The following is a conversation with Vitalik Buterin, co-creator of and author of the white
paper that launched Ethereum and Ether, which is a cryptocurrency that is currently the
second largest digital currency after Bitcoin.
Ethereum has a lot of interesting technical ideas that are defining the future of blockchain
technology and Vitalik is one of the most brilliant people innovating in the space today.
Unlike Satoshi Nakamoto, the unknown person or group that created Bitcoin, Vitalik is
very well known and at a young age is thrust into the limelight as one of the main faces
of the technology that may redefine the nature of money and all forms of digital transactions
in the 21st century.
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And now, here's my conversation with Vitalik Buterin.
So before we talk about the fundamental ideas behind Ethereum and cryptocurrency, perhaps
it'd be nice to talk about the origin story of Bitcoin and the mystery of Satoshi Nakamoto.
You gave a talk that started with sort of asking the question, what did Satoshi Nakamoto
actually invent?
Maybe you could say, who is Satoshi Nakamoto and what did he invent?
Sure.
So Satoshi Nakamoto is the name by which we know the person who originally came up
with Bitcoin.
So the reason why I say the name by which we know is that this is a anonymous fellow
who has shown himself to us only over the internet just by first publishing the white
paper for Bitcoin, then releasing the original source code for Bitcoin, and then talking
to the very early Bitcoin community on Bitcoin forums and interacting with them and helping
the project along for a couple of years.
And then at some point in late 2010 to early 2011, he disappeared.
So Bitcoin is a fairly unique project in how it has this kind of mythical kind of quasi-godlike
founder who just kind of popped in, did the thing and disappeared and we've somehow just
never heard from him again.
So in 2008, so the white paper was the first, do you know the white paper was the first
time the name would actually appear Satoshi Nakamoto?
I believe so.
So how is it possible that the creator of such an impactful project remains anonymous?
That's a tough question.
There's no similarity to it in the history of technology as far as I'm aware.
So one possibility is that it's Healthini because Healthini was also active in the Bitcoin
community and as Healthini in those two beginning years and Healthini, maybe he is one of the
people in the early Cypherpunk community.
He was a computer scientist, cryptographers, people interested in technology, internet
freedom, like those kinds of topics.
Was it correct that I read that he seemed to have been involved in either the earliest
or the first transaction of Bitcoin?
Yes.
The first transaction of Bitcoin was between Satoshi and Healthini.
Do you think he knew who Satoshi was?
If he wasn't Satoshi, you probably know.
How is it possible to work so closely with people and nevertheless not know anything
about their fundamental identity?
Is this like a natural sort of characteristic of the internet?
If we were to think about it, because you and I just met now, there's a depth of knowledge
that we now have about each other that's like physical.
My vision system is able to recognize you.
I can also verify your identity of uniqueness, like it's very hard to fake you being you.
So the internet has a fundamentally different quality to it, which is just fascinating.
Yeah, this is definitely interesting as I definitely just know a lot of people just
by their internet handles.
To me, when I think of them, I see their internet handles and one of them has a profile picture
as this face that's not quite human with a bunch of psychedelic colors in it.
When I visualize him, I just visualize that.
That's not an actual face.
You are the creator of the second most popular cryptocurrency, Ethereum.
On this topic, if we just stick on Satoshi Nakamoto for a little bit longer, you may
be the most qualified person to speak to the psychology of this anonymity that we're talking
about.
Your identity is known, I've just verified it, but from your perspective, what are the
benefits in creating a cryptocurrency and then remaining anonymous?
If it can psychoanalyze Satoshi Nakamoto, is there something interesting there?
Or is it just a peculiar quirk of him?
It definitely helps create this image of a neutral thing that doesn't belong to anyone.
You created a project and because you're anonymous and because you also have disappeared or as
unfortunately happened to health any if that is him, he ended up dying of Lou Gehrig's
disease and he's in a cryogenic freezer now.
If you pop in and you created and you're gone and all that's remaining of that whole
process is the thing itself, then no one can go and try to interpret any of your other
behavior and try to understand this person wrote this thing in some essay at age 16 where
he expressed particular opinions about democracy.
Because of that, this project is a statement that's trying to do this specific thing.
That it creates this environment where the thing is what you make of it.
It doesn't have the burden of your other ideas, political thought and so on.
So now that we're sitting with you, do you feel the burden of being kind of the face
of Ethereum?
I mean, there's a very large community of developers, but nevertheless, is there like
a burden associated with that?
There definitely is.
This is definitely a big reason why I've been trying to kind of push for the Ethereum
ecosystem to become more decentralized in many ways, just encouraging a lot of kind of core
Ethereum work to happen outside of the Ethereum foundation and of expanding the number of
people that are making different kinds of decisions, having multiple software limitations
instead of one and all of these things.
There's a lot of things that I've tried to do to remove myself as a single point of failure
because that is something that a lot of people criticize me for.
So if you look at like the most fundamentally successful open source projects, it seems
that it's like a sad reality when I think about it is it seems to be that one person
is a crucial contributor often if you look at Linus for Linux, for the kernel.
That is possible.
I'm definitely not planning to disappear.
That's an interesting tension that projects like this kind of desire a single entity and
yet they're fundamentally distributed.
I don't know if there's something interesting to say about that kind of structure and thinking
about the future of cryptocurrency.
Does there need to be a leader?
There's different kinds of leaders.
There's dictators who control all the money.
There's people who control organizations.
There's kind of high priests that just have themselves as their Twitter followers.
What kind of leader are you, would you say?
These days, actually, a bit more in the high priest direction than before.
I definitely actually don't do all that much of kind of going around and ordering Ethereum
Foundation people to do things because I think those things are important.
If there's something that I do think is important, I do just usually kind of say it publicly
or just kind of say it to people and quite often projects just kind of start doing it.
Let's ask the high philosophical question about money.
What at the highest level is money?
What is money?
It's a kind of game and it's a game where we have points and if you have points, there's
this one move where you can reduce your points by a number and increase someone else's points
by the same number.
It's a fair game, hopefully.
It's one kind of fair game.
For example, you can have other kinds of fair games.
You're going to have a game where if I give someone a point and you give someone a point
instead of that person getting two points, that person gets four points.
That's also fair.
Money is easy to set up and it serves a lot of useful functions.
It kind of just survives in society as a meme for thousands of years.
It's useful for the storage of wealth.
It's useful for the exchange of value.
It's also useful for denominating future payments, a unit of account.
A unit of account.
If you look at the history of money in human civilization, if you're a student of history,
how has its role or just the mechanisms of money changed over time in your view?
Even if we just look at the 20th century before and then leading up to cryptocurrencies, that's
something you think about.
I think the big thing in the 20th century is we saw a lot more intermediation, I guess.
The first part is the move from adding more of different kinds of banking, and then we
saw the move from dollars being backed by gold to dollars being backed by gold that's
only redeemable by certain people to dollars not being backed by anything to this system
where you have a bunch of free-floating currencies and then people getting bank accounts and
then those things becoming electronic, people getting accounts with payment processors that
have bank accounts.
What do you make of that?
That's such a fascinating philosophical idea that money might not be backed by anything.
Is that fascinating to you that money can exist without being backed by something physical?
It definitely is.
What do you make of that?
How is that possible?
Is that stable?
If we look at the future of human civilization, is it possible to have money at the large
scale at such a hugely productive and rich society be able to operate successfully without
money being backed by anything physical?
