The Crypto Airplane: understanding cryptocurrency ownership [bitcoin, ethereum]

so let's get started so the talk i'm doing today the crypto airplane comes from my love of two technologies i really really like computers communications blockchains cryptocurrency cryptography all things crypto i also love aviation and many of you probably already know this but i'm an amateur pilot so i'm a licensed private pilot i fly a small single single-engine airplanes ones that are really smaller than your family car in most respects and i do this for fun it's not something i want to do professionally i do it as a hobby it's something i started doing when i was 19 years old i love aviation i love the methodical aspect of trying to figure out how this incredible machine works i love the feeling of being in the sky and being in control i love the sense of accomplishment that comes from being able to master a skill like that um you know many of the same things i love about crypto so i often find parallels in topics that i'm interested in and today's talk the crypto airplane is about the parallels i see between aviation and cryptocurrencies in fact what i'm going to do is create an elaborate scenario an analogy and this analogy will be used to highlight some very very important concepts that i think we all need to understand now over the last few months we've been accelerating down the runway with this uh crypto airplane so let's talk about how we got here what's happening and how we see some similarities between aviation and cryptocurrency so the first thing i want to talk about is the idea that there are different classes of ownership in cryptocurrencies not everyone who owns cryptocurrency owns it at the same level think about aviation right when you get into a commercial flight maybe you are in first class maybe you're in business class maybe you're in economy maybe you're in basic economy or maybe you're flying standby so you have a ticket but you don't yet have a seat allocated and if you look at cryptocurrency ownership from the same perspective there are different levels of cryptocurrency ownership so let's look at some of these levels and see what they mean one of the reasons there's a lot of excitement about cryptocurrency is the announcement of some big financial institutions that they have now entered the cryptocurrency space specifically paypal announced a few months back that they would now make bitcoin available to their customers and their customers can buy and sell bitcoin if you looked at the fine print you would have noticed something peculiar and that is that you cannot withdraw your bitcoin so there is no mechanism to actually take custody of bitcoin once you've bought it from paypal and this is not just paypal that does this we see this same pattern with companies like robinhood which is a broker trader for stocks and in that case again you can buy and you can sell but you can't withdraw long before either of these two companies were available to retail investors another company called grayscale investments um that has an index uh fund called gbtc offered a way to be exposed to the price of crypto for accredited investors where you could buy and sell gbtc shares and you have a share in a trust that owns bitcoin and the share value represents the price of the underlying asset bitcoin in this case that is held in trust for you as it fluctuates so again you get price exposure now again you can't withdraw the bitcoin so you never have real control over the bitcoin all you're getting is price exposure and i really compare that directly to having a ticket to fly but you're flying standby there isn't actually a seat allocated to you on the aircraft maybe you're gonna fly maybe you're not going to fly so if uh paypal and robin hood and gbtc is flying standby then it would kind of make sense that the next level up is an economy class ticket that has an assigned seat and that would be something like your coinbase gemini kraken or whatever other exchange you're using where you've bought some bitcoin and if you wish you can withdraw it and withdrawing it essentially means you give the exchange a bitcoin address and you transfer that bitcoin from the custody of the exchange to self-custody to keys that you control thereby achieving one of the most important principles in the cryptocurrency space which i've immortalized in a slogan and also turned into a mug none of you are surprised at this point you've seen this mug many times not your keys not your coins cheers to that so if you buy from an exchange that allows you withdrawal you're an economy but you really don't yet have self-custody because if you just leave the cryptocurrency on the exchange they have control of the keys and a lot of things can go wrong when they have control of the keys you may discover for example that in the end they didn't have your bitcoin or it got stolen or it got frozen or it got lost due to embezzlement or the government seized it or your account got shut down due to suspicious activity that they won't tell you what that is etc etc and then comes the next step and that's business class business classes where you have custody of your cryptocurrency and business class is a pretty big upgrade now here you are in control of your destiny you have the keys and therefore you can exert full control over that cryptocurrency it can be taken from you it can't be seized frozen it can be embezzled and if you take good care of your keys it's actually very difficult to steal it from you because you have decentralized security someone has to go out and rob everyone who has these keys rather than having a nice juicy honeypot in the form of a centralized exchange so business class that's where things start getting interesting now there may be some additional classes available on many flights business class is it it's the best you can get on some classes and some flights they might have first class so what would be first class well maybe first class is not only do you have custody of your own keys but you also earned that bitcoin instead of buying it on an exchange and you're running your own node so that would be another upgrade it's not a huge difference from business class you are still a custodian of your own destiny with the keys you have an assigned seat if you want and it's a nice one too with lots of legroom but it's a slight upgrade sometimes a quite nice upgrade the big difference of course between simply having self-custody and earning your crypto uh through products and services that you offer or getting it on a decentralized exchange and running your own node is privacy you see one of the important things about first class is there's a little curtain that closes that keeps all of them people out in the back away from you know the luxuries that you're enjoying in first class now the funny thing about that is that what that means is the people who've never actually flown first class don't know what it involves the same with business class because there's another little curtain and they don't really see the point maybe they noticed that you boarded earlier maybe as they're walking down the aisle they