--

  • [LAUGHTER]

  • --no, no.

  • All right, so the two main questions

  • for this week's lecture really is, what is blockchain?

  • And why might it be a catalyst?

  • And I emphasize the word "might" it be a catalyst for change

  • in the world of finance.

  • We could talk a lot about things outside

  • of the world of finance.

  • And blockchain may indeed have a lot of applications outside

  • of finance, but I've chosen to try

  • to just narrow the scope a bit.

  • So this semester is really about blockchain and money

  • or blockchain and finance.

  • And secondly, you will see index cards

  • on every one of these round tables.

  • One assignment, by the end of the class--

  • you could do it now or later--

  • I would like each of you to anonymously write

  • on the card what you want to achieve in this semester.

  • It could be anything from this class,

  • from learning about blockchain, from making money on Bitcoin,

  • from--

  • I don't care if you tell me it's meeting your future spouse.

  • Like, what do you want to achieve in this class?

  • I can't help you on the third, but I

  • will try to help you on the things I can help you on.

  • And Sabrina and Talida will collect them later.

  • And next Tuesday, we'll tell you the results.

  • What is it that you want to achieve in this class?

  • And then we'll see at the end of the semester

  • if we've done that.

  • So it's just a way to help guide me help you.

  • So that's what we're trying to do.

  • And so what were the two readings?

  • One was a little thing I did.

  • And one was a thing I did with some of my colleagues.

  • And Tom, since I know you, what did you

  • take out of the readings?

  • AUDIENCE: That blockchain is essential to improved

  • profitability [INAUDIBLE].

  • GARY GENSLER: Did you have a good summer?

  • AUDIENCE: Mhm.

  • GARY GENSLER: Did you raise your hand?

  • Did you own Bitcoin?

  • No.

  • Who in the class read the readings

  • and took something different than Tom?

  • He said there was potential.

  • And your first name?

  • AUDIENCE: Alin.

  • GARY GENSLER: Alin.

  • AUDIENCE: Well, I'm coming from the technical side.

  • So from the technical side, all I see is a bunch of hype.

  • And 10 years have passed since the launch of Bitcoin

  • with very little to show for it other than hype.

  • [INAUDIBLE]

  • GARY GENSLER: OK, how many agreed with Alin?

  • This isn't a vote.

  • No, just two or three.

  • How many agreed with Tom?

  • There is more.

  • And how many of you are too shy on the first day

  • to put your hands up?

  • Most.

  • So I'm going to start and go back-- the internet.

  • How do I sort of--

  • I've come about this and of thought about, well,

  • what is blockchain?

  • What is it really about?

  • Well, the internet started many decades ago, before most of you

  • were born, but 1974-ish.

  • I mean, there is some predecessors

  • even from the late '60s, the ethernet, which is really

  • how two computers communicate.

  • And then you had TCP/IP, which was really

  • the internet protocol of multiple computers compute--

  • talking to each other.

  • And then later on in 1990, how do we move forward?

  • Does anybody know what HTTP is?

  • We're at MIT.

  • Your first name would be helpful.

  • AUDIENCE: Eric.

  • GARY GENSLER: Eric.

  • AUDIENCE: It's a protocol for communicate web content.

  • GARY GENSLER: Web content.

  • AUDIENCE: It's Hypertext Transport Protocol.

  • GARY GENSLER: Right, do You know who is

  • associated with the invention?

  • AUDIENCE: I don't remember right now.

  • GARY GENSLER: Anybody else?

  • Anybody know who-- it's not in the readings, or anything,

  • Tim Berners-Lee?

  • Anybody know who is associated with TCP/IP?

  • AUDIENCE: Was the company initiated by MIT faculty,

  • I think, [INAUDIBLE] or something?

  • GARY GENSLER: I don't know if it was a company associated

  • with MIT, but Vint Cerf may have had some association with MIT.

  • So these are the first three layers.

  • And then there were companies, commercialization, 3Com

  • and Cisco.

  • And of course, Amazon is still around today.

  • But there was something else going on.

  • How do we commercialize the internet?

  • Does anybody know what this scene is from?

  • AUDIENCE: This is the first pizza sold by Bitcoin.

  • GARY GENSLER: Good thought, good thought,

  • first pizza sold by Bitcoin, but no.

  • AUDIENCE: Is it from that movie Hackers or something?

  • GARY GENSLER: All right, movie Hackers.

  • AUDIENCE: I think it's from Net.

  • GARY GENSLER: The Net?

  • Have you ever seen the movie?

  • It's not a good movie.

  • So this is the opening scene of The Net.

  • And yes, that's Sandra Bullock.

  • And the year is 1995.

  • It's a cyber thriller.

  • You know, a president's involved.

  • The Defense Department's involved, and so forth.

  • But actually, Pizza Hut is associated

  • with the very first sale, online sale anywhere in the world.

  • They started something called PizzaNet.

  • This was the screen, by the way.

  • If you wanted to go on, you could order your pizza.

  • But there was one problem.

  • Does anybody know what the problem was with PizzaNet?

  • I mean, maybe there were multiple problems.

  • No, Alin I've called on you.

  • AUDIENCE: You couldn't pay online.

  • GARY GENSLER: You couldn't pay online.

  • Nobody had figured out how to move money online.

  • You had to pay when you showed up with the pizza.

  • So now I'm going to talk a little bit about cryptography.

  • We're going to spend a lot of time on cryptography.

  • It's cryptocurrencies and the like.

  • What's your name?

  • AUDIENCE: Jihee.

  • GARY GENSLER: Gigi?

  • AUDIENCE: Jihee.

  • GARY GENSLER: Jihee.

  • Jihee, what's cryptography?

  • AUDIENCE: I would assume that that's something cryptic?

  • GARY GENSLER: Cryptic, all right, no, you got it.

  • You've got a start there.

  • Anybody want to help Jihee out?

  • Does anybody want to help Jihee out?

  • Yeah, tell me your first name.

  • We're going to figure out how to have everybody

  • have nameplates by next week, but we'll work with Ryan

  • and do it that way.

  • AUDIENCE: Addy

  • GARY GENSLER: Addy

  • AUDIENCE: Yeah-- it's the technology or the science

  • behind encryption and decryption for fortification, so how do

  • you encrypt a particular text such

  • that it's not readable by someone else

  • without having the decryption code.

