The following is a conversation with Vitalik Buterin, his second time in the podcast.
Vitalik is the co-founder of Ethereum and one of the most influential people in cryptocurrency
and technology broadly defined.
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Check them out in the description to support this podcast.
As a side note, let me say that Ethereum, Bitcoin and many other cryptocurrencies have
been taking a wild ride of prices going up and down in the past few months.
To me, the prices were never as important as the ideas, both technical and philosophical.
Cryptocurrency has the potential to empower billions of people to participate in a global
economy in a way that resists the manipulation by centralized power.
Also with smart contracts, Layer 2 technologies, data pools, NFTs and of course integration
of artificial intelligence into the whole thing, we have the opportunity to build tools
and worlds that transform physical and digital life as we know it, hopefully minimizing the
suffering in the world and maximizing the fun.
This is the Lex Friedman podcast and here is my conversation with Vitalik Buterin.
Let's first talk about Shiba Inu, if we can, also known as Shiba Token, Code SHIB.
For contact, Shiba Inu was created in August 2020, modeled off of Doshcoin by the anonymous
founder known as Riyoshi.
On May 10th this year, it had a market capitalization of over 13 billion and maybe you can explain
this, but in a crazy move, you were given half of SHIB's total supply.
You burned, a.k.a. destroyed 90% of it, that's worth $6.7 billion and you donated 10%, that's
worth $1.2 billion at the time to an India COVID-19 relief fund, saying you don't want
to be the locus of this much power.
This is fascinating.
Why and how were you able to walk away from this much money and this much power?
I should probably start by giving some of the backstory around these coins and this concept
of giving me coins.
First of all, Shiba Inu, as you said, is this knockoff of Doshcoin.
Doshcoin was this initial kind of fund coin that was created back around 2014 or so.
It was just created by Jackson Palmer and put it out as a joke for a couple of hours
in a community formed around it.
At the beginning, people didn't take it very seriously.
I actually remember putting about $25,000 into Dosh sometime around 2016 and I just
remember thinking to myself, okay, how am I going to explain to my mom that I just invested
$25,000 into dog coins?
What even are dog coins?
The only interesting thing about this coin is that there's a logo of a dog somewhere.
Of course, that ended up being one of the best investments I've ever made.
It did really well.
Then at the end of 2020, Elon Musk, of course, started talking about Doshcoin and the market
cap just shot up to about $50 billion.
It shot up multiple times.
The first time, it went up from about 0.8 cents to about $0.7 cents, and this just happened
all in one day.
I remember this was when I was still in Singapore in the middle of COVID, and I saw that the
price just went up by 1,000% and I was like, oh my God, my doge is worth a lot.
I immediately called up some of my friends and told them to drop everything in scramble
and I just sold half the doge and I got $4.3 million donated the proceeds to give directly.
A few hours after I did this, the price dropped back down from about 0.7 cents to 0.4 cents.
I managed to sell the doge at the top, and I remember just feeling like I was such an
amazing trader.
Then, of course, the price went up from 0.4 cents then to 0.7 cents and then 0.50 cents.
Doge becoming this big phenomenon where there's even a lot of people that have heard of doge
or should have not heard of Ethereum is just something even I wasn't predicting.
After that, of course, we have doge and then people are thinking, well, if the leading
doge token is worth $50 billion, then surely the second largest doge token deserves at
least $7 billion or $8 billion.
I feel like that's what the mindset of these Shiba people is.
Then, of course, they did this other gimmick where they gave me half the Shiba token supply.
They were actually not the first projects to do this.
Around the end of 2020, there was this weird project called Teller, it's like T-E-L-L-O-R.
I think they're a chain link competitor or something like this.
I remember they just dumped $50,000 worth of their token into my wallet, and then they
had their TwitterRB basically run around saying, look, look at Vitalik's wallet.
Vitalik holds Tellers.
He's one of us.
He's a supporter.
As soon as I discovered this, I just publicly sold the Teller tokens on you to swap.
This created a bit of a Twitter splat.
The Shiba people were more clever.
The Shiba people, instead of dumping to that wallet, they dumped to my cold wallet.
In cryptocurrency, there's this concept of cold wallets and hot wallets.
The thing that actually owns your money is this 80-digit number called a private key.
The hot wallet is when that private key is just stored in memory on your computer, on
your phone, really easy to access.
Cold wallet means it's either written down on a piece of paper or it's on a computer
that's just never accessed the internet.
Cold is very inconvenient, but cold is also much more secure.
Even if that computer has some viruses on it, it's air-gapped, it's not actually going
to be able to upload it.
This cold wallet and all the money is out of the cold wallet, so it's safe for me to
talk about my setup now.
It was a laptop that was sitting in Canada.
I also had two pieces of paper where I wrote down two numbers on those two pieces of paper.
One was with me, one was in Canada.
If you add those two numbers together, you get the private key.
Because of COVID travel restrictions, cold wallets in Canada, it's very difficult for
me to actually access it.
I'm not sure if they knew this, maybe they just got lucky, but basically they sent a
lot of these dog tokens into this wallet where it was very difficult for me to access it.
I saw these dog tokens, I saw more and more people talking about them, and then at some
point I realized that these things are worth billions of dollars.
There was lots of really good things that you could do with that amount of money, and
it would actually be a waste to just see it go.
I made the decision that I would actually power through and figure out how to safely
basically get my private key.
I actually had to call up my family, tell them to read out their number off of their
piece of paper.
I entered that into a fresh laptop that I bought from Target.
Then I put in my other number on my piece of paper, added the two numbers together on
the computer, there's the key.
At the same time, just scrambled for two days, setting up a new wallet where I could move
my ETH to safely, getting people to be multi-sig partners, just doing all sorts of stuff that
10 years ago you would expect to just be part of a cyberpunk science fiction novel, but
now it's all real.
You're doing this all by yourself, essentially?
Most of it by myself.
You have to keep it secret.
I needed my family to actually go and read the number on their piece of paper.
Then in my new multi-sig wallet, there's other people that are signatories, but I'm
obviously not going to reveal any details beyond that.
I did this, and I actually managed to get the private key, make the first transaction
that would just move all my ETH to the multi-sig wallet so it's safe, and then put the private
key on my main computer, then started going in and just selling some of the dock tokens
and then just giving them to these different charities.
At the time, I actually did not even have any idea of how much you would be able to
get because on paper, the dock tokens are $7 billion, but in reality, it's a very liquid
market.
Are you going to crash it after you sell 1 million worth?
Are you going to crash it after 10 million?
Might you actually be able to get an entire 200 million?
I had no idea.
I definitely was just over the mindset, okay, I'll sell a bit, maybe I get some ETH and
then donated some ETH to give well donated some to other groups and then, okay, have
some dock tokens.
I don't have an easy ability to sell more myself, but then I'll just give them to these
groups and hopefully they'll do good things with them.
I actually donated at 20% and dumped 80%.
The COVID India group got one batch and then there's another group that got another batch.
I don't want to say who they are because I think they want to announce themselves at
some point.
You can see the fact that these transactions were made on the blockchain, but it was just
very interesting and unexpected and just an insanely crazy situation.
It's been a couple of weeks.
First of all, thank you for helping me hang up some curtains.
This is a first for the podcast and shows that you're a truly a special person to be
willing to help.
But now a couple of weeks later, do you regret any aspect of that decision?
I'm sure there are some things that I probably could have done better.
I was actually talking to some of these charities and I was impressed by just how much money
they managed to get out of selling some of these coins.
I probably could have done better by just talking more with the traders and actually
ensuring that they can do a better job of maximizing the value of all of them.
It was a very stressful time and I did have to act quickly.
I did manage to make a lot of the donations a few days before the great crypto crash happened.
It's difficult to like, obviously there's parallel universes in which I did better,
but at the same time, there's also lots of parallel universes where because I hesitated
more and tried to spend more time thinking I missed the opportunity.
So on that, it's like a luck of the draw and I'm just happy that everything was able
to turn out as well as it did.
But psychologically, you mentioned stress, how hard was it?
It was stressful.
I think one of the really stressful parts was just the fact that I had to basically
move all of my funds, including the 325,000 ether from one cold wallet into another multi-sig
wallet and maybe the multi-sig wallet had a bug in it.
Maybe there's some mistake I'll make in the middle that causes the funds to get lost.
That part was stressful and I was definitely stressing out for two days, triple checking
the new wallet.
I even did a bit of an audit of the code myself.
I wrote my own JavaScript to DAP to make confirmations because Gnosis Safe didn't work with the status
wallet well.
That whole thing was definitely a bit of a marathon.
I was also definitely a bit worried about or uncertain, I guess, how the public and
including the coin community would perceive the whole thing.
But I was actually impressed.
For every poster that was saying, no, why did Vitalik rugpole on his wallet was supposed
to be a burn address?
There's 10 people that are like, oh, I thought I was just in this because it's a fun pyramid
gambling thing, but instead I ended up being part of this great public good thing for humanity
and that's even more amazing.
The amount of that that I got was very impressive.
All in all, I think the dog people did great.
The dog people.
Is there something you can extend to the bigger picture of it in the principles you apply
to make in this decision?
Is there some principles, philosophies that you apply also to the decisions you make around
Ethereum?
I think a big one for me is just this idea that crypto isn't just an opportunity to give
people slightly better ways to save value in all of these things.
It's also an opportunity to basically create these new digital institutions that could
serve the public good in new ways.
That's something that I've been interested in for a long time.
I actually even have this article in Bitcoin Magazine back in 2014 where I basically suggested
this idea that you would have coins that represent causes and people would just buy
and accept those coins because they support those causes.
I think it's called markets, institutions, and currencies, a new form of social incentivization
or something like that.
I'm sure you can find it in the links.
That was interesting to see becoming real.
In general, I think public goods are very important.
On the internet, public goods are even more important.
Every single Lex Friedman podcast is just on YouTube and anyone can go and see it.
There's no way for you to sell it so that some people can see it, but other people can't
see it.
You could do that, but then you'd obviously be reducing your impact.
Thank you for making the amazing Lex Friedman podcast so freely available.
This actually attends things is how do you do it in a way that's not controlled in a
centralized fashion because YouTube feels free and open, but it nevertheless is one
company making centralized decisions.
The first time I realized YouTube is not forever is when a lot of the Joe Rogan experience
library was pulled from YouTube as part of the Spotify deal.
They made me realize it's like the realization that fiat money is centralized is realizing
that this is not forever and you might want to come up with schemes to distribute it,
to decentralize the control in a way that audio for podcasts is with just an RSS feed.
One of the philosophical things that I hope to achieve is kind of decouple the concept
of public goods, which are incredibly important and are the lifeblood of modern civilization
from the idea that there is or can be one central organization that represents the public
and perfectly understands and can impose their idea of what is the good.
When people talk about public goods, it just often comes with this baggage of either centralization
or conformism.
I think it doesn't have to, right? Often the most important public goods are the ones
that are created by the crazy individualists that disagree with everyone else.
Trying to make this kind of synthesis where you combine the values of decentralization
and the values of open source, but you're not naive about it and you realize that for
these things to be produced, there needs to be a way for it to be sustainable.
There needs to be some way of supporting people who are working these projects, but at the
same time, you want to avoid that turning into a vector of centralization, like trying
to get all of the good things without the bad things.
To me, that's a big part of what my grand experiment in crypto is about.
We are doing things in different kinds of things for this.
The Gitcoin grants quadratic funding in the Ethereum ecosystem.
There's obviously these dog coins that just happens, I guess, accidentally.
There's other projects that, for example, Uniswap has their Uniswap DAO that just has
a huge amount of funding.
We haven't seen yet how that's going to be deployed, but it could be potentially deployed
to do lots of really good and amazing things.
Do you see Ethereum as essentially a mechanism to fight for social causes?
I definitely see Ethereum as being a mechanism to fight for definitely some specific things
that are social causes, like just the fact of creating an open financial system that
anyone can participate in no matter where they are in the world.
That's a social cause, just giving people the ability to organize and create projects,
even if it's five people in five different countries.
That kind of inclusiveness, I think, that's a social cause and it's a core crypto value.
But then at the same time, the other important part of the magic of Ethereum that you have
to balance that against is that it is also this open platform where ultimately the thing
that are on Ethereum is just the things that the community makes of it.
Well, you briefly opened the door, so let's go there.
When it comes to government regulation of crypto, what's the best case scenario?
What's the worst case scenario?
In terms of, as you've mentioned, Ethereum challenges the power centers of the world.
How do you see the interplay between governments and this new technology that resists centralized
power?
The best case and worst case?
The best case is that blockchains continue to prosper and we figure out scalability so
that people can actually start doing things on block.
All of the amazing use cases that people have been talking about instead of today, where
a lot of the great stuff gets priced out because transaction fees are at $5 to $10.
And then we see a lot of different amazing applications happening on blockchains.
It could be DAO is creating new ways for people to interact and organize with each other,
new ways for artists to get funded and all sorts of these amazing things.
And there's just enough public support and just enough people that see that what crypto
is truly doing a lot of good things.
There are definitely areas where there's tensions, but in those areas where there's tensions,
there could be some kind of creative and interesting approaches that get figured out.
The concept of corporate taxes, for example, that would disappear as a revenue stream if
theoretically corporations just all get replaced by DAOs.
But maybe there's some other creative way by which DAOs themselves can have some kind
of encoded governance that ensures that they have at least some kind of bias towards serving
the global public good.
Maybe DAOs can do enough of that that people are happy with it.
There are going to be things that people are unhappy about.
There's always going to be the people that wants to surveil everyone.
But if the effect of crypto from just empowering people is greater than that and greater than
that in a way that people can just easily see, then that would be a good scenario.
And we'll just become incorporated and accept it the same way as happened with the internet.
But in the worst case scenario would, of course, be just people suddenly flipping and going
into moral panic mode and just, oh my god, this technology is used by insert bad group
over the day.
And then I don't think governments have the ability to ban crypto to the extent of just
preventing blockchains from existing, but they definitely have the ability to really
marginalize it.
If you just ban all exchanges and ban all links from the fiat ecosystem to crypto and
ban all mainstream employers from accepting or paying in cryptocurrency, then you can
successfully turn it into a fairly niche countercultural thing that has much less impact than otherwise
would.
So it's somewhere between the good scenario and the bad scenario, I'm obviously hoping
for the good.
Well, that's interesting also the tension between governments and companies, like if
you have a bunch of billionaires or a bunch of companies like Tesla investing in Bitcoin
and then governments resisting that, it's interesting who wins out in that worst case
scenario.
And almost when companies and rich, quote unquote, respectable people embrace cryptocurrencies,
Bitcoin, Ethereum, so on, even the dog coins, it's almost sends a signal to everybody else
that this is a revolution that's here to stay.
On this one little tangent that you brought up, this is almost an outdated idea, but it's
still with us, which is cryptocurrencies are used for illegal activity, for drugs, for
crime, and so on.
Is there some sense that worries you that if cryptocurrency, if Ethereum runs the world,
then making money from crime will be easier?
There's always that possibility, but at the same time, I think if you look at the world
as a whole and the way all the other technological trends are going, in-person surveillance is
just going up every year.
If you commit a crime in meat space, it's getting harder and harder to get away with
it.
If you want to do something, and this is something that's just happening as a result of better
technology and information transparency, a lot of it's hard to prevent even if you really
tried.
So, the world where things go dark as the police hawks sometimes like to say to such
an extent that, oh my God, the criminals are committing crimes with impunity and we can't
see anything.
