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.

Quick summary of the ads, two sponsors, Masterclass and ExpressVPN.

Please consider supporting the podcast by signing up to Masterclass at masterclass.com

slash lex and getting ExpressVPN at expressvpn.com slash lexpod.

This show is sponsored by Masterclass sign up at masterclass.com slash lex to get a discount

and to support this podcast.

When I first heard about Masterclass, I honestly thought it was too good to be true.

For $180 a year, you get an all access pass to watch courses from experts at the top of

their field.

To list some of my favorites, Chris Hatfield on space exploration, Neil deGrasse Tyson

on scientific thinking and communication, Will Wright, the creator of SimCity and Sims

on game design, Jane Goodall on conservation, Carlos Santana, one of my favorite guitarists

on guitar, Garry Kasparov on chess, Daniel Negrano on poker, one of my favorite poker

players, Phil Ivey gives a course as well, and many more.

Chris Hatfield explaining how rockets work and the experience of being launched into

space alone is worth the money.

By way of advice, for me, the key is not to be overwhelmed by the abundance of choice.

Pick three courses you want to complete.

Watch each all the way through from start to finish.

It’s not that long, but it’s an experience that will stick with you for a long time,

I promise.

It’s easily worth the money.

You can watch it on basically any device.

Once again, sign up at masterclass.com slash lex to get a discount and to support this

podcast.

This show is sponsored by ExpressVPN.

Download it at expressvpn.com slash lexpod to get a discount and to support this podcast.

I’ve been using ExpressVPN for many years.

I honestly love it.

It’s easy to use, press the big power on button, and your privacy is protected.

And if you like, you can make it look like your location is anywhere else in the world.

I might be in Boston now, but I can make it look like I’m in New York, London, Paris,

or anywhere else.

This has a large number of obvious benefits.

For example, certainly it allows you to access international versions of streaming websites

like the Japanese version of Netflix or the UK version of Hulu.

As you probably know, I was born in the Soviet Union, so sadly, given my roots and appreciation

of Russian history and culture, my website and the website for this podcast is blocked

in Russia.

So this is another example of where you can use ExpressVPN to access sites like the podcast

that are not accessible in your country.

ExpressVPN works on any device you can imagine.

I use it on Linux, shout out to Ubuntu, Windows, Android, but it’s available everywhere else

too.

Once again, download it at expressvpn.com slash lexpod to get a discount and to support

this podcast.

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 an 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 then disappeared and we’ve

somehow just never heard from him again.

So in 2008, so the white paper was the first, do you know if 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.

Yeah.

So one possibility is that it’s hellfinny because hellfinny was kind of also active

in the Bitcoin community and as hellfinny in those two beginning years.

Who is hellfinny, maybe you could say?

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 hellfinny.

Do you think he knew who Satoshi was?

If he wasn’t Satoshi, probably no.

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?

Like 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, like 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.

This is definitely interesting as I definitely just know a lot of people just by their internet

handles.

And to me, when I think of them, I see their internet handles and one of them has a kind

of profile picture as this kind of face that’s kind of not quite human with a bunch of psychedelic

colors in it.

And when I visualize him, I could just visualize that.

That’s not an actual face.

You are the creator of the second, well, he’s currently the second most popular cryptocurrency

Ethereum.

So 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.

Like your identity is known, like I’ve just verified it.

But from your perspective, what are the benefits in creating a cryptocurrency and then remaining

anonymous?

Like 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 kind of image of this kind of neutral thing that doesn’t

belong to anyone.

And that you created a project and because you’re anonymous and because you also disappear

or as unfortunately happened to Hal Finney, if that is him, he ended up dying of Lou Gehrig’s

disease and he’s in the cryogenic freezer now.

But if you pop in and you create it 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 like, oh, this person wrote this thing in some essay at age

16 where he expressed particular opinions about democracy.

And so because of that, this project is a statement that’s trying to do this specific

thing.

Instead, 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 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 and 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 high priests that just have themselves other 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 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 going to start doing it.

So 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.

So it’s a fair game, hopefully.

Well, 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

and instead of that person getting two points, that person gets four points and that’s also

fair.

But, you know, money is easy to kind of set up and it serves a lot of useful functions

and so 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.

And it’s also useful for denominating future payments, a unit of account.

A unit of account.

So what, if you look at the history of money in human civilization, just 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 or before and then leading up to cryptocurrencies,

that’s something you think about?

Yeah, and I think the big thing in the 20th century is kind of, we saw a lot more intermediation,

I guess.

The first part is kind of 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 kind of bank accounts

and then those things becoming electronic, people getting accounts with payment processors

that have bank accounts.

So what do you make of that, that’s such a fascinating philosophical idea that money

might not be backed by anything.

