Peter Thiel Warns: The Alternative to Silicon Valley Is Worse

Well, I have to disclose one's biases when one speaks. One of my biases that makes me somewhat careful in answering your question is I'm on the board of Facebook, so I have to be pretty careful how I answer. But let me give a somewhat indirect answer. The big tech companies are facing antitrust, regulatory stuff, Europe pushing tax-related things, privacy, data ownership issues. They're under cultural and political attack on many levels. The way I understand the context of why this is happening is that it's not just that Silicon Valley did all these bad things. The main problem is that it hasn't done enough good things. Google should be able to say, 'Maybe there are problematic things, but we've made the world a better place in tangible ways,' but that story has gotten harder to tell. The core challenge remains. On the specific merits, the way Silicon Valley should defend itself against accusations of being too big and centralized is that the practical alternative is not crypto-anarchist decentralization but even more centralization in the form of Chinese communist tech companies, which are like one giant Borg-like thing controlled by the Chinese Communist Party. So we have to be careful not to set up an alternative that's even bigger, more centralized, and literally communist.

It's a little bit harder than I thought in 1999, certainly. One of the books that influenced me when I started PayPal was 'The Sovereign Individual' by Rees-Mogg, about how we'd have cryptocurrencies and a decentralized world where sovereignty would decentralize to the individual level. That inspired me to start PayPal as a libertarian project to liberate people's money from central monetary authorities. We built a successful business, but that part of the vision turned out hard to do. Forms of electronic money that were theoretically decentralizing in practice enabled more centralization and control, especially after 9/11 and the Patriot Act. It may have trended the other way. I do think of Bitcoin as the real thing, the centralized currency we fantasized about at PayPal but didn't quite build. I have speculative thoughts on who Satoshi is. Without stating precisely who I think it is, let me give the key origin story. When I started PayPal, we attended a financial cryptography conference in Anguilla in early 2000. It gathered libertarians into cryptocurrencies and probably NSA people spying for the US government. My theory is that Satoshi was at that conference or one like it. One manifestation of cryptocurrency there was a system called E-gold, anonymous encrypted electronic gold certificates. It was a company based in southern Florida with servers distributed globally, a gold-based alternative to the dollar. We made it interoperable with PayPal, but there was a lot of criminal fraud. We disconnected it, and the people who started it eventually got in trouble, the company was targeted and prosecuted. There was something about E-gold's architecture that was theoretically a cryptocurrency and fairly decentralized, but in practice it was still centrally attackable by the central government. I believe the true Bitcoin origin story was in contrast to E-gold. It's almost the same name: E-gold, Bitcoin. It's like someone thought, 'I'm going to do the next E-gold, change E to bit and gold to coin.' The reason we don't know who Satoshi is integral to Bitcoin's history. If we knew, our powerful central government would probably do very unpleasant things to that person.