That just seems unlikely, but on the other hand, the world where there just is no privacy
for example, or the world where there just is no ability to act outside of the confines
of mainstream institutions, that's something that's more realistic and that seems like
something that could lead to a lot of scary things.
Even from a government's point of view, governments over the last few years, a lot of them, they're
very worried about sovereignty, they're worried about if their country's economy is in social
environments, they're just completely dependent on basically foreign tech companies controlled
by foreign governments.
Governments are not on team government.
It's like the Indian government is on team India, the Russian government is on team Russia
and so forth.
They don't want the US to be able to have this big backdoor into everything.
So I do think that a balance is needed, but at the same time, I do think, I guess I definitely
worry more about the possibility that just without things to like crypto, acting outside
of institutions becomes too impossible and I don't even necessarily mean outside of governments,
but just outside of corporations becomes too impossible and there's just terrible things
that come as a result.
Things going in the other direction, it obviously is a risk, but at the same time, I think in
the long term, a crypto can potentially even offer defenses as much as a tax against that
sort of thing.
Yeah.
Throughout history, many of the most destructive things came from centralized institutions
versus sort of from the people operating in the shadows.
And I've been talking to a bunch of psychedelics folks, the people doing researches like Rick
Doblin in Johns Hopkins, there's a lot of exciting research on psychedelics.
And one thing you could say about operating at the edge of legality, it could actually
accelerate the adoption of particular things like whether it's marijuana or psychedelics,
they can help people out, it's almost accelerates the policy.
It forces the policy to catch up to where the people stand.
So there's a positive way of doing things that are in the gray area of legality and
creating a market that allows people to in a safe way be able to participate in this
gray area of legality.
I mean, the other thing to keep in mind, of course, is that the set of like the kinds
of things that just like payment processors as companies try to restrict people you're
from is much larger than the set of things that's illegal.
Part of that is because they want to be super conservative and like the more layers you
have the more they're like kids conservative because they're scared of what the what the
layer below them will do to them.
Sometimes they have their own moral opinions of various kinds.
They go after lots of people, they make life really hard for sex workers, for example psychedelics,
as you mentioned, there's like a lot of activity, even including stuff that is totally legal
that just, you know, there's this like, you know, shadow like PayPal credit card government
or whatever you want to call it and that makes it just hard to participate in this stuff.
So I think like reducing the number of intermediaries is definitely normally a good thing.
All right, let's talk about one of the most exciting technologies like technically, philosophically,
like socially, financially in every way, which is Ethereum 2.0.
There's a million things to talk about, but at the step one is probably a good thing to
do, which is can you briefly summarize your vision, how Ethereum 2.0 will make Ethereum
more scalable, secure and sustainable?
Sure.
So I think recently we've actually been kind of de-emphasizing the Ethereum 2.0 branding,
I guess.
So the reason behind that was that originally we envisioned something more like a big grand
event where, you know, all the good things would happen at the same time and it would
be a new blockchain and it would be a new protocol and people would have to take a lot
of effort to migrate over, but later we've slowly changed the roadmap over to something
that's much more incremental.
So proof of stake happens kind of over time and then charting gets added over time and
all these features get added over time.
And so the experience for just a regular Ethereum user still feels very seamless.
It's like maybe a little bit more complex than the hard forks that we've already done
from a user's point of view, but not by that much.
So the big two things that are happening, these are what used to be considered the two
flagship features of E3.0 and now they're just the flagship features of the next evolution
of Ethereum as proof of stake and charting.
So proof of stake is a consensus algorithm or a consensus mechanism, I should say.
The difference is that an algorithm is something that you run by yourself, a mechanism is like
interactions between people and it could even include incentives and all of that.
So you can sense this mechanism, so by which nodes in the network agree on which blocks
came in, which transactions came in, in what order, make sure that once a block gets accepted,
it can't get reverted and all of these things that we expect from a blockchain.
So existing blockchains including Bitcoin, including the Ethereum of today and including
a lot of them, they use proof of work.
So the reason why we need proof of anything is because they serve this function that I
call an economic civil resistance.
So that's obviously a big word for, especially if you've never heard of civil as before,
but the basic idea is that you have a network and you have lots of computers that agree
on which block to accept and sometimes you get two blocks that get published at the same
time and you just have to agree on an order.
So there has to be some kind of voting game.
But then the question is, well, in this voting game, who gets to vote, who gets to participate?
Now you can't say one person, one vote.
The reason why you cannot say one person, one vote is because you need some kind of
authority or some kind of mechanism to say who the humans are and if you don't have that,
then a bad guy could just come in with a virtual machine or with a computer that has on it
10 billion virtual machines that have 10 billion virtual nodes and then just say, look, I'm
99% of the network, I should control everything.
So to prevent this, what proof of work and proof of stake both do is they basically say,
well, the weight of your vote, how much influence your votes have in the consensus is proportional
to what quantity of economic resources you bring in.
So in the case of proof of work, you prove what economic resources you have because your
economic resources are computers and you prove that you have them by just running them 24
seven using these hash algorithms.
So this does solve the problem because in order to attack the network, you have to come
in with more computers and more money invested into computers and electricity than the rest
of the network puts together and that's extremely expensive.
In proof of stake, instead of relying on people with computers that are just constantly cranking
out hashes 24 seven, you as your unit of economic resources, you just use holdings of coins inside
the system.
So all of these blockchains, they have some kind of coin in them.
Bitcoin has Bitcoin, Ethereum has Ether, they all have a coin.
So why not just use that as the economic resource that you're using to measure participation?
So that's the core distinction between proof of work and proof of stake.
I like proof of stake and I've liked proof of stake for many years basically because
it just requires much less ongoing resource consumption.
With proof of work, you have to actually go and buy these physical computers and these
days, they have specialized hardware, ASICs, application-specific integrated circuits.
You have to go produce them and you have to go buy them and unless you have millions of
dollars, you have to buy them from one of these other people who creates them and those
other people often end up taking a huge cut of the profits themselves.
And then you have to plug them in, you have to just burn all of this electricity that's
just running 24 seven.
So it consumes a huge amount of energy and not just energy, it also just to create the
hardware.
People focus a lot on energy, but actually about half the cost of proof of work mining
is the cost of the hardware.
So hardware is a very big deal too and you need this really big and powerful, very specialized
hardware, another kind that fills up these big warehouses.
So proof of stake, you don't really need that much electricity, you just need just a little
bit to run a regular computer.
You can run proof of stake validators on computers that you already have.
So it's just much less resource intensive and this is good for a few reasons.
One is the kind of environmental rationale that you're not breaking the environment.
The second is that you're not taking away electricity and other resources from other
people.
I think just today I saw a story about Iran wanting to shut down some Bitcoin mining because
it was just grabbing up so much electricity that it was outbidding the nearby towns and
they didn't have enough.
And then there was the one that's doing proof of hard disk mining basically is just grabbing
up so many hard disks that there's a shortage.
So that's the second reason.
And then the third more selfish reason is that because participating in consensus does
not require so much energy expenditure, you don't need to pay people as much to participate.
So Bitcoin and Ethereum, they both issue somewhere around 4% of the total supply every
year right now to miners.
So Ethereum is about 4.7 million ether and the current supply is about 115 million.
But with proof of stake, like we expect it'll be somewhere between 500,000 and 1 million
per year.
So that means the supply doesn't have to increase so quickly.
One of the pros that the people sort of argue for the proof of work is that it is secure
because it's much more difficult to sort of, as you've highlighted, it's difficult to participate.
Is there, what are your thoughts about the security of the proof of stake mechanism?
Is there ways to make it secure?
So I think proof of stake is very secure because in order to be able to attack the system,
you need to have basically as much stake as the rest of the network.
So that means right now, for example, we have 5 million ETH staking.
So you have to come up with 5 million ETH and then join the network.
And then the other, so 5 million ETH is a lot, right?
It's like, how much is it now, like $15 billion.
So that's actually more than, I believe, the cost of attacking the Bitcoin network.
And then the second thing is that recovering from attacks is much easier in proof of stake
than in proof of work, right?
Because in proof of stake, you have, like first of all, we have for many kinds of attacks
that you do against this network.
We have this concept of automatic slashing, right?
Which basically means that in order to revert a finalized block, so if there's one block
that's accepted by the network and you try to convince the network to revert that block
and accept a different block, in order to make that kind of attack, you basically have
to have your validator, a big portion of your validator signed to conflicting messages.
And this is something that once these messages are on the network, you can go and prove.
Look, these people did it.
And so we have this feature in the protocol called slashing, where you basically take
all these people who provably misbehaved and you burn their coins, right?
And you don't burn anyone else's coins.
Now there are other cases, like for example, if instead of reverting blocks, the attack
just tries to censor everyone, right?
Then what you do, everyone who got censored would just like basically create the minority
chain.
And then the community would basically have to do a soft fork, right?
They would just have to say like, look, this chain is clearly attacking us.
This chain is the one not attacking us.
And so we're going to join this chain.
And then what happens is that on that new chain, the attackers also lose a lot of coins.
So the difference between proof of stake and proof of work is that in a proof of stake
system, you can identify specific participants and you can say, this isn't like a human going
in and saying, I don't like you.
I don't like you.
I don't like you.
I don't like you.
This is automated, right?
So the slashing process is automated?
Yes.
There are ways it can go wrong, so that's a painful process where the coins are burned.
It is painful, yes.
I think the one big unknown, of course, is if an attack actually happens and if an attack
happens that requires the community to actually choose one of these minority forks, then what
would the community actually successfully coordinating on this look like?
We can talk about it and we can write science fiction novels about it, but until it's happened,
you don't really know the details of what it looks like and how difficult it is.
What are the channels of communication for the community if you can enlighten me a little
bit?
In many ways, in the political realm, Twitter is often used as a way to have these emergent
phenomena of large groups of people coming to a consensus about a particular idea, and
then there's battle for consensus.
What's in the Ethereum community, what are the sources of natural language-based communication
that have an emergent belief structure that you would say?
Or is it all through money?
Is it all through trading that the communication happens?
There's definitely talking as well.
We have to agree on protocol changes somehow.
There's Twitter, there's Reddit, there's GitHub, there's all of the various Ethereum
forums, Ethereum magicians, Ethereum research.
There's just in-person communication.
Then there's just the hidden web of everyone talking to everyone on Telegram or Signal.
It's like some of everything, but I think the thing to emphasize around can you actually
come to consensus on whether or not to fork the chain because the attacker is censoring
everyone.
For example, everyone who's running a node is going to see almost the same thing.
They're going to be off by a few seconds, and maybe they'll disagree by a few minutes,
but if it's a serious attack, people are going to know.
It's not one of those things where, oh, we're trying to agree on did Epstein kill himself
or some random political fact where in reality no one knows a single thing about what's actually
going on and they're all speculating.
It is much more visible.
We do have that, but at the same time, I'm happy to admit that these are fairly untested
mechanisms, but at the same time, they're also untested mechanisms in proof of work.
In proof of work, it's even harder because in proof of work, you don't have the ability
to identify and say, I'm going to, these miners attacked, and so we're not going to let these
miners in.
These miners did not attack, so we're going to keep them in.
You have to pretty much either take out none of the miners or you do a fork that changes
the proof of work algorithm, which takes out all of the miners.
The economics of recovering from attacks in proof of work, at least to me, actually do
seem more unfavorable, but I'm sure the proof of work people you talk to will give very
different and contradictory opinions, and that's totally fine and amazing.
Some people describe MEV, minor extractable value, as an existential risk to Ethereum.
What is MEV?
How important is it to solve an MEV?
If it's important, what ideas do you have?
Sure.
How about after this one?
We'll also talk about sharding because it's amazing and it's part of the review too.
We'll return back to sharding, which is we'll return to the big picture of the scaling problem,
as you mentioned.
I love this conversation, depth first search instead of breadth first.
Okay.
MEV, minor extractable value, it is not different in proof of work and proof of stake.
If you want to call it block proposal or extractable value, it sounds less sexy, but we can call
it BPEV instead of math, who cares?
This is a problem in both proof of work and proof of stake.
The basic idea is that if you have the ability to choose which transactions go into a block
and in what order, then you have the ability to take advantage of that position for economic
gain in a lot more ways than just collecting transaction fees.
For example, there's decentralized exchanges on chain like Uniswap.
Let's say the price of ETH versus USDC was 2700, the previous block, but then there was
a bit of a market drop and now it's 2680, where you can go on Uniswap and you can just
gobble up the entire part of the automated order book that's between 2700 and 2680.
Then at the same time, you run a bot and you buy some ETH back at 2680 and you've just
made about $10 of profit or $10 times whatever the depth is.
There's lots of little things like that.
There's also things that involve front running other people's transactions.
One example of this would be that if someone sends a transaction that says buy me five
ETH for whatever price that you can get, but with a maximum of, let's say, $15,000, then
you can go and you can put a transaction right in front of that transaction and you can buy
up that ETH first and then you resell it to him at $15,000 minus one.
Then you get to make a little bit of money though.
Exactly.
There's a lot of these different arbitrage front running, back running, these different
tricks that allow block proposers to get some percentage on top like overhead.
Exactly.
The reason why this is a challenge is because first of all, it sometimes degrades user experience
because users get less favorable trades, but there are sometimes ways to mitigate that
for applications.
Sometimes it's not that bad, but the bigger risk that I think some people consider more
existential is that there's just much more economies of scale in figuring out how to
extract all this revenue because if you're just collecting transaction fees, there aren't
really economies of scale.
There aren't really benefits to centralizing because it's a very simple formula.
You just grab up the transactions that pay you the most, but with MEV, there's all these
sophisticated algorithms, and if you have lots of money, then you can hire really smart
people to make amazing algorithms, and then you can use the other half of your money to
get a lot of mining power, a lot of stake, and you get a lot of opportunities to use
your even better algorithms.
There's this risk that as a result of this, mining is basically, or even validating, improve
of stake is going to centralize.
I think the ecosystem is best replied to this sort of risk, and it's the direction
where projects like flashbots are going already is if you can't eliminate the centralization,
then you try to firewall it.
The way that you firewall it is, you basically say, we're going to try to deliberately create
a marketplace where people can just do the complicated work of creating what are called
bundles, like the bundles of transactions that are very profitable.
And then at the other side of the market, you just have block proposes or miners that
are just dumb notes, and they go and ask what are called searchers, the bundle creators,
and they just ask, hey, how much can you give me if I put in your bundle, and then they
just take the highest offer.
So you sort of separate out the task, and you have the easy part, and then you have
the hard part, and you have this special class of actor called a searcher that does the hard
part, and then the easy part, the people doing the easy part, which is just miners and validators,
they just talk to all the different people doing the searching, and they just accept
the highest bidder.
So this is also just an interesting example of economic design philosophy.
Sometimes you can't just make centralization go away.
Sometimes it's inevitable, but at least you can try to contain it.
You can direct it, or you can even firewall it away from core consensus, the parts that
really do need to be decentralized.
But you don't see it as an existential risk, it's just a bit of a problem that has to be
constantly dealt with.
It's a risk.
There's obviously a risk that it's a very severe problem, and that even this FlashBots
approach has some fatal flaw or whatever, but we're definitely approaching it with the
mindset of this is a problem, and yes, we do have to do some work to solve it, but we're
doing it, and so far it's being solved.
Okay, let's talk about the other really, really fascinating part of the future of Ethereum.
Let's not call it Ethereum 2.0, but the future of Ethereum that also may require a hard
fork.