Is that like 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 societies 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, something like Twitter, you could theoretically

imagine that if all of the employees wanted to, they could kind of come together, they

would quit and start working on Twitter 2.0 and then the value of and just kind of build

the exact same product or possibly build a better product and then just kind of continue

on from there and the original Twitter would just not have people left anymore.

There is theoretically kind of code and IP that’s owned by the company but in reality

like good programmers could probably rewrite all that stuff in three months.

So the reason why the thing has value is just kind of network effects and coordination problems

right like these 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 and so there’s these kind of meta stable and of equilibrium in interactions between

thousands of millions of people that are just actually quite sticky even though if you try

to kind of 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 sort of the fundamental dynamic like the physics of

that stickiness?

It seems to work but 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 like one of the

kind of analogy of something as similar that you often see in textbooks as like what is

a government like if for example like 80% of people in a country just like tomorrow

suddenly had the idea that like the laws that are currently the laws of the government that

currently is the government are just people and some other thing is the government and

they just kind of start acting like it then that would kind of become the new reality

and then the question is well what happens if and if between zero and 80% of people start

believing that and like what is the thing you also you see is that if there is one of

these kind of switches happening is kind of revolution then if you’re the first person

to join then like 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 and so it’s definitely

is the sort of thing that you can kind of try to analyze and understand mathematically

but one of the kind of results is that the sort of like when the switch happens definitely

can be chaotic sometimes yeah but still like to me the idea that the network affects that

the fact that human beings at a scale like millions billions can share even the idea

of currency like yeah I’ll agree that’s just uh I know economists can model it I’m a skeptic

on the economic and uh it’s like uh so my my favorite sort of field maybe recreationally

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 we it’s such a messy

space that all the models that psychology or economics those different perspectives

on human behavior can have are are difficult it’s difficult to know how much that’s wishful

thinking and how much it is actually getting to the core of uh 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 like

human desires money is definitely very far from the only motivator um it is a big motivator

and that’s uh one of the closest things you have to a universal motivator think because

ultimately in like almost any person in the world if you ask them to do something like

they’ll be more inclined to do it if you also offer some uh offer them money right and that’s

uh like 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 like though a lot

of those other things are kind of but 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 the interplay of the other motivator from like Nietzsche

perspective is power do you think money equals power do you think those are conflicting ideas

do you think i mean that’s the one of the ideas that decentralized currency decentralized

applications are looking at is uh who holds the power yeah money is definitely a kind

of power and there’s definitely people who want money because it gives them power and

even if my money doesn’t seem to and if explicitly be about money a lot of things that people

spend money on are ultimately about a social status of some kind um so i mean i definitely

view those two things as an of interplaying and then there’s also money as just a way

of like measuring how successful you are like as a scoreboard right so this kind of gets

back to the game i mean like if you have four billion dollars then the main benefit you

get from going up one of the big benefits you get from going up to six million dollars

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 uh in the game of life it’s also a measure of

self worth it’s like how we it’s definitely how uh how a lot of people perceive it define

ourselves in the hierarchy of yeah and i’m not yeah not saying it’s kind of a healthy

thing that people uh define their self worth as money because it’s definitely kind of far

from a uh perfect indicator of how much you value you provide the society or anything

like this but i definitely think that like as a matter of kind of current practice so

much 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 economist’s utopia would be one

where kind of everything is incentive aligned in the in the sense that there aren’t enough

conflicts between what satisfies your goals and kind of what is uh good for everyone in

the world in the world as a whole what do you think that would um look like does does

that mean there’s still poor people and rich people there’s still income inequality do

you think sort of uh marxist ideas are strong do you think sort of ideas of uh objectivism

like where the market rules is strong like what is there is the different economic philosophies

that just seem to be reflective what utopia would be so i definitely think that existing

economic philosophies do end up kind of systematically kind of deviating from the utopia in a lot

of ways yeah like one of the big things i talk about for example is public goods right

and public goods are especially important on the internet right because like the idea

is with kind of money as this game where you know i lose a few coin a few coins and you

gain the same number of coins is that this usually happens in a trade where i lose some

money you gain some money you lose a sandwich and i gain a sandwich and this kind of model

works really well when the thing that we’re using money to incentivize this kind of private

goods right things that you provide to one person where the benefit comes to one person

but the like on the internet especially but also many many contexts and if off the internet

there’s actions that kind of 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 where the benefit goes to right so for example this podcast you know we publish

it and when it’s published you don’t have any fine grains control over like oh these

