The following is a conversation with Vitalik Buterin,

his second time on the podcast.

Vitalik is the cofounder of Ethereum

and one of the most influential people

in cryptocurrency and technology broadly defined.

Quick mention of our sponsors,

Athletic Greens, Magic Spoon, Indeed,

Four Sigmatic, and BetterHelp.

Check them out in the description to support this podcast.

As a side note, let me say that Ethereum, Bitcoin,

and many other cryptocurrencies

have been taking a wild ride of prices going up and down

in the past few months.

To me, the prices were never as important as the ideas,

both technical and philosophical.

Cryptocurrency has the potential to empower billions

of people to participate in the global economy

in a way that resists the manipulation

by centralized power.

Also with smart contracts, layer two technologies,

data pools, NFTs, and of course,

integration of artificial intelligence

into the whole thing, we have the opportunity

to build tools and worlds that transform physical

and digital life as we know it,

hopefully minimizing the suffering in the world

and maximizing the fun.

This is the Lex Friedman podcast

and here is my conversation with Vitalik Buterin.

Let’s first talk about Shiba Inu, if we can.

Also known as Shiba Token, code SHIB,

for context, Shiba Inu was created in August 2020,

modeled off of Dogecoin by the anonymous founder

known as Ryoshi.

On May 10th this year, it had a market capitalization

of over 13 billion.

And maybe you can explain this, but in a crazy move,

you were given half of SHIB’s total supply.

You burned, a.k.a. destroyed 90% of it.

That’s worth $6.7 billion.

And you donated 10%, that’s worth 1.2 billion at the time

to an India COVID 19 relief fund,

saying you don’t want to be the locus of this much power.

This is fascinating.

Why and how were you able to walk away

from this much money and this much power?

So I should probably start by giving some of the backstory

around these coins and this concept of giving me coins.

So first of all, Shiba Inu, as you said,

is this kind of knockoff of Dogecoin, right?

And Dogecoin was this initial kind of fun coin

that was created back, I think, around 2014 or so.

And it was just created by Jackson Palmer

who put it out as a joke for a couple of hours

and a community formed around it.

And at the beginning, people didn’t take it very seriously.

I actually remember putting about $25,000 into Doge

sometime around 2016.

And I just remember thinking to myself,

okay, how am I going to explain to my mom

that I just invested $25,000 into Dogecoins?

And what even are Dogecoins?

The only interesting thing about this coin

is that there’s a logo of a dog somewhere.

But of course, that ended up being one of the best

investments I’ve ever made and it did really well.

And then at the end of 2020, Elon Musk, of course,

started talking about Dogecoin and the market cap

just shot up to about $50 billion.

Actually, it shot up multiple times, right?

Like the first time it went up from about 0.8 cents

to about like 7 cents.

And this just happened all in one day.

And I remember this was when I was still in Singapore

in the middle of COVID and I saw that the price

just went up by 1000% and I was like,

oh my God, my Doge is worth like a lot.

And so I immediately called up some of my friends

and told them to like drop everything and scramble.

And I sold half the Doge and I got $4.3 million,

donated the proceeds to give directly.

And a few hours after I did this,

the price dropped back down from about 7 cents to 4 cents.

So I managed to sell the Doge at the top

and I remember just that feeling

like I was such an amazing trader.

But then of course, the price went up from 4 cents

then to 7 and then 50 and just like Doge becoming

this big phenomenon where there’s even a lot of people

that have heard of Doge that have not heard of Ethereum

is just like something even I wasn’t predicting, right?

And so after that, of course, we have Doge

and then people are thinking, well,

if the leading DOG token is worth $50 billion,

then surely the second largest DOG token deserves

at least seven or 8 billion, right?

Like, I feel like that’s the kind of what the mindset

of these Shiba people is.

So that of course, they did this other gimmick, right?

Where they gave me half the Shiba token supply.

They were actually not the first projects to do this.

So around the end of 2020,

there was this weird project called Teller.