  • GARY GENSLER: OK, so it's how do you encrypt something

  • so it's not detectable by others.

  • Or in essence, it's communications

  • in the presence of adversaries.

  • You have an adversary who wants the communication.

  • You want to communicate and not let your adversaries

  • know that communication.

  • And this is true for ancient times.

  • So in ancient times, there was something called the cipher.

  • And this was a way that you'd take a piece of leather

  • or a piece of cloth and have a lot of letters.

  • And both sides, you'd encrypt and decrypt,

  • because they were different measurements of the cylinder.

  • Has anybody seen the movie Imitation Games?

  • AUDIENCE: Mhm.

  • GARY GENSLER: All, right the Enigma machine--

  • now the movie was wonderful, because it

  • said Turing cracked it.

  • And he did help crack it in an automated way,

  • but actually, the Polish government

  • had cracked it in the 1930s before they

  • fell to the Germans.

  • And Turing built on all of that and cracked it further.

  • And then in the 1970s--

  • and this was here at MIT, to some extent--

  • there is private-key public-key cryptography,

  • which I'm not going to dive into today,

  • but it's the heart of Bitcoin and blockchain.

  • It's at the heart of the internet.

  • But it's about-- the key thing is

  • communications and the presence of adversaries.

  • How do you keep a secret when everybody wants in

  • and get that information?

  • And there is a long history.

  • And MIT is at the center of a lot of that.

  • A lot of early cryptography failed on the internet.

  • In the early '90s and late '80s, David Chaum and others

  • tried to do things.

  • And we're not going to debate these today,

  • but you will have one reading--

  • I think it's either next week--

  • which will give you that history.

  • And it's worthwhile knowing about the history of failure.

  • But cryptography is the reason why the internet works today.

  • Does anybody want to tell me what SSL and TLS is?

  • Do we have any computer scientists?

  • And remind me your first name?

  • AUDIENCE: Eric.

  • GARY GENSLER: Eric.

  • AUDIENCE: That's the protocol that

  • mounts on top of the TCP/IP stack

  • to provide encryption using asymmetric case, which

  • is public-infrastructure cryptography.

  • It's secure socket layer [INAUDIBLE]..

  • GARY GENSLER: Right, so it basically

  • uses asymmetric cryptography, which we're

  • going to talk about two lectures from now,

  • but it secures the whole internet.

  • So all of a sudden you could deliver the pizza

  • and get a pass code.

  • And I have to tell you, I never knew how this

  • worked before I was at MIT.

  • So PayPal came along in 1998.

  • I mentioned this.

  • A whole bunch of other digital currencies

  • then failed, but some of these people who we'll read later--

  • like, we'll read Nick Szabo's is a piece on smart contracts

  • later, Adam Back who created Hashcash.

  • Some of these innovations were what Satoshi Nakamoto later

  • used.

  • Some innovations which were really helpful and worked

  • were Alipay and M-Pesa.

  • Does anybody know what M-Pesa is?

  • AUDIENCE: I think it's used in Kenya as, like,

  • mobile cellular-enabled cash.

  • GARY GENSLER: Right.

  • In essence, they found out in Kenya--

  • this was 10, 12 years ago-- that people

  • were trading mobile minutes.

  • They were unbanked, but they had cellular phones.

  • And they were trading their minutes as a form of currency.

  • And Safaricom realized that and said, wait,

  • we could help people be part of the digital economy,

  • even if they're unbanked.

  • And in Africa today, a half of the adult population,

  • according to World Bank figures, is still unbanked,

  • but half of that half has mobile phones.

  • M-Pesa has 20 million customers in Kenya right now.

  • So it's a form of money that's kind

  • of swapping mobile minutes.

  • But the riddle remained, how do you move money on the internet?

  • Or in essence how, do you move value

  • peer to peer without a centralized intermediary?

  • And that's the core of blockchain technology.

  • So who solved the riddle?

  • Is anybody going to tell me who solved the riddle?

  • Who solved this riddle?

  • No, [INAUDIBLE].

  • You're wearing a t-shirt that says Quentin Tarantino.

  • So I think Quentin Tarantino--

  • AUDIENCE: [INAUDIBLE]

  • GARY GENSLER: --should solve a riddle.

  • What's that?

  • What's your name?

  • AUDIENCE: Rufus.

  • GARY GENSLER: Rufus-- and who solved this riddle?

  • AUDIENCE: Satoshi Nakamoto.

  • GARY GENSLER: Yeah.

  • So a peer-to-peer cash--

  • this is the actual doc top of an email

  • that was sent out on Halloween 2008 by Satoshi Nakamoto.

  • We don't actually know who Satoshi Nakamoto is,

  • but it's a study question a few lectures from now

  • to ask you to tell me who you think Satoshi Nakamoto is.

  • So I won't ask that now.

  • And he started with a very simple sentence in his email.

  • "I've been working on a new electronic cash

  • system that's fully peer-to-peer with no trusted third party.

  • It's kind of a modest statement.

  • And so the question is, is this another internet layer?

  • We're going to explore that this whole semester.

  • I don't really have the answer.

  • I don't think the best minds at MIT could really yet tell you.

  • There are some who are maximalist

  • and say, yes, it will be.

  • And there are others who will say, no, no, no.

  • And in this course, we're going to review the minimalist

  • and the maximalist.

  • We're not going to try to center it in one place.

  • But that's the key kind of question.

  • So what is a blockchain?

  • We're going to do this and a lot of lectures,

  • but I'm going to try to do it in a short version.

  • So it's time-stamped append logs,

  • meaning you can add a little bit of information to this.

  • And it's time-stamped.

  • So these are these blocks being added.

  • Satoshi did not invent blockchain.

  • It was way earlier.

  • Does anybody want to guess when it was?

  • You're going to have a reading about this

  • later, but early 1990s.

  • AUDIENCE: Stuart Haber.

  • GARY GENSLER: What's that, Madars?

  • AUDIENCE: Stuart Haber.

  • GARY GENSLER: Stuart Haber, Stuart Haber--

  • worked for Bell Labs, right?

  • So one of your assignments-- it's

  • not going to be a graded assignment.

  • It's just going to be a fun assignment.

  • Could any of you, I'm going to say by next Thursday,

  • just because, have some fun, find the longest,

  • and time wise, longest-running blockchain.