I don't know, you can correct me on this, is, well, broadly, ideas for scaling and more
specifically Layer 2 or Layer 1 and 2 intersection ideas of how to achieve scaling, and at the
core of that is the idea of sharding.
First, what is sharding?
There's two major paradigms for scaling blockchains, as you said, Layer 1 and Layer 2.
Layer 1 basically means make the blockchain itself capable of processing more transactions
by having some mechanism by which you can do that, despite the fact that there's a limit
to the capacity of each participant in the blockchain, and then Layer 2 says, well, we're
going to keep the blockchain as is, but we're going to create clever protocols that sit
on top of the blockchain, that still use the blockchain, and that still kind of inherit
things like the security guarantees of a blockchain, but at the same time, a lot of things are
done off-chain, and so you get more scalability that way.
Then Ethereum, the most popular paradigm for Layer 2 is rollups, and the most popular
paradigm for Layer 1 is sharding.
So one way to achieve Layer 1 scaling is to increase the block size, hence the block
size, wars, quote-unquote, and you actually tweeted something about, people are saying
that Vitalik changed his mind about, he went from being a small, big to small, but you
said I've been a medium blocker all along.
So maybe you can also comment on the very basic aspect before we even get the sharding
of where you stand on this block size debate.
So the way that I think about the trade-off is I think about it as a trade-off between
making it easy to write to the blockchain and making it easy to read the blockchain.
So when I say read, I just mean have a node and actually verify it and make sure that
it's correct and all of those things, and then by write, I mean send transactions.
So I think for decentralization, it's important for both of these tasks to be accessible,
and I think that they're about equally important.
If you have a chain that's too expensive to read, then everyone will just trust a few
people to read for them, and then those people can change the rules without anyone else's
permission.
But if on the other hand it becomes really expensive to write, then everyone will move
on to basically second-layer systems that are incredibly centralized, and that takes
away from decentralization and self-sovereignty as well.
So this has been my viewpoints pretty much the whole time.
It's that you need this balance and going in one direction or the other direction is
very unhealthy.
In the Bitcoin case, basically what happened was that Bitcoin originally, at the very beginning,
it didn't really have a block size, it just had an accidental block size limit of 32 megabytes
because that just happens to be the limit of the peer-to-peer messages.
Interesting, I didn't even know that part.
But then Satoshi, back in 2010, was worried that even 32 megabyte blocks would be too
hard to process, so he put the limit down to one megabyte, and I think the...
If I put, you mean, sneaked in there.
Yeah, just made an update to the Bitcoin software that made blocks bigger than what I think
it's a million bytes invalid.
I think the impression that most people had at the time is that this is just a temporary
safety measure, and over time, as we become more confident in the software, that limit
would be raised somewhat, but then when the actual usage of the blockchain started going
up and then started going up, first to 100 kilobytes per block, then to 250 kilobytes
per block, then to 500 kilobytes per block, there started a kind of coming out of the
woodworks, this opinion that, like, no, that limit should just not be increased.
And then there were all of these attempts at compromising, right?
First there was a proposal for 20 megabyte blocks, then there was the 248 proposal, which
is a bit ironic because the 248 proposal started off being a small block negotiating position.
But then when the big block people came back and said, like, hey, aren't we going to do
this?
Well, we don't want the block size increases anymore.
So there were these two different positions, right?
The small blockers, I think they valued one megabyte blocks for two reasons.
One is that they just really, really believe in the importance of being able to read the
chain, but two is that a lot of them really believe in maintaining this norm of never
hard forking, right?
So the difference between a hard fork and a soft fork is basically that in a soft fork,
any block that's valid under the new rules was still valid under the old rules.
So if you have a client that verifies according to the old rules, then you'll still be able
to accept the chain that follows the new rules, whereas with a hard fork, like, you have to
update your code in order to stay on the chain.
And, look, they have this belief that, you know, soft forks are kind of either less coercive
than hard forks, which, by the way, I completely disagree with.
I actually think soft forks are more coercive because, like, basically, they force everyone
who disagrees to sort of go along by default, or they have this opinion that it's more difficult
to abuse soft forks to do really mean things or that completely violate people's expectations,
like increasing the supply, which is, again, I think there is some truth to that.
So because of these reasons, they just say, we're only going to do soft forks and we want
to just not do any hard forks.
And they eventually discovered this idea called segregated witness that allows for a very tiny
block size increase to the equivalent of about two megabytes with a soft fork.
It's just a really weird and devious trick.
Basically, what they do is they take the signatures of transactions and then they put them outside
of the block, and then they add an extra rule that says that, like, every block to be valid,
the block has to come with a separate, like, basically, extension block that contains all
of the transaction signatures, right?
So you know, when you measure it according to the old rules, like, you know, hey, it
adds up to less than a million, but actually, there's this extension block that the old
protocol doesn't even know about.
So it's a hack that seemed to work to do in a small way extend the size of the block.
But so, you know, a small block side was, like, happy with these very low levels of block
size, and the big block side wanted to expand to, you know, at the very least go to four
megabytes, then, you know, maybe go, maybe eight, 20, there are those disagreements within
there as well.
I definitely was favoring the big side the whole way through, as you can probably tell.
But even though, so the argument against the big is that it makes things more centralized.
Yes, because fewer people can run and know that there is a chain, and also because any
of these things would require a hard fork and, you know, hard forks are inherently risky.
Do you think there's truth to that?
I'm pro-hard fork.
I think hard forks are actually, like, in a, you know, politically economic sense, they're
better than soft forks.
Well, let's, okay, okay.
I think that's a beautiful principle as stated that soft forks may be more coercive than
hard forks.
This is not just about cryptocurrency, this is about politics and life.
That's fascinating.
So you're okay with hard forks.
In fact, you think hard forks is the right way to make changes, because then everybody's
forced to make a decision.
Do you accept this change or not, as opposed to ideas being sneaked in behind the door
and your, and the decision is forced on you?
Exactly.
Yeah.
Okay.
So hard forks, some people say, this is when they talk about sort of Ethereum, is there's
some aspect to a hard fork where you're trying to upgrade, what is it, airplane while it's
flying.
And I think soft forks are also upgrading an airplane while it's flying.
But it's smaller upgrades.
That's, there's some truth to that.
There's definitely, there's definitely a bit more risk of like a split as a result of a
hard fork than as a result of a soft fork.
And the split is highly undesirable, right?
Well it depends.
Like if it's a split because of a bug, then that's horrible.
If it's a split as a result of political differences, then I think like a split is better than,
you know, one side being forced to basically just like suck it up and accept the majority
position even if it really hates it.
What there's also political connections throughout the history of the United States is like sometimes
groups of people that strongly disagree with each other should be forced to work it out.
Even if they, even when a split seems like an easy thing in the short term.
It depends.
And I think like, well, for blockchains in particular, the costs of people being able
to like peacefully do their go off and do their own thing are much lower, right?
Like, you know, okay, if you have a country and you have two groups, then like often enough
like fighting out the new rules requires that, you know, a civil war requires everyone to
move and so forth, you know, on a blockchain, like, you know, the costs are lower and so.
So if you were to look at the way things worked out with the block size wars and there was
a split, what is it, Bitcoin Cash and Bitcoin?
Yeah.
Which like you looking, putting on your historian hat, you mentioned offline, you like Dan Carlin.
So if Dan Carlin wanted to do an episode on the block size wars, do you think he could
have turned out better or are you okay with the way it turned out?
I'm definitely disappointed with what happened with the block, with the big block side.
I think the source of my disappointment is that like, one of the things that you notice
when just looking at like this political disagreements generally, especially when you
have environments where, you know, they're authoritarian or like single party dominated
and then there's some opposition party and the opposition often has like very legitimate
grievances.
But at the same time, the thing you notice is that often enough, the opposition just
sucks, right?
Like it just doesn't have, you know, political capacity, it doesn't have like the ability
to come up with policy because its entire culture is like designed around resisting
much more and then it's designed around like, you know, actually debating serious policy
tradeoffs.
And I worry or I guess not so much worry because it's already happened.
I unfortunately think that Bitcoin Cash ended up being a victim of this, right?
Like first there was a split with Bitcoin Cash and then of course, Craig Wright came
in and you know, Craig Wright was this basically scammer who just keeps on pretending that
he is Cesar Shinakamoto, the inventor of Bitcoin.
Hey, Craig Wright's legal team.
Do you hear me?
Yes.
It's a scammer.
So sue me.
This is definitely going to be depth first search because I got to ask you, Paul Craig.
I guess this people have been contacting me and I'm trying to figure out like what is
up with this human being.
So for people who don't know, there's somebody who is, let's start.
There's Satoshi Nakamoto, who is the creator of Bitcoin who's anonymous and actually most
really big people in the cryptocurrency space do not like yourself and others do not
dare claim that they are even for funds Satoshi Nakamoto.
In fact, if Satoshi Nakamoto is still alive and if say you were Satoshi Nakamoto, it
seems like the thing he would do is probably or she is trying to remain anonymous.
On the flip side of that, there's a guy named Craig Wright who continually keeps claiming
that he is in fact Satoshi Nakamoto and keeps suing a lot of people.
So on him, if you could just linger on him, what do you make of this character?
What are we supposed to make of this character?
Should he be ignored?
Is there any possible truth to his claims?
What do you make of him?
The analogy that's at the top of my head will get a bit political, but that's fine.
You've had Michael Ballas.
So I guess I view Craig Wright as being kind of like a Donald Trump figure in that he's
not very intellectual, but I think he gets a big audience because he says things that
play to the resentments that people have and he says things that people want to hear.
In the wake of this block size war, the big blockers did feel very disenchanted.
They felt that Bitcoin always had this vision that we were supposed to just keep increasing
the block size and Bitcoin is peer-to-peer cash.
It says so in the white paper, and then this elitist clique of core devs just came in and
said, no, no, no, we're going to impose this totally different vision, and if you ever
want your scalability, you'll have to wait for us to create this totally unproven fancy
technology called the Lightning Network that works under completely different principles.
They were very angry at this, and I think a lot of that anger is justified.
But at the same time, when people are in that mental state, it's very easy for you to just
kind of latch on, and if you find someone who expresses anger at the same things that
you're angry at and also seems like someone who's strong and seems like someone who might
be good to rally around, it's very easy to just get behind that.
But that extra part about where he's touching the ground, I don't understand why that's
necessary.
I think that he could have done it without that, but that just, it's a marketing strategy.
It sort of gives him more salience.
There's other big block personalities, but what's the difference with Craig Wright?
He's not just a big block personality, he's potentially Satoshi, and he did say all the
big block things.
He talked about how, oh, the concept of a fee market is fundamentally economically wrong,
and it should be a free market, and you should be able to have blocks as big as you want.
He repeated all the talking points, and so a lot of people were kind of sucked into
that.
And so he unfortunately was able to basically dominate a big part of the Bitcoin Cash community
for a long time.
And then eventually, of course, more and more people started to catch on.
He would just say technical things that are completely wrong.
One example of this that I remember is that he mixed up the concept of 256 bits and two
to the power of 256 bits.
So the difference is, it's like the difference between 80 and the concept of 80-digit numbers.
Because of this, he made this argument that said that Bitcoin's elliptic curve is friendly
to cryptographic pairings.
You don't have to understand what that is, but if you want to know, I have articles on
both at Vitalik.ca.
But basically, he made this technical argument that really hedged on this point.
And then when people pressed him on it, it was like, yes, but no, no, look, exactly.
The height is two to the 256 bits.
That's a very tiny amount of information.
No, no, no, two to the 256 bits is more than the amount of information in the universe.
And he equivocated and prayed on people's inability to understand that mathematical
new lens.
And I called him out.
And eventually, I even called him out in person at this conference in Seoul.
Like I just stood up and asked, hey, conference organizer, why are you letting this fraud
speak at this conference?
And I remember even some big blockers at the time getting angry at me.
But eventually, they did get rid of him.
And then basically, Craig Wright was forced to split off because the rest of the community
refused to accept some network change that he wanted.
And so then there was the BCH and BSV.
And then in the Bitcoin Cash community, there was this drama of, are they going to add a
developer fund where they redirect 12.5% of the revenue from the miners to the devs?
And according to the libertarian, not aggression principle is this technically theft.
Like his understanding of the technical depths of cryptocurrency was lacking in a way that
you, Satoshi Nakamoto, certainly would not.
Yes, exactly.
But the point is that even after Craig Wright got expunged, the Bitcoin Cash community kept
having these disagreements, right?
And now after this development funds dispute, there was a further split between Bitcoin Cash
and ABC.
But so, you know, the, the, the branching tree continues to extend, right?
So in that way, it's disappointing to see those kinds of splitting.
It was never resolved.
It is.
I would have definitely like wanted to see more of a kind of like principled coin with
a, like tries to be Bitcoin, but, but, you know, follows consistent big block values.
But I know maybe I should just like stop expecting projects that I have no involvement in to
be care at all about what my values are.
And you know, like maybe Ethereum just like is,
Interesting.
I think you have a powerful voice and you can inspire other projects to do, to, to, to
live up to their best possible selves.
Okay.
So that's the level.
That's the layer one approach.
The other layer one within Ethereum is the idea of sharding.
Yes.
What the heck is sharding?
Okay.
What is the future of sharding look like?
Right.
So to summarize that big, long tangent that we just,
It's a beautiful tangent by the way.
It's an amazing tangent.
And I think like crypto is just one of the most underrated aspects of crypto is I think
how you can like analyze the, you know, the sociology and the politics and the anthropology
and like, yeah, and I'm sure Dan Carle would have fun exploring the space at some point.
But like the core tradeoff, right, is that if you scale blockchains the dumb way just
by increasing the parameters, then eventually you just make it harder and harder to participate
as a node and you end up with a system where there's like 20 computers running the whole
thing and it's just very centralized.
So sharding basically says, well, instead of just increasing the parameters, what we're
going to do is we're going to change the blockchain architecture in such a way that
each individual node in the blockchain only needs to store a small portion of the data
and only needs to process a small portion of the transactions.
So you can think about it as being like inspired by BitSorrent, right?
Like on BitSorrent, there's no such thing as a BitSorrent full node that has every movie.
Right.
You know, the work is like split up among a huge number of computers and like that makes
sense.
That's, you know, the only sane way to scale a system like that.
And if they actually tried making a version of BitSorrent that required full nodes that
store every movie, then, you know, it would have like zero censorship resistance and it
would just like, you know, be dead in an instant.
So the challenge with taking that model and applying it to blockchains, right, is that
blockchains aren't just about like spreading data around, they're about agreeing on exactly
what data was spread around and ensuring that everything that you agree on actually is correct.
And so you have this paradox where let's say you want to have a system that supports 10,000
transactions a second, but each computer in the network can only personally verify a hundred
transactions a second.
So how can each computer get a guarantee about the other 9,900 without actually going and
verifying them themselves?
And it turns out that there are some like a bundle of different tricks that can do that,
right?
And one of them is just random sampling.
So the idea behind random sampling is like, let's say for simplicity, this is a proof
of stake chain, and you have 10,000 validators, validators, like, you know, the stakers.
And like for simplicity, we'll assume they all have the same number of coins, right?
If someone has more coins, we'll just kind of split them up and pretend they're 10 stakers.
Then you use, you do like some random shuffling and you basically say, these random hundred
validators are assigned to validate this block.
These random hundred validators are assigned to validate this block.
These random hundred validators are assigned to validate this block.
And so each individual computer only gets assigned to validate like a small piece.