It’s like T E L L O R.

I think they’re a chain link competitor

or something like this.

But I remember they just like dumped $50,000

worth of their token into my wallet.

And then they had their Twitter army

just like basically run around saying,

look, look at Vitalik’s wallet, Vitalik holds Tellers.

He’s one of us, he’s a supporter.

And as soon as I discovered this,

I just like publicly sold the Teller tokens on Uniswap.

And this created a bit of a Twitter splat.

Now, the Shiba people were more clever.

The Shiba people, instead of dumping to that wallet,

they dumped to my cold wallet, right?

So in a cryptocurrency, right,

there’s this concept of like cold wallets and hot wallets.

Basically, like the thing that actually owns your money

is like this 80 digit number called a private key, right?

And a hot wallet is when that private key

is just stored in memory on your computer,

on your phone, really easy to access.

Cold wallet means it’s either written down

on a piece of paper or it’s on a computer

that’s just never accessed the internet, right?

So cold is very inconvenient,

but cold is also much more secure, right?

Because even if that computer has some viruses on it,

like it’s like air gapped,

it’s not actually going to be able to upload it.

So this cold wallet and like all the money

is out of the cold wallet,

so it’s safe for me to talk about my setup now, right?

But it was a laptop that was sitting in Canada.

And I also had two pieces of paper

where I wrote down two numbers

on those two pieces of paper.

One was with me, one was in Canada.

And if you add those two numbers together,

you get the private key.

So because of COVID travel restrictions,

and this cold wallets in Canada,

like it’s very difficult for me to actually access it, right?

And I’m not sure if they knew this,

maybe they just got lucky,

but basically they sent a lot of these dog tokens

into this wallet where it was very difficult

for me to access it.

But then I saw these dog tokens,

I saw more and more people talking about them.

And then at some point I realized that like,

hey, these things are worth billions of dollars.

And like, no, there’s lots of really good things

that you could do with that amount of money.

And it would actually be a waste to just like see it go.

So I made the decision that like,

I would actually power through

and figure out how to like safely,

like basically get my private key.

I actually had to call up my family,

tell them to read out their number

off of their piece of paper.

I entered that into a fresh laptop

that I bought from Target.

Then I put in my other number on my piece of paper,

added the two numbers together on the computer,

there’s the key.

And at the same time, like just scrambled for two days,

setting up a new wallet

where I could move my ETH to safely,

like getting people to be multisig partners,

just like doing all sorts of like stuff

that 10 years ago you would expect

to just be part of a cyberpunk science fiction novel,

but now it’s all real.

So you’re doing this all by yourself, essentially.

Most of it by myself.

So you have to keep it secret.

Right, and I needed my family to actually like go

and read the number on their piece of paper.

And then in my new multisig wallet,

like there’s other people that are signatories,

but I’m obviously not gonna reveal any details beyond that.

So I did this, right?

And I actually managed to like get the private key,

make the first transaction that would just move all my ETH

to the multisig wallet so it’s safe.

And then second transact,

put the private key on my main computer,

then started going in and just selling some

of the dog tokens and then just like giving them

to these different charities.

Now, at the time I actually did not even like have any idea

of how much you would be able to get, right?

Because like on paper, the dog tokens are $7 billion,

but like in reality, it’s a very liquid market.

Are you gonna crash it after you sell 1 million worth

or are you gonna crash it after 10 million?

Might you actually be able to get like an entire 200 million?

I had no idea.

So I definitely was just over the mindset,

like, okay, I mean, I’ll sell a bit,

maybe I get some ETH and then donated some ETH

to give well, donated some to other groups.

And then, okay, have some dog tokens.

Like I don’t have an easy ability to sell more myself,

but then I’ll just like give them to these groups

and like, hopefully they’ll do good things with them.

It was actually, I actually donated at 20%

then dumped 80%.

Yeah, so the COVID India group got one batch

and then there’s another group that got another batch.

And I don’t wanna say who they are

cause I think that they wanna announce themselves

at some point.