notice that you've been offered a newspaper maybe some champagne and a little plastic glass some orange juice but you know the seats slightly nicer but is it really worth a ticket that's four times more expensive it doesn't seem to be like that which reminds me of a friend of mine who had never flown in business or first class and we went uh on a trip to new zealand and during this flight uh they had the first time opportunity to experience not only first class but first class in uh asian airline or in this case new zealand airlines and first class on a long long flight and trust me this is a whole other level of first class now at first it looks kind of the same only instead of the seat simply laying flat in this particular flight the seat flipped over and revealed a hard bottom side of the seat that was flat as a bed onto which a mattress was unrolled followed by a featherbed duvet when the when the flight attendant came by they almost offered to tuck you in so it's a whole other experience and of course the people in the back didn't get to see any of that because there was a curtain it's it's a bit difficult to explain how much of a different experience it is to be able to order your meals anytime you want watch a movie from a huge catalog maybe sleep take a nap wake up again order a snack off the menu get served breakfast at whatever time you want and then arrive at your destination fresh but of course the ticket is quite expensive here's the thing though the one thing that's very different about crypto is that the difference between flying standby and flying first class is not an issue of money it's purely an issue of education and skill in a traditional airline in order to upgrade yourself from economy to first class you have to pay a lot of money but in crypto in the blockchain space when you're dealing with bitcoin or ethereum or one of these other technologies the upgrade is simply a matter of learning if you know nothing you're very likely to buy a standby ticket from paypal or robinhood and not know that all you're getting is the price not know that if you actually control your own keys you can do a lot more and not knowing that there is a series of steps for self-custody that will give you more and more control and the only difference between the people sitting in first class and the people sitting in economy is that the people in first class have spent a couple of years studying and building skills in order to be able to get there so that's the big difference you don't get to buy your better seats you get to teach yourself a better class of bitcoin ownership or ethereum ownership or generally cryptocurrency ownership simply through education and building skills here's the other thing though there's more to this flight that meets the eye for many people this is simply a matter of going to some destination but there are these people who have predicted that the city we are departing from is about to experience the thousand-year flood and they're desperate to get the hell out and so for them this ticket represents exit from a disaster scenario that's unfolding you get to see these particular passengers many of them are crowded in business and first class you know they might be wearing animal pelts carrying mres and trying to get their guns on board they seem very very paranoid and edgy and they keep telling other people that if they don't get on this plane they're going to see their city wiped out by this flood and it's really funny because you can't really explain that to the other people who are maybe just going on a vacation imagine the conversation of these newbies who are going on vacation a nice family from minnesota um john those people out front they seem rather strange a yes uh they kept talking about a big flood yeah i know ufta it's the kind of thing that happened to my cousin marge in argentina they keep having floods all the time do you think we're gonna have a flood let's just enjoy our vacation folks you can't explain what's happening to people who are there just to get a tourist vacation now then of course there's those of us who didn't board this aircraft because we're trying to run away from a flood mainly the aviation enthusiasts i'm into the technology i love building and tinkering and flying and i'm just fascinated by everything aviation even before i got on a flight i had studied everything about every aircraft i devoured information about aviation long before i got to do my first flight as a pilot uh even a student pilot and of course the exhilaration of flying solo for the first time which is terrifying and then flying with passengers who are my responsibility and doing long distance flights etc etc it's a whole journey and i don't do it because i'm trying to get somewhere the purpose of aviation for me isn't to get from a to b i'm not commuting to the office i do it because of the love of flying and even in crypto there are those who are crypto enthusiasts who just are in it for the technology love the technology and maybe maybe there's going to be a flood and certainly if there is a flood coming i want to be able to get out of dodge and sure it helps that um i have access to an aircraft that i can rent you know maybe i go on the commercial flight but i also have access to a little single engine four-seater that i can use to get out of dodge and i know how to operate it so worse comes to worse i might do that some of the enthusiasts of course are buying their own planes think of this as the hardware wallet scenario and there's all kinds of arguments about whether a cessna is better than a piper or a piper is better than a carbon fiber cub that can do a very short takeoff and landing and land on the gravel bed next to a river in alaska that's the cold card if you didn't get it so far uh you know what's the difference between a piper might be a tresor a cessna might be the ledger or some other hardware wallet there's dozens of different models really the biggest difference is that you've decided to take absolute control of that mechanism and you're willing to maintain and run the device and have ultimate control and custody over your keys so buying a hardware wallet is probably a good idea and having one is better than not having one at all really the differences between the different models are not as substantial as the difference between flying commercial or not flying at all and then of course even the people in standby the people who have tickets but not seats they're also at least interested in leaving the flood zone they haven't yet figured out that in order to leave the flood zone you have to get a seat and they also haven't figured out that they're in a very precarious position flying standby doesn't always end well and one of the reasons it doesn't always end well is because the airlines tend to oversell the seats this is known as fractional reserve aviation well no it isn't but it should be so you arrive at the airport the waters are rising back in the security zone they're up to your ankle already and you really really want to get onto this plane when suddenly you hear ladies and gentlemen could i have your attention please at