38 000 people can watch it and then like these other 29 000 people can’t it’s like once the

number goes high enough then you know people just like copy it and then when i write articles

on a blog then they’re just like free for everyone and that stuff’s even harder to prevent

anyone from copying so and aside from that things like you know scientific research for

example and even taking more pedestrian examples like climate change mitigation would be a

big one so there’s a lot of things in the world where you have these kind of individual

actions with enough concentrated costs and distributed benefits and money as a point

system does not do a good job of encouraging these things and one of the kind of other

things even kind of tangentially connected to crypto but kind of theoretically outside

of it that i work on is this sort of mechanism called quadratic funding and the way to think

about it is i kind of imagine a point system where if like if one person gives coin 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 kind of not in consideration for a

specific service to that person themselves then the number of coins received by that

person is kind of greater than just the sum of the number of coins that have 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 kind of square the

sum yeah and then you give that and the idea here would basically be that if let’s say

for example you 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 the like there is like basically the fact that kind

of you get more than the sub you get this kind of square of sum of these of square roots

of these tiny nodes that this actually kind of compensates for the tragedy of the commons

right this there’s even this kind of mathematical proof that it’s sort of optimally compensates

for it what is the tragedy of the common this is just this idea that like 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 what quadratic funding like

what’s in which context is this mechanism useful so obviously you said to combat the

tragedy of the commons but you know in which context do you see it as useful actually practically

yeah theoretically public goods in general right so like like services like what are

we what are we talking about what’s a public yeah so within the ethereum ecosystem for

example like we’ve actually tried using this mechanism like yeah 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 um some of the top ones that people supported there were um things

like kind of just online user interfaces that make it easier for people to interact with

ethereum um there was a documentation there were podcasts um there were kind of software

kind of clients like kind of implementations of the ethereum protocol of privacy tools

just like lots of things that are kind of useful to lots of people when a lot of people

are contributing for like funding a particular particular entity yeah that’s really that’s

really interesting is there something special about the quadratic the the the summing of

the square roots and yeah so another way to think about it is like imagine if n people

each give a dollar then the person gets n squared right um and and so each individual

person’s contribution gets multiplied by n right because you have n people and so that

kind of perfectly compensates for the kind like kind of n to one uh tragedy of the commons

i just wonder if the the squared part is yeah fundamental no it is um and i’d uh recommend

you go to on vitalik.ca i have this article called quadratic payments a primer and highly

recommended it’s kind of at least my attempt so far kind of explaining the intuition behind

this intuition so if we could can we go to the the very basics what is the blockchain

or perhaps we might even start at the uh the the byzantine generals problem and byzantine

fault tolerance in general that i i uh bitcoin was taking steps to uh providing a solution

for so the byzantine generals problem it’s this uh paper that leslie lamport published

in 1982 where he has this thought experiments where if you have two generals that are kind

of camped out on opposite sides of a city um and they’re planning when to attack the

city then uh 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 road some of those messages could end up being traders

and if things could end up happening and with just 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 um are the mess messages kind of just

oral messages um 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 traders among those generals and

if what like under what conditions you actually can’t agree when to launch an attack uh so

it’s actually a big misconception that the byzantine generalist problem was unsolved

so let’s say lamport solved it the thing that was unsolved though is that all of these solutions

assume that you’ve already agreed on and have fixed the 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 like the enemy could just be 99 percent of the

generals uh so right the um in the 1980s and the 1990s kind of the general use case

for distributed system stuff was more kind of enterprisey stuff where you could kind

of assume that uh you know you know who the nodes are that are running these kind of computer

networks so if he wants to have some kind of decentralized computer network that pretends

to be a single computer and that you can kind of do do kind 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 exactly almost a network of devices sensors so on

like in airplanes and i think uh like flight systems in general still use these kinds of

ideas yep yep um 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 uh kind of going back to the that presentation i made at defcon a few months ago where i said that the

things that satoshi invented with crypto economics um is this uh really neat idea that you can

use economic resources to kind of limit identity how many identities you can get and the uh

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 uh just uh you publish

a solution to a hard mathematical puzzle that takes some uh 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 in the white paper that defines bitcoin uh what’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 wire 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

checks pass then it subtracts the coins from one account and adds the coins to the other

account roughly so first of all the the the proof of work idea is kind of i mean at least

to me seems pretty fascinating it is i mean that’s a it’s kind of a revolutionary idea

i mean is is it is it obvious to come up with that you can use uh you can exchange basically

computational resources for for identity it’s uh it actually has a pretty long history it

was uh first proposed in a paper by uh mc cynthia dwork and nixon naor in 1994 i believe

and the original use case was uh combating email spam so the idea is that if you send

an email you have to send it with a proof of work attached and like 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 so the 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 this 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 um different nodes in the network periodically publish

blocks and a block is a kind of 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 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 it

a lot of possibilities of different ways to make sure there’s no funny stuff going on

there are indeed a lot of possibilities um 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 and have occasionally creating blocks building on top

of them 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 you’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 um 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 you know 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 the uh no in the bitcoin system

uh the nodes follow the longest chain um so if um this um attack had happened uh and when

the original chain had more than two blocks on it so if it was trying to kind of revert

more than more than two blocks then everyone would just would just ignore it and everyone

would just keep following the regular chain but here you know we have block two and we

have block two prime and so the two are kind of even and then whatever block um the next

block is created on top of so say block three is now created on top of block two prime then

everyone says uh agrees that block three is the new head um 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 right so how like

if we look at the general problem like how many what fraction of people who participate

in the system have to be bad players in order to mess with it truly like what’s your is

there is there a good number there is um well depending on kind of what your model of the

participants is and like what kind of attack we’re talking about it’s anywhere between