Sure.

Yeah, but you can see the fact

that these transactions were made on the blockchain,

but it was just very interesting and unexpected

and just an insanely crazy situation.

It’s been a couple of weeks.

First of all, thank you for helping me hang up some curtains.

This is a first for the podcast

and shows that you’re a truly a special person

to be willing to help.

But now a couple of weeks later,

do you regret any aspect of that decision?

I’m sure there is some things

that I probably could have done better.

Like I was actually talking to some of these charities

and I was impressed by just how much money they managed

to get out of selling some of these coins.

So I probably could have done better

by just talking more with the traders

and actually ensuring that they can do a better job

of maximizing the value of all of them.

But it was a very stressful time

and I did have to act quickly.

Like I did manage to make a lot of the donations

before, a few days before the great crypto crash happened.

So it was, it’s difficult to,

obviously there’s parallel universes in which I did better,

but at the same time,

there’s also lots of parallel universes

where because I hesitated more

and tried to spend more time thinking I missed

the opportunity.

So on that, it’s like a luck of the draw

and I’m just happy that everything was able to turn out

as well as it did.

But psychologically, you mentioned stress.

How hard was it?

It was stressful, right?

I think, well, one of the really stressful parts

was just the fact that I had to basically move

all of my funds, including the 325,000 ether

from one cold wallet into another hot wallet,

or sorry, into another multi SIG wallet.

And maybe the multi SIG wallet had a bug in it.

Maybe there’s like some mistake I’ll make in the middle

that causes the funds to get lost.

You know, that part was stressful.

And I was definitely stressing out for two days.

I mean, triple checking the new wallet.

I even did a bit of an audit of the code myself.

I wrote my own JavaScript to DAP to make confirmations

because Gnosis Safe didn’t work with the status wallet well.

So there was definitely,

that whole thing was definitely a bit of a marathon.

I was also a kind of definitely a bit worried

about or uncertain, I guess, how the public

and including the coin communities

would perceive the whole thing.

But I was actually impressed.

Like I, for every poster that was saying like,

no, you know, why did Vitalik like rug pull on us?

He was, his wallet was supposed to be a burn address.

You know, there’s like 10 people that are like,

oh, you know, I thought I was just in this

because it’s a fun pyramid gambling thing.

But instead I ended up being part of this, you know,

great public good thing for humanity.

And that’s like even more amazing.

So the amounts of that that I got was very impressive.

So, you know, all in all, you know,

I think the dog people did great.

The dog people.

Is there something you can extend

to the bigger picture of it

in the principles you apply to making this decision?

Is there some principles, philosophies

that you apply also to the decisions you make

around Ethereum?

I think a big one for me is just this idea

that crypto, you know, isn’t just an opportunity

to give people like slightly better ways

to save value in all of these things.

Like it’s also an opportunity to like basically create

these like new digital institutions

that could serve the public good in new ways.

And that’s something that I’ve been interested in

for a long time.

I actually even have this article in Bitcoin Magazine

back in 2014, where I basically suggested this idea

that, you know, you would have coins that represent causes

and like people would just like buy and accept those coins

because they support those causes.

So I think it’s called markets, institutions, and currencies,

a new form of social incentivization or something like that.

And I’m sure you can find it and throw it in the links.

So that was interesting to kind of see becoming real.

And like in general, I think, you know,

public goods are very important

and on the internet, public goods are even more important.

Like every single Lex Friedman podcast is just on YouTube

and no anyone can go and see it.

Like there’s no way for you to like, you know, sell it

and so that some people can see it,

but then other people can’t see it.

Like, you know, you could do that,

but then you’d obviously be reducing your impact.

So thank you for making the amazing Lex Friedman podcast

so freely available.

Well, that’s actually a tense thing is how do you do it

in a way that’s not controlled in a centralized fashion?

Cause actually YouTube feels free and open,

but it nevertheless is one company

making centralized decisions.