this moment our flight is oversold we are looking for volunteers uh to take the next flight which is also overbooked or perhaps the one after that um in order to free up some space but do not worry those of you who have a ticket are going to be offered a fiat voucher of a hundred and twelve dollars as well as a voucher for the holiday inn express and this wonderful set of paypal branded floaties that you can wear to remain dry somewhat from the neck up while you wave at the aircraft departing from this airport so clearly standby is pretty risky if you don't have custody of your keys and you don't know that the bitcoin actually exists or even if it does exist when you bought it how secure is that your one executive order or legislative action before paypal has to shut down all trading and turn over the bitcoin to the government because it's now being considered an illegal asset and maybe they'll fight that i'm sure they will and one supreme court decision later boom there goes your bitcoin they will compensate you they will compensate you in worthless fiat which is about the same as getting floaties to escape a flood um while watching other people board the crypto airplane now if you're on the plane and you see the people in the gate who are on standby you have one of two options you can mock them or you can help them get a seat and i've always believed it's more important to help others to get upgraded in their skills and education so they can also get a seat on the crypto airplane or maybe even build some more airplanes there's lots of ways to do that but don't forget that even the people who just bought a ticket and don't have a seat they're fueling this aircraft their money is paying for part of your flight even if they don't end up flying so first of all thank you secondly being at the airport is already a huge step up all of the people who are sitting at home going there's no flood the flood is a hoax it was a hoax to make us think we need to fly out of here the water rising that's just a seasonal event i'm sure the waters will recede again what's on tv honey those people haven't even arrived at the airport yet at least the people with standby tickets have figured out that maybe maybe it's a good idea to try to get on a flight and they're certainly funding your efforts then again of course is all of the people who are just noticing that airline stocks are shooting through the roof and there's a secondary market for standby tickets that are being traded furiously by people sitting at home um calling their broker and their travel agency travel agent is making lots and lots and lots of money selling and reselling and reselling these standby tickets and creating a mania around it but keep in mind they're not actually getting out of the flood zone all they're doing is making money that they can't actually spend because it's going to be sitting under water so understanding these nuances allows you to gradually see what we're trying to do there's a chance that this is just a seasonal flood we have to accept the reality that maybe the waters will recede and all that will happen is some damage to the basement and ground floor you know the lower classes they'll get sunk but hey if you have a condo in the sky with some nice investments and you know you can barricade your door so the people from the basement don't try to raid your apartment maybe everything's going to be fine but there's also the possibility that this really is a pretty nasty flood and at that point you're better off having at least one ticket or even better a seat or even better an airplane and a pilot's license you don't want to find out at the end of the day that you should have taken some precautions up front so the bottom line here is that ownership in crypto has different levels and there is one very big distinction between flying standby flying economy and flying in business class where you control your own keys that difference can be a life-saving difference and it's not just bitcoin we're talking about in fact in some other cryptocurrencies the difference is even greater think for example what the difference is between owning an index fund that exposes you to the price of ethereum that you can't use to do any of the interesting smart contract things you can't use it for define you can't use it for tokens you can't really use it at all all you get is exposure to the price versus controlling your own keys that you can use to do some interesting things with smart contracts for ethereum the difference is night and day and and that difference means that as we see more and more controls on exchanges and things like that owning custodial ethereum that you don't control the keys becomes more and more meaningless in a utility token like ethereum if you take away the utility you're not left with much so the bottom line is that whether you are one of the crazy preppers with the pelts and the mres crowding out business class or building your own planes whether you are one of the people who just has a love of aviation maybe you're one of the people in economy class who's gotten a taste for this and is trying to graduate to the next level maybe you're one of those people who is trying to build a kit at home be careful of course because not all kits are the same and if you exclude if you exceed your skill level you might end up building something that isn't very air worthy this for example would be the case if you're trying to build a hardware wallet out of consumer equipment and a general purpose operating system allow me to demonstrate i have a hardware wallet this is going to be awesome oops the bottom line is no matter what your level of skill and education you're welcome we will get out of here this flight will depart on time and if all we're doing is going for a quick little jaunt a little vacation that's fine and if in fact the thousand-year flood is about to completely wipe out the city we're leaving from you'll be very glad you got on to the crypto airplane now that you're here help the people in the seats behind you get educated and get upgraded in their skills that's all i had for you today thanks so much for listening to this talk about the crypto airplane i hope you enjoyed it if you have any comments questions or suggestions please leave them in the video comments below and don't forget to subscribe and share this video if you enjoyed it thanks so much for listening hi i'm andreas antonopoulos if you enjoyed that video consider that it takes a lot of work to produce open and free content that can be shared with everyone around the world this isn't sponsored by some company it's not promoting a product or an altcoin or some kind of investment scheme my goal is simply to help explain the technology of bitcoin and open blockchains to as many people as possible in a neutral way that focuses really on the incredible possibilities that this technology brings us if you'd like to support that mission subscribe to my channel and go on patreon.com antonop where you can participate and help me build better content for more people thank you

2021-01-21 12:10

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