But then the way that the information about like what's valid gets passed around, right,
is that when these hundred participants validate a block, they all sign a message basically
saying like, yes, we agree that this block is valid.
And then like they combine that signature into one, and then they broadcast that signature.
And then everyone else, instead of verifying the blocks directly, just verifies that signature,
right?
And so if I see the signature, I'm not directly convinced that that block is valid.
But what I am convinced of is that out of this committee of, or this randomly selected
group of 100 validators, let's say at least 70 of them agree that this block is valid.
And so if I trust that, you know, the majority of these participants are all honest, then
because it's all randomly selected, you know, the attacker can't just like force themselves
into one committee.
And so, you know, the attacker is going to be even at least, even at least spread out
too.
And so if, you know, the entire set of validators is mostly honest, every committee is going
to be mostly honest.
And so like bad blocks are not going to go through, right?
So that's like one simple form of sharding.
There's also other more clever things that you can do.
So for example, there's this concept of a ZK Snarks, right?
I'll call it as your knowledge proofs.
So this is the idea that you can make a cryptographic proof that says, I verified the
or I ran some complex computation on this piece of data and I got this answer.
And so if you make these kinds of proofs, then like if you see a ZK Snark that says
some block is valid, then you're convinced that that block is valid.
And even if, you know, everyone in that committee is evil, like they have no way of making a
valid proof for a bad block, right?
Like because the proof itself, like it is a proof that you did the computation where
that proof is much easier to verify than just running the computation yourself.
And you know, the, there's a once again, you know, super awesome mathematical cryptographic
magic behind making ZK Snarks work.
It gives you a little bit of a leg up over the 51% honest assumption.
So it's a little hack that improves upon the random sampling thing.
Exactly.
And like there's other hacks, right?
Like there is another hack called data availability sampling that allows you to make sure that
the data in the blocks was actually published.
But like basically, like if you stack a couple of these tricks on top of each other, you
can create a system where like I as an individual participant can be convinced that everything
that's going on in this distributed blockchain thing is correct without actually personally
checking more than like a percent of it.
So that's charting.
That's charting.
But the, as I understand, maybe correct me on this is in the space of Ethereum, the
charting happens on some fixed number.
Like the split is on some fixed number.
I think it's 64 is the currently sort of proposed number.
So how does that help scaling?
Is it just a fixed constant scaling by 64?
And is that a way to achieve those crazy, the crazy amount of scaling that seems to
be required to use cryptocurrency for, for, for purchasing.
So doing like competing with credit cards and visa and so on.
So first, I think like the 64 can be hard forked up over time.
So we have set it so that like there's theoretically space in the data structure for 1024 shards.
It's just that 64 of them are turned on.
There are challenges with having more shards because like you have to have logic that just
like checks and manages all of those shards.
And if there's too many of them, then that becomes too expensive.
But you know, even still, you can improve quite a bit.
And then the other thing that we're doing is if we're getting maximum scalability by
combining rollups and sharding.
So this might be a good time to talk about rollups.
What are rollups?
Okay.
Now we're moving into layer two ideas.
Yes.
So the idea behind a rollup is basically that so instead of just publishing transactions
directly on chain and having everyone do all of the checking of those transactions.
What you do is you create a system where users send their transactions to some central party
called an aggregator and like, well, theoretically you can have a system where like the aggregator
switches around or anyone can be an aggregator.
So you know, it's still like permissionless to send things.
And what the aggregator does is they strip out all of the transaction data that like
is not relevant to helping people update the state.
So when I say the state, this is like, this is a very important kind of technical term
from blockchain.
I mean, like account balances, code, like things that are like memory, internal memory
of smart contracts, like basically everything the blockchain actually has to keep track of
and remember, right?
So you just put in, you take all these transactions, strip out all the data that's not relevant
to telling people how to update the state.
And then you take the data that's needed to update the state and then you're like really
compress it, right?
So like for example, if we say, you know, I Vitalik have an account that's 0xab58 blah,
blah, blah, blah, blah, blah, and it's 20 bytes, well, instead we can say, well, I have
an account that is number 1874224 in the tree, right?
And that goes down from 20 bytes to just like an index and a position, which is three bytes,
right?
So you use all sorts of these fancy compression tracks, and you basically just, instead of
publishing all these transactions, you publish this like tiny compressed blob, right?
So the amount of data that goes on chain goes down by maybe about a factor of 10, right?
And then the second thing is that you don't do the computation on chain.
Maybe you do the computation off chain, and there's one of two ways to do this, right?
One is called a ZK rollup, which is you just provide a ZK snark that basically says, hey,
look, I did this computation and I have this proof that here's the, here's the, you know,
some hash of the result and it's correct.
And then you stick it on chain and everyone verifies this one proof instead of verifying
all these transactions.
And then the other approach is called an optimistic rollup, which is basically made of the scheme
where like first someone says like, hey, this is what I think the result of the, of applying
these transactions is, and then someone else can say, I disagree, the result is different.
And only if two people disagree, do you actually do it on, do you actually just like publish
all of the data and run the whole, that whole blog on chain.
So if there's disagreements, then you just like run everything on chain and whoever was
wrong, like loses a lot of money, right?
So like disagreements are very rare and they're very expensive.
And in a ZK rollup, you don't even rely on this like challenging game at all.
You just rely on a proof.
So now the core principle is basically that instead of lots of transactions and all the
trends that everyone verifies every transaction, it is, you take the transactions, you strip
it, strip them down and compress them as much as possible, then stick that on the blockchain.
You do need to stick something on the blockchain just so that everyone else can like keep up
to date with the state.
So they know, you know, what all the contracts are, what all the balances are and all of this.
But it's a very small amount of data.
And then you use some one of these other off chain games, you know, could be this optimistic
game could be a ZK snark to just prove that somebody out there did the computation and
the result is correct.
So you're pushing like 90% of the work off chain and then, you know, well, 90% of the
data and 99% of the computation off chain.
And then you still have 10% of the data and 1% of the computation on chain.
And so, you know, your scalability goes up by a factor of about 100.
So these systems are already live for, for some applications, right?
So there's something called loop ring, which is just a ZK roll up for payments, right?
So you can have, you know, assets inside of, inside of the loop ring system, and you can
go around and transfer them.
But what you, and you get like much lower transaction fees, right?
Like instead of $5, you'd have to pay like less than five cents.
And the only problem is that this only supports a couple of applications right now, like making
one that supports anything that you can do on Ethereum, just takes a bit more work.
But that's being done as well, right?
So like within a few months, I'm expecting, you know, fully Ethereum capable roll ups
to be available as well.
So then it's a roll ups, just summarizing, you know, do most of the work off chain put
only a little bit on chain factor of 100 scaling, sharding and other factor of 100 scaling,
two times a hundred factor of 10,000, you know, hundreds of thousands of transactions
a second.
And like, you know, there's your scalability.
Okay.
So you choose scalability, you can do a large number of transactions very quickly and the
cost to do those transactions is much lower.
You wrote that in the long-term ZK roll ups are going to win in terms of layer two technology.
Specifically, you wrote, in general, my own view is that the, in the short term, optimistic
roll ups, as you were saying, are likely to win out of general purpose EVM computation
and ZK roll ups are likely to win out for simple payments, exchange and other application
specific use cases, just as you were saying.
But in the medium to long term, ZK roll ups will win out in all use cases as ZK snark
technology improves.
Why do you think ZK roll ups are going to win the big picture battle over layer two
technologies?
So I think ZK roll ups, like once you accept that the technology works are just like conceptually
simpler and they have nicer properties.
The reason is that they do not have this concept of a challenge game, right?
Like as I mentioned in an optimistic roll up, the way that you ensure that the results
are correct is that you let one person submit and like they just submit with no proof.
They just say, here's what I think the result is.
And then if someone else disagrees, they make their own submission.
And then if you have to disagreeing submissions, then you actually publish it on chain and
you see who's right.
But for this to work, like you need to actually wait for someone to disagree.
Right.
So like, for example, if I have an asset inside of an optimistic roll up and I want to withdraw
it, then I actually have to wait a week to withdraw it because like if the block that
contains my withdrawal turned out to be invalid, then there needs to be space for someone to
disagree with it.
But whereas with a CK roll up, like you don't need time for disagreeing because you just
have a proof, right?
As soon as the block is submitted, there's a proof and like, you know, it's correct.
So disagreements, especially in the long term or sparse, then you don't want to do the optimistic
or the game theoretic thing.
You want to do the CK stock.
Right.
The CK stuff is just like you can win a CK roll up, you can withdraw immediately.
You don't have to like worry about the economics of proving as much.
There's just like fewer issues.
The reason why CK roll ups are not winning everywhere today is because, you know, ZK
Starks is still a crazy new technology, right?
Like this is something that 10 years ago, you know, it existed only in theory and there
was not in practice.
Then, you know, eight years ago, people were just getting excited about it in Bitcoin conferences
for the first time.
Like four years, starting four years ago or three and a half years ago, even that was
the first time you were able to make any ZK Starks based anything on Ethereum.
And then people started making them and ZK technology has only really become efficient
enough to do a lot of things within the past maybe one and a half years.
So it's new technology.
It's crazy technology.
It's admittedly scary technology.
If you want to learn more, I also have an article about this on Vitalik.ca.
It's actually really, really good.
As you're writing, it goes, it's technical, but it's accessible.
I highly, highly recommend to check out Vitalik's articles and blogs, whatever you call them.
It's brilliant summary of the work.
Actually, Ethereum documentation period is really good.
I think that's somewhat crowdsourced.
That documentation is really, really accessible and brilliant.
So let me ask about sort of other approaches to layer two, like side chains.
So the one popular one is polygon.
What are your thoughts about polygon, which is a layer two network?
Is it positive?
Is it negative for Ethereum?
Is it both?
Does it have a future?
Which is its own chain, but it's using Ethereum, it's like based on Ethereum, essentially.
Or maybe you can describe what it is.
So I think there is a really big and important difference in security models between rollups
and side chains, which is basically that a rollups inherit from the security of Ethereum.
So if I have coins inside of a loop ring or Optimism or Arbitrum or ZK sync, then even
if everyone else in the world who is participating in these ecosystems, so like hates me and wants
to steal my money, I can still personally make sure that no matter what happens, I get my
money out.
It might be a bit expensive for me to get my money out and I have to do transactions
on the main chain, but I'll be able to do it.
Whereas in polygon, which is a side chain, and so instead of being secured by Ethereum,
it's also in part secured by its own approved of state consensus with its own token.
So if 70% of the whole, or even 51% of the holders of polygon tokens wanted to take my
money in polygon, they can.
So that's the, and to be fair, there aren't even, the supply I don't think is even that
widely distributed.
So potentially you could, this idea of 51% of the token holders coming together and
stealing everything, it's not impossible.
Where does the scaling of polygon come from?
Why is it able to process much more transactions than the Ethereum main chain?
What's the idea there?
I think in part, I imagine, I'm not sure exactly what its capacity level is, but I imagine
it has a higher capacity because it's a bit more willing to take centralization trade-offs.
And then another thing is that if the Ethereum ecosystem, even if it did not do that, if
you think about an Ethereum ecosystem hypothetically scaling with sidechains, then you would have
100 copies of polygon.
And they would each have their own tokens, they would each have their own chains.
And so even if each one of those chains was only as scalable as Ethereum, you could still,
the total sum of them would still be 100 times more than Ethereum.
The thing that I want to say in Polygon's favor, just to be very fair to them, I definitely
really respect the work that they're doing, so start with a bit with that word of not
criticism caution.
It's that they made this deliberate trade-off for very pragmatic reasons, which is that
the Ethereum ecosystem needs to scale now.
And there are applications that want to do something now.
And if there aren't Ethereum-friendly options for them, then they're not going to just wait
peacefully and do nothing for 12 months, and they're going to go to either Binance Smart
Chain or one of some other system, potentially something that just has totally no alignment
with Ethereum values whatsoever.
But whereas with Polygon, the best thing that you can say in Polygon's favor and against
optimism is that optimism is not live and Polygon is live.
It just takes more work to create a system that has these extra roll-ups, security features.
And so Polygon just said, we're going to be the system that makes the pragmatic trade-off.
We're going to go functionality first, and then we can talk about adding back the security
later.
So I've talked to them, and in principle, I think they're very open to the idea of adding
more security and becoming a roll-up or at least adding a Polygon chain that's a roll-up
at some point in the future, which is definitely something I think they absolutely should follow
through on.
But the fact that they exist now and so applications can bootstrap now on a chain that even though
its security isn't perfect, at least it exists and people can go use it.
And then over time, the chain matures as the applications mature, and it's I think a very
reasonable strategy, and I'm definitely really happy that they're part of the ecosystem.
Yeah, it's kind of interesting.
The history of cryptocurrency has this tension of really good ideas that are hard to implement,
so they take longer to implement, and ideas that are not as good but are faster to implement.
This is like the story of you have JavaScript that basically took over the world because
it was quick to implement within 10 days, and then later kept fixing itself.
I don't know what to make of that, from the engineering perspective, I'm more and more
becoming comfortable in accepting the fact that our whole world will run a technology
that's not as good as it could have been, just because the crappy solution is faster
to implement and it sticks.
What do you make of that tension?
I think the compromise that we've been taking within Ethereum is when we have to take the
crappy solution, we look for crappy solutions that are forward compatible with becoming
good over time.
When you build the quick and dirty thing, you would still already have ideas in your
head about what the more complete thing with all the security features added on would look
like.
Even if it requires a hard fork?
Yes.
For example, we're sharding.
I think it's likely that the first version of sharding that comes out is not going to
have ZK Snarks and data availability sampling, for example.
We know what these technologies are.
We feel like we have wrapped our heads around them.
We know how to build a system where we can put all the pieces in place so that it becomes
very easy to bolt those components on in the future.
If you do things that way, then at the beginning, you can have your system that has the functionality
but has less security or less sustainability or less of something else.
But then over time, it's designed in such a way that it has this easy on-ramp to adding
those things.
If you don't think explicitly about being future compatible, then you do often end up
with a quick and dirty solution that backs you into a corner.
There are definitely cases where I think the Ethereum ecosystem has suffered from that
and we have had to expend pretty significant effort on, for example, removing features
that we didn't realize that we actually can't sustain.
One big example is just increasing the gas costs.
Making some operations more expensive because they should be expensive because they actually
take a lot of time in the process.
All things more expensive, taking some functionality away.
If you can be cognizant of where you're likely going into the future and if you don't know,
even be cognizant of both the most likely paths that you'll take in the future and thinking
about your roadmap and coming up with a roadmap where you know that if you want to do either
of those things, then you have a clean path toward it, that's probably the best practical
way to get the best of Worthworlds that we have.
Okay, let's talk about this wonderful process of merging.
Okay, so there's the main net, which is the Ethereum 1.0 chain or the chain that uses
proof of work as a consensus mechanism and then there is what is it called?
The beacon chain that uses the proof of stake mechanism and I believe the beacon has been
deployed successfully, is working, so that was in December of 2020.
There's a bunch of questions around that that's fascinating as well, but I think the most
fascinating question is about merging those two.
When do the two chains, one that's proof of work, one that's proof of stake, merge?
And what are the most difficult parts of this process?
Right, so as you've said, the way that we have set up this proof of stake transition
is that at first, the proof of stake chain just launches on its own and this is the
thing that happened in December and the proof of stake chain has been running for close
to six months now.
By the time people watch this, it might actually be six months, but it isn't actually coming
to consensus on anything except for itself.