And the first time I realized YouTube is not forever

is when a lot of the Joe Rogan experience library

was pulled from YouTube as part of the Spotify deal.

And it made me realize we need to,

it’s like the realization that fiat money is centralized

is realizing that, you know, this is not forever

and you might want to come up with schemes to distribute it,

to decentralize the control of it

in a way that audio for podcasts is just an RSS feed.

Exactly.

And I think one of the kind of philosophical things

that I hope to achieve is kind of decouple

the concept of public goods,

which are incredibly important

and are the lifeblood of modern civilization

from the idea that there is or can be

one central organization that represents the public

and like perfectly understands and can impose their idea

of what is the good, right?

Like it’s, when people talk about public goods,

it just often comes with this baggage of, you know,

either centralization or conformism.

And I think like it doesn’t have to, right?

Like often the most important public goods

are the ones that are created by, you know,

the crazy individualists that disagree with everyone else.

So trying to make this kind of synthesis

where you combine the values of decentralization

and the values of open source,

but you’re not naive about it.

And like, you know, you realize that

for these things to be produced,

there needs to be a way for it to be sustainable.

There needs to be some way of supporting people

who are working these projects.

But at the same time,

you want to avoid that turning into

a vector of centralization,

like trying to sort of get all of the good things

without the bad things.

To me, that’s a big part of sort of

what my grand experiment in crypto is about.

And like, we are doing things

in different kinds of things for this, right?

Like there’s the Gitcoin Grants quadratic funding

in the Ethereum ecosystem.

There’s obviously these dog coins

that just happens, I guess, accidentally.

There’s other projects that, like for example,

you know, Uniswap has their Uniswap DAO

that just has a huge amount of funding.

And like, we haven’t seen yet how that’s going to be deployed,

but, you know, it could be potentially deployed

to do lots of really good and amazing things.

Do you see Ethereum as essentially a mechanism

to fight for social causes?

I definitely see Ethereum as being a mechanism

to fight for definitely some specific things

that are social causes.

Like just, you know,

the fact of creating an open financial system

that anyone can participate in

no matter where they are in the world,

that’s a social cause.

Just, you know, giving people the ability

to organize and create projects,

even if it’s five people in five different countries.

I think that kind of inclusiveness,

I think that’s a social cause

and it’s a core crypto value.

But then at the same time, like the other important

and if part of the magic of Ethereum

that you have to balance that against

is that it is also this open platform

where ultimately, you know,

the things that are on Ethereum

is just the things that the community makes of it.

Well, you kind of briefly opened the door,

so let’s go there.

When it comes to government regulation of crypto,

what’s the best case scenario?

What’s the worst case scenario?

In terms of, you know, as you’ve kind of mentioned,

Ethereum challenges the power centers of the world

and how do you see the interplay between governments

and this new technology that resists centralized power?

Best case and worst case.

The best case is that, you know,

blockchains continue to prosper

and we figure out scalability

so that people can actually start doing things on block,

like, you know, all of the amazing use cases

that people have been talking about

instead of today where a lot of the great stuff

gets priced out because, you know,

transaction fees are at five to $10

and then we see a lot of different amazing applications

happening on blockchains.

You know, it could be like DAO is creating new ways

for people to interact and organize with each other

and new ways for artists to get funded

and just all sorts of these amazing things

and there’s just enough public support

and just enough people that see that, you know,

look, crypto is clearly doing a lot of good things

and, you know, there are definitely areas

where there’s tensions,

but in those areas where there’s tensions,

like, there could be some kind of creative

and interesting approaches that get figured out, right?

Like, you know, the concept of corporate taxes,

for example, right?

Like, you know, that would disappear as a revenue stream

if theoretically corporations just all get replaced by DAOs

but, you know, like maybe there’s some other creative way

by which DAOs themselves can kind of be code,

you know, have some kind of encoded governance

that ensures that they have at least some kind of bias

towards serving the global public good

and, you know, maybe DAOs can do enough of that

that people are happy with it.