  • It's not Bitcoin.

  • And it's been running since the mid '90s.

  • And your clue is The New York Times.

  • And we'll discuss it next Thursday.

  • But this time-stamped block, block, block, block of data

  • creates a database, an auditable database.

  • And we'll talk about ledgers, particularly next week,

  • but we'll talk about ledgers all throughout this course,

  • and how it changes the world of finance.

  • Now, it's secured by cryptography,

  • because cryptography, remember, is communications

  • and making sure adversaries can't pick you off.

  • We're going to learn about hash functions.

  • And hash functions are a really important part of cryptography,

  • and initially for databases, and how to search and store

  • information in databases, but in this circumstance,

  • hash functions were the way to not only append the next block

  • to the prior blocks, but really importantly, to compress data,

  • to make it more manipulable, and to verify it,

  • and as I've written here, tamper resistance and the integrity.

  • Digital signatures, which has to do

  • the public-key private-key cryptography--

  • there is no prerequisite to this course.

  • You do not had to have taken computer science,

  • cryptography, algorithms.

  • If I can learn a little bit about hash functions

  • and asymmetric cryptography, these are the two key important

  • sides.

  • And we have enough computer scientists

  • in this room that can sort us out if I say the wrong thing.

  • Right, Madars?

  • Hopefully.

  • And then consensus-- so there is a really important part

  • of blockchain is, how do you decide

  • who appends that next block?

  • Because when I went back here, there is block and block.

  • Each of these blocks, somebody has to decide who appends,

  • who gets to pick the next block.

  • And that's what's called consensus protocol.

  • And there is wide debates about consensus protocol.

  • And we'll talk a lot about consensus protocol.

  • But in essence, it addresses something,

  • a term called the cost of trust.

  • And we'll talk about Byzantine Generals problems,

  • which is another reading.

  • The Byzantine Generals problem was laid out

  • as a sort of mathematical game theory

  • issue some 30-ish years ago.

  • That's what Satoshi Nakamoto solved

  • was this last part, the Byzantine Generals problem.

  • Pizza for Bitcoins-- a year and a half after Satoshi Nakamoto

  • laid out blockchain and Bitcoin, somebody sent an email.

  • And you'll get these slides.

  • But this is the real, live email.

  • I'll pay you 10,000 Bitcoins for a couple of pizzas.

  • I just want some pizzas.

  • The guy who sent this, he says, I like onions, peppers,

  • sausage, mushrooms--

  • Laszlo.

  • Now, catch the date.

  • This is May 18.

  • And he's offering 10,000 Bitcoins of 2010.

  • But the key line is, what I'm aiming

  • for is getting food delivered in exchange for Bitcoins.

  • Nobody had used Bitcoins as a medium of exchange.

  • 16 months into its existence, nobody

  • had used it to buy something.

  • And Laszlo is a computer scientist in Florida

  • who was just kind of interested.

  • And he put this ad on an email list.

  • Three days later, he still doesn't have his two pizzas.

  • So nobody wants to buy me a pizza?

  • Is the Bitcoin amount I'm offering too low?

  • Another day goes by.

  • He gets his pizzas.

  • And he posts pictures.

  • So here is a picture of his child reaching

  • for those Papa John's pizzas.

  • Anybody know what those 10,000 Bitcoins were worth back in--

  • back then?

  • Chicago.

  • AUDIENCE: I know what they're worth now.

  • GARY GENSLER: Anybody want to say back then?

  • AUDIENCE: [INAUDIBLE]

  • GARY GENSLER: What's that?

  • AUDIENCE: [INAUDIBLE]

  • GARY GENSLER: $41.

  • And Laszlo was saying, two pizzas

  • are probably worth $25 to $30, because there was a whole email

  • thread.

  • He kept saying, why won't anybody get me my pizzas?

  • You can make money on this.

  • Today or earlier, late last night, $66 million.

  • Yeah, so it's kind of a cute story.

  • May 22 every year is called Pizza Day or Bitcoin Pizza

  • Day or something.

  • So what is blockchain technology?

  • These are my words but they're sort of picked

  • from the literature and so forth.

  • It verifiably moves data on a decentralized network.

  • And the economics of blockchain technology

  • are really around that, verification,

  • and the economics of verification,

  • and the economics of networking.

  • And in many ways, blockchain adds certain costs

  • to the verification through this consensus protocol

  • that we'll be studying, but it lowers some other costs

  • of verification, because you're not relying

  • on a centralized authority.

  • So it's really a trade off of cost to verification.

  • I don't think it's--

  • I'm not a purist that says it's better or worse,

  • but it's a trade off of cost and verification

  • through decentralized networks.

  • The data can be value.

  • Like, Bitcoin was a money system.

  • Or the data can be actually computer code.

  • And we'll learn a lot about smart contracts.

  • And you could have the data being verified

  • computer code and algorithms.

  • My world, finance, this directly goes

  • to the plumbing of finance, because finance

  • is fundamentally about moving money and risk

  • through a network.

  • And that network is the 7 billion people

  • that live in this world.

  • It's moving money and risk.

  • And you've all taken finance courses.

  • Or many of you have.

  • And it's the intermediation of money and risk

  • throughout our economy.

  • But there is a whole host of challenges.

  • And over the course of this semester,

  • we'll talk about those challenges, technical,

  • commercial, and public policy hurdles.

  • Will they be solved?

  • Will they not be solved?

  • But it could be a catalyst--

  • but we're not sure yet--

  • for a change in the world of money and finance.

  • So does anybody want to tell me that the role of money

  • in society?

  • And tell me your first name.

  • AUDIENCE: Thomas.

  • GARY GENSLER: Thomas.

  • AUDIENCE: Basically it's a way exchange things and services

  • between people--

  • GARY GENSLER: All right, medium of exchange, got that one.

  • AUDIENCE: --without doing bartering, I mean.

  • Exchange [INAUDIBLE].

  • GARY GENSLER: So a medium of exchange.

  • Somebody give me a second--

  • yellow shirt.

  • AUDIENCE: Yeah, medium of savings.

  • GARY GENSLER: Savings, all right,

  • so that would be a store of value.

  • AUDIENCE: Yeah.

  • GARY GENSLER: Third--

  • I'm sorry, the gentleman here.