I feel like the interesting thing about the 21st century especially is that a lot of the
important valuable things are not backed by anything.
If you look at tech companies, for example, like something like Twitter, you could theoretically
imagine that if all of the employees wanted to, they could have come together, they would
quit and start working on Twitter 2.0 and then they get value and just build the exact
same product or, of course, possibly build a better product and then just continue on
from there and the original Twitter wouldn't just not have people left anymore.
There is theoretically code and IP that's owned by the company, but in reality, good
programmers could probably rewrite all that stuff in three months.
The reason why the thing has value is just network effects and coordination problems.
Employees in reality aren't going to switch all at once and also the users aren't all
going to switch at once because it's just difficult for them to switch at once.
There is this meta-stable of equilibrium in interactions between thousands of millions
of people that are just actually quite sticky even though if you try to assume that everyone's
a perfectly rational and kind of perfectly slippery, spherical cow, they don't seem to
exist at all.
That stickiness, do you have a sense, a grasp of the fundamental dynamics, like the physics
of that stickiness?
It seems to work, and I think some of the cryptocurrency ideas kind of rely on it working.
It's the sort of thing that's definitely been economically modeled a lot.
On the analogy of something as similar that you often see in textbooks as what is a government?
If 80% of people in a country just tomorrow suddenly had the idea that the laws that are
currently the laws in the government that currently is the government are just people
and some other thing is the government and they just start acting like it, then that
would become the new reality.
The question is, well, what happens if between 0 and 80% of people start believing that?
The thing you see is that if there is one of these kind of switches happening as kind
of revolution, then if you're the first person to join, then you probably don't have the
incentive to do that, but then if you're the 55th percentile person to join, then suddenly
becomes quite safe too.
It definitely is the sort of thing that you can try to analyze and understand mathematically,
but one of the results is that the sort of when the switch happens definitely can be
chaotic sometimes.
Yeah, but still, to me, the idea that the network affects the fact that human beings
at a scale like millions, billions can share even the idea of currency, like all agree.
That's just, I know economists can model it.
I'm a skeptic on the economic, it's like, so my favorite sort of field, maybe recreation
of these psychology is trying to understand human behavior, and I think sometimes people
just kind of pretend that they can have a grasp on human behavior even though it's such
a messy space that all the models that psychology or economics, those different perspectives
on human behavior can have are difficult, it's difficult to know how much that's wishful
thinking and how much it is actually getting to the core of understanding human behavior,
but on that idea, what do you think is the role of money in human motivation?
So do you think money from an economics perspective, from a psychology perspective is core to human
desires?
Money is definitely very far from the only motivator.
It is a big motivator, and that's one of the closest things you have to a universal motivator.
Because ultimately in almost any person in the world, if you ask them to do something,
they'll be more inclined to do it if you also offer them money.
And there's definitely many cases where people will do things other than things that maximize
how much money they have, and that happens all the time, but a lot of those other things
are kind of much more specific to and of who that person is, and of what their situation
is, the relationship between the motive and the action and these other things.
What do you think is an interplay of the other motivator from Nietzsche's perspective, power?
Do you think money equals power?
Do you think those are conflicting ideas?
I mean, that's one of the ideas that decentralized currency, decentralized applications are
looking at is who holds the power.
Money is definitely a kind of power.
There's definitely people who want money because it gives them power, and then even if money
doesn't seem to explicitly be about money, a lot of things that people spend money on
are ultimately about social status of some kind.
I definitely view those two things as interplaying.
And then there's also money as just a way of measuring how successful you are as a
scoreboard.
So this kind of gets back to the game, meaning if you have $4 billion, then one of the big
benefits you get from going up to $6 million is that now instead of being below the guy
who has five, you're above the guy who has five.
So you think money could be kind of in the game of life?
It's also a measure of self-worth, it's like how we...
It's definitely how a lot of people perceive it.
Define ourselves in the hierarchy of society.
Not saying it's a healthy thing that people define their self-worth as money because it's
definitely far from a perfect indicator of how much value you provide to society or anything
like this.
I definitely think that as a matter of kind of current practice, a bunch of people do
feel that way.
So what does utopia from an economic perspective look like to you?
What does the perfect world look like?
I guess the economists say utopia would be one where kind of everything is an incentive
aligned in the sense that there aren't enough conflicts between what satisfies your goals
and kind of what is good for everyone in the world as a whole.
What do you think that would look like?
Does that mean there's still poor people, rich people, there's still income inequality?
Do you think sort of Marxist ideas are strong?
Do you think sort of ideas of objectivism, like where the market rules is strong?
Is there different economic philosophies that just seem to be reflective of what utopia
would be?
So I definitely think that existing economic philosophies do end up systematically deviating
from the utopia in a lot of ways.
One of the big things I talk about, for example, is public goods.
Public goods are especially important on the internet.
The idea is with kind of money as this game where I lose a few coins and you gain the
same number of coins as this usually happens in a trade where I lose some money, you gain
some money, you lose a sandwich and I gain a sandwich.
This kind of model works really well when the thing that we're using money to incentivize
this kind of private goods, things that you provide to one person or the benefit comes
to one person.
On the internet especially, but also many, many contexts off the internet, there's actions
that individuals or groups can take where instead of the benefit going to one person,
the benefit just goes to many people at the same time and you can't control who the benefit
goes to.
For example, this podcast, we publish it and when it's published, you don't have any fine
grains control over these 38,000 people can watch it and then these other 29,000 people
can't.
It's like once the number goes high enough, then people just copy it and then when I write
articles on a blog, then they're just free for everyone and that stuff's even harder
to prevent anyone from copying.
Aside from that, things like scientific research, for example, and even taking more pedestrian
examples like climate change mitigation would be a big one.
There's a lot of things in the world where you have these kind of individual actions
that have concentrated costs and distributed benefits and money as a point system does
not do a good job of encouraging these things.
One of the other things even, tangentially connected to crypto but theoretically outside
of it that I work on is this mechanism called quadratic funding and the way to think about
it is imagine a point system where if one person gives coins to one other person, then
it works the same way as money.
But if multiple people give coins to one person and they do so anonymously, so it's not in
consideration for a specific service to that person themselves, then the number of coins
that are received by that person is kind of greater than just the sum of the number of
coins that are given by those different people.
So the actual formula is you take the square root of the amount that each person gave,
then you add all the square roots and then you end up square the sum, and then you give
that.
And the idea here would basically be that if, let's say, for example, you would just
start going off and kind of planting a lot of trees and there's a bunch of people that
are really happy that you're planting trees and then so they go and all kind of throw
a coin your way, then there is basically the fact that kind of you get more than the sum,
you get this kind of square root of these tiny nodes, that this actually kind of compensates
for the tragedy of the commons.
There's even this kind of mathematical proof that it sort of optimally compensates for
it.
What is the tragedy of the commons?
This is just this idea that if there is this situation where there's some public good that
lots of people benefit from, then no individual person wants to contribute to it.
Because if they contribute, they only get a small part of the benefit from their contribution,
but they pay the full cost of their contribution.
In which context is this, sorry, what is the term quadratic?
Quadratic funding.
Quadratic funding.
In which context is this mechanism useful?
So obviously you said to combat the tragedy of the commons, but in which context do you
see it as useful actually practically speaking?
Yeah, theoretically public goods in general.
Like services, what are we talking about?
What's the public good?
