And the implications of the Virtual Currencies also other block chainbased applications for the future broadly and i will get into what i mean in a little bit. We are a Nonpartisan Organization that promotes constructive u. S. And european leadership in the world and who meets todays challenge is working with our allies. But we also serve a Public Education function. And i really cant tell you how many people from what i would call that traditional constituency of the Atlanta Council, which is a Longstanding Institution in washington. How many people have come to me and said what is this thing called this claim bitcoin, will it be here tomorrow or will it be here in 2050, and that is part of the reason i decided we should have an event that sort of performs these functions but i try to bring together a nontraditional panel with a lot of distinctive experts from distinct as the plans. Im thrilled and honored that they are here today to explain what bitcoin is, what it means for the future of currency and finance and what it might portend for the future of our society and for our security as well. And so come our focus today on Virtual Currencies is one area of a body of research that we have done on disruptive technologies, particularly those that empower individuals relatively more than for nationstateinformationstates thf centers strategically cite initiative here at the council. In the last year weve published analysis on such issues as the impact on robotics on the issues of manufacturing, how the big data will influence decisionmaking by corporations, individuals and companies and government. A major report last december on how the United States can harness the technological revolutions that are ongoing including biotechnology, threedimensional and four dimensional printing and other technologies that are really changing our operating environment and our world. And pretty soon we are going to publish a new concept on how the uniteUnited States conceived ite in this Dynamic World and a new concept for National Security strategy. There will be a major conference right here on may 14 on the defense policy aspects of these issues. The discussion will be kicked off by the chairman of the joint chiefs of staff, general Martin Dempsey whom ive been discussing these issues within there will be an interesting presentation by him as well as the rector of darpa which is the Research Project agency and a number of other important and interesting speakers. We hosted also in this room what we call the foresight for the top thinkers to engage in very deep conversations and again at the harness in the technological disruptions to be better prepared for trends. Its much more scarce and the individuals and small groups have power to do things that are very good and bad advance the society and strengthen our security but much of the technology has darker applications that can cause significant new security and military threats and a number of other sources of instability. As it is a positive and a negative about that with all of these technologies. Now, bitcoin itself as a marker of yet another innovation that empowers individuals and really democratizes the second task but traditionally has been reserved for the government, and here im talking about the regulation of currency. Its something i think we couldnt even fathom just a few years ago. And now it is upon us and we will talk about how this is upon us today significant number of questions we will try to address on the panel with the peertopeer engagement is displacing government in such tasks what other government functions that were used to them performing might also soon be disruptive. What does this mean for the security of the finances, how might the International Affairs be affected, how might National Security be affected by the digitization of the Services Like this and a number of other questions. So, i would like to introduce the experts as a really excellent panel. Im thrilled as George Washington university, Homeland Security policy institute, he has held a number of increasingly senior positions with the cia. So yes, he could kill you. As an Intelligence Council for the former senator bob dole during his cia career he was a special assistant to the associate director of social intelligence for military support he was at the state department as the director for Law Enforcement issues and the senior director at the reconnaissance office. Since leaving government, hes been a Senior Defense contractor at the Software Executive he testifies before the congress. He comments extensively on a range of defense and intelligence issues on television and radio. So im thrilled to have you with us here today. To his immediate left is mr. Kevin who is already an established bitcoin minor. He studies risk analysis and a e cybersecurity and he will be working for block chain info this coming summer. He serves as the captain of the air force Association Cyber patriot competition steam which he led it through the nationwide competition with 16 teams competing to test how well one can secure from viruses, trojans, etc. His team was a 16th place. So not a bad for the work that he did. In 2012 with the Northrop Grumman corporation on the cloud research, which i wont even ask about. We also have mr. Jason healey who is here, the director of the cyber statecraft initiative. As the director for cyberinfrastructure at the white house from 20032005 he helped advise the president and coordinated Critical Infrastructure immediately after the attack as the vice chairman of the Financial Services information sharing and Analysis Center created bonds between the sector and the government have remained strong today. And i think most recently he edited a book called the fierce domain conflict in cyberspace 1986 which is the first history of cyber conflict. Its