And, you know, there are going to be things

that people are unhappy about.

There’s always gonna be the people

that, you know, wants to surveil everyone

but if the kind of effect of crypto

from just empowering people is greater than that

and greater than that in a way

that people can just easily see,

then, you know, that would be a good scenario, right?

And we’ll just become kind of incorporated and accepted

the same way as happened with the internet.

But in the worst case scenario would, of course,

be just like people suddenly, you know,

flipping and going into moral panic mode

and just, you know, oh my God,

like this technology is used by like, you know,

insert bad group over the day.

And then I don’t think governments have the ability

to ban crypto to the extent of just complete

like preventing blockchains from existing

but they definitely have the ability

to really marginalize it, right?

Like if you just ban all exchanges,

like in ban all links from the Fiat ecosystem to crypto

and, you know, you ban all kind of mainstream employers

from accepting or paying in cryptocurrency,

then like you can successfully like turn it into a,

like, you know, a fairly kind of niche countercultural thing

that has much less impact than otherwise would.

So it’s somewhere between the good scenario

and the bad scenario.

I’m obviously hoping for the good.

Well, that’s interesting also the tension

between governments and companies.

Like if you have a bunch of billionaires

or a bunch of companies like Tesla investing in Bitcoin

and then governments resisting that,

it’s interesting who wins out in that worst case scenario.

And almost when companies and rich, quote unquote,

respectable people embrace cryptocurrencies,

Bitcoin, Ethereum, so on, even the dot coins,

it’s almost sends a signal to everybody else

that this is a revolution that’s here to stay.

On this one little tangent that you brought up,

this is almost an outdated idea, but it’s still with us,

which is cryptocurrencies are used for illegal activity,

for drugs, for crime, and so on.

Is there some sense that worries you

that if cryptocurrency, if Ethereum runs the world,

then making money from crime will be easier?

There’s always that possibility, but like at the same time,

I think if you look at, you know, the world as a whole

and like the way all the other technological trends

are going, like, you know, in person surveillance

is just going up every year, right?

Like if you commit a crime in, you know, meat space,

it’s getting harder and harder to get away with it.

So like, you know, if you wants to do something,

and this is something that’s just like happening

as a result of, you know, just better technology

and information transparency,

like a lot of it’s hard to prevent even if you really tried.

So the world where like things go dark to such an extent,

you know, as the police hawks sometimes like to say,

to such an extent that like, you know, oh my God,

the criminals are committing crimes with impunity

and we can’t see anything, like that just seems unlikely.

But, you know, on the other hand,

like the world where there just, you know,

is no privacy, for example, or the world where there just

like is no ability to kind of act outside of the confines

of, you know, mainstream institutions,

like that’s something that’s more realistic

and that seems like something that could lead

to a lot of kind of a lot of scary things, right?

And like, even from a government’s point of view, right?

Like I think governments over the last few years,

a lot of them, they’re very worried about sovereignty.

You know, they’re worried about like,

if their country is economies and, you know,

social environments are just completely dependent

on basically foreign tech companies controlled

by foreign governments, like, you know,

governments are not on team government, right?

It’s like, you know, the Indian government is on,

you know, team India, then the Russian government

is on team Russia and so forth, right?

So like, you know, they don’t want the US to be able

to like have this big backdoor into everything.

So, I mean, I do think that a balance is needed,

but at the same time, I do think,

I guess I definitely like worry more

about the possibility that just like without things

to like crypto kind of acting outside of institutions

becomes too impossible.

And I don’t even necessarily mean outside of governments,

even just, you know, outside of corporations,

like becomes too impossible.

And there’s just like terrible things

that come as a result.

I mean, if things going in the other direction,

like it obviously is a risk, but no,

at the same time, I think in the longterm,

like a crypto can potentially even like offer defenses

as much as attacks against that sort of thing.

Yeah, many throughout history,

many of the most destructive things came

from centralized institutions versus sort of

from the people operating in the shadows.