So the idea behind that is to just give the proof of stake chain time to mature, time
for people to build the ecosystem around it, time to make sure that there aren't any bugs
and just prove to the community that proof of stake actually is real and a full transition
is realistic because the thing that you're transitioning to already exists and already
works.
And then at some point in the future, you have this event called the merge where you
basically take the activity that's being done inside of the proof of work chain and
you actually move it over into the proof of stake chain so you get rid of the proof of
work side completely.
So the way that the merge will work is, it's definitely gone through a few different iterations,
like the earlier versions of this actually required more work for users and more work
for clients.
It was much more like, oh, there's this new chain, there's this old chain, and then everyone
has to migrate from the old chain to the new chain and then at some point, we'll forget
about the old chain.
The new version is designed to be much more seamless for users.
So basically what actually happens is that the old chain basically becomes embedded inside
the new chain.
So starting from the merge transition block, every proof of stake chain block is going
to contain a block of what we consider to be the Ethereum chain today, but we'll call
it the execution chain.
And then at the same time, to create one of these blocks, you're not going to need proof
of work anymore.
So basically at the same time, you would both get rid of the proof of work requirements
for one of these blocks to be valid, but instead, you require these blocks to be embedded
inside of the proof of stake blocks.
So you basically have a chain inside a chain.
And from an architecture perspective, you might think it's a little bit suboptimal,
but it actually has some nice properties and makes it easier to think about the consensus
and think about what we call the execution layer, transactions and contracts separately
and upgrade them separately.
And it also just means that the upgrade process is extremely seamless because from the point
of view of a client that's following the chain, you basically have to update nothing, right?
You're still following the same chain and follows the same rules, except instead of
checking proof of work, you'll switch to checking that these blocks are embedded inside of blocks
of the proof of stake.
So there'll be this merge block that will mark this transition.
And over time, I guess the new chain will contain the full record of all the transactions
that's ever happened on the previous chain, on the old chain.
So maybe I'm asking a dumb question here, but in this process, is the new chain going
to have all the information of the past transactions?
The new chain is not going to hold information from what happened in the Ethereum chain before
the merge.
So Ethereum clients that people are going to use around the time of the merge and soon
after the merge, they're probably just going to sync and check the proof of work chain
up to the merge.
And then they're going to check the proof of stake chain.
But at some point in the future, I think people will just stop bothering checking the proof
of work before the merge.
Got it.
So that old history information is not important for the future.
Like if you're operating actively on the new chain, that history is not important to you.
So it's not strictly important for just any smart contract or just applications that run
on the blockchain.
It can be important to users and it can be important for some applications, but we're
basically saying that maintaining and serving that is not going to be simultaneously the
responsibility of every Ethereum node.
If you want that information, there can be separate protocols for backing it up.
And these other protocols actually exist.
There's something called the graph, which is doing some history retrieval.
Potentially you can just take that entire chain and stake it on BitTorrent.
There's lots of ways to archive it and create kind of customized search protocols for it.
So what's your sense why, so there's a Python 2 and Python 3 and it took forever for people
to switch.
What's your sense why this merge has been taking longer than perhaps was expected?
I think the biggest reason is just we've been underestimating the technical complexity.
There's a lot of technical complexity in making a successful proof of stake chain.
There's a lot of technical complexity in actually figuring out the transition process.
So that's bigger than social complexity.
So the technical complexity, you would say, is the bigger reason for any delays than the
social complexity.
I actually think so.
I think we've been very fortunate to not have too much social complexity around the
merge.
So not much drama.
No.
I think the biggest part of the reason is just because we have been talking about proof
of stake and sharding as being part of the roadmap since almost the very beginning of
the project.
The very first proof of stake blog post is from January 2014, which is two months after
the project started and maybe even a day after the announcement.
So proof of stake was not something that we put on anybody by surprise.
And then when the Dow fork happened and the people on the ETC side split off, I think
it also just happens that a lot of the people that were not willing to stomach the Dow fork
and then joined the ETC side, they were the more Bitcoin-y types.
And the more Bitcoin-y types do also tend to like proof of work more.
And so that also ended up purifying the communities on both sides, I guess.
So Ethereum Classic is not switching to proof of stake and they're happy with their setup.
By the time that it came to the Beacon Chain launching and now I think the community is
very strongly in favor of the proof of stake switch.
But let me ask the question that no engineer wants to hear, which is the question of timeline.
When do you think the merge will happen?
Do you have a sense it might happen this year?
Do you have a sense it might be pushed towards next year, 2022, or even beyond?
I think early 2022 was the most realistic.
I think there's definitely still an optimistic case of it happening this year, but the realistic
thing to count on is definitely the very early part of next year.
Is there specific things that stand out to you that make you feel good about progress
if you see it happening?
So the thing that we had last month is we had this online hackathon called Rayonism,
where basically a bunch of the different client developers that are going to be part
of the transition hacks together some test nets of the post-merge Ethereum chain.
So these were only test nets of what would happen after the merge.
They were not test nets of the transition itself.
So the thing that people are working on now actually is the transition.
So having a full specification of both the transition and post-transition, and we have
specifications now, but in a realistic way, they'll probably needs to have a couple of
changes and have things that continue to be ironed out, and then have a test net that
does both the transition and the post-transition.
And then once you have a test network, then you just have to do a lot of testing and audited,
and then do some runs on not just a specialized test network, but on, say, an existing test
network like Robson or Rinkeby that Ethereum people already significantly use.
And if it works, then you can deploy the transition on mainnet.
Just as a quick comment, because this is fascinating.
In August of last year, there was this medalla.
I believe it's pronounced medasha.
It's a South American subway station, I forget where.
But spelled with two L's.
Yeah, yeah, because that's, you know, that's how Spanish works, right?
Like the two L's have a medasha.
Yeah.
Okay, cool.
Anyway, but I read about it in the middle of August, August 14th, there was an incident
on that test net.
How does this process work?
Like, what do you learn from those kinds of incidents when stuff goes wrong in the test
process?
I think that incident was that there was a consensus failure of some kind, as I remember.
Like basically just different clients interpreting things in different ways and then one of them
getting kicked off the network.
And then it ended up taking a while to actually like get everyone to get back online.
Like a big part of the reason why it took weeks to resolve, right, is because it's on
a test network, like the coins are valuable, and so there's not really this big push of
any kind for people to actually, you know, go and download the new clients so they can
start participating again.
And so, you know, it definitely took a while until the chain started finalizing again.
But and then also, like there was, I think, another round of just not finalizing in October,
as I remember, that, I mean, there were definitely things that we learned.
Like there were a lot of things, especially that client developers just learned about
like optimization and how to build their clients in a way that they can process things efficiently.
There's a lot that we learned from just like seeing the full life cycle of what happens
when more than a third of the validators go offline and then finalization stops.
And then that kind of weird unusual state of the chain continues for a while.
And then eventually everyone who is not participating just gets enough of their stake.
Like, we don't use the word slash, we use the word leaked for this, but like basically
also burned until, you know, the people who are participating go back up to two thirds
and then the chain goes back to finalizing.
So just seeing all of those edge cases play out live, I think actually helped a lot and
probably helped really contribute to making us feel better about mainnet.
I mean, there's also an incident just recently in April 24th of 2021, where this was on Beacon,
I guess, there was a bug discovered in the software client prism that prevented roughly
70% of validators on the network from producing blocks.
I mean, maybe you can comment on what happened, but broadly, like the big picture, what kind
of stuff are you worried about in terms of problems that might arise?
I was talking about small bugs, I was talking about like emergent, social, unexpected social
bugs.
You know, what are the things that worry you about the future of Ethereum that you want
to make sure you construct mechanisms that prevent those things from happening?
So one of the lucky things there was that this particular bug only prevented, proposed
those soft blocks.
It did not prevent attestations, right?
So attestations is just a mechanism for voting on blocks.
And it's the attestations that are actually responsible for the chain finalizing.
So like coming to this more permanent agreement on blocks, right?
So the chain was actually quite stable all the way through.
I think the thing that we generally learn from these experiences is just how valuable
it is to have this multi-client network.
So this is one of these areas where I think Ethereum distinguishes itself from like Bitcoin,
for example, right?
That in Ethereum, we don't have one single client that everyone just runs, right?
There's multiple implementations of the protocol.
And these multiple implementations, they all process and verify the blocks that each other
can verify, right?
So they all speak the same language.
Now, sometimes when there's a bug, they disagree.
And when two clients disagree because of a bug, we call this a consensus failure.
And consensus failures are pretty serious, right?
And when you have a client's monoculture like Bitcoin does, then it's more rare to have
consensus failures.
You still have them, actually, Bitcoin had a consensus failure between two different
versions of the same client back in 2013.
But they're less likely to happen.
But the interesting thing is that the multi-client architecture has actually, I think, saved
Ethereum much more than it's heard it.
So even in this most recent incident, right?
Like Prism was not producing blocks, but all the other clients were still producing
blocks.
There's four others, right?
Yes.
Prism, Nimbus, Tecru, and the Lighthouse.
And then also, Ethereum back in 2016 had this fun event that we call the Shanghai DOS
attacks.
They're called that because the attacks started right on the first day of our annual conference,
DefCon, that happens to be in Shanghai that year.
So what happened basically was that someone came up with a way to create blocks that were
very slow for one client to process, but not the other client.
So at that time, there were basically two Ethereum clients.
They were called Geth and Parity.
Right now, I think the top three ones are Geth, Nethermind, and Beisu.
But what happened as a result of us having two clients is that the attacker was just
not able to come up with blocks that both clients were completely failing at processing.
And so a lot of the miners and a lot of network participants, they just kept on switching
between the two implementations, depending on which one worked, and that actually really
helped the chain survive through that month of attacks as the attacker just kept on hammering
at our system and identifying all of the weaknesses and just forcing our clients to do this rapid
sprint of just optimizing the hell out of everything and make sure there aren't any
of those DOS bugs remaining.
So that was another example.
And then as a counter example, so something that also shows the point from the other side,
Bitcoin had this bug in 2010, the balance overflow bug.
Basically someone created a transaction that had two outputs, and those outputs were both
of a few billion Bitcoin, so about to the power of 63 Satoshis.
And then if you add those numbers together, you go above to the power of 64.
And of course, computers, once you go above to the power of 64, you wrap around.
And so the Bitcoin nodes thought that there was enough money to pay for the transaction
because it was asking for, let's say, a billion Satoshis or something, but actually it was
asking for to the power of 64 plus a billion.
And so the attacker just managed to create billions of Bitcoin out of thin air.
And this was not only discovered and fixed after something like 12 hours.
But if Bitcoin had been a multiple implementation system, then what almost certainly happened
is one of the clients would have bugged out, but the other clients would have probably
actually had a check for that.
And so there would have been a consensus failure, but at least that would have alerted everyone
that there is a problem very quickly.
And it also would have given everyone just obvious social permission to go and pick whichever
one of the chains is correct and solve the problem.
So that's, I think, a big learning that we've had from multiple of our experiences in the
Ethereum ecosystem, just like validating this multi-client model.
And to be fair, it's a model that we get criticized for a lot.
Bitcoin people talk about the risk of consensus failures that this creates.
VC types are like, well, isn't it expensive and wasteful to fund three software teams
where you could just be making one quote-focused effort?
They love the word focused.
Ethereum is not that, but it's amazing, despite not being that.
Basically, yeah, so that was interesting.
And then there have definitely been other learnings as well, just from seeing the chain
live and seeing what actually is the staking experience, like what are the actual incentives
for all the different participants.
So I definitely feel like we're gaining a lot from this sort of one year of trial running
the chain before we actually make all of Ethereum depend on it.
Let me ask perhaps a strange question, but proponents of Bitcoin will say things like
Bitcoin fixes everything.
So why do we need Ethereum versus like Bitcoin plus Lightning Network for scalability?
And then using Bitcoin with this proof of work for security.
So it is perhaps sort of a strange question, but it's a high-level question.
Why do we need another technology?
Yes, it has a bunch of nice features, but doesn't Bitcoin fix everything already?
So the thing that always attracted me about Bitcoin is these values of decentralization,
creating these open, provisional systems that anyone can participate in and that aren't
just going to flop over and die if whoever created them gets bored and that are resistant
to whoever runs them, breaking the rules and all of these things.
And I think that pretty strongly that these principles are really valid and important
to much more things than just money.
Bitcoin is the blockchain for money, and Ethereum is built from the start as a general
purpose blockchain.
There is ether the asset on Ethereum, but then you can also make decentralized financial
things, what we call DeFi today.
You can make like ENS, the decentralized domain name system.
You can make prediction markets on it.
You can make totally non-financial systems that just keep track of whether or not some
certificate was signed or whether or not some cryptographic key got revoked.
This big long list of interesting things that you could use about blockchains to do, basically
they are the missing piece that where without them, the kinds of things that a decentralized
computer network can do is very limited.
And once you have them, a lot of those limitations end up going away.
So Ethereum was always from the beginning about that.
It's about, hey, this isn't just money, there's so much more that you could do if you could
just go ahead and make any infrastructure or digital institution or DAO or whatever
you want to call it, where the base layer of the logic is just executed in this open
and transparent way where everyone can see what's going on, or if you like your zero
knowledge proofs, at least everyone can see proofs that prove to you that what's going
on follows the rules, and you don't need to just constantly keep trusting centralized
actors.
Hence, the smart contracts as being a core technology as part of Ethereum.
Yes, exactly.
Smart contracts, the computer programs that are running on Ethereum, they are the core
of what makes Ethereum general purpose.
So I do think that there's a lot more wrong with the world than just money.
I'm not one of these people who thinks that if you get rid of fiat currency and you replace
it with cryptocurrency, then suddenly wars are going to go away because, like, first
of all, like, Sanyaraj revenue is only a small portion of government revenue.
It's like what, 5%, 10%, something like that.
Second of all, if you are the sort of, this is one of the things I don't even get about
their philosophy.
Let's say you're the sort of person who is an extreme and very distrusting libertarian,
and you think that these governments are terrible.
We know today that governments find a combination of things like welfare and things like the
military that goes and bombs people in Afghanistan.
So the question you have to ask is, okay, you, with your new magic newfangled cyber
currency that takes over the world, take away the government's ability to have Sanyaraj
revenue and so you reduce the government's revenue by 10%.
If the government is that evil, which portion of its expenses is it going to take that 10%
from?
Is it going to stop the bombing people in Afghanistan or is it going to cut welfare?
If you think it's the first, you have a very optimistic view of the government, right?
So that's, I guess, my perspective on, like, why the whole, you know, we're going to save
the world and create peace by, like, denying governments the right to stealth taxation kind
of perspective doesn't really make much sense for me.
And I do think that there is real value that comes from a decentralized and open currency,
like just the fact that there is a financial infrastructure that anyone in the world can,
you know, go ahead and use, right?
Like, it's, that's something that can easily be a big boon for people, right?
There's a lot of places where the currency is much less stable than the dollar.
And, you know, these people, like, well, if they use Bitcoin, their only option is to
get Bitcoins, right?
Which, you know, are also pretty volatile.
If they use Ethereum, then, you know, they can get Ether, but then they can also get
stablecoins, right?
And you might think that, you know, oh, you're not being ideologically pure, now you're giving
them stablecoins, which are mirroring dollars, and obviously, dollars are going to collapse
too.
But the reality is that dollars are vastly more stable than the Venezuelan Bolivar.
So, like, there are really, like, meaningful and beneficial things that you can give to
people by having a global and open financial system.