  • AUDIENCE: Unit of account.

  • GARY GENSLER: Unit of account--

  • wow, all right, there we go.

  • There we go.

  • So we're going to spend some time next Tuesday

  • talking more about money, and the role of money,

  • in the history of money, which I think it sort of lays

  • a foundational piece of this.

  • What about the role of finance?

  • I've already sort of said a few things about that.

  • And I'm sorry.

  • I don't know your name, but right here, the woman, yeah--

  • role of finance?

  • It's all right, I'm not going to tell any financial finance

  • professor what your answer is.

  • AUDIENCE: To raise money.

  • GARY GENSLER: To raise money--

  • so keep going.

  • Anybody else want to--

  • AUDIENCE: Connect savers and borrowers.

  • GARY GENSLER: Connect savers and borrowers--

  • so connecting is sort of moving money, moving.

  • AUDIENCE: The valuations.

  • GARY GENSLER: Valuations-- so that's the pieces of it.

  • So there is moving, making valuations.

  • I use the words, moving, allocating, and pricing.

  • Pricing is the valuations of money.

  • But let's not forget, it's also about risk.

  • When you buy insurance, that's a transference of risk.

  • When you buy an equity stock, that's a transference of risk.

  • If you enter into a complex credit default swap,

  • that's a transference of risk.

  • So finance is not just the movement of money.

  • It's the movement of risk as well, throughout the economy.

  • And I always think, finance, I always--

  • I've thought this when I was at Goldman Sachs for 18 years--

  • that finance sits at the neck of an hourglass.

  • And it's why it collects so much economic rents from society,

  • because when you sit at the neck of an hourglass and billions,

  • literally trillions of grains of sand go by,

  • if you collect some of those grains of sand,

  • you get uber wealth.

  • And that's-- those are for other classes.

  • But finance can collect a lot of economic rents.

  • The financial sector, though, has a bunch of challenges.

  • We'll have one lecture later in the semester

  • about some of those challenges.

  • And we have a reading.

  • I think Sheila Bair wrote something recently

  • that I asked you all to read later in the semester.

  • But we will talk about the financial crisis and some

  • of the problems.

  • But it's had a lot of crises.

  • Fiat currencies have a lot of instabilities, of course.

  • We have centralized intermediaries, as I laid out.

  • And we'll talk about collect a lot of economic rents.

  • So there is opportunity.

  • Blockchain has real opportunity to kind of come

  • under this world of finance and maybe do some things better.

  • Central banking, I also have a bunch

  • of legacy payment systems.

  • And those legacy payment systems are slowly adapting,

  • but it's slow.

  • And why did Alipay do so well in China is part of this story,

  • because there were so many unbanked, just

  • like M-Pesa in Kenya.

  • But here in the US, we still pay 2.5% to 3%

  • for our interchange charges for Visa, MasterCard, and the like.

  • And a lot of clearing and settlement

  • still has a lot of counterparty risk.

  • And one that I care deeply about,

  • financial inclusion-- there is still 1.7 billion people

  • in this world who are unbanked.

  • And so we don't think of it as much in the developed

  • countries, but it's certainly true in many products

  • even here in the US.

  • And these are, to me, the opportunities.

  • Finance is 7.5% of the US economy.

  • That's $1.5 trillion of revenues.

  • So any of you that are thinking about

  • entrepreneurial opportunities, the payment system

  • just here in the US is a 0.5% to 1% of our economy.

  • That's $100 billion to $200 billion of revenues.

  • I think Visa is about $18 billion.

  • But you know, when you add up the whole payment system,

  • that's $100 billion to $200 billion in payment revenues.

  • So that's kind of the opportunity.

  • Can blockchain technology come in?

  • It's got problems.

  • It's slow.

  • It has performance issues still.

  • But can it compete with that?

  • Here are some of the problems, the financial sector

  • would say, with blockchain.

  • These are real, live things that we're going

  • to study later in the semester.

  • They say, it doesn't have the performance, scalability.

  • A modern payment system, you need

  • to be able to move about 100,000 payments a second.

  • A modern securities clearing, the Depository Trust

  • Corporation, the Securities and Exchange Commission

  • says, you do about 30,000 transactions a second,

  • but we need you to scale.

  • And your computers and everything

  • have to be resilient to 100,000 transactions a second.

  • Bitcoin, you can do about seven transactions a second.

  • Visa currently-- it depends on the second--

  • does anywhere from 20,000 to 70,000 a second.

  • So it's just a sense of scalability and performance.

  • We might get there.

  • It might be three to seven years away.

  • I'm optimistic, but there is still

  • a bunch of performance and scalability issues.

  • Privacy and security-- blockchains, by their nature,

  • are public.

  • So they're not fully censorship-resistant,

  • but there is a lot of innovation about making them more private.

  • But then that makes the public sector a little nervous.

  • Interoperability-- they don't necessarily

  • work yet with other legacy systems or with each other.

  • The internet, one of the great innovations of the internet,

  • it became interoperable, that all of these different websites

  • could kind of speak with each other.

  • Governance is a very big issue we'll talk about.

  • And one of the things about governance

  • is, it's hard to update the software of a blockchain,

  • because if you create a decentralized where

  • no one's in control, no one can collect economic rents,

  • you also don't have sort of somebody with the ability

  • to necessarily update the software.

  • And we'll talk later about how Bitcoin updates its software,

  • and what Bitcoin core developers are, and so forth.

  • But Facebook, you do know one thing-- though they're

  • a company that collects a lot of profits

  • and economic rents off of their two billion members,

  • they know how to update their software.

  • It's a governance issue that's a real, live challenge.

  • And that's why the financial sector says,

  • I'm not sure this works, this is ready yet for me.

  • And then thus, what are the commercial use cases?

  • And what are the public policy issues?

  • So right now, the financial sector

  • favors permissioned blockchains versus permissionless.

  • About four weeks from now, we'll kind

  • go through these two differences,

  • but I want to just frame this briefly.

  • Permissioned blockchains have a known group of people

  • who actually participate.

  • The half of you that said you've owned Bitcoin,

  • you know it to be something where

  • anybody can update the ledger.

  • Permissioned blockchains, you can't do that, in essence.

  • You pick the 3 or 20.

  • The Australian Stock Exchange is updating their clearing

  • and settling.