Within the Ethereum ecosystem, for example, we've actually tried using this mechanism.
I wrote a couple of articles about this on Vitalik.ca where I go through some of the
most recent rounds and it's been really interesting.
Some of the top ones that people supported, there were things like just online user interfaces
that make it easier for people to interact with Ethereum.
There was documentation, there were podcasts, there were software clients, implementations
of the Ethereum protocol of privacy tools, just lots of things that are useful to lots
of people.
When a lot of people are contributing or funding a particular entity, that's really interesting.
There's something special about the quadratic, the summing of the square roots and the taken
square.
Yeah.
So another way to think about it is imagine if N people each give a dollar, then the person
gets N squared.
And so each individual person's contribution gets multiplied by N, because you have N people.
And so that kind of perfectly compensates for the N to 1 tragedy of the commons.
I just wonder if the squared part is fundamental.
Yes.
And I'd recommend you go on Vitalik.ca, I have this article called Quadratic Payments
a Primer and highly recommend it, at least my attempt so far of explaining the intuition
behind this.
The intuition.
So if we could, can we go to the very basic, what is the blockchain?
Or perhaps we might even start at the Byzantine generals problem, the Byzantine fault tolerance
in general, that Bitcoin was taking steps to providing a solution for.
So the Byzantine generals problem, it's this paper that Leslie Lamport published in 1982
where he has this thought experiment where if you have two generals that are kind of camped
out on opposite sides of a city, and they're planning when to attack the city, then the
question is, and if how could those generals coordinate with each other, and they could
send messengers between each other, but those messengers kind of could get sniped by the
enemy on the road, some of those messages could end up being traitors, and if things
could end up happening, and with just the two mess generals, it turns out that there's
kind of no solution in a finite number of rounds that guarantees that they will be able
to kind of coordinate on the same answer.
But then in the case where you have more than two generals that then Leslie analyzes cases
like are the messages kind of just oral messages, are the messages kind of signed messages so
I could give you a signed message and you can pass along that signed message, and the
third party can still verify that I originally made that message, and depending on those
different cases, there's kind of different bounds on like given how many generals and
how many traitors among those generals and what like under what conditions you actually
can't agree one to launch an attack.
So it's actually a big misconception that the business in general's problem was unsolved,
so Leslie will import solved it.
The thing that was unsolved though is that all of these solutions assume that you've
already agreed on and a fixed list of who the generals are.
And these generals have to be kind of semi trusted to some extent, they can't just be
anonymous people because if they're anonymous, then the enemy could just be 99% of the generals.
So in the 1980s and the 1990s, the general use case for distributed system stuff was
more kind of enterprise-y stuff where you could kind of assume that you know who the
nodes are that are running these kind of computer networks.
So if you want to have some kind of decentralized computer network that pretends to be a single
computer and that you can kind of do a lot of operations on, then it's made out of these
kind of 15 specific computers and we know kind of who and where they are.
And so we have a good reason to believe that say at least 11 of them would be fine.
And it could also be within a single system, almost a network of devices, sensors, so on
like in airplanes and I think like flight systems and generals still use these kinds
of ideas.
Yep.
Yep.
So that's the 80s.
That's the 80s and 90s.
Now the cypherpunks had a different use case in mind, which is that they wanted to create
a fully decentralized global permissionless currency.
And the problem here is that they didn't want any authorities and they didn't even want
any kind of privileged list of people.
And so now the question is, well, how do you use these techniques to create consensus when
you have no way of kind of measuring identities, right?
You have no way of kind of determining whether or not some 99% of participants aren't actually
all the same guy.
And so the clever solution that Satoshi had, this is kind of going back to the, that presentation
I made at DEF CON a few months ago where I said that the thing Satoshi invented was
crypto economics is this really neat idea that you can use economic resources to kind
of limit identity, how many identities you can get.
And the, if there isn't any existing decentralized digital currency, then the only way to do
this is with proof of work, right?
So with proof of work, the solution is just you publish a solution to a hard mathematical
puzzle that takes some kind of clearly calculable amount of computational power to solve, you
get an identity.
And then you solve five of those puzzles, you get five identities.
And then these are the identities that we run the consensus algorithm between.
So the proof of work mechanism you just described is like the fundamental idea proposed in the
white paper that defines Bitcoin.
It's the idea of consensus that we wish to reach.
Why is consensus important here?
What is consensus?
So the goal here in just simple technical terms is to basically kind of wired together
a set of a large number of computers in such a way that they kind of pretends to the outside
world to be a single computer where that single computer keeps working even if a large portion
of the kind of constituents, the computers that make it up break and kind of break in
arbitrary ways.
Like they could shut off, they could try to actively break a system, they could do lots
of mean things.
So the reason why the cypherpunks wanted to do this is because they wanted to run one
particular program on this virtual computer.
And the one particular program that they wanted to run is just a currency system, right?
It's a system that just processes a series of transactions, and for every transaction
it verifies that the sender has enough coins to pay for the transaction, it verifies that
the digital signature is correct, and if the check's passed, then it subtracts the coins
from one account and adds the coins to the other account roughly.
So first of all, the proof of work idea is kind of, I mean, at least to me, seems pretty
fascinating.
It is.
I mean, that's a kind of revolutionary idea.
I mean, is it obvious to come up with that you can use, you can exchange basically computational
resources for identity?
It actually has a pretty long history.
It was first proposed in a paper by Cynthia Dwork in 1994, I believe, and the original
use case was combating email spam.
So the idea is that if you send an email, you have to send it with the proof of work
attached, and this makes it reasonably cheap to send emails to your friends, but it makes
it really expensive to send spam to a million people.
Yeah.
That's a simple, brilliant idea.
So maybe also taking a step back, so what is the role of blockchain in this?
What is the blockchain?
Sure.
The term blockchain, my way of thinking about it is that it is this kind of system where
you have this kind of one virtual computer created by a bunch of these nodes in the network.
And the reason why the term blockchain is used is because the data structure that these
systems use at least so far is one where they have different nodes in the network periodically
publish blocks, and a block is a list of transactions together with a pointer, like
a hash of a previous block that it builds on top of.
And so you have a series of blocks that nodes in the network create where each block points
to the previous block, and so you have this chain of them.
Is a fault tolerance mechanism built into the idea of blockchain, or is there a lot
of possibilities of different ways to make sure there's no funny stuff going on?
There are indeed a lot of possibilities.
So in a kind of just simple architecture, as I just described, the way the fault tolerance
happens is like this, right?
So you have a bunch of nodes, and they're just happily kind of occasionally creating
blocks, building on top of each other's blocks.
And let's say you have kind of one block, we'll call it kind of block one, and then
someone else builds another block, honestly, we'll call it block two, then we have an attacker.
And what the attacker tries to do is the attacker tries to revert block two.
And the way they revert block two is instead of doing the thing they're supposed to do,
which is build a block on top of block two, they're going to build another block on top
of block one.
So you have block one, which has two children, block two, and then block two prime.
Now, this might sometimes even happen by random chance if two nodes in the network just
happen to create blocks at the same time, and they don't hear about each other's things
before they create their own.
But this also could happen because of an attack.
Now, if this happens, you have an attack, then in the Bitcoin system, the nodes follow
the longest chain.
So if this attack had happened when the original chain had more than two blocks on it, so if
it was trying to revert more than two blocks, then everyone would just ignore it, and everyone
would just keep following the regular chain.