an interesting book with a lot of anecdotes in addition to analysis which is favorable by the economists. When it came out. Certainly last but not least we have doctor Chris Brummer who is a fellow here at the Atlanta Council business and economics center. He is also the product counsel in the Transatlantic Finance Initiative and he leads the council on the regulatory trade policies and provides bipartisn analyst is on the transatlantic Economic Cooperation issues. He serves on the delisting panel for the national adjective for a council beginning in 2013 he received his jd from Columbia Law School and a phd in dramatic studies from the university of chicago. Im going to turn to ron. Please join us on twitter using the hash tag we use for events like this, a c. Disrupt. And i will turn to ron. Let me be disruptive. I was trying to think of what i was going to say that would still allow me to be friends with berry, maintain my relationship with the council and something i think is the truth. Let me relate you a Little Family history and context. I come from a long line of people who have a slightly questionable reputation. My grandfather was someone who was from boston and was originally part of something called the ponzi scheme and he made a lot of money out of it. I was born in 1966 and my dad was born in 1906. In the first years of his life he lived through three depressions. You think the last one was bad. In 1907 in world war i and 1929 u. S1929to more than double digit unemployment. The banks fail. People do not necessarily trust the government which wasnt necessarily all that involved. So, growing up with my father and listening to him talk about the banks and the depression come an and by the way he was a lobbyist in washington. The opinion as you can imagine it wasnt high to begin with. It was an interesting experien experience. My memories are of postworld war ii. 1944 near New Hampshire and Washington Hotel people from the united kingdom, the u. S. And other countries gathered together to figure out how in the world we will survive after world war ii because we had gone through ten years of depression, ten years of paraphrasing etc. In the 1930s which pretty much stipe is the world economy. He was representing the british anand trying to hang on to whateveonto whatevershred of die marketplace. They were bankrupt. They went bankrupt just after world war i. They almost went bankrupt in the 1930s and by 1944, they were broke again and living essentially on our money. The largest empire in the world was essentially living on the u. S. Dollar by borrowing on the u. S. Dollar. So this conference in 1944 was about how the United States and others were going to rule after world war ii. Some of these delightful buildings that you see around at the bank, inf o imf and all thoe places, this all came out of that. The british found convenient to world war ii it was about 4. 60 and it went down at the end of the war it was 2. 60. It was going to reign supreme. We had roughly half of the worlds gdp and pretty much called the shots. By the way the decision was made at that point to have a dollar which was not only hold the value throughout the world but was actually exchangeable for something. 35, it was amazing. Some are higher than others. And if you aragain if you are ae and in old spy to be leaving james bond. Do you remember goldfinger, the movie goldfinger . It was about gold arbitrage. You can move at 35 an ounce and if you have the right you can move to europe with 9,042 albums were into the middle east like pakistan where it would be 300 an ounce. There are pleas of working around the system and ive also added that my father and my uncle after world war ii and living in paris i wouldnt be surprised when the stories were related to me how they used to take suitcases of dollars and exchange them there for other things. We grew up in a stable time. The last 70 years of our existence has been based. The u. S. Dollar has been dominant in that period of time. Ive been to 50 some on countries and no one turns down. Even the russians when the currency wasnt exchangeable, wouldnt turn down a dollar because it was considered a value. Now, by 1971 we went off the gold standard. Why . Because there was a tremendous desire to have the u. S. Dollar overseas and those people wanted to convert to that in the 1960s it demanded a whole lot of gold. Gold. With contempt again in the 1970s to demand a lot of gold out of fort knox. You dont physically ship it. You put the sticker from one side to another, that its going to be an article reserve. The United States dollar since 1971 has been based on the full faith and credit of the United States. We have this old certificate with dollar bills etc. , etc. That system lasted pretty much through the 1990s. We won the cold war or as i think of it i won the cold war. And then between 1991 to 2001, we drifted along fairly well. Since 2001, and certainly since the last depression starting in 2008 and by the way if you have a job it is a recession and if you dont it is a depression. We have seen other parts of the world begin to move forward. China in particular. Weve also seen the world that has been increasingly allowing itself, more than allowing itself, connecting itself. 2. 5 billion people on the internet today. They belong to some 200 countries not all of whom have stable currencies. I can sit here right now and recite which peso and whatever else is promulgated by Different Countries over the years or who slashed a couple of zeroes off the end of their currency. Now ask me what that does to people when they start thinking about stability. Some of you are probably too young to remember that even in the United States i remember parking money at about 19. 5 because the mortgages were being charged at 16. 