  • They announced they're doing a blockchain project.

  • They're doing it with digital assets.

  • And they're using the Hyperledger blockchain,

  • which is an IBM software, open-source software.

  • But the Australian Stock Exchange

  • is going to put it on three computers, which

  • is called three nodes, that they control all three of them.

  • The Depository Trust Corporation is

  • looking at blockchain-inspired solutions for some

  • of their data warehouses, but they, too,

  • are going to control the nodes.

  • I'm just giving you-- that's permissioned blockchain.

  • So there is nothing wrong with that.

  • That's just how they are looking at this.

  • Permissionless blockchains are like

  • Bitcoin, unknown participants, securities

  • based on incentives, a cryptocurrency, and crypto

  • economics.

  • Crypto finance is about $200 billion.

  • But you know, you have to update these slides daily.

  • Two days ago, it was $230 billion.

  • And this little pie chart is-- a little over half is Bitcoin.

  • The next slice is something called Ethereum, and then

  • Ripple, and down the line.

  • We're not going to spend a lot of time in this semester--

  • if your goal is to how can you profit,

  • and day trade Bitcoin, and day trade Ether, god bless.

  • Go prosper.

  • You can stay in the class.

  • I just won't give you much advice on it.

  • This is not a crypto-investing-centered

  • class.

  • But I'm OK if that's what you're doing.

  • Does anybody know what the worldwide capital market

  • size is?

  • Does anybody want to guess?

  • You know, this is $200 billion.

  • What's it look like?

  • I've already said it's modest.

  • AUDIENCE: Hundreds of trillions.

  • GARY GENSLER: Hundreds of trillions-- global equity,

  • about $80 trillion, global bond and debt

  • markets, $250 trillion, so it's still quite modest

  • compared to that broad breadth of capital formation.

  • And gold?

  • If Bitcoin is digital gold, what's the value of gold?

  • All the gold that's ever been--

  • Tom?

  • AUDIENCE: About $6 or $7 trillion.

  • GARY GENSLER: Yeah, $7 trillion--

  • so just to give you a sense of scale.

  • So there is also something that's interesting

  • about this space, is that it's outsized public attention,

  • even as evidenced by the hundred of you in this room,

  • versus the size it is relative to the capital markets today.

  • There is a bunch of public policy issues.

  • We'll have a lecture.

  • I'm a former regulator.

  • I ran the Commodity Futures Trading Commission.

  • But this course is not about regulation,

  • though we have to always come back to regulation.

  • We always have to infuse what we're

  • doing with the regulation.

  • But let me just give you a little framework.

  • And then you'll have to be bored in a handful of weeks

  • and read--

  • I gave some congressional testimony on it.

  • Yes, it will be required reading, sorry.

  • But it's guarding against illicit activity.

  • A lot of Bitcoin and cryptocurrencies

  • started out in the cyber punk sort

  • of movement and libertarian movement, so forth.

  • And it is true.

  • You can use this for illicit activity, absolutely.

  • But I would say, crime is not new,

  • just the mechanisms and means are new.

  • And so the criminals, yes, will use this

  • and have used it for illicit activity.

  • Financial stability-- central bankers around the globe,

  • sort of will this shake finance?

  • Well, it's only $200 billion.

  • The financial markets are $300 trillion plus--

  • not yet, is generally what they're saying.

  • But for some countries, it's a way

  • to get around capital controls.

  • And so for those countries worried about capital controls,

  • it's a very real and live set of issues.

  • And then protecting the investing public--

  • and when we do this in a few weeks,

  • I'll go through each of these, the investor protection

  • issues, and yes, the SEC, how we test, and the like.

  • For those who wish to do their own initial coin offering,

  • I'll give some broad sense of what the SEC is

  • trying to accomplish.

  • But it's a moving target.

  • So this is a very interesting thing.

  • As opposed to many of your Sloan classes,

  • or your C cell classes, or Media Lab classes,

  • this is a very unsettled area of public policy.

  • So it makes it interesting.

  • And if you all go off and form companies,

  • you will actually be helping sort

  • of set the edge of that public policy debate.

  • I would always say, just remember poet

  • Riley, the duck test.

  • This is a poet, Indiana poet-- so those

  • that aren't from the US might not know the duck test.

  • But basically, if it quacks like a duck

  • and it walks like a duck, it's a duck.

  • So whenever you're thinking about public policy, folks

  • like myself who once was a regulator,

  • we think in the duck test.

  • And then we secondarily think about the actual words

  • in the congressional act.

  • Where is the common sense?

  • And if it quacks and walks like a duck,

  • it's probably a security.

  • Or it's probably this or that.

  • The incumbents, like this lioness in the corner,

  • are eyeing this space, because there is a lot of volatility.

  • And Wall Street makes money on volatility.

  • Volatility is the friend of Wall Street.

  • It may not be the friend of investors,

  • but it's a friend of Wall Street.

  • And they also like the trading volumes and the spreads.

  • Coinbase, the largest crypto exchange here in the US,

  • has 20 million accounts.

  • They might not all be active, but that's

  • the size of Fidelity's membership or account

  • list and twice DE Shaw.

  • And Robin Hood-- how many of you have ever used

  • Robinhood as a trading app?

  • Wow, half of you.

  • So you know, free trading, five million members--

  • for those who don't know, you can download Robinhood.

  • And you can trade stocks for free, no commission.

  • And if anybody is interested, show up

  • and I'll do office hours on how Robinhood commercializes--

  • they commercialize your order flow.

  • And they make money without charging you commissions.

  • But it's a sort of wonderful app.

  • Millennials love it, 5 million members already.

  • So you better believe DE Shaw and the incumbents

  • are worried about things like that.

  • The startups are also more willing to beg for forgiveness

  • from regulators.

  • They're willing to sort of take risks and beg for forgiveness,

  • whereas incumbents tend to have to ask for permission.

  • So there is an unlevel field, that always, it's

  • asymmetric business set of risk about regulatory risk--

  • not always.

  • I'm not crying for JP Morgan.

  • I mean, the big incumbents have also-- they

  • have their advantages.

  • And Coinbase is becoming an incumbent rather than

  • just a startup, in a sense.

  • And we'll talk during the semester

  • about some of the incumbents.

  • We're probably going to get Jeff Sprechers here in mid-November.