But here we have block two, and we have block two prime, and so the two are kind of even.
And then whatever block the next block is created on top of, so say block three is now created
on top of block two prime, then everyone agrees that block three is the new head, and block
two prime is just kind of forgotten, and then everyone just kind of peacefully builds on
top of block three, and the thing continues.
So how difficult is it to mess with the system?
So if we look at the general problem, how many, what fraction of people who participate
in the system have to be bad players in order to mess with it truly?
Is there a good number?
There is.
Well, depending on kind of what your model of the participants is and what kind of attack
we're talking about, it's anywhere between 23.2 and 50% of all of the computing power
in the network.
Sorry.
So between 23.2 and 50%.
And 50% can be compromised.
So like once your portion of the total computing power in the network goes above the 23.2 level,
then there's kind of things that you can mean things that you can potentially do.
And as your percentage of the network kind of keeps going up, then your ability to do
mean things kind of goes higher, and then if you have above 50%, then you can just break
everything.
So how hard is it to achieve that level?
Like, it seems that so far historically speaking, it's been exceptionally difficult.
This is a challenging question.
So the economic cost of acquiring that level of stuff from scratch is fairly high.
I think it's somewhere in the low billions of dollars.
And when you say that stuff, you mean computational resources?
Yeah.
So specifically specialized hardware and of ASICs that people use to solve these puzzles
to do the mining these days?
Small tangent.
So obviously, I work a lot in deep learning with GPUs and ASICs for that application.
And I tangentially kind of hear that so many of these, you know, sometimes NVIDIA GPUs
are sold out because of this other application.
Like what do, if you can comment, I don't know if you're familiar or interested in this
space, what kind of ASICs, what kind of hardware is generally used these days to do the actual
computation for the proof of work?
Sure.
So in the case, in Bitcoin and Ethereum are a bit different.
So in the case of Bitcoin, there is an algorithm called the SHA-256.
It's just a hash function.
And so the puzzle is just coming up with a number where the hash of the number is below
some threshold.
And so because the hashes are designed to be random, you just have to keep on trying
different numbers until one works.
Because the ASICs are just like specialized circuits that contain and circuits for evaluating
this hash over and over again.
And you have kind of like millions or billions of these hash evaluators and just stacked
on top of each other inside of a box and you just keep on running the box 24-7.
In the ASICs, there's literally specialized hardware designed for this.
Yes.
This is living in an amazing world.
Another tangent, and I'll come back to the basics, but does quantum computing throw a
wrench into any of this?
Very good question.
So quantum computers have two main families of algorithms that are relevant to cryptography.
One is a Shor's algorithm.
And Shor's algorithm is one that completely breaks the hardness of some specific kinds
of mathematical problems.
So the one that you've probably heard of is it makes it very easy to factor numbers.
So figure out kind of what prime factors are that you need to multiply together to get
some number, even if that number is extremely big.
Shor's algorithm can also be used to break elliptic curve cryptography.
It can break any kind of hidden order group, so it breaks a lot of cryptographic nice
things that we're used to.
But the good news is that for every major use of things that Shor's algorithm breaks,
we already know of quantum proof alternatives.
We don't use these quantum proof alternatives yet because in many cases, they're five to
10 times less efficient, but the crypto industry in general knows that this is coming eventually
and it's ready to take the hit and switch to that stuff when we have to.
The second algorithm that is relevant to cryptography is Grover's algorithm.
And Grover's algorithm might even be more familiar to AI people that's basically usually
described as solving search problems.
But the idea here is that if you have a problem over the form, find a number that satisfies
some property, then if with a classical computer, you need to try and if n times before you find
a number, then with a quantum computer, you only need to do square root of n computations.
And Grover's could potentially be used for mining, but there's two possibilities here.
One is that Grover's could be used for mining and whoever creates the first working quantum
computer that could do Grover's will just mine way faster than everyone else and we'll
see another round of what we saw when ASICS came out, which is that kind of the new hardware
just kind of dominated the old stuff and then eventually it switched to a new equilibrium.
But by the way, way faster, not exponentially faster.
Quadratically faster.
Quadratically faster, which is not sort of, it's not game changing, I would say, or like
ASICS, like you said, it would be.
Exactly.
Yeah, so it would not necessarily break proof of work as a thing.
That's right, yeah.
Now, the other kind of possible world is that quantum computers have a lot of overhead.
There's a lot of complexity involved in maintaining quantum states and there's also, as we've
been realizing recently, making quantum computers actually work requires kind of quantum error
correction, which requires kind of a thousand real qubits per logical qubit.
And so there's the very real possibility that the overhead of running a quantum computer
will be higher than the speed up you get with Grover's, which would be kind of sad, but
which would also mean that given proof of work, we'll just keep working fine.
So the beautifully put, so proof of work is the core idea of Bitcoin.
Is there other core ideas before we kind of take a step towards the origin story and ideas
of Ethereum?
Is there other stuff that were key to the white paper of Bitcoin?
There's proof of work and then there's just the cryptography and just kind of public
keys and signatures that are used to verify transactions.
Those two are the big things.
So then what is the origin story, maybe the human side, but also the technical side of
Ethereum?
Sure.
So I joined the Bitcoin community in 2011 and I started by just writing.
I first wrote for this sort of online thing called Bitcoin Weekly.
Then I started writing for Bitcoin Magazine.
Sorry to interrupt.
You have this funny kind of story, true or not, is that you were disillusioned by the
downsides of centralized control from your experience with, wow, World of Warcraft.
Is this true or you're just being witty?
I mean, the event is true, the fact that that's the reason I do decentralization is witty.
Maybe just a small tangent.
Have you always had a skepticism of centralized control?
Is that sort of...
Sort of something to agree, yeah.
Has that feeling evolved over time or has that just always been a core feeling that
decentralized control is the future of human society?
It's definitely been something that felt very attractive to me ever since I could have
heard that such a thing is possible.
It's possible, even technically.
Yeah.
So great.
So you joined the Bitcoin community in 2011, you said, you began writing.
So what's next?
I started writing, moved from high school to university halfway in between that and
spent a year in university.
Then at the end of that year, I dropped out to do Bitcoin things full-time.
And this was a combination of continuing to write Bitcoin magazine, but also increasingly
work on software projects.
And I traveled around the world for about six months and just going to different Bitcoin
communities.
I went to first in New Hampshire, then Spain, other European places, Israel, then San Francisco.
And along the way, I met a lot of other people that are working on different Bitcoin projects.
And when I was in Israel, there were some very smart teams there that were working on
ideas that people were starting to kind of call Bitcoin 2.0.
So one of these was Colored Coins, which is basically saying that, hey, let's not just
use the blockchain for Bitcoin, but let's also kind of issue other kinds of assets on
it.
And then there was a protocol called Mastercoin that supported issuing assets, but also supported
many other things, like financial contracts, like domain name registration, a lot of different
things together.
And I spent some time working with these teams.
And I quickly kind of realized that this Mastercoin protocol could be improved by a kind of general
izing it more, right?
So the analogy I used is that the Mastercoin protocol was like this Swiss Army knife.
You have 25 different transaction types for 25 different applications.
But what I realized is that you could replace a bunch of them with things that are more
general purpose.
So one of them was that you could replace like three transaction types for three types
of financial contracts with a generic transaction type for a financial contract that just lets
you specify a mathematical formula for kind of how much money each side gets.
By the way, just a small pause.