5 because the inflation was 12 to 14 . That was unusual in our circumstance. Its not unusual around the world. So, when you start asking other people to have full faith and credit in their money, they look at you, smile a little bit, non to their head and go on their way thinking i have to do what i have to do to survive. I was just recently spent three weeks in the uae to an enormous amount of bracelets and necklaces and whatever an ounce of gold it comes for me to pakistan, bangladesh or burma and we dont trust the local currency. We want to get the mind frame of the 20th century american and 21st century where the power of the United States is not as great as it used to be. The cover of the dollar isnt as great as it used to be and we have to start thinking about a way of dealing and communicati communicating. I purchased one by the way because cardin the expression dialect is my money where my mouth is, ive taken a look at this and i think to myself okay is this the beall and the endall . Is a ponzi scheme . I dont think so. But we will see. Does it represent value and ability to exchange across the borders . Like money than the answer is yes. Does i that represent a threat o the nationstates . Take a look at china. However, and i will probably conclude on this one note. One of the things i spent a career doing is getting around the rules and around the borders and around different places in the world. Exchanging value to family and friends you will use money orders you will use a bitcoin if possible. Kennedy forged and copiesof visit as it is cracked up to be . Take a look at what happened to the regular currency. If it is subject to something besides the regular currency, i dont know. Given some basic aspect of what bitcoin is. So basically it might get a little bit complicated, and i will definitely do my best to come up with bridges for you to help understand the process. But basically just keep in mind its dollars and computers can exchange to one another. And this dollar can be written on the physical paper if you want to. The way bitcoin is revolutionary is that encryption, decryption has been around for a while. They were the first to use encryption for asymmetrical encryption to have the value of money and it how much people perceive the value to be. This works on a principle of when somebody wants an address or think of it like a paypal email they click the button on the computer and basically it will create two keys for you. One is called public key and this key you give to anybody that you want to send bitcoin. So they will have the key and send funds to the public key. Its two sides of the same claims when you create a public key you also create private key that you used to unloc use to uf the funds that are sent. If you give anybody your private key they could very well steal all of your money. And so. Minors are the things that keep the network going. There is no central bitcoin like paypal. Everything is distributed. Its something that gives more power to the people. And this works on basically they will take ten minutes worth of transaction so i will send a bitcoin to my mom and whoever will be sending bitcoin and all of the transactions are floating in the namespace. And then in the meantime theres people running programs on their computer that basically check the transactions across the network. So the way that they do this is called the block chaining that bitcoin gives to the world. Thats the way that you dont need a central authority. It is a large ledger that tracks transactions. So if i were to say that i have one it would say okay you have fewer bitcoin from fred and he got his from bob and so its like okay you do have a bitcoin to send. The key is valid. I will send that to you. So the way that they do that is if they race to find out which one is going to solve the puzzle. So imagine a very large puzzle and the only way to solve it is for a minor to through random numbers in the puzzle, check to see if its right and then if they are doing this a million times a second they will try another one so they will throw a combination of numbers into the sudoku puzzle and then they will broadcast that answer to the world. So when you have a solution is relatively easy to check. Hard to find the answer that easy to check. When the network confirms you have found the answer, the one that sounded is awarded the first work. The bitcoin reward is decreasing. So a couple of years ago, as great minor was given 50 big claims for solving the puzzle. Today the reward is 25 bitcoins until the cap of 21 million is hate. Once that is reached, there will be no more reward for finding the answer to the sudoku puzzle. So once they find the answer to the puzzle it does one last check with these ten minutes of transactions in limbo to make sure nobody is our return late saying im going to transmit 100 billion bitcoins because they will check and see that you are wrong. So they go through the transactions and use answers theyve gotten from the puzzle and they will compress all of these into a block and add it to the chain and then once the confirmation page and they add it to the block chain, they work all over again and the puzzle will change every single block. To keep the program itself designed to be every ten minutes that compression will hit and they will be minted. It wanted to be ten. If they take more and more people come if they take five minutes to nine what they will do is make the sudoku puzzle harder. It will make it bigger so you have to spend a little bit more time throwing out random numbers in order to find the answer. So once this is confirmed, then youve successfully made the transfer of bitcoins. Once they are added, the transaction becomes more and more final and etched into stone because the further chain in the transaction is the more that this transaction basically is as good as go