But I think if you want to actually do that, like, you have to have much more than just
a currency, right?
And then if you want to go beyond financial things, then, you know, you have to, obviously,
have much more than a currency.
And then, you know, you also have to actually take scalability seriously because non-financial
applications, like, nobody's going to pay $5 a transaction for them.
Can we return to dogs?
Sure.
No, no, no, no, no, no.
The other one's categorically forbidden?
Yeah, categorically forbidden.
Is there any cryptocurrency based on cats, actually?
I think there are.
Like, there was cat coin, there was NAND coin.
For some reason, they just didn't catch on as much as the dog coins did.
Okay, so let's talk about Dogecoin and Elon Musk.
Elon said that, quote, ideally Doge speeds up block time 10x, increases block size 10x,
and drops fee 100x.
Then it wins hands down, end quote.
You said in the blog post, partially responding to that, that there are subtle technical reasons
why this is not possible.
To this, Elon said that you, quote, fear the Doge.
So let's talk about this.
What are the technical hurdles for Dogecoin that prevent it from becoming one of the primary
cryptocurrencies of the world, and do you, in fact, fear the Doge?
I definitely feel obligated to correct the record.
I definitely do not fear the Doge.
Okay.
No, I love the Doge.
I actually visited the Doge in Japan a few years back.
She's an amazing dog.
She's still alive.
Wait.
The original Doge?
Yeah.
Wow.
We accept Doge every year for our annual DEF CON conferences.
I definitely don't think Ethereum is opposed to dog coins.
I kind of want to feel like Ethereum is at least a little bit in spirit itself, a dog coin.
And then, as I mentioned, I love Doge, I bought a bunch of Doge, I still hold a bunch of Doge.
On the scalability question, the challenge basically is the limits, scalability, and
the tradeoffs with centralization.
If you just increase the parameters without doing anything else, then it just becomes
more and more difficult for people to validate the chain, and it just becomes more likely
that the chain becomes centralized and becomes vulnerable to all kinds of capture.
So does it need some of the Layer 2 technologies that we've been talking about?
I personally think that if Doge wants to somehow bridge through Ethereum and then people can
trade Doge thousands of times a second inside of looping, then that would be amazing.
If they want to just take ZK roll-up style technology and just have thousands of transactions
a second on their own chain, then that would be a great outcome as well.
Is there ways for Ethereum and Dogecoin to work together?
Okay, so there's a power behind a person like Elon Musk pushing the development of a cryptocurrency.
Is there ways to leverage that power and that momentum to improve Ethereum, to improve some
of the sort of cryptocurrencies that are already technologically advanced and pushing forward
that kind of technology?
I definitely think there's room for...
You know that meme of Doge taking over that storm?
Yes, I've seen it.
Is there a way to ride that storm, that wave of the Doge that's taken over?
I think if we could have a secure Doge to Ethereum bridge, then that would be amazing.
Then when Ethereum gets its scalability, any scalability thing that works for Ethereum
assets, you would be able to also trade wrapped Doge with extremely low transaction fees and
very high speed as well.
Is there precedence for building secure bridges between cryptocurrencies?
How difficult is this kind of task?
It's definitely something that's in its infancy.
There definitely have been some cross-chain interaction things that have been done before.
The early assist is probably the concept of merge mining, when a chain just makes its
entire proof-of-work algorithm dependent on the proof-of-work algorithm of another chain.
I think famous Dogecoin actually merge mines to Litecoin, which I think in retrospect is
not looking like a very good choice because now Dogecoin is bigger than Litecoin.
If there's potentially some way for Dogecoin to merge mine with an Ethereum proof of stake
in some kinds, then that could be an interesting alternative.
So that's one type of chain interaction.
As far as bridges, one chain reading another chain, early in Ethereum's history, there
was this project called BTC Relay.
It's a smart contract on Ethereum that just verifies Bitcoin blocks.
I think people stopped really caring about and maintaining it because there just weren't
enough applications that were actually interested in using it at the time and then the transaction
fees got too high to actually maintain it.
So I think if we want to make a BTC Relay 2.0, that becomes cheaper because it uses snarks
or something like that, then you probably could.
But maybe now is the time when you actually can do that one-way verification.
But the one challenge though is that if you want to have a bridge that allows you to move
assets between chains, then you don't just need one-way verification, you need two-way
verification.
Ethereum can verify anything because Ethereum smart contracts can just run arbitrary code.
But if you want Bitcoin to be able to do things based on what happens in Ethereum lands, then
Bitcoin would have to basically, well, they can do everything with soft forks because
that's their religion, but they'll do it that way.
And if Doge wants to make a fork that allows for two-way transferability with Ethereum,
then they could.
I mean, I think that would be a lovely collaboration to make if there is interest.
I think there might actually even be some multi-sig funds that has some funding.
It's just a bounty for someone to make a bridge between the two.
Could you maybe try to psychoanalyze Elon Musk for a brief second?
So what are your thoughts about Tesla and Elon Musk's journey through the cryptocurrency
world?
So, first with Bitcoin and then with Dogecoin, acquiring and holding a large amount of Bitcoin.
And I believe at least considering the acquiring and holding a large amount of Dogecoin.
Positive is negatives.
What do you think the future for Tesla and SpaceX in the cryptocurrency space looks
like?
Do you think they'll consider Ethereum?
I'm sure that if they stay in the cryptocurrency ecosystem at all, then they have to at some
point.
Bitcoin number one, Dogecoin number, I mean, come on, it deserves to be number three or
number two.
And then Ethereum can be whatever that other number is.
If Ethereum only becomes a dog coin somehow, maybe change the logo to incorporate a dog
or something, so it almost like doors sneaking behind.
Oh, that would be fascinating for when the merge happens.
And I think, Elon, you definitely, I think you would make a mistake if you were to kind
of ascribe too much sophisticated malevolence or any deep intentionality to the whole process.
I think he's just a human being and he likes dogs, just like I like dogs.
I think that is literally the reasoning behind the whole Dogecoin thing.
There is some aspect to which, I mean, the guy helped launch a car into space, right?
You could ask, what is the purpose of that?
I think the purpose of that is fun.
I think he truly is more and more especially lately embodying the whole idea that the most
entertaining outcome is the most likely and he's fully embracing the most entertaining
outcome.
And in many ways, Dogecoin is the most entertaining cryptocurrency.
As cryptocurrency becomes more and more impactful in the world, people are getting more and
more serious about it.
And so he's selecting the cryptocurrency that is the least serious and the most fun.
And there's something to that, like coupling fun with technological sophistication and
somehow figuring out a way to do that.
Absolutely.
To do that well.
And I want the world to be fun.
I think the world being fun is great.
Okay.
Let me ask about a couple of other technologies if it's okay.
Sure.
What are your thoughts about Chainlink and hybrid smart contracts that utilize off chain
external data sources?
And I think it's definitely necessary for smart contracts so that do a lot of things
to use off chain data of some kind.
If you want to have a stable coin, you need a price oracle so you know what price you're
targeting.
If you want to have some fancy crop insurance gadget, I think Aether Risk has been doing
a lot of good work with that and I think it was either Kenya or Sri Lanka or both.
They're making a lot of good progress in some of those places.
Do you need some kind of oracle to tell you, did it actually rain in this particular area?
If you want to have assets that mirror other financial assets, you need an oracle.
If you want to have a prediction market, you need an oracle and so projects that provide
oracles are definitely really important.
There are definitely different kinds of use cases like auger is more about events and
the auger oracle is designed, I think, differently from Chainlink.
Like, emphasize as the whole, we have a fast automated thing that just gives you data quickly.
Whereas auger is more, we don't give a crap about speed and look, we don't need to give
a crap about speed because if you want to get your money out on a prediction market
that we're in reality it's resolved, you can probably just sell your coins for 99 cents
anyway.
I think Chainlink is definitely taking a good and important part of the oracle design space.
I'm definitely happy that there is that project taking the task on.
At the same time, I do think that their frog army on Twitter can get a bit intense sometimes.
The frog army?
Is there a way to incorporate sort of oracle network type of ideas into Ethereum?
I personally would prefer the Ethereum base layer.
Stay away from trying to provide too much functionality because once you have the Ethereum base layer
making a claim about, say, the US dollar to Ethereum price, at some sense you're basically
saying that Ethereum as a base platform starts making what could be geopolitical statements.
For example, imagine if there was some civil war and the US split up and you had two currencies
that both claims to be the US dollar, well, Ethereum would have to pick one for the sake
of everyone who was already using that oracle.
Does that mean that the blockchain would be taking a position in this big mega political
debate?
I think for just those kinds of reasons, I would personally prefer Ethereum itself to
be more of this sort of pure platform that just analyzes transactions and just mathematically
using deterministic and census rules, and then if you need the oracles, that can be
a layer two.
I think Ethereum benefits from not trying to do everything at layer one and having this
very robust layer two ecosystem where you have all these projects doing interesting
things.
Yeah, focus on the basic technology, avoid the politics, gotcha.
Let me ask a bit of a human question.
Charles Hoskinson, someone you've worked with in the early days of Ethereum, there
appears to my outsider view to have been a bit of a falling out.
Is there a positive, inspiring human story to be told about why you two parted ways?
I kind of want to let the various books about Ethereum speak for themselves, but I feel
like since that time, Charles has clearly progressed and matured in a lot of ways.
People who follow Charles closely have definitely told me that 2021 Charles is very different
from 2014 Charles, and I'm sure 2021 Vitalik is much different from 2014 Vitalik as well.
I'm kind of interested how the 2030 and 2040 Vitalik and Charles look like as well.
Oh, interesting.
Like the progression of the humans.
Is this going to be one of those things where everyone comes full circle and then 2030 Vitalik
and Charles are best friends?
Not necessarily best friends, but some kind of, are able to reminisce in ways that puts
some of the tension of the past behind.
I think such things are possible when you think people definitely absolutely have a
right to and they should strive to just constantly change and reinvent themselves.
Is there something you could say about your thoughts about the Cardano project that Charles
Hoskinson leads?
They worked on some interesting ideas that mirror some of the ideas in Ethereum, proof
of stake, working on smart contracts and all those kinds of things.
Is there something, again, positive inspiring that you could say?
Are they a competitor?
Is it complementary technology?
There's definitely interesting ideas in there.
I do think Cardano takes a bit of a different approach than Ethereum in that they really
emphasize having these big academic proofs for everything, whereas Ethereum tends to
be more okay with heuristic arguments in part because it's just trying to do more faster,
but there's definitely very interesting things that come out of IOHK research.
Can you comment on that kind of idea?
I as sort of having a foot in research enjoy Charles' kind of emphasis on papers and deep
academic rigor.
Is there, what's the role of deep research rigor in the world of cryptocurrency?
Interesting.
I'm actually the sort of person who thinks deep rigor is overrated.
The reason why I think deep rigor is overrated is because I think in terms of why protocols
fail, I think the number of failures that are outside the model is even bigger and more
important than the failures that are inside the model.
If you take selfish mining, for example, that original discovery from 2013 that showed
how Bitcoin, even if it has a 50% of fault tolerance, assuming everyone's honest, it
only has a zero to 33% fault tolerance, depending on your network model, if you assume rational
actors.
To me, that was a great example of an outside the model failure because traditional consensus
research just up until before the blockchain days did not think about incentivization
much.
There was a little bit of thought about incentivization.
There's a couple of papers on the Byzantine altruist rational model, but it wasn't that
deep.
It was mostly operating under the assumption that we're going to make consensus between
15 participants and these are institutions.
If something goes wrong, then we can figure out whether or not it was deliberate offline
and if they did something evil, we can sue them, whereas in the crypto world, you can't
do that.
That whole discovery basically arose just because the model of traditional consensus
research just didn't cover those possibilities.
Once you go out of the model, those other issues do exist.
But then at the same time, there definitely are protocols that do have failures inside
the model.
This reminds me of the time when I found a bug in a proposed consensus implementation
from either BitShares or EOS.
This happened around the end of 2017.
That was definitely inside the model because they had a very clear idea of what they were
trying to achieve.
They had a very clear description and there's a very clear mathematical argument for why
the description doesn't lead to what they're trying to achieve.
Ultimately, what you're trying to achieve can never be fully described in formal language.
Like this is the big discovery of the AI safety people, for example.
Just having a specification of what you want is an insanely hard problem.
The more powerful the optimizer that you're giving the instructions to, the more you have
to be careful.
I think there are these two sides.
The other thing is that a lot of the academic approach ends up basically optimizing for
other people inside of the academic system and it doesn't really optimize for curious
outsiders.
Whereas I personally, Matt, totally optimize for curious outsiders or at least I feel like
I strive to.
I guess that's my case for why I tend to behave in ways that occasionally traditional
academic types criticize as being reckless.
On the other hand, there's definitely real benefits that come from just taking a rigorous
approach, especially when you know what the specification is of what you're trying to
get and you're trying to improve your way or provide protocols that actually provide
that and you know exactly what you're looking for.
I feel like realistically, you probably want to do both kinds of analysis and sometimes
even want to do both kinds of analysis and stages.
You want to do more quick and dirty things and even want public feedback on the quick
and dirty stuff and then later on you formalize it more and then you get more feedback.
In general, I feel like the norms of research in the future, the internet has just changed
so much.
It's even changed collaboration structures and the patterns in which we work with each
other.
There's no way that the correct structure for collaborative research is the same as
what it was 15 years ago, but what combination of these existing components and of new ideas
it is, that's something that's totally legitimate to fight it out.
I think it's great that there's different ecosystems that have different attitudes to
things.
I think there's a big possibility that ways that the Ethereum ecosystem approaches some
problems is totally wrong.
If there's other ecosystems with different principles and they do well, that's something
that we can learn from.
In the spirit of the depth of research, can you comment on AI safety and some people are
really worried about the existential risks of artificial intelligence?
Is there something you could say that's hopeful about how we avoid in the same kind of line
of reasoning about creating form of models versus looking outside the model into what
the real world actually is like?
Is there some lessons from that we can take and map onto the AI safety world where the
potentials of the technology, whether it's in autonomous weapon systems or just the paper
clip problem, that we can avoid AI destroying the world?
My impression is actually that this is some more of a far away impression and it could
be wrong, that it might even be that one of the challenges is that AI is not formal enough.
Because AI is very practitioner-oriented, it's all about, hey, I found a couple of hacks
and look, I ran them and they seem to improve classification accuracy from 0.684 to 0.773.
A lot of the time, there just isn't actual science behind why this hack works and why
this other hack doesn't work.
You just trial and error your way into it and I could see how that approach works, but
at the same time, that approach is not good for eligibility, for example.
It's not good for understanding what the heck is actually going on, how these kinds of systems
conceivably might fail.
There's even a debate on can you take GPT-3-like things and just scale them up and their intelligence
will continue to improve or is there just some types of reasoning that they're fundamentally
bad at and they're not going to get good at it no matter how much you scale this exact
same approach and add more hardware to it.
Thinking about what's going on more explicitly, my understanding is that a big part of AI
safety research is trying to do that sort of stuff.
Formalize.
Formalize, try to improve just AI eligibility, trying to understand if the AI makes some
classification so we can actually see what happens and what's going on in the middle.
Whereas with traditional cryptography, it's very much not... Well, okay, I should quite
say that.
Trucial cryptography is this interesting mix of being very formal and being very informal
because it's very formal with, given these security assumptions, prove that the protocol
works under these security assumptions.
The places where it's very informal is like, well, how do we even know that there isn't
any efficient algorithm for factoring numbers?