What's, you say financial contract, just the terminology, what is the contract?
What's the financial contract?
So this is just generally an agreement where kind of either one or two parties kind of
put collateral kind of in.
And then depending on certain conditions, like this could involve prices of assets,
this could involve the actions of the two parties, it could involve other things.
They kind of get different amounts of assets out that just depend on things that happened.
So a contract is really a financial contract as at the core, it's the core interactive
element of a financial system.
Yeah.
There's many different kinds of financial contracts, like there's things like options
where you kind of give someone the right to buy a thing that you have for some specific
price for some period of time.
There's contracts for difference where you basically are kind of making a bet that says
like for every dollar this thing goes up, I'll give you $7 or for every dollar that
thing goes down, you give me $7 or something like that.
But the main idea that these contracts have to be enforced and trusted them.
Yes, exactly.
You have to trust that they will work out in a system where nobody can be trusted.
Yes.
This is such a beautiful complicated system.
So you were seeking to kind of generalize this basic framework of contracts.
So what does that entail?
So what technically are the steps to creating Ethereum?
Sure.
So I guess just to kind of continue a bit with this master coin story.
So started by kind of giving ideas for how to generalize the thing and eventually this
turned into a much more kind of fully fleshed proposal that just says, hey, how about you
scrap all your futures and instead you just put in this programming language.
And I gave this idea to them and their response was something like, hey, this is great, but
this seems complicated and this seems like something that we're not going to be able
to put onto our roadmap for a while.
And my response to this was like, wait, do you not realize how revolutionary this is?
Well, I'll just go do it myself.
And then I was the name of the programming language.
I just called it ultimate scripting.
So then I went through a couple more rounds of iteration and then the idea for Ethereum
itself started to form.
And the idea here is that you just have a blockchain where the core unit of the thing
is what we call contracts.
It's these, and if accounts that can hold assets and they have their own internal memory,
but that are controlled by a piece of code.
And so if I send some ether to a contract, the only thing that can determine where that
kind of ether, the currency inside Ethereum goes after that is the code of that contract
itself.
And so basically kind of sending assets to computer programs becomes this kind of paradigm
for creating these self-executing agreements.
Self-executing.
It's so cool that code is sort of part of this contract.
So that's what's meant by smart contracts.
So how hard was it to build this kind of thing?
Harder than expected.
And originally, I actually thought that this would be a thing that I would kind of casually
work on for a couple of months, publish, and then go back to university.
Then I released it and a bunch of people, or I released a white paper.
The white paper, the idea is there.
That's the idea.
The white paper.
A whole bunch of people came in offering to how about a huge number of people and have
expressed interest.
And this was something I was totally not expecting.
And then I kind of realized that this would be something that's kind of much bigger than
I had ever thought that it would be.
And then we started on this kind of much longer developments log of making something that
lives up to this sort of much higher level of expectations.
What are some of the, is it fundamental like software engineering challenges?
It was.
Is there social?
Okay.
And social.
So what are the biggest interesting challenges that you've learned about human civilization
and software engineering through this process?
So I guess one of the challenges for me is that I'm one of the apparently unusual geeks
who was kind of never treated with anything but kindness in school.
And so when I got into crypto, I kind of expected everyone would just kind of be the same kind
of altruistic and nice in that same way.
But the algorithm that I used for finding co-founders for this thing was not very good.
It was literally one computer scientist called the greedy algorithm.
Instead of the first 15 people who applied back offering to help kind of are the co-founders.
Oh, you mean like literally the people that will form to be the co-founders of the community?
The algorithm.
I like how you call it the algorithm.
And so what happened was that these, like especially as the project got really big,
like there started to be a lot of this kind of infighting and there are a lot of, like
I wanted the thing to be a non-profit and some of them wanted to be a for-profit.
And then there started to be people who were just kind of totally unable to work with each
other.
There were people that were kind of trying to get an advantage for themselves in a lot
of different ways.
And this just about six months later led to this big governance crisis.
And then we kind of reshuffled leadership a bit.
And then the project kept on going, then nine months later there was another governance
crisis and then there was a third governance crisis.
So is there a way to, if you're looking at the human side of things, is there a way to
optimize this aspect of the cryptocurrency world?
It seems that there is, from my perspective, there's a lot of different characters and personalities
and egos.
And like you said, I don't know, I also like to think that most of the people in the world
are well-intentioned, but the way those intentions are realized may perhaps come off as negative.
Is there a hopeful message here about creating a governance structure for cryptocurrency where
everyone gets along?
Here about four rounds of reshuffle, I think we've actually come up with something that
seems to be pretty stable and happy.
I think, I mean, I definitely do think that most people are well-intentioned.
I just think that one of the reasons why I like decentralization is just because there's
like this thing about power where power attracts people with egos.
And so that just allows us a very small percentage of people to just ruin so many things.
You think ego has a use?
Is ego always bad?
It sometimes does.
But then the Ethereum research team, I feel like we've found a lot of very good people
that are just primarily just interested in things for the technology.
And things seem to just generally be going quite well.
Yeah, when the focus and the passion is in the tech.
So that's the human side of things.
The technology side, what have you learned, what have been the biggest challenges of bringing
Ethereum to life on the technology side?
So I think, first of all, there's like the first of all of software development, which
is that when someone gives you a timetable, switch the unit of time to the next largest
unit of time and add one, and we basically fell victim to that.
So instead of taking like three months, it ended up taking like 20 months to launch the
thing.
And that was just, I think, underestimating the sheer technical complexity of the thing.
There are research challenges, like so for example, one of the things that we've been
saying from the start that we would do, one is a switch from a proof of work to a proof
of stake.
A more proof of stake is this alternative consensus mechanism where instead of having
to waste a lot of computing power on solving these mathematical puzzles that don't mean
anything, you kind of prove that you have access to coins inside of the system.
And this gives you some level of participation in the consensus.
Can you maybe elaborate on that a little bit?
I understand the idea of proof of work.
I know that a lot of people say that the idea of proof of stake is really appealing.
Can you maybe linger on it a longer, explain what it is?
Sure.
So basically, the idea is like, if I kind of lock up 100 coins, then I turn that into
a kind of quote, virtual miner.
And the system itself kind of automatically randomly assigns that in a virtual miner is
the right to create blocks at particular intervals.
And then if someone else has 200 coins and they walk on the walk, there's 200 coins,
then they get a kind of twice as big a virtual miner, they'll be able to create blocks twice
as often.
So it tries to kind of do similar things to proof of work, except instead of the thing
and of rate limiting your participation being your ability to crank out solutions to kind
of hash challenges, the thing that real limits your participation is kind of how much coins
you're kind of locking into this mechanism.
Okay.
So interesting.
So that limited participation doesn't require you to run a lot of compute.
Does that mean that the richer you are, so rich people are more like their identities
more.
Right.
And this stable.
Yeah.
Verifiable or whatever the right terminology is.
Right.
And this is definitely a common critique.
I think my usual answer to this is that like proof of work is even more of that kind of
system.
Exactly.
Yeah.
I didn't mean it in that statement as a criticism.
I think you're exactly right.
That's equivalent.
The proof of work is the same kind of thing.
But in the proof of work, you have to also use physical resources.
Yes.
And burn computers and burn trees and all of that stuff.
Is there a way to mess with the system of the proof of proof of stake?
There is, but you will once again need to have a very large portion of all the coins
that are locked in the system to do anything bad.