  • He's going to talk to you about what Intercontinental Exchange

  • and the New York Stock Exchange is doing with Starbucks,

  • and Microsoft, and the like.

  • The financial sector use cases--

  • I'm not going to go through these,

  • but this is the second half of the course, is going

  • to go through each of these.

  • And we'll do one to two sessions on each, payment systems,

  • central bank digital currency, secondary market trading.

  • The venture capital and initial coin offering space,

  • we'll do two course on that, and move through.

  • So what are we going to do in this whole course?

  • Basically, our goal is to learn the fundamentals--

  • that's about roughly the first half of the course--

  • pivot to two sessions on the economics.

  • We're going to be talking about the economics

  • throughout the whole course, but I

  • want to really just focus, drill down on the economics,

  • on two of the discussions.

  • And then riff through the financial space

  • for the second half--

  • that's our journey together.

  • To me, it's for anybody who wants to gain

  • critical reasoning skills.

  • This is not just kind of a, hey, this

  • is going to change the world and revolutionize everything class.

  • And so I basically think of an old Defense Department

  • term called ground truths.

  • It's when the general doesn't really know what's going on

  • but needs to figure it out and needs to talk to that corporal

  • on the ground who has got dirt all over him

  • and has been shot up and says, here is the real ground truth.

  • We're going to try to talk about ground truths in this class

  • and separate the mere assertion from the hype.

  • And some of your readings will be some real Bitcoin

  • and blockchain minimalists, from Nouriel Roubini that

  • uses words I'm not supposed to repeat

  • on a recording about this stuff, to Paul Krugman who--

  • and Joe Stiglitz, and other Nobel laureates who say,

  • no, it's not going to work, or Warren Buffett, to maximalists.

  • We're going to try to cover both sides.

  • Larry Lessig is honoring me because he's

  • in the back of the class--

  • who is an enormously esteemed professor from Harvard.

  • I didn't know Larry was going to be here.

  • And I did this slide before.

  • But in 1999, I think, you wrote this book, Larry.

  • Is that right?

  • AUDIENCE: [INAUDIBLE]

  • GARY GENSLER: Code and Other Laws of Cyberspace,

  • I put you in the--

  • but I think it's worthwhile to think about Larry's four bits

  • here.

  • And I don't know, Larry, if you want to say anything,

  • but I'm going to try to infuse this course in just how you

  • think about this.

  • The tech-- we're at MIT.

  • The technology-- and we're going to get you a lot of technology.

  • If you want more than I can give you as a former finance

  • sort of type my whole life, there

  • is going to be a bunch of computer science

  • people in the class.

  • We're going to hook you up together

  • with the folks from the Media Lab and C cell

  • and try to connect you to the technology side

  • if you want to swim deeper in that pond.

  • But the technology really, really matters.

  • And that's why we are going to go through hash functions,

  • and go through asymmetric cryptography, and so forth.

  • From a business perspective, markets matter.

  • Why is it that incumbents or startups are or are not

  • doing this and that?

  • Why is it 10 years in and nobody has

  • got an enterprise-wide solution yet to payments

  • that use blockchain?

  • The law matters.

  • The public policy side matters.

  • And the fourth of Larry's layout, social norms--

  • that's a little harder for me to teach.

  • That's not what this class is about.

  • But it is also a flex all this.

  • It's not just the technology, and the markets, and the law.

  • So it's not just a three-legged stool.

  • It's kind of a four-legged stool.

  • How did I do Larry?

  • AUDIENCE: Excellent, all right.

  • GARY GENSLER: I really didn't know

  • Larry was going to be here.

  • But I wanted to give you a framework for how your faculty

  • member thinks.

  • And we'll be on this journey together.

  • Range of perspectives-- we're not

  • going to be a Bitcoin minimalist or maximalist.

  • I'm probably, to be self-disclosed here,

  • a little bit center minimalist on Bitcoin.

  • Smart contract minimalist, maximalist,

  • I'm probably pretty center.

  • Larry is probably a little bit center maximalist,

  • I'm guessing.

  • AUDIENCE: I'm hoping I can be, but you're going

  • to teach me whether I can.

  • GARY GENSLER: Oh, so you're still center or center

  • minimalist on smart contracts?

  • And then blockchain maximalist or minimalist--

  • I'd say a few weeks ago, I was kind of center maximalist.

  • And I'm sort of skipping back to the middle.

  • Permissioned blockchain, I'm a little bit more--

  • and there is some in here.

  • Alin who is one of your Sloan cohort

  • that you might know, six months ago when we met

  • was working on a permissionless system.

  • And now you're working on a permissioned system.

  • You have a startup.

  • AUDIENCE: That is correct.

  • GARY GENSLER: Yeah, because you bounce up

  • into the market realities.

  • And we're going to talk a lot in this course

  • about critical thinking, about when

  • do you really need the advantage of a decentralized peer-to-peer

  • system where the costs of trust are such that that's

  • the right way to go.

  • But I am one who thinks that there is also so much

  • economic rents in the financial system that $1.5 of revenues,

  • or 7.5% of our economy, or just $200 billion

  • in the payment systems, for instance,

  • that there may be times that you don't really

  • need a decentralized system, but it just

  • might be your opportunity to tuck

  • in underneath all of those economic rents and all

  • those revenues.

  • Now, incumbents will react.

  • You poke an incumbent, commercially poke them, I mean,

  • and they're going to react.

  • And that's why I think blockchain may well

  • be a catalyst for change, even if incumbents then

  • adopt a lot of that inside.

  • The requirements of the course--

  • class participation is a hard thing

  • to judge as a faculty member when I have this many people.

  • But I always think class participation matters.

  • We made it 30%, which if you have any advice

  • on this next semester--

  • 30% two individual write ups, one in the first half,

  • which is up to, I think, lecture 10, which is basically

  • the blockchain fundamentals.

  • You pick a topic.

  • I don't care which one, but you'll get a much better grade

  • if it's about critical reasoning,

  • if it's really taking whatever those sets of writings are

  • and not just repeating that which is in the readings,

  • but really going the next step and saying,

  • here is what's going on.

  • And this isn't business school.

  • You don't have to convince me that something about computer

  • science.