23.2 and 50 of what of all of the computing power in the network sorry so 22 and 23 point

between 23.2 and 50 and 50 can be compromised so like once your once your your portion of

the total computing power in the network goes above the 23.2 level then there’s kind of

things that you could mean things that you can potentially do and as your percentage

of the network kind of keeps going up then the your abilities as you mean things kind

of goes higher and then if you have above 50 then you can just break everything so how

how hard is it to achieve that level like it seems that so far historically speaking

it’s been exceptionally difficult so this is a challenging question um so the economic

cost of acquiring that level of stuff from scratch is fairly high i think it’s uh 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 uh 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 for 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 sha256 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 and the asics are just like specialized

circuits that contain and if circuits for evaluating this hash over and over again and

you have 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 oh this is a little bit an amazing

world another tangent i’ll come back to the basics but uh does quantum computing throw

a wrench into any of this very good question so uh quantum computers have two main uh kind

of families of algorithms that are relevant to cryptography one is shor’s algorithm and

shor’s algorithm is one that kind of 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 the kind of 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 like any kind of hidden order

groups it breaks a lot of kind of cryptographic nice things that we’re used to but the good

news is that for every kind of major use of things that shor’s algorithm breaks we already

know of quantum proof alternatives right now we don’t use these quantum proof alternatives

yet because in many cases they’re five to ten times less efficient but the crypto industry

in general kind of knows that this is coming eventually and it’s kind of ready to take

the hit and switch to that stuff when we when we have to the second algorithm that is relevant

to cryptography is grover’s algorithm and in grover’s algorithm might even be kind of

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 of the form find a number that satisfies some

property then if with a classical computer you need to try and if n times before 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 a6 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 it’s like a6 like you

said it would be exactly yeah so it would not necessarily break proof of work as a that’s

right yeah now the other kind of possible world right is that quantum computers have

a lot of overhead there’s a lot of a 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 the given proof of work will just keep working fine so beautifully

put so 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 is proof of work and then there’s just

the cryptography is 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 um and uh sorry to interrupt you have this

funny kind of uh story true or not is uh 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 uh i mean the event is true the fact that that’s the reason i do decentralization

is witty maybe just a small tangent do have you always had a skepticism of centralized

control is that sort of degree yeah has that feeling evolved over time or has that just

always been a core feeling that decentralized control is the future of a human society it’s

definitely been something that felt very attractive to me ever since i could have learned that

such a thing is possible it’s possible even yeah so great so you’re you joined the bitcoin

community in 2011 you said you began writing so what’s next started writing uh 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 like i went to first in new hampshire then spain other european places israel and

then san francisco and along the way i’ve 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 were colored coins which is basically saying that hey let’s not just use

the blockchain for bitcoin but let’s also like kind of issue other kinds of assets on

it and then there was a protocol called master coin that supported issuing assets but also

supported many other things like financial contracts like domain name registration and

a lot of different things together and i spent some time working with these teams and i quickly

kind of realized that this master coin protocol could be improved by kind of generalizing

it more right so the best the analogy i use is that the master coin 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 who how much money each

side gets by the way it’s a small pause what’s you say financial contract just the terminology

what is the contract what’s a 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 they depending

on kind of certain conditions like this could involve prices of assets this could involve

the actions of the two parties it could involve other things but they kind of get different

amounts of of assets out that just depend on things that happened so a contract is really

a financial contract is at the core it’s the it’s the core interactive element of a financial

system yeah there’s 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 uh 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 seven dollars or for every dollar that thing goes down you give

me seven dollars or something like that and 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

okay so uh so you were seeking to kind of generalize this basic uh framework of contracts

um so what does that entail so what what technically are the steps to creating ethereum

sure so i guess just to kind of continue a bit with this master coin story um so started

by kind of giving ideas for how to generalize the thing and eventually um this turned into

a much more kind of fully fledged proposal that just says hey how about you scrap all

your futures and instead you just um 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 it 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 what was the name of the programming language

i just called it ultimate scripting great uh so then i kind of went through a couple

more rounds of iteration and then the idea for a theorem itself started to form

um 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 kind of accounts that can hold assets um and like