Got it.
Yeah.
And just to that, maybe take a small change in one of the criticisms of cryptocurrencies,
the fact that it gets for the proof of work mechanism, you have to use so much energy in
the world.
Yes.
Is one of the motivations of proof of stake is to move away from this?
Definitely.
What's your sense of that?
Maybe I'm just under informed.
Is there like legitimately environmental impact from this?
Yeah.
So the latest thing was that Bitcoin consumed as much energy as the country of Austria or
something like that.
Yeah.
And then Ethereum is like right now, maybe only like half in order of magnitude smaller
than Bitcoin.
I've heard you talk about Ethereum 2.0.
So what's the dream of Ethereum 2.0?
What's the status of proof of stake as a mechanism that Ethereum moves towards?
And also, how do you move to a different mechanism of consensus within a cryptocurrency?
So Ethereum 2.0 is a collection of major upgrades that we've wanted to do to Ethereum
for quite some time.
The two big ones, one is proof of stake and the other is what we call sharding.
Sharding solves another problem with blockchains, which is scalability.
And what sharding does is it basically says instead of every participant in the network
having to personally download and verify every transaction, every participant in the network
only downloads and verifies a small portion of transactions, and then you kind of randomly
distribute who gets how much work.
And because of how the distribution is random, it still has the property that you need a
large portion of the entire network to corrupt what's going on inside of any shard.
But the system is still very redundant and very secure.
That's brilliant.
How hard is that to implement and how hard is proof of stake to implement?
Like on the technical level, software level?
Proof of stake and sharding are both challenging.
I'd say sharding is a bit more challenging.
The reason is that proof of stake is kind of just a change to how the consensus layer
works.
Sharding does both that, but it's also a change to the networking layer.
The reason is that sharding is kind of pointless if at the networking layer, you still do
what you do today, which is you kind of gossip everything, which means that if someone publishes
something, every other node in the client hears it from on the networking layer.
And so instead, we have to have subnetworks and the ability to quickly switch between
subnetworks and other subnetworks, talk to each other.
And this is all doable, but it's a more complex architecture, and it's definitely the sort
of thing that has not yet been done in cryptocurrency.
So most of the networking layer in cryptocurrency is you're shouting, you're like broadcasting
messages, and this is more like ad hoc networks.
Yeah, you're shouting within smaller groups.
Smaller groups, but you have like a bunch of subnetwork, and you have to switch between
it, oh man, I'd love to see the, so it's a beautiful idea, so from a graph theory perspective,
but just the software that, like who's responsible, is the Ethereum project, like the people involved,
would they be implementing, like what's the actual, you know, this is like legit software
engineering, who, like how does that work?
How do people collaborate, build that kind of project?
Is this like almost like, is there a software engineering lead?
Is there, is it legit, almost like large scale open source project?
There is, yeah.
So we have someone named Danny Ryan on our team, who's just been brilliant and great
all around, and he is a kind of de facto kind of development coordinator, I guess.
It's like, you have to invent job titles for this stuff.
The reason is that, like we also have this unique kind of organizational structure where
the Ethereum Foundation itself does research in-house, but then the actual implementation
is done by independent teams that are separate companies, and they're located all around
the world in fun places like Australia, and so, you know, you kind of just need a bunch
of almost non-stop cat herding to just keep getting these people to talk to each other
and kind of implement this back, make sure that everyone agrees on what's going on and
kind of how to interpret different things.
So how far into the future are we from these two mechanisms in Ethereum 2.0, like what's
your sense of the timeline keeping in mind the previous comment you made about the sort
of general curse of software projects?
So Ethereum 2.0 is split into three phases.
So phase zero just creates a proof of stake network, and it's actually separate from kind
of proof of work network at the beginning, just to kind of give it time to grow and improve
itself.
Do people get to choose?
Sorry to interrupt.
Do people get to choose, I guess?
Yes, they get to choose to move over if they want to.
And phase one adds sharding, but it only adds sharding of data storage and not sharding
of computation.
And then after that, there is the merger phase, which is where the accounts, kind of smart
contracts, all of the activity on the existing ETH1 system just kind of gets cut and pasted
into ETH2, and then the proof of work chain gets forgotten, and then all the things that
were living there before just kind of continue living inside of the proof of stake system.
So for timelines, phase zero has been kind of almost fully implemented, and now it's
just a matter of a whole bunch of security auditing and testing.
My own experience is that right now it feels like we're at about a phase comparable to
when we were doing the original Ethereum launch, when we were maybe about four months away
from launch.
So that's just a hunch, then you can.
That's just a hunch, yeah.
So how, you know, it took over a decade for people to move from Python 2 to Python 3.
How do you see the move from this phase zero for different consensus mechanisms?
Do you see there being a drastic phase shift in people just kind of jumping to this better
mechanism?
So in phase zero, I don't expect too many people to do much because in phase zero and
phase one, the new chain, the new deliberately, and if it doesn't have too much functionality
turned on, it's there just like if you want to be a proof of stake validator, you can
get things started if you want to store data for other blockchain applications, you can
get started, but existing applications will largely keep living on each one.
And then when the merger happens, then the merger is a operation that happens all at
once.
So that's one of the benefits of a consensus system that like on the one hand, you have
to coordinate the upgrade, but on the other hand, the upgrade can be coordinated.
So what's Casper FFG, by the way?
Casper FFG is the consensus algorithm that we are using for a proof of stake.
Is there something interesting, specific about Casper FFG, like some beautiful aspect of
it that's...
There is.
So Casper FFG combines together two different schools of a consensus algorithm design.
So the general two different schools of the design are right.
One is 50% fault tolerant, but dependent on network synchrony.
So 50% fault tolerant, but it can tolerate up to 50% of faults, but not more, but it
depends on an assumption that all of the nodes can talk to each other within some of a limited
period of time.
If I send a message, you'll receive it within a few seconds.
The second the school is 33% fault tolerant, but safe under a synchrony, which means that
if we agree on something, then that thing is finalized, and even if the network goes
horribly wonky the second after that thing is finalized, there's no way to revert that
thing.
That's fascinating how you would make that happen.
It's definitely quite clever.
I recommend the Casper FFG paper.
If you just search archive as in ARX, IV, Casper FFG, it's right there.
That's an archive.
The paper's an archive.
Yeah, yeah.
Who are the authors?
Myself and Virgil Griffith.
That's awesome.
Take a small tangent.
This idea of just putting out white papers and papers and putting them on archive and
just putting them publicly, is that at the core?
Is that a necessary component of the currencies that the tradition started with Satoshi Nakamoto
wrote?
What do you make of it?
What do you make of the future of that kind of sharing of ideas?
I guess so, yeah.
It's definitely something that's kind of mandatory for crypto because crypto is all about making
systems where you don't have to trust the operators to trust that the thing works.
If anything behind our system works is closed sourced, then that kind of kills the point.
Here is the kind of a sense in which the fundamental properties of the category of the thing which
we're trying to build just kind of forces openness, but also openness just has proven
to be a really great way to collaborate.
There's actually a lot of innovation and academic collaboration that's just kind of happened
ad hoc in the crypto space the last few years.
For example, we have this forum called ethresearch that's like ETH, R-E-S-E-A-R, and then.ch.
There we publish just ideas in a form that's kind of half formal, like it's halfway in
between.
It's kind of a text write up and then you can have math in it, but it's often much shorter
than a paper.