  • It's like critical reasoning about the economic

  • opportunities, the strengths, the weaknesses,

  • the opportunities, the threats, that old business school sort

  • saying of swats with regard to that week's--

  • whether it's about hash functions early on,

  • cryptography, or you sort of wait

  • during the foundational period to permissioned

  • versus permissionless.

  • You pick-- but to please hand it in before that class' lecture,

  • because I might during the lecture say, who wrote today?

  • Do you want to tell us what you think?

  • And it might help spur the class participation--

  • and then a second write up in the second half

  • when we're riffing through the use cases,

  • again, critical reasoning.

  • And then lastly, the usual approach

  • of teams of up to four--

  • no, I don't want teams of five, to handle that right now,

  • three or four.

  • And somewhere in the second half of this semester,

  • we'll talk about more of the content.

  • And there is a couple of you in here

  • that worked with me last semester in a smaller group.

  • You know, I want you to do well so I'm going to sort of give

  • you a sense of what do we want to do, but it's basically,

  • the idea is, you're an entrepreneur

  • or you're an incumbent.

  • And what sort of use case are you going to pick?

  • And whether it's permissioned or permissionless,

  • sort of make a proposal.

  • Do a use case.

  • Use your critical reasoning around this new technology

  • somewhere in the broad world of finance.

  • I mean, you know, and I'm glad to define finance really broad.

  • You'll pick.

  • So that's kind of the piece.

  • Act one are the fundamentals.

  • I won't go through each of the pieces, but you know,

  • that's in the syllabus, of course.

  • Act two is the pivot of the economics,

  • and act three, our financial sector use cases.

  • And hopefully throughout, we'll have a lot of fun.

  • So the study questions for next Tuesday, real quick,

  • what are the roles and characteristics of money?

  • So I really want to sort of dig behind money.

  • Money is but a social construct or a social convention,

  • medium of exchange, a store of value, unit of account.

  • There is some readings about the debate,

  • whether money first came from the barter system,

  • or a really good set of anthropologists

  • and archaeologists and everything

  • say, no, it actually came as a ledger system.

  • And no one knows for sure 10,000 and 15,000 years

  • ago whether money came from the--

  • out of the barter system or more as a unit of account,

  • keeping account of credits and ledger.

  • But I'd say, when you read through some of those readings,

  • you start to think, well, this is just a societal construct.

  • And so we'll get behind that.

  • What is fiat currency?

  • Fiat currency, which is an invention, really, only of

  • the last few hundreds years that we take for granted now.

  • But how does that fit into that whole history?

  • And importantly, how do ledgers--

  • accounting ledgers, I know, boring stuff,

  • but it's probably why we came out

  • of the dark ages about 500 or 600 years ago

  • with double-entry bookkeeping.

  • Sorry, I like ledgers.

  • We'll talk a little bit about ledgers

  • and how that fits into money, and securities,

  • and so forth, and then layering in how Bitcoin

  • fits on top of that history.

  • Next Tuesday is not deeply about Bitcoin.

  • It's just a little dollop on that.

  • There will be five or six readings.

  • One of them is a three-minute video, the third one.

  • It's fun.

  • Watch.

  • It's just a funny little video on what money is.

  • There is no need to read Nakamoto's full paper.

  • When I said the email, I mean just the cover email.

  • It's one paragraph.

  • My goal in the readings each week was not--

  • and each session was, by and large,

  • try to keep less than 50 pages.

  • You say, you're going to look sometimes and you'll go,

  • it looks like it's more.

  • And maybe it is.

  • I figure you're all going to figure out

  • for yourself how to sort through the depth of your knowledge.

  • But I will predict that some of you, maybe as much as a quarter

  • or a third of you, are going to go down a rabbit hole one day.

  • And you're going to be doing blockchain for the next 48

  • hours.

  • And you won't know where the time went,

  • because it is an addiction at some point that some of you

  • will get, because there is this curious notion.

  • I'm not predicting that infirmity for all of you.

  • I'm just saying some of you will have that happen to you.

  • So occasionally I have readings just--

  • what, Alin it's happened to you?

  • AUDIENCE: I think so.

  • GARY GENSLER: Let me just conclude

  • and then take any other questions and lay it up there.

  • Blockchain I think does provide a peer-to-peer alternative.

  • I hope, Larry, I'll be able to convince.

  • It does provide-- and that peer-to-peer alternative

  • addresses cost of trust.

  • It doesn't mean it's the only way to address cost of trust,

  • but it addresses cost of trust.

  • The financial sector does have challenges,

  • not just that it has 7.5% of our economy in the US

  • and similar ratios around the globe,

  • but resilience, how it survives shocks.

  • The financial crisis and things like that are real.

  • And inclusion-- 1.7 billion people unbanked, but then

  • if you look at other products, who has access to credit cards,

  • and mortgages, and the like?

  • And then fiat currencies, Ken Rogoff and others

  • have written a lot about the instabilities

  • that come with fiat currencies.

  • And we'll talk about some of the history,

  • and why central banks exist, and how they came about.

  • The next key point is, we already

  • live in an electronic age.

  • Satoshi Nakamoto and Bitcoin didn't create electronic cash.

  • I mean, Sandra Bullock couldn't pay electronically.

  • That was 1995.

  • They did a sort of B-rated movie about it all.

  • But by today, you pay your tuition online.

  • Those of you who work get paid online.

  • You pay your auto loans online.

  • Most of our lives are electronic cash, not 100%,

  • but in some countries like Sweden,

  • it's getting very close to 100%.

  • We'll learn together and discover

  • that money is but a social and economic consensus.

  • Blockchain technology along with crypto finance

  • might be a catalyst for change.

  • And then much masquerades as fact,

  • but is only mere assertion.

  • We're going to try to sort through that,

  • those differences.

  • That doesn't mean that all of you

  • are going to walk out agreeing with Paul Krugman, a Nobel

  • laureate, or Nouriel Roubini, that this is just

  • a bunch of nonsense.

  • Some of you might, by the way.

  • But I think you'll come out with real critical thinking skills.

  • And I hope that some of you will say,

  • I've figured out actually where there

  • is a real opportunity in the world of finance

  • to use blockchain technology, and make it a better

  • financial sector, democratizing finance, or somehow providing

  • a service at a lower cost, a better service throughout.

  • I hope throughout that we'll learn together

  • and we'll have a bit of fun along the way.

  • So that's kind of my thoughts.