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 and it goes after that um 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 sort of agreements self executing agreements self executing it’s so

cool that code is sort of part of this contract so that that’s what’s meant by smart contracts

yeah so how hard was it to build this kind of thing harder than expected um 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 um then i released it and a bunch

of people or i released the white paper the white paper the idea is there the idea the

white paper um a whole bunch of people came in offering the help 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 um thought

that it would be and then we started on this kind of much longer development slog of making

something that lives up to this sort of much higher level of expectations what are the some

of the is it fundamentally like software engineering challenges it was their social

okay so there’s social so so what are the biggest interesting challenges that you’ve learned about

human civilization and in in software engineering through this process

so i guess one of the challenges for me is that like i’m one of the kind of apparently unusual

geek schoolers and i’ve never treated with anything but kindness in school yes um 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 um but the um kind of the algorithm that i used for

finding cofounders for this thing was not very good it was sort of literally one computer

scientist called the greedy algorithm it’s sort of the first 15 people who replied back offering

to help kind of are the cofounders oh you mean like literally the the the people that for will

form to be the the founders cofounders of the community the algorithm i like how you call it

the algorithm yeah um and so what happened was that uh these um like especially as the project

got really big like there started to be a lot of this kind of infighting and there were a lot of

like i wanted the thing to be a non profit and some of them wanted to be a for profit

uh 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 uh just about six months later led to this big governance crisis and then

we kind of reshuffled leadership a bit and then uh the project kept on going then nine months

later there was another governance crisis and then there was a third governance crisis and 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 uh from my perspective there’s a lot of

different characters and personalities and egos and like you said uh i don’t know if you know i

also like to think that most of the world most of the people in the world are well intentioned

but the way those intentions are realized may perhaps come off as uh yeah as as negative like

what uh is there is there a hopeful message here about creating a governance structure for

cryptocurrency that uh where everyone gets along and after about four rounds of reshuffle like i

think we’ve actually come up with something that seems to be pretty stable and happy um i think uh

i mean i definitely do think that most people are well intentioned i just think that like 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 you think ego has a use like is ego always bad

it seems like sometimes does but then the ethereum research team i feel like we’ve found

also kind of a lot like a lot of very good people that are just kind of primarily just interested

in things for the technology and uh things seem to just generally be going quite well

yeah when you’re when the focus and the passion is in the tech so on the so that’s the human side

of things but the technology side like 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 just uh you know

there’s like the first law of software development which is that when someone gives you a timetable

i switch the unit of time to the next largest unit of time and add one and like we basically

fell victim to that um and uh and so instead of taking like three months it ended up taking like

20 months to watch the thing um and that was just i think underestimating the sheer technical

complexity of the thing um 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 um where proof of stake is so this uh 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 uh then it 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

um i know that a lot of people say that the idea of proof of stake is really appealing can you

maybe linger on it longer explain what it is sure uh so basically the idea is like if i kind of lock

up a hundred coins then i turn that into a kind of quote virtual miner and the system itself kind

of automatically and randomly assigns that in a virtual miner 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 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 really limits your participation is kind of how much coins you’re

kind of locking into this mechanism okay so interesting so that that limited participation

doesn’t require you to run a lot of compute does that mean that the richer you are so rich people

um are more like their identities more right and this stable yeah verifiable or whatever

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 because

i didn’t mean it and that statement is 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 um a way to mess

with the system of the proof of uh 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 that maybe take a small tangent one of the criticisms of cryptocurrency is the fact

that i guess 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 like what’s

your sense of the uh maybe i’m just under informed is there like legitimately environmental impact

from this yeah uh 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 what’s the dream of ethereum 2.0 what’s the the status of proof of stake is the 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 uh one is a proof of stake and the other is

what we call sharding um sharding solves another problem with blockchains which is a 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 um 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 in a very redundant and very secure that’s brilliant how

hard is that to implement and how hard is uh proof of stake to implement like on the technical level

yeah software level proof of stake and sharding are both challenging um i’d say sharding is a bit

more challenging the reason is that proof of stake is kind of just a change to the how the

consensus layer works sharding does both that but it’s also a change to the networking layer

um 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 and the client hears it like from uh on the networking layer and so

instead we have to have kind of subnetworks and the ability to quickly switch between subnetworks

and have the 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 hasn’t not yet been done in cryptocurrency

so most most of the networking layer in uh cryptocurrency is you’re shouting you’re like

broadcasting messages and this is more like ad hoc networks like yeah you’re shouting within

smaller groups smaller group but you have like a bunch of subnet like exactly then you have to

switch between oh man i’d love to see the uh so it’s a beautiful idea uh so from a graph