It turns out that the great majority of new ideas like they're just kind of fairly small
nuggets that you can explain in like five to ten lines and they don't really.
They don't need the whole formality of a paper, right?
Exactly.
They don't require the kind of like ten pages of a filler.
Introduction conclusion is not needed.
Yeah.
And so instead you just kind of publish the idea and then the people can go comments on
it.
That's brilliant.
Yeah.
This has been really great for us.
I think I interrupted you.
Was there something else on Casper FOG?
No, just Casper FOG is just kind of combines together these two schools.
And so basically it creates this system where if you have more than 50% that are honest,
and you have network synchrony, then the thing kind of goes as a chain.
But then if network synchrony fails, then kind of the last few blocks in the chain might
kind of get replaced, but anything that was finalized by this kind of more asynchronous
process gets, can't be reverted.
And so you essentially get a kind of best of both worlds between those two models.
Okay.
So I know what I'm doing to them.
I'm going to be reading the Casper FOG paper.
I apologize for the romanticized question, but what do you are some or the most beautiful
idea in the world of Ethereum?
Is something surprising, something beautiful, something powerful?
Yeah.
I mean, I think the fact that money can just emerge out of a database if enough people
believe in it, I think is definitely one of those things that's up there.
I think one of the things that I really love about Ethereum is also this concept of composability.
So this is the idea that if I build an application on top of Ethereum, then you can build an
application that talks to my application.
And you don't even need my permission, you don't even need to talk to me.
So one really fun example of this is there was this kind of game on Ethereum called CryptoKitties.
They're just involved in breeding digital cats.
And someone else created a game called CryptoDragons, where the way you play CryptoDragons is you
have a dragon and you have to feed it CryptoKitties, and they just created the whole thing just
like as an Ethereum contract that you would send these tokens that are defined by this
other Ethereum contract.
And for the interoperability to happen, the projects don't really need to, like the teams
don't really need to talk to each other, you just kind of interface with the existing
program.
So it's arbitrarily composable in this kind of way, so you have different groups that
could be working in.
So you could see it scaling to just outside of dragons and kitties.
You could build like entire ecosystems of software.
Yeah.
And I mean, especially in the decentralized finance space that's been popping up the last
two years, there has been a huge amount of really interesting things happen as a result
of this.
Is it a particular kind of like financial applications kind of thing?
Yeah.
I mean, there's like stable coins.
So this is a kind of tokens retain value equal to $1, but they're kind of backed by
cryptocurrency, then there's decentralized exchanges.
So as far as the decentralized exchanges goes, there's this really interesting construction
that has existed for about one and a half years now called Uniswap.
So what Uniswap is, it's a smart contract that holds the balances of two tokens, we'll
call them token A and token B. And it maintains an invariance that the balance of token A
multiplied by the balance of token B has to equal the same value.
And so the way that you trade against the thing is basically like you have this kind
of curve, you know, like X times Y equals K. And before you trade, it's at some points
on the curve.
After you trade, you just like pick any other points on the curve.
And then whatever the delta X is, that's the amount of A tokens you provide, whatever
the delta Y is, that's the amount of B tokens you get or vice versa.
And that's just, and then kind of the slope at the current points on the curve kind of
is the price.
And so that just is the whole thing.
And that just allows you to have this exchange for tokens and even if there's very few participants
and the whole thing is just like so simple and it's just very easy to set up, very easy
to participate in, and it just provides so much value to people.
And the fundamental, the distributed application infrastructure allows that somehow.
Yes.
So this is a smart contract meeting.
This is all a computer program that's just running on Ethereum.
Smart contracts too are just fascinating.
They are.
Okay, do you think cryptocurrency may become the main currency in the world one day?
What do you think we're headed in terms of the role of currency, the structure type of
currency in the world?
I definitely expect fiat currencies to continue to exist and continue to be strong.
And I definitely expect fiat currencies to also digitize in their own way over the next
couple of decades.
What's fiat currency by the way?
Just like things like US dollars and dollars and euros and yen and these other things.
And they're sort of backed by governments.
Yes.
But I also expect fiat cryptocurrency is to play this kind of important role in just
making sure that people always have an alternative if fiat currencies start breaking.
So like if you're in some very high inflation place like Venezuela, for example, or if
your country just kind of gets cut off from other financial systems because of something
the banks do, if there's even some major trade disruption or something worse happens, then
cryptocurrencies are the sort of thing that just because of their kind of global neutrality,
they're just always there and you can keep using them.
It's interesting that you're quite humble about the possibilities of the future of cryptocurrency.
You don't think there's a possible future where it becomes the main set of currency
because it feels like fiat, it feels like the centralized control by governments of
currencies limiting somehow, maybe my naive utopian view of the world.
It's definitely very possible.
I think for cryptocurrencies being the main form of value to work well, you do need to
have some much more price stability than they have today.
And there are now stablecoins and there are kind of cryptocurrencies that try to be more
stable than existing things like Bitcoin and Ether, but that just is to me the kind of
the main challenge.
Do you think that's a characteristic of this just being the early days?
It's such a young concept that 10 years is nothing in the history of money.
I think it's a combination of two things.
One is it's still early days, but the other is a kind of more durable, any kind of economic
problem which is that the demand for currency is volatile because of like recessions, booms,
changes to technology, lots of things, and if people's demand for how much currency they
want to hold changes, and if you have a currency that has a fixed supply, then the change in
demand has to be entirely expressed as a change in value of the currency.
And so what that means is that kind of the volatility of demand becomes entirely translated
into volatility and ahead of prices of things that are dominated in that currency.
But if you have a currency where instead the supply can change and so the supply can end
up going up when there's more demand, then you have the supply kind of absorbing more
of that volatility and so the price of the currency would absorb lots of the volatility.
On that topic, so Bitcoin does have a limited supply, a specific fixed supply.
What's the idea?
And Ethereum doesn't, but can you clarify?
Just in the comment you just made, is Ethereum qualified to the kind of currency that you're
talking about and being flexible in the supply?
That's a bit more flexible, but the thing that you would really want is something that's
kind of specifically flexible in response to how valuable the currency is.
And I'd recommend you look at stablecoins as well, so things like die, for example.
How do you spell that?
DAI.
And what's stablecoins?
Is it a type of cryptocurrency?
It is a type of cryptocurrency.
It's a type of cryptocurrency that's issued by a smart contract, one of these Ethereum
computer programs, that where the smart contract holds a bunch of Ether and then it basically
that people deposit and then it issues DAI and the reason why people deposit is because
they want to kind of go high leverage on their Ether and so it kind of pairs these two sets
of users, one that wants stability and one that kind of wants extra risk together with
each other.
And it basically creates or gives one set of participants a guarantee that they'll have
this asset that can be later converted back into Ether, but specifically at kind of the
one dollar rate.
And it has some kind of stabilizing network effects?
Yeah, it has many kinds of stabilizing mechanisms in it.
That's fascinating.
Okay.
This world is awesome technically.
At least from a scientific perspective, it's an awesome world that I often don't see from
an outsider's perspective.
What I often see is kind of maybe hype and a little bit, if I may say so, like Charltonism
and you don't often see, at least from my outsider's perspective, the beautiful science
of it and the engineering of it, maybe is there a comment you can make of who to follow,
how to learn about this world without being interrupted by the Charlton's and the hype
people in this space?
I think you do need to just know the specific kind of just people to follow.