  • Questions?

  • We have exactly-- what?

  • AUDIENCE: 18.

  • GARY GENSLER: 18 minutes, there you go,

  • but we can cut it short, too.

  • I don't care.

  • There we go.

  • Could you tell me your name?

  • And we're going to do placards.

  • Ryan's going to work to figure out how to do placards,

  • because--

  • AUDIENCE: It's [? Younghere. ?] I

  • wonder how are the teams formed, the final project.

  • GARY GENSLER: How the teams form?

  • Traditionally-- anybody at Sloan can speak to this too--

  • but students do it their own.

  • So the faculty doesn't sort of try

  • to insert themselves to help you,

  • but we tend towards the latter half and say, well,

  • who is formed up in groups?

  • If it's a smaller group, it's like, well anybody who is not

  • yet formed in a team, why don't you

  • move to the left-hand side of the room and just get together.

  • But we could do that electronically too.

  • And you know, whether Talida and Sabrina who

  • could help in trying to basically have a social network

  • to help form the teams, because this is a big group,

  • you're right.

  • But that's traditionally, people-- students

  • do it on their own.

  • Other questions?

  • Is anybody going to go out and sell their Bitcoin now?

  • Larry, why are you here?

  • No, no, let--

  • AUDIENCE: Other than the payments you talked about or--

  • no, I am here because I think you're

  • going to bring a critical skepticism to the whole field.

  • And you're incredibly informed about the finance side.

  • So I want to see the combination of those,

  • and whether at the end I'm still there is a there there.

  • I am convinced there is a there there.

  • As we've spoken, because I really think

  • it could radically change the cost of trust around the world.

  • That will benefit the developing nations substantially.

  • But I think there is a lot of questions I still have.

  • And I'm eager to see how this conversation helps it

  • [INAUDIBLE].

  • GARY GENSLER: Well, I thank you for coming.

  • And any week you could be here, any day, we benefit.

  • And I hope it's really--

  • this is meant to be a conversation.

  • I'm not that far ahead of you.

  • Simon Johnson approached me last October

  • and said, what do you think about coming up to MIT?

  • And Tom knows this story.

  • And we were sitting down for lunch in DC.

  • And it was a good time in my life.

  • My three girls-- I have three daughters.

  • And I'm a single dad.

  • And they were-- two are in grad school

  • and one are in undergrad.

  • It was a good time in my life.

  • I said, why not come up here and get

  • engaged in this digital currency initiative

  • over at the Media Lab?

  • And I've spent a life--

  • I was 18 years at Goldman Sachs on the investment banking side,

  • helping people buy and sell companies.

  • We call it mergers and acquisitions.

  • And then I went to the trading side, fixed income,

  • and went off to Asia, and did a bunch of--

  • I ran the fixed income, and currency,

  • and swap trading in Asia.

  • And then my last job was the co-finance officer.

  • So we were about a quarter of a trillion dollar balance

  • sheet at that time--

  • Goldman Sachs, this is.

  • We were still private, which meant if we lost money,

  • we were personally--

  • I was a general partner--

  • was kaput.

  • That's a technical word.

  • But we had 700 legal entities and 1,000 people who could

  • commit the capital of the firm.

  • Those are people we generally call traders.

  • But you know, it was a fascinating period of time.

  • I then went on to public service,

  • because Bob Rubin knew that I'd be a soft touch to service.

  • He was the Treasury Secretary.

  • I was a former partner at Goldman Sachs.

  • And I went off to the US Treasury

  • as a assistant secretary, an undersecretary

  • in the late '90s-- a little different times

  • than we have now for many reasons.

  • But we were paying down the debt.

  • We were dealing with the Asian debt crisis, long-term capital

  • management, the Russian debt crisis.

  • It was sort of a fascinating period of time.

  • I worked on a bill with John McCain--

  • I didn't get to know Senator McCain that well,

  • but he was just remarkable to work

  • with even for a short period of time-- called E-Signature.

  • It was a bill that basically said,

  • you can sign everything electronically.

  • And he was the Chair of the Senate Commerce Committee

  • at the time.

  • It was a wonderful little-- sometimes in government,

  • you can work on small things.

  • I worked on the redesign of the currency.

  • And I could tell you stories about why

  • it looks the way it does, and how you

  • can redesign paper currency.

  • And for a future lecture, I'll tell you

  • the one design feature that I-- is still in the currency.

  • And you can visually see it.

  • And when I asked for it, the fellow

  • that ran the Bureau of Engraving said, why?

  • And I said, because it looks better.

  • And I'm the guy that's approving it.

  • And maybe can we get it done?

  • Can we work this out?

  • And it did look better.

  • And he loved it.

  • He was worried about the political risk of doing it.

  • It was a better design.

  • He just was--

  • I said, I'll cover you politically.

  • Let's do it.

  • But then I worked with Paul Sarbanes

  • in what became Sarbanes-Oxley.

  • I was his senior advisor.

  • I worked and kicked around some political campaigns.

  • We lost two of them.

  • That would be the '08 Hillary campaign and the '16 Hillary

  • campaign.

  • I was her Chief Financial Officer.

  • I was an OA to a senior advisor doing

  • economic policy, and outreach, and handholding, and--

  • oh, gosh.

  • And then in the middle of those two campaigns,

  • I ran something called the Commodity Futures Trading

  • Commission, which was post-crisis, what do we do?

  • This is a real public policy shortcoming.

  • And I looked at it as an opportunity to, as I said,

  • democratize finance a bit and lower risk.

  • And so we tried to bring transparency to a $300 or $400

  • trillion dollar market called swaps,

  • which are just contracts for transference of risk.

  • And they are a form of a derivative

  • that were unregulated.

  • And we were trying to bring transparency to that and lower

  • risk through central clearing.

  • So that's sort of my professional life.

  • And as I said, I've got three daughters.

  • And they're well-situated.

  • So when Simon said come on up, I said great.

  • And I love him.

  • I'd say, it's just terrific.

  • And you all are great.

  • Unless there is other questions, I'm going to let you go early.

  • I don't--

  • [APPLAUSE]

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1.15.S12ブロックチェーンとお金の入門2018年秋号 (1. Introduction for 15.S12 Blockchain and Money, Fall 2018)

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    林宜悉 に公開 2021 年 01 月 14 日
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