theoretical 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 uh who like how does that work how do people

collaborate build that kind of project is this like almost um like is there a software engineering

lead is there it’s like is it a legit almost like large scale open source project there is

yeah so um we have uh someone named uh 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 um like we also have this unique

kind of organizational structure where the ethereum foundation itself kind of 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 and like fun places like australia and and

and so uh you know you kind of just need a bunch of kind of almost nonstop cat herding to just

keep getting these people to kind of talk to each other and kind of implement this back make sure

that everyone agrees on kind of what 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 what’s your

sense of the timeline keeping in mind the previous comment you made about the sort of uh general

curse of software projects so ethereum 2.0 is split into three phases so phase zero just

creates a proof stake network and it’s actually separate from kind of proof of uh the 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 they

get to choose to move over if they want to then phase one adds sharding but it only adds sharding

of data storage and not sharding of computation and then after that there is kind of the merger

phase which is where the uh and if the accounts uh kind of smart contracts like all of the activity

and uh the existing eth1 system just kind of gets cut and pasted into eth2 and then the proof of

work chain gets forgotten and then and things all the things that were living there before just

kind of continue living inside of the proof of stake system so for timelines um phase zero has

been uh kind of almost fully implemented um and now it’s just a matter of uh a whole bunch of

security auditing and testing um my own experience is that right now it feels like we’re at about a

phase comparable to when we were doing uh the original ethereum launch when we were maybe about

four months away from launch so that’s just a hunch then that’s just a hunch yeah so how you

know it took it took like over a decade for people to move from python 2 to python 3 uh how do you see

the move from like this phase zero of for for different consensus mechanism do you see there

being a 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 in phase one the new chain

the get of deliberately enough 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 eth1 and then when the merger happens then the merger is a operation that

happens all at once so that’s kind of 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 um casper ffg is the consensus algorithm that we are using for

the proof of stake is there something interesting uh specific about casper ffg

like some beautiful aspect of it that’s uh there is so casper ffg combines together kind of two

different schools of a consensus algorithm design uh so the general two different schools of the

of this design are right one is uh 50 fault tolerant but dependent on network synchrony

so 50 fault tolerant but it didn’t tolerate up to 50 of faults but not more but it depends on

an assumption that all of the nodes can talk uh talk to each other within some

kind of limited period of time like if i send the message you’ll receive it within a few seconds

and the second school is 33 fault tolerant but safe under asynchrony which means that

like 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 um and that’s

fascinating how you would make that happen it’s uh definitely quite clever um i’d recommend the

uh casper ffg paper if you just search like archive as in like arxiv casper ffg it’s that’s

that’s an archive the paper is an archive yeah yeah who are the authors um myself and uh virgil

griffith that’s awesome i 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 is that at the core

is that a necessary component of the currency is that the tradition started with uh uh satoshi

nakamoto’s what do you make of it like what do you make of the future of that kind of sharing of

ideas i guess so yeah and it’s definitely something that’s kind of mandatory for crypto because like

crypto is all about making systems where you know you don’t have to trust the operators to

trust that the thing works and so if anything behind our system works is closed sourced and

that kind of uh kills the point and so there is the kind of a sense in which the fundamental

properties of the category of the thing we’re trying to build just kind of forces openness

but also openness just has proven to be a really great way to collaborate and then there’s actually

had a lot of kind of innovation and academic collaboration that’s just kind of happened

ad hoc in the crypto space the last few years so like for example we have this forum called

eth research that’s like e th r e s e a r and then dot ch um and there we publish kind of just

ideas in a form that’s kind of half formal like it’s halfway in between like it’s it’s a kind of

a text write up and then you can have math in it but it’s often and of much shorter than a paper

and 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 exactly they don’t require the kind of like 10 pages of a filler

and so introduction conclusion is not needed yeah and so instead you just kind of publish the idea

and then people can go comments on it and that’s brilliant yeah this has been great for us i think

i interrupted you was there something else on casper ffg that’s just casper ffg is just kind

of combines together these two schools um and so basically it creates this system where if you have

more than 50 that are honest then 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 um kind of get replaced but anything that was finalized by this kind of more asynchronous

process uh gets uh 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 tonight i’m going to be reading the casper

fg paper uh apologize for the romanticized question but what to you are some or the most

beautiful idea in the world of ethereum just something uh 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 um i think one

of the things that i really love about ethereum is also this concept of composability so this is the

idea that like 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

right so one really fun example of this is there was this game on ethereum called crypto kitties

that just involved kind of breeding digital cats yes and someone else created a game called crypto

dragons where the way you play crypto dragons is you have a dragon and you have to feed it crypto

kitties um and they just uh created the whole thing just like as an ethereum contract that you

would send these uh these tokens that are defined by this other ethereum contract and for the