Like there's, you know, there's all the kind of the cryptographers and the researchers
and there's just like, even just the Ethereum research crew, like myself, Dan Cradd, Danny
Justin, the other people, and then the academic cryptographers and like before this today was
at Stanford and Stanford has the Center for Blockchain Research and of Dan Bonet, that's
a really famous and great cryptographer who's running it and there's a lot of other people
there.
And there's people working on zero-knowledge proofs, for example.
And Zuko from Zcash is one other person that I respect.
So I think if you follow the technical people, you crawl along that start with the Ethereum
group and then look at the academics, Dave Bonet and so on and then just cautiously expand
the network of people you follow.
Yeah, exactly.
And like if someone seems too self-promotional, then just like remove them.
Is there books that are, so there's these white papers and we just discussed about ideas
being condensed into really small parts.
Is there books that are emerging that are kind of good introductory material?
So for historical ones, and there's like Nathaniel Popper's Digital Gold, which is just about
the history of Bitcoin, there's like one, and then Matthew Lysing announced that there's
one about the history of Ethereum.
For technical ones, and there's Andrea Senopoulos's Mastering Ethereum.
Great.
So let me ask you to pull back to the idea of governments and decentralized currency.
There's a tension between decentralization of currency and the power of nations, the
power of governments.
What's your sense about that tension?
Is there some rule for regulation of currency?
Is the government the enemy of digital currency, of distributed currency, or can they be like
cautious friends?
I think one thing that people forget is that it's clearly not entirely an enemy because
I think if there hadn't been so much government regulation on centralized digital currency
is that we'd be seeing people like Google and Facebook and Twitter just kind of issuing
them left and right, and then if that was the case, then decentralized currencies would
still appeal to some people, but they definitely would appeal to less people than today.
So even in that sense, I think it's clearly been more of a help, just kind of set the
stage for the existence of the sector in some ways, but also, and I think some of both.
There's definitely things that governments can do, in some cases, have done to hurt the
spread of growth of blockchains, there's things that they've done to help, and in some cases
definitely done a good job of going after fraudulent projects and going after some of the projects
that have some of the craziest and most misleading marketing.
There's also the possibility that governments will end up using blockchains for a lot of
different things.
Governments, they do a lot more than just regulating, but there's also, they have identity
records and they have property registries, even their own currency is secured, lots of
different kind of things that they're operating, and there's even blockchain applications in
a lot of those.
Yeah, and they can leverage technology, do a lot of good for our society, it is a little
unfortunate that governments often lag behind in terms of their acceptance and leverage
of technology.
If you look at the autonomous vehicle space, AI in general, they're a few years behind.
It'd be nice to help them catch up, that's always an ongoing problem.
You met Vladimir Putin to discuss the centralized currency, you're born in, where were you born?
Kolomna, it's a city about 115 kilometers south of Moscow.
In Russia?
Yes.
Yeah, I grew up in Moscow, I mean, Vladimir Putin is a central figure in this part of
the world, so what was that like meeting him, what was that experience like?
He's taller in photos than in person.
Yeah, that's right, he's 5'7", I think, 5'8", maybe.
Yeah, unfortunately, we didn't actually kind of have too much of a chance to talk to him,
like I managed to see him for about one minute at the end of this meeting, and I did get
a chance to see a lot of some of the other end of government ministers, and Kira recommended
some, and some of them are actually interested in trying to use blockchains for various government
use cases, the kind of limit corruption and other things, and it's hard to tell from one
conversation kind of what things are genuine and what things are just like, oh, blockchain
is cool, let's do blockchain.
But when I listen to Barack Obama talk about artificial intelligence, there's certain things
I hear where, okay, so he might not be an expert in AI, but he actually studied it carefully
enough to think about it, like even if he's just reading a Wikipedia page, he really thought
about what this technology means, did you get a sense that Putin or some of the ministers
like thought about blockchain, like thought about the fundamentals of technology, or like
understand it intuitively, or are they too old school to try to grasp it?
Summer old school, summer more new school, it depends, it's definitely like depends
on who you talk to.
I mean, that's an open question for me with Putin because Putin has said stuff about AI.
I don't know, as I said, I've only talked to him for about one minute, so.
But sometimes you can pick up sort of insights, as a quick comment, they're about, maybe you
can correct me on this, but they're about 3,000 cryptocurrencies being actively traded.
Yes.
And Ethereum is one of, a lot of people believe that there will be the main crypto currency.
I think Bitcoin is currently still the main cryptocurrency, but Ethereum very likely might
become the main one.
Is this kind of diversity good in the crypto world?
Do you see it sticking around?
Should there be a winner?
Should there be some consensus globally around Bitcoin or around Ethereum?
What's your sense?
I definitely think the diversity is good, and I definitely think also that there's probably
too many people trying to make separate blockchains right now.
The numbers should definitely be greater than one and probably greater than two or even
five.
Not 3,000.
Yeah, and also not even like 40 high quality platforms that try to do the same thing.
There's definitely this range from just one person who just wrongly thinks that you can
create a cryptocurrency in like 12 hours and doesn't even think about kind of the community
aspects of maintaining it, going to people actually trying, but only creating a really
tiny one to scammers, to people making something that's actually successful, and then there's
a lot of different categories of blockchain and of project in terms of what it's trying
to do and what applications it's for.
I think the experimentation is definitely healthy.
If you look at the two worlds, there might be a little bit disjoints, but the distributed
applications, cryptocurrency, and in the world of artificial intelligence, do you see there's
some overlap between these worlds that both worry about centralized control?
Is there some overlap that's interesting that you think about?
Do you think about AI much?
Yeah, and I think definitely I thought about things like the AI and if control problems
and alignment problems and all of those things.
Do you worry about the existential threat of AI?
It's definitely one of the things I worry about.
I think there's a lot of kind of common challenges because in both cases, what you're ultimately
trying to do is you're trying to get a simple system to direct a more complex system.
In the case of strong AI, the idea would be that the simple system is people and the
complex system is whatever thing the people end up unleashing on the universe that will
hopefully be a great thing.
In the case of blockchains, the simple thing is the algorithm, which is a piece of static
and fully open source code, and the more complex thing is all of the different possible human
actors and the strategy is that they might end up used to participate in the network.
Do you think about your own mortality, like what you hope to accomplish in your life in
the context?
I definitely think about ending my own mortality.
If I gave you the option to live forever, would you?
Depends a lot on what the fine bridge is.
If it's one of those things where I'm going to be kind of like floating through empty
space for 10 to the 75 years, then no.
If it's forever worth of having a fulfilling life with friends to spend the time with,
with meaningful challenges to explore and interesting things to be working on, then
I think that's absolutely a move.
That's beautifully put.
You're forever, but you'd have to check the fine print.
I think there's no better way to end it, Vitalik.
Thank you so much for talking to us.
So exciting to follow your work from a distance and thank you for creating a revolutionary
idea and sticking with it and building it out and doing some incredible engineering work,
and thanks for talking today.
Yeah, thank you.
Thanks for listening to this conversation with Vitalik Buterin, and thank you to our
sponsors, ExpressVPN, and Masterclass.
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And now let me leave you with some words from Vitalik Buterin.
The thing that I often ask startups on top of Ethereum is, can you please tell me why
using Ethereum blockchain is better than using Excel?
And if they can come up with a good answer, that's when you know you got something really
interesting.
Thank you for listening, and hope to see you next time.