We kind of tried it for 40 years and then so far no one's found anything better than
the general number field sieve and like, okay, fine, we'll just assume it's fine.
How do we know you can't find the discrete log between two elliptic curve points?
Yeah, did it a couple of decades and no one's found anything faster than baby step, giant
step stuff.
There's definitely ways in which that approach really makes sense because at least you can
concentrate your analysis on a small number of building blocks.
You do have some intuitive reasoning about those building blocks, but at least there
is a small number of building blocks and lots of people are looking at them.
Then everything else just sort of gets formally built on top and you actually can mathematically
reduce the security of big things to building blocks.
You can have mathematical proofs that say, if you make a ZK Sennarch of a yes statement
when in reality that statement is false, then you can use that to extract information out
of elliptic curves that it completely breaks the problem or something like that.
So ZK is not an example where formalism is beneficial.
Absolutely.
And so maybe you can have the same kind of stuff in AI safety within AI systems that
you can get a hold of some kind of aspect of the systems that you can control provably.
And then in blockchains and cryptocurrency, I think the one area where consensus mechanisms
is still more an art than a science is that these aren't just technological systems, they're
crypto economic systems, and they make assumptions about people.
And which assumptions you can make about people is not something that you can prove
with math.
Even just the basic 51%, people are honest.
Can you trust the 51%?
If you can't trust the 51%, can you trust the other 49% to be able to coordinate on
making their own fork?
What will happen to coin prices?
How do people as human beings react to these events?
There's all of these assumptions.
But at the same time, if you can write down the assumptions, then you can do formal things
with them.
I almost forgot to ask you about one of the most exciting aspects of Ethereum.
It's non-technical.
I think it's a societal, it's social, which is NFTs.
So what do you think about the explosion of NFTs in the recent months, especially in the
art world and beyond, and what does the future look like?
So this is maybe the social impact on the world, on the individual creators of all kinds.
Is that something you've actually expected to see, and NFTs having this kind of impact,
and beyond what do you think will happen in the digital space with NFTs in virtual reality
and gaming, all those kinds of things?
I was definitely surprised by NFTs in particular.
I even actually, I think, might be on record somewhere on some tech conference panel.
They were asking, it was one of those overrated or underrated sections, and I asked about
NFTs, and I thought, and I said, hey, I think NFTs are overrated.
And in retrospect, that turned out to be quite wrong.
I think, I guess I just personally can't really relate to this concept of spending a lot of
money on a thing, and there's no clear understanding of why that thing would maintain its value.
Right.
Uniqueness of a thing having value.
Right.
Exactly.
Yeah.
I definitely cannot really understand the psychology behind paying $200,000 for original
art painting.
I'd be like, if I had a mansion, just give me photocopies of everything.
You can hang three photocopies of the Mona Lisa.
Why would you even have the Mona Lisa?
I think I'd probably just have some Nyan cats or something.
That's one thing where mathematics or theoretical computer science cannot formalize why the
heck NFTs are valuable at all.
But the thing that makes me very happy about the space now that it has happened is that
this gets back to the conversation that we had at the beginning.
I'm interested in this concept of decentralized public goods funding.
I want things that are good and valuable to as much as possible also be things that can
economically sustain the people who produce them.
Because if you don't have that, then either the public goods just don't get produced at
all or people make centralized versions that have some of the properties and try to be
substitutes, but actually just concentrate control on a very small group.
Both of those things are not very nice.
The nice thing about NFTs would be, well, if you're an artist and you can just mint
NFTs and this is a source of revenue, it's like, great.
That's another stream of revenue for creative work that often does still get underfunded
and that's amazing.
Okay.
Let me ask you a weird question.
We talked about Craig Wright a little bit, but a lot of people write to me, one of two
emails.
One email is calling any coin outside of Bitcoin a scam and then the other email is saying,
my favorite coin is the best coin, it's going to save the world, whatever that coin is.
I sit back and I look, I have no idea.
I try to figure out the humans that I trust in the space, just basic human qualities,
but do you think some coins are scams?
Do you think some coins, maybe another way to ask it are scammier than other coins?
How are people that are looking outside of the space where there's all of these cryptocurrencies
supposed to figure out what is a scam and not or how to use the right language when
talking about them?
Because there's the harshness of the language from the Bitcoin Maximus that doesn't just
say everything's a scam, including Ethereum, but they use terms like shit coin that says
it's not only a scam, it's like a waste of time.
Every word you can use, they say that that's very harsh.
Some people are just apply the word scam much, much more conservatively and just refer to
coins that are legitimately are trying to scam people out of their money as scams.
What do we do with this word scam?
Should it ever be applied to coins?
Is it a binary thing or is it a gray area?
I think it's definitely a gray area.
There's definitely things that are really in actual scams.
BitConnect would be one example of something that's a way on the scam spectrum.
Did you see their 2017 promotional video, by the way?
BitConnect?
Yeah.
Hey, hey, hey.
What's up?
What's up?
BitConnect.
It was this three-minute, 48-second video that was just of this guy making this totally
crazy rant and it was at some conference in Vietnam where they were, of course, trying
to convince a whole bunch of people to buy this coin and they had these claims about
how it would go up in value.
That was definitely the peak of these pure, completely scammy coins.
That was definitely really terrible.
I feel like despite cryptocurrency as a whole being bigger, we actually have quite a bit
less of that now, but then, of course, there is this spectrum of things that are not completely
scams and then things that are not scams and that are technically totally fine projects
but where their community is just incredibly sketchy and then all the way to things that
are where the community is nice, but maybe the project is just fundamentally incapable
of achieving what it's trying to do or the community doesn't realize and then really
good projects.
If you want to go a step, if that's 100% scam, then what would I call, say, 80% scam?
Bitcoin SV is one example.
This is Craig Wright's work of Bitcoin.
Theoretically, it's a blockchain.
It's a fork of Bitcoin.
It has 512 megabyte blocks.
If you really wanted to, you could use the blockchain.
It satisfies the properties that you can send transactions onto it.
You can probably use it as a backup to store your files if you really wanted to just because
it has so much space.
It might fail, but at the same time, as we basically
said, Craig Wright is a scammer and half the community is just totally batshit insane.
The humans of a particular cryptocurrency is what makes for a scam and not the humans
at the top that have a voice guiding the community.
In the case of BSV, the humans make just completely wrong and just obviously wrong
claims about what BSV is capable of accomplishing and what it can see or could accomplish.
There's just a lot of aspects of it that make it feel like a money grab.
That's one example.
Then, you've got to go a bit further and then you have the trons of the world.
That's a platform.
You can use it.
You can do stuff on it, but at the same time, they did plagiarize the IPFS white paper and
then...
So, the scam equalities, the thing that throws me off a lot, it's very difficult for me,
is that most coins, but the ones that make me feel like are scammy, have a large community
of people that are super positive about it and they'll write to me.
That said, on the flip side of that, Bitcoin people are also very positive.
There's some sense and the reason I was having squinty eyes looking at Bitcoin for quite
a while is why is everyone so positive?
I was getting total cult vibes.
The ideas are not grounded in truth, but are grounded in an obsession of when you can artificially
conjure up a truth, which is why I was a little bit worried about Bitcoin.
I think I've learned a lot since then to where I learned to separate the community
from the ideas and I think Bitcoin is a revolutionary idea on many fronts, but still a community
that's dogmatically excited about something, whatever that is, makes me skeptical.
Maybe it's just my upbringing, but when everybody's really excited about something, it makes
me skeptical, but it also makes me difficult to decide what is this scam or not because
some of the most exciting ideas in this world have a community of people who are excited
about it, because I don't know.
I think space exploration is super exciting and there's people, I know a lot of them that
are exceptionally excited about space exploration.
Does that mean it's a scam?
No.
I don't know what to do with that and so most of us just try to stay away, I suppose,
but it's unfortunate because I'm sure there's a lot of exciting technologies in that space.
In the case of Bitcoin, I would definitely not call Bitcoin a scam.
I would also not call Litecoin a scam.
There's people who call Litecoin a scam because they just say, oh look, it has no fundamental
use case and the concept of being silver to Bitcoin's gold is just stupid and Millie
Bitcoin is the silver to Bitcoin's gold, but at the same time, if you have these people
who just, they do seem to honestly believe this and they're trying to just make Litecoin
be Litecoin as best as they can, then to me that's enough for it to not be a scam.
So I think the biggest gray area is definitely between projects that are earnest, but they
have just all sorts of these different combinations of flawed qualities to them.
The ones that legitimately use the scam is when the key people that are at the head of
the project are intentionally lying and I think as long as the intent is to try to
do good in the world, even if your actual implementation of that is flawed, I think
that's not a scam.
It could be flawed ideas, it could be wrong ideas, but it's not a scam.
I'm learning to navigate this space.
It's definitely a very challenging space to navigate.
In some ways, the reflection of the world at large.
And as we've said, maybe offline that the fact that money has evolved makes it a little
bit more complicated, that lives can be ruined by the choice of technologies that are taken
on.
So it makes it more real, more painful, more elevated the impact of this.
Imagine Mac versus PC wars.
If everyone who bought a Mac book, I had 10 Apple shares inside of it and everyone who
had a PC had 10 Microsoft shares inside of it and then you had the elites who bought
their Macs back in 1983 that they spent $500 debt and now they have $40 billion that they
just think that they're these gurus who understands the future of finance and geopolitics and
they make theories about why Apple is the one that's going to bring freedom to the world
and Windows is secretly aligned with the axis of evil.
That's brilliant.
So yeah, this is so brilliant.
So I think the right way to think about this is we map some of the cryptocurrency battles
into the space of like Emacs versus Vim or Apple versus PC.
If there were some stock that came along with each implementation of each PC, each Mac,
that's fascinating.
This is 100% correct, 100% correct because then that really energizes the armies of people
debating over this in a way that something without money does not.
Okay, let me ask you about something really fascinating that you are also excited about
which is longevity, anti-aging.
You have donated money to the SENS Foundation, so you have an interest in this whole space
of lifespan research.
What's your vision here?
What do you hope to see in anti-aging and longevity research?
I think I hope to see the concept of seeing your parents and grandparents die just slowly
disappear from the public consciousness as an experience that happens over the course
of half a century, the same way that getting lost in a city slowly disappeared over the
public consciousness over the last 15 years that we have smartphones.
The thing you have from Nick Bostrom, the essay pinned in your Twitter, argues that
essentially death is almost unethical.
The fact that we don't do something about this thing in the essay is a dragon that keeps
murdering everybody around us, including our parents and grandparents.
The fact that we don't try to do something aggressively about that dragon doesn't make
any sense.
You think this is a battle worth fighting, a battle for immortality or at least longevity?
I'd say absolutely, and I'd say a battle where we really have started over the last
five years in particular to see the first cracks of humanity starting to make things
that look like they'll turn into victories.
Do you think humans can eventually live forever?
Maybe as a side comment to that, what technology do you think will enable that as a genetic
modification, is it cloning, is it uploading your mind?
Define forever.
Are we talking 1,000 years, a million, 10 to the 14, 10 to the 45?
Let's start as I tweeted today, eventually everything, the universe will be filled with
supermassive black holes.
That forever, maybe backtracking to where?
We'll have 10 to the 16 years to figure it out.
We travel between the multiverse, between the different universes, the multiverse.
But forever meaning millennia.
I definitely think that we can get there.
I definitely think that it's the sort of thing that's going to take an insanely huge amount
of work.
I definitely think it's the sort of thing where once we figure out the first crop of
problems and people start living to 150, we'll just realize that there's 10 other problems
that kill you half a slowly and we'll have to do more work.
The good news is that this is Aubrey's longevity escape velocity argument that if you get everyone
to live to 150 now, then you have half a century to fix all those other problems as well.
I'm optimistic for that reason, I think.
I definitely do not want to underestimate human ingenuity, especially over the long-term.
Just to look at what happens to computers between the NEAC in 1950 and where we're
in 2020.
That's a span of 70 years.
Both of us, I think, with just present-day technology, have at least 70 more years to
live.
Just to imagine what kind of sea change will happen in biomedicine during that time.
The other thing that made me optimistic is that I actually think COVID has been this
event that's really pushed biomedicine and especially activist approaches to biomedicine
really into the public consciousness.
It's put people into this mindset that, wait, it's not just the bits and tweets that are
going to save the world, but the bio was actually super important and huge.
Ultimately what's ending COVID, basically, is the vaccines and the vaccines have just
been amazing.
You can take that energy and also this, I think, philosophical attitude that I've noticed.
The way that I would describe the philosophical attitude here.
This is going more depth first, is that I think the way that I interpret part of what
I would call late 20th century ideology is that there is this mentality that nature is
good and disruptions from nature are bad and generally you want to minimize disruptions
from nature.
This exists everywhere in the political spectrum.
There's nature as in literal nature and my view is that the right-wing version of that
is markets as nature.
Markets as nature.
The way that that kind of philosophy talks about markets and the goal of not interfering
with them.
It is very nature-styled and then, of course, the conservative one, which is traditional
culture that existed before the activists started controlling everything as also being
a kind of nature, but the 21st century attitude and really COVID has flipped a lot of minds
because with COVID, what's happened is that, well, no, nature is not safe.
The default is untold misery and suffering in tens of millions of people dying.
The only way out for us is through human ingenuity.
That frame of mind is one that's much more friendly to this other change of minds that
I want to see, which is basically treating aging as an engineering problem.
The default is all 7.8 billion human beings that are currently on this earth are going
to die and they're going to live their last decade of life in debilitating pain.
The only way to stop that is human ingenuity.
We don't have that solution yet, but if we work hard, we will.
More and more people on the biology side, computational biologic, are basically converting
the mess of the human biology into an engineering problem.
Once that conversion is happening, looking at the genetic code, the proteins, all those
kinds of things, once that conversion happens, you can now apply the tools that we know how
to solve engineering problems to solving it that way.
Then there's also the other version, which is why do we romanticize this meat vehicle
that ultimately is just a thing that carries the brain?
Maybe we can more and more convert ourselves into the digital realm.
This is where Neuralink have the brain-computer interfaces and then achieve immortality in
the space of information and the digital space versus the biology space.
That stuff's interesting too.
I agree.
I think we have enough resources and we should just try all the parallel tracks.
It's great that we have people just trying to make our bodies work.
It's great that we have people trying to improve brain scanning.
It's also great that we have people improving cryonics, so we could just go to sleep in
the freezer and eventually, hopefully sometime in the future, Helfinny's going to be able
to wake up all of this.
Anyone who gets cryochronically frozen today will be able to wake up, but that's a bet.
That's the last resort.
The other interesting thing about the extreme uploading approach is we're excited about
space.
One of the points that a lot of hard science fiction types make is that if you want to
explore space, that's a lot easier if you're not a human.
One example of this is that in the context of humans, we're talking about, oh, we're
going to be able to go to the moon, oh, we're going to be able to go to Mars, but there's
this project called Starshot, I believe.
That's basically trying to send spacecrafts to mini spacecrafts to Alpha Centauri and
they literally believe that they're going to be able to get spacecraft over to Alpha
Centauri four light years away by the 2060s.
By traveling close to the speed of light.
Exactly.
The way it works is you have these light sails.
You basically take these as a spacecraft and you shine a laser at it, and the laser
is insanely strong, quickly accelerated at 100 Gs, no, I think it was 10,000 Gs until
it gets to 20% the speed of light, and then it goes on your merry way.