interoperability to happen like the projects didn’t 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 uh you know different groups that

could be working and so you could see it scaling to just outside of dragons and kitties it could

be you could build like entire ecosystems of software yeah and in the 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 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 that retain a value equal to one dollar but they’re kind of backed by a crypt uh cryptocurrency

um then there’s decentralized exchanges um so when as far as the decentralized exchanges goes

there’s this uh really interesting construction that um has existed for about one and 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 yeah before you trade it’s at some points on the curve after you trade you just like

pick some different any to 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 um 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 so and uh the uh the fundamental the 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 so where do you think we’re headed

in terms of the role of currency the structure type of currency in the world i definitely expect

um fiat currencies to continue to exist and continue to be strong and i definitely expect

kind of fiat currencies to also digitize in their own way over the next couple of decades what’s

fiat currency by the way oh just like things like us dollars and like dollars and euros and yen and

these other things and they’re sort of backed by governments yes but i also expect kind of

cryptocurrencies 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 or if you’re in you know some very

high inflation place like venice will for example or if uh your country just kind of gets cut off

from um cut off from other financial systems because of like something the banks do

uh if any kind of if there’s even like some major trade disruption or something worse happens then

like cryptocurrencies are the sort of thing that just because of their kind of global neutrality

they’re just kind of 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 it feels like the centralized

control by governments of currency is limiting somehow maybe my naive utopian view of the world

it’s uh i mean it’s definitely very possible uh i mean i think like for cryptocurrencies being

the main form of value to kind of work well like you do need to have some much more price stability

than they have today and i mean there are now stable coins and there are kind of cryptic

cryptocurrencies that try to be more stable than existing things like bitcoin and ether but

and that just is to me the kind of the main challenge do you think oh that’s do you think

that’s a characteristic of this just being the early days it’s such a young concept the 10 years

is nothing in the history of money yeah and i think it’s a combination of two things right one

is um it’s uh uh it’s still early days but the other is a kind of more durable any kind of

economic problem which is that like demand for currency is volatile right 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 dominated in that currency but if you have

a currency where instead the supply can change and so the supply can kind of go up when there’s

more demand then you have the supply and of absorbing more of that volatility and so the

price of the currency would absorb less of the volatility on that topic so bitcoin does have a

limited supply a specific fixed supply yes uh what’s what’s the idea and ethereum doesn’t but

can you clarify just in the comments you just made is ethereum qualify to the kind of currency

that you’re talking about and being flexible in the supply i mean it’s a bit more flexible but

kind of the thing that you would really want is something that’s kind of specifically flexible

in response to how valuable the currency is and and i’d recommend you to look at stable coins

as well so like things like die for example it’s a new like how you spell that da i and what uh

what’s stable coins is it a type of cryptocurrency it is a type of cryptocurrency it’s um a type of

cryptocurrency that’s issued by a smart contract one of these ethereum computer programs that um

where the smart contract holds a bunch of ether and then it is basically like that people deposit

and then it issues die 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 some

or gives one set of participants a guarantee that they’ll be that they have this asset that can

that can be later converted back into ether but and like specifically at kind of the one dollar

rate and it has some kind of uh stabilizing network effects yeah it has this yeah it has

many kinds of stabilizing mechanisms in it that’s fascinating okay this is this world is awesome

technically just from a scientific perspective is an awesome world uh that i i often don’t see from

an outsider’s perspective what i often see is kind of uh maybe hype and a little bit if i may say so

like charlatanism and you don’t often see at least from my outsider’s perspective the beautiful

science of it and the engineering of it i mean maybe is there a comment you can make of who to

follow how to learn about this world without being um interrupted by the charlatans 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 you know like dan grad danny justin

and of the other people were and then and of the academic cryptographers and like before um

this today i was at stanford and stanford has the center for blockchain research and of dan bonet

this and really a famous and great cryptographer um was uh running it and there’s a lot of other

people there and there’s people working on zero knowledge proofs for example and um zuko from

zcash has one other person that i respect so i think if you follow the technical you crawl along

that yeah yeah you just start with the theory group and then look at the academics day bonet

and so on and then just cautiously expand the network of people you follow yeah exactly and

like if someone seems too too self promotional then just like remove them is there books

that are so there’s these white papers and we just discussed about about ideas being

condensed into really small parts is there books that are emerging that are kind of

good uh 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 leising announced

that there’s one about the history of ethereum um for technical ones and there’s andreas hansenopoulos

is mastering ethereum great so um let me ask you sort of uh sorry to to pull back to the

the idea of governments and decentralized currency

you know there’s a tension between decentralization of currency and the power of nations

um the power of governments you um what’s your sense about that tension can is there some rule

for regulation of currency you yeah is there like is the government the enemy of digital currency

of distributed currency or can they be like cautious friends i mean i think like

like the one thing that people forget is that it’s clearly not entirely an enemy because i think

if uh there hadn’t been so much government regulation on and if centralized uh issuing

centralized digital currencies then i like we’d be seeing things people like google and facebook

and twitter just kind of issuing them left and right and then like 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 uh clearly been kind of more of a help

just kind of set the stage for the end of the existence as a of the sector in some ways but

also and i think some of both you know like there’s definitely things that governments

and if can do in some cases have done to have hurt the spread of uh and of growth of uh of

blockchains there’s uh things that they’ve done to help and they’ve uh in some cases definitely done

a good job of kind of going after fraudulent projects and going after some of the projects

that have some of the kind of craziest and most misleading marketing um there’s uh also the

possibility that governments will end up using blockchains for a lot of different things like

you know governments yeah i mean they do a lot more than just regulating right like there’s also

like they have the kind of identity records and they have kind of like property registries

even just their own currency is like secure like 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 you know they

can leverage technology do a lot of good for our societies 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 uh they’re a few years behind it’d be

nice uh to help them catch up that’s a that’s that’s a always ongoing problem you um met

vladimir putin to discuss the centralized currency here you’re born in the where were you born

columbia it’s a city about 115 kilometers south of moscow in russia yes yeah i grew up in moscow

i mean that’s vladimir putin is a is a central figure in this part of the world so what was

that like meeting or meeting him what was that experience like he’s taller in photos than in

person yeah he’s yeah that’s right he’s 57 i think 58 maybe yeah that’s uh 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 like some of the other

end of government ministers and like he recommended some and uh some of them are are actually

kind of interested in trying to use um like blockchains to like for various government

use cases they kind of limit corruption and other things and i have like 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 right but you know when i when i listen to like um 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 know he like actually studied it carefully enough to think about it like he

internally like uh even if he’s just reading a wikipedia page like he really thought about what

this technology means did you get a sense that uh putin or some of the ministers like thought about

blockchain like thought about the fundamentals of technical like understand it intuitively

are they too old school to try to grasp it some are old school some are more new school

it depends it’s 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 i don’t know i’ve only talked to him for about one minute

so but sometimes you can pick up sort of insights there’s a quick comment there they’re about maybe

you can correct me on this but they’re about 3000 cryptocurrencies being actively traded yes uh and

ethereum is one of you know a lot of people believe that there will be the the main cryptocurrency i

think bitcoin is currently still the main cryptocurrency but ethereum very likely might

become that the the main one um is this kind of diversity good in the crypto world do you see it

sticking around should there should there be a winner like should there be some consensus globally

around uh bitcoin or around ethereum like what’s your 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 kind of right now the number should definitely be greater than one and

probably greater than two or even five um not three thousand not three thousand yeah and also

not even like 40 high quality platforms that try to do the same thing i mean there’s definitely

this range from just like one person who just like wrongly thinks that you can create a cryptocurrency

in like 12 hours and uh doesn’t even think about kind of the community aspects of maintaining it

going to uh people actually trying but only creating a really tiny one to like scammers

to people like making something that’s actually successful and then there’s a lot of different

categories of blockchain and you have project in terms of what it’s trying to do and what

applications it’s for um and i think the experimentation is definitely healthy

if you look at the two worlds it might be a little bit disjoint but uh the distributed

applications cryptocurrency and then 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 uh definitely

i’d have thought about things like in 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 they think um block there’s a lot of uh kind of common challenges

because in in both cases what you’re ultimately trying to do is you’re trying to kind of get a

simple system to direct a more complex system like in the case of uh this is drawing ai’s the

idea would be that the simple system is people and the complex system is well whatever um thing

uh the people uh the people end up kind of unleashing on the universe that’ll hopefully be

a great thing um and in the case of blockchains and of the complex well the simple thing is uh

the algorithm which is a piece of static and fully open source code and the more complex thing is

just the all of the different possible kind of human actors and the end of 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 oh i definitely i definitely think about ending my

own mortality so that’s if i gave you the option to live forever would you depends a lot on what

the fine birds is but i mean you know 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 uh um forever worth

of uh and of having you know fulfilling life with uh and of meaning like with with friends to uh to

spend the time with with kind of meaningful challenges to explore and individual interesting

things to be working on then i think absolutely move that’s uh beautifully put live forever

but uh 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 uh 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 express vpn and masterclass please

consider supporting the podcast by signing up to masterclass at masterclass.com slash lex

and getting express vpn at express vpn.com slash lex pod if you enjoy this podcast subscribe on

youtube review it with five stars on apple podcast support it on patreon or simply connect with me on

twitter at lex friedman 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’ve

got something really interesting thank you for listening and hope to see you next time