If you want to be in, personally explore the Alpha Centauri system within two centuries
or one century, then being a robot is by far the most practical way to do it because there's
no way that a human being can survive 10,000 Gs.
It's definitely interesting long term, but at the same time, there's definitely a lot
of psychological hangups and a lot of deep philosophy that we'll just have to grapple
with to get there.
I think what it hangs on the topic of whether we can convert consciousness into an engineering
problem is consciousness tied to our biology because the moment we can convert consciousness
into a digital form, then we can send it with that light sail to Alpha Centauri.
Until then, a robot is not carrying anything except maybe some basic knowledge like Wikipedia.
It's not carrying the flame of human consciousness.
I have high hopes for converting consciousness into an engineering problem.
In fact, I think it's not as difficult as people think.
I agree with that.
I'm definitely in the camp that consciousness is a property of the algorithm and not a property
of a brain structure.
The kind of philosophical things we'd have to grapple with is once you upload yourself,
you can hit Control C. It wouldn't be lovely to have 10 copies of a experiment and then
we can just interview everyone.
I have to ask this question.
It's a difficult one, which I don't think it'd be wonderful, first of all.
In the following way, and this has to do with immortality as well, there's something about
scarcity that creates value, or there's a bunch of philosophers, Victor Franco, Bernard
Williams, Ernest Becker, they argue that death or the scarcity of life creates meaning.
The reason life is beautiful, the reason so many moments of experience of love or delicious
food, all those things are made delicious because they're finite, because they end and
because we don't have that many of them.
There's a kind of worry that if we extend the human lifespan, if we achieve immortality
or if we, God forbid, clone me multiple times, then you lose the richness of what it means
to have this life, to have this experience.
Is that worry you at all?
Do you think there's some aspect to which death does, in fact, give meaning to life?
I guess the one historical parallel, and this might be a bit unfair, is that there have
been philosophers that have said things like war gives meaning to human collectives and
the struggle for supremacy between nations and races, as this big driver of progress
that ensures that everyone strives to be their best.
Of course, this viewpoint got into the head of a crazy Austrian guy, and 20 years later,
his soldiers were shooting at my grandparents.
These days, we don't really have that, but yet, life still feels meaningful.
We've still found other ways to... They're still us driving for technological progress.
They're still us driving for self-improvement in general, and it turns out that you don't
actually need to have existential conflicts in order to have that.
Now, maybe you need conflict, but we have other kinds of conflicts.
We have competition between businesses, competition between political ideologies, competition
between projects.
Whatever the psychological needs are, they're just our substitutes for it.
If we... I feel like once we start living to the age of 200, then I'm just intuitively
expecting that we'll see substitutes emerge in the same way.
Yeah, we'll create conflicts of other sorts that lead to less human suffering than wars
do.
We'll just start playing Diablo 4, 5, 6, because you die in video games, so maybe we'll get
some of the inkling of scarcity through the activities we partake in as opposed to our
own body dying.
I feel shitty when I... I remember in Diablo 3, you can play in hardcore mode, where if
you die in the game, your character's dead.
Maybe we'll get the richness that we currently get from life by having little artificial versions
of ourselves that die.
Interesting enough, as I've just personally spent more time in this world, I've started
realizing that there is a concept of real finiteness that still exists, and it might
even still be a thing that provides meaning that doesn't require anyone to actually die.
For example, how many people from middle school or even high school, yours, do you still talk
to regularly?
I happen to be close friends with four or five of them.
In my case, the answer is zero for middle school and two for high school.
But you're right.
It dropped close to zero.
Exactly.
It dropped close to zero.
There's a lot of these relationships that end up being very finite.
A person changes their... I feel like a person changes enough of their worldview after 25
years.
Was it there even a study about this?
Something like a person and themselves 25 years later are about as different as two
different people or something like this.
Just like you can have conflict without bloodshed, I think you can have finiteness and even the
necessary sorrows of finiteness that give meaning without literally anyone having to
end their life.
Hopefully, if we do extend our life, we'll figure out ways to extend the period of time
where there's neuroplasticity to where we could change our worldviews continually throughout
that time so you can have these different phases of life.
I thought it would be fun to hear you speak a little Russian.
Do you speak Russian?
Yes, of course.
How did your Russian roots help you?
It's an interesting question.
What can you say about Russian in this?
What can you say about my Russian roots?
I just look at other projects and other people in the blockchain industry.
Do you think for people who don't speak Russian that Vitalik said that there's
something to the spirit of the people that are Russian that are working in the cryptocurrency
world that's a little bit different and it's something that connects to some kind of aspect
of your own self, some kind of roots there?
It's kind of interesting.
Do you think that there's, does it make you sad that there's these two different worlds
that are in part disconnected by language and I'm sure the same could be the case with
China and other parts of the world where the language slows the transmission of the beauty
of the culture in a certain kind of way where you can't truly collaborate?
You can all speak English, so you're collaborating on maybe a technical level, but you're not
collaborating on the level of some deep human connection.
Do you see that being able to speak both languages?
There's definitely benefits, I think, to be able to speak multiple languages.
Once you can, you discover that your mindset changes while you're speaking in one language
versus the other.
People have told me this.
When I speak Russian, I sound more to the point in pragmatic.
When I speak Chinese, I sound more cute when I speak English, I'm something else.
I guess there's definitely a richness that you're missing if you're only in one of these
language bubbles, but I guess the arguments on the other side would be that if everyone
spoke the same language, then there would just be one bubble.
This is the challenge, I think.
There are actually benefits to having cultural diversity, and you definitely don't want
the entire world to be too conformist.
One of the interesting things about crypto is that it's just a culture that actually
manages to somehow have its uniqueness and preserve its independence from all of these
surrounding countries despite being embedded in all of them.
It spans outside of the geographical boundaries, and language in some way does as well.
In the way these cultures, these bubbles are created, they overlap in interesting ways.
It's almost like a hierarchy, the same as the case of the crypto world.
There's communities associated with these cryptocurrencies, there's communities within
those communities.
Yeah.
I think it's definitely sad whenever these groups are fighting each other, and it's definitely
good for them to, if people can cooperate more, but at the same time, just having groups
of people that have different kinds of life experiences, there's definitely something
to benefit from that.
So let me ask one last question.
I don't think I asked you last time.
The ridiculous question about the meaning of life, Dostoevsky said, beauty will save
the world.
Some people believe money is a big part of happiness, and first of all, you've made a
lot of money, you've turned away a lot of money, you've turned away a lot of power.
So you're a fascinating person to ask, what do you think is meaning to life?
The thing that I've realized with money as I have experienced both having a little of
it and having a lot of it is that you can get the most out of money if you think of
it not as something that lets you do and have more things, but as something that lets you
worry about fewer things.
If your savings are just non-zero at all, then you don't have to worry as much about
losing your job, and if you feel like you have a job that just really conflicts with
your values, then if you have even six months saved up that just makes it easier for you
to say, bye-bye, I'm going to do something else.
If you have more money than you can not worry about even what you're doing, needing to be
profitable at all, once you get more money, then you can choose transportation options
and food options that just have less hassle in your life and allow you to be lazier.
This aspect of just reducing troubles and opening up a room for other things I think
is a big part of it.
If you instead think of money as being this positive or this thing that gives you stuff
and you try to derive meaning from the stuff, I think that's much more likely to be a road
to basically squandering that opportunity.
I guess my philosophy is definitely more subtractive than added over there.
Once you have enough money that you don't have to worry about the money, you're burdened
with another question, which is of meaning.
Do you think there's meaning to it all?
It seems like your own life, you're trying to build cool stuff that alleviates some level
of suffering in the world.
One way to think about it is think back to how you thought about life when you were in
school.
In school, this is interesting to think about because in a lot of ways, it's just totally
outside of bounds of the kinds of systems that are like social systems that we live
in as adults, or maybe not.
Maybe things like academia are intended to replicate parts of school.
First of all, school is very totalitarian.
You have to follow the teacher's instructions, the bulk of your schedule is forced to be in
particular areas.
You can control, and they're real preview from weaving the grounds during this period
of time.
You'll assign a lot of homework, but at the same time, also, school is a bit of a post
scarcity utopia in that you just don't have to worry about getting resources for yourself.
We've both lived through 12 years of that.
What does that say about us?
One thing of aspect, obviously, is that there's definitely an easiness to living life if all
of your decisions are made for you.
One of the challenges of adulthood, I guess, is moving to this world where your choices
are much more self-directed, and you just have to learn to live and deal with that.
Yeah, dealing with the burden of freedom in some sense.
Actually interesting, because in some ways, I feel like even my first five years of doing
Ethereum things, my life was not even all that self-directed, because a lot of it was
just responding to obligations.
Like someone said, come to speak at this event in Korea, come to speak at this thing in Taiwan.
For Ethereum to launch, we need this particular piece to be done and tested.
Work on that.
We need some proof of stake algorithm, work on that.
The last year of COVID life, basically, I was holed up in Singapore for much of it.
It gave me a lot more alone time, I had much less travel.
That was definitely a very new and interesting experience for me.
Would you characterize it by sadness, melancholy, hope, dreaming, like innovative period?
How would you characterize that alone time?
Some of all five.
Definitely some self-discovery.
I definitely did make this very deliberate decision that, okay, I have this time and
I'm going to actually make something meaningful out of it.
One example of the things I did is I just actually started listening to your audiobooks
and podcasts much more.
Just this year, I basically discovered that the podcast space is real for the first time,
I guess.
Before that, there would be things that I would get interviewed for, but I was not mentally
incorporate, I did not mentally incorporate this idea that podcasts are a thing that you
can go listen to.
This year, I did.
My friend Carl LaFleur, one of the optimism people, recommended Hardcore History to me.
I went ahead and just listened to all the Hardcore Histories, but then after that, I listened
to Ted Luxfried, Bids, a bunch of others.
After that, I also got into audiobooks, oh, I listened to the entire, the rise and fall
of the Third Reich, the whole thing, 45 hours.
That was fascinating.
Let me ask about that, because Dan is going to love hearing this.
I'm going to set it up, Joe.
Do you have a period of history, whether it's Dan or in general, that you draw for your
own life, like kind of thinking about the world, about human nature that you go to?
Is it World War II?
Is it Wrath of the Khans, the Jengis Khan?
Is it some other more ancient history?
Is it World War I?
Is there something that kind of echoes with you in the voice of Dan or anyone else that
you connect to?
I feel like the 1930s and 40s are fascinating, because they force you to really grapple with
the question of where does evil come from?
The sort of mental puzzle that I've always had in my head is, on the one hand, things
like the Holocaust happened, but on the other hand, if you just go and have a coffee with
people, then 100 times out of 100, everyone just seems so nice.
Yeah, exactly.
Yeah, how do you reconcile the macro and the micro there?
That's the sort of thing that's very difficult if you don't have a lot of, I guess, the right
kind of personal experience.
Especially if your personal experience starts off being sheltered, like it was for me, right?
I know the stereotype is that the nerds get bullied in school, but actually for me, in
my school experience was just being treated with kindness by everyone.
So that definitely made it harder to understand things.
I remember actually being pretty blindsided when I started Ethereum, and then within six
months there started being fights over who would get more shares if Ethereum turned out
to be a company.
And then I suggested we should just make it a non-profit, and somehow that ended up upsetting
people.
So the fascinating thing for me is that I've been obviously reading and listening to the
history and then at the same time just observing things happening in the crypto space.
So one of my interesting mental intuitions that I've gotten is that I think most evil
doesn't come out of greed, it comes out of fear.
One example of this in Ethereum lands is I think the part of Ethereum history where
I thought that the Ethereum community was at its lowest and even when I personally was
at my lowest.
Now, if you go back to the Dow fork in 2016, right?
So the Dow hack happened, and then we made this controversial decision to change the
Ethereum protocol, and then there was that Ethereum classic split, and as soon as that
Ethereum classic split happened, there was a lot of anger everywhere, and there started
especially being anger when the price of ETC started taking up.
So this was the time when Ether started off being $13 and Ethereum classic started at
zero, but then suddenly there was this one day when ETH dropped to 12.5, ETC went up
to 0.5, and then they dropped more.
And people were saying things like, oh, this whole thing, Ethereum classic is just a Psyop
by the Bitcoin community and just a wealthy Bitcoiners trying to destroy Ethereum.
And in the back of my mind, I knew that that wasn't entirely true.
There were definitely more Bitcoiners, but at the same time, I think blaming political,
blaming disagreements on foreign interference, this is the sort of thing that countries
and governments do all the time.
It's a very convenient excuse because it allows you to just blame these things that
are happening on the foreigners and avoid actually grappling with the facts that, well,
no, actually you have people in your very own community who just disagree with you and
have a different belief.
And I feel like the Ethereum community during that time did not do a very good job of grappling
with that.
And I feel like I during that time did not do a very good job of grappling with that.
And so there was a lot of blaming the Bitcoiners.
There were also even a lot of people calling for us to use trademark law and basically
sue exchanges and try to prevent them from all listing Ethereum classic.
And to me, that was very unethical.
Basically using the government as a weapon to try to attack the other cryptocurrency
and destroy it as it goes completely against them.
The ideals of freedom and things that at least in theory were supposed to stand for.
But in that particular time, basically what was happening was that the ETC price was rising
and at the same time the ETH price was dropping in lockstep.
And there were a lot of Bitcoin people basically saying, this is the end of Ethereum.
And I think a lot of people really were afraid that Ethereum would be just like completely
destroyed as a result of this.
And so-
That's where the anger came from that fear.
Yeah, exactly.
It came from the fear.
Like that's what allowed people to rationalize like an abandonment of principles that I think
they would not have accepted in other circumstances.
And I definitely, to some extent, played along with this myself, and I definitely regret that
to some extent.
Well, I definitely regret the excesses completely.
So that and then obviously, Bitcoin block size war, similar sort of stuff happened.
So that insight was interesting because it does mentally make a lot of sense, right?
Like when you're actually afraid that unless you act in some way that your entire world
is going to collapse, it's much easier to just rationalize forgetting your principles
and doing whatever you have to to just save the specific thing that you care about.
It feels like the right thing to do, the brave thing to do is in the face of fear to still
have compassion, to still have love as opposed to hate.
So the darkest moments, the toughest moments of human history are those where fear is everywhere.
And despite that, like the way to get out of that is through love, not giving into the
fear.
And again, that's the lesson that you draw from all those moments of history.
Yeah.
Well, I like you have in terms of those coffee and the kindness that people have, it does
seem that everybody has the capacity for evil and everybody has the capacity for love.
And you just have to create mechanisms of incentives that prioritize the latter over
the former.
Vitalik, you're one of the most interesting people I've gotten a chance to talk to.
Thank you so much for talking to me.
I hope we get a chance to talk again.
I hope, but I can at least be some small part, this would be awesome on a podcast with you
and Dan Carlin.
That would be an awesome conversation.
Thank you so much for doing so much incredible technical innovation that inspires the computer
scientists, the economists, inspires the world and what technology can do.
And now with longevity, I do hope we live a very long time and play Diablo to make that
long time fun.
Thank you so much for talking to me.
Thank you too, Lex.
This was great.
Thanks for listening to this conversation with Vitalik Buterin and thank you to Athletic
Greens, Magic Spoon, Indeed, ForSigmatic and BetterHelp.
Check them out in the description to support this podcast.
And now let me leave you with some words from Nelson Mandela.
When a man is denied the right to live the life he believes in, he has no choice but
to become an outlaw.
Thank you for listening and hope to see you next time.