And, you know, I’ve been talking to a bunch

of psychedelics folks that people doing researches

like Rick Doblin in Johns Hopkins,

there’s a lot of exciting research on psychedelics.

And one thing you could say about operating

at the edge of legality,

it could actually accelerate the adoption

of particular things like whether it’s marijuana

or psychedelics, they can help people out.

It’s almost accelerates the policy.

It forces the policy to catch up

to where the people stand.

So there’s a positive way of doing things

that are in the gray area of legality

and creating a market that allows people

to in a safe way be able to participate

in this gray area of legality.

The other thing to keep in mind, of course,

is that the set of like the kinds of things

that just like payment processors as companies

try to restrict you from is much larger

than the set of things that’s illegal, right?

Like part of that is because they wanna be

super conservative and like the more layers you have,

the more they’re like conservative

because they’re scared of what the layer below them

will do to them.

Sometimes they have their own moral opinions

of various kinds.

They go after lots of people, right?

Like they make life really hard for sex workers,

for example, psychedelics, as you mentioned,

there’s a lot of activity,

even including stuff that is totally legal

that just there’s this like shadow

like PayPal credit card governments

or whatever you wanna call it.

And that makes it just hard to participate in this stuff.

So I think like reducing the number of intermediaries

is definitely normally a good thing.

All right, let’s talk about one of the most exciting

technologies like technically, philosophically,

like socially, financially in every way,

which is Ethereum 2.0.

There’s a million things to talk about,

but step one is probably a good thing to do,

which is can you briefly summarize your vision

how Ethereum 2.0 will make Ethereum more scalable,

secure and sustainable?

Sure, so I think recently we’ve actually been

kind of deemphasizing the ETH 2.0 branding, I guess.

So the reason behind that was that originally

we envisioned something more like a big grand event

where all the good things would happen at the same time

and it would be a new blockchain,

and it would be a new protocol

and people would have to take a lot of effort

to migrate over.

But later we’ve slowly changed the roadmap

over to something that’s much more incremental, right?

So proof of stake happens kind of over time

and then sharding gets added over time

and all of these features get added over time.

And so the experience for just a regular Ethereum user

still feels very seamless, right?

It’s like maybe a little bit more complex

than the hard forks that we’ve already done

from a user’s point of view, but not by that much, right?

So the big two things that are happening, right?

These are what used to be considered

the two flagship features of ETH 2.0

and now they’re just the flagship features

of the next devolution of Ethereum,

as proof of stake and sharding.

So proof of stake is a consensus algorithm.

It’s a, or a consensus mechanism, I should say.

The difference is that like an algorithm

is something that you run by yourself.

A mechanism is like interactions between people

and it could even include incentives and all of that.

So a consensus mechanism,

so by which nodes in the network agree on

which blocks came in, which transactions came in,

what order, make sure that once a block gets accepted,

it can’t get reverted and all of these things

that we expect from a blockchain.

So existing blockchains, including Bitcoin,

including the Ethereum of today,

and including a lot of them, they use proof of work, right?

So the reason why we need proof of anything

is because they serve this function that I call

an economic civil resistance.

So that’s obviously a big word for,

especially if you’ve never heard of symbols before,

but like the basic idea is, right,

that you have a network and you have lots of computers

that agree on like which blocks to accept.

And sometimes you get two blocks that get published

at the same time and you just have to agree on an order.

So there has to be some kind of voting game.

But then the question is, well, in this voting game,

who gets to vote, who gets to participate?

Now, you can’t say one person, one vote, right?

The reason why you cannot say one person, one vote

is because you need some kind of like authority

or some kind of mechanism to say who the humans are.

And if you don’t have that,

then a bad guy could just come in with a virtual machine

or with a computer that has on it 10 billion virtual machines

that have 10 billion virtual nodes.

And then just like say, look, I’m 99% of the network,

I should control everything.

So to prevent this, what proof of work and proof of stake

both do is they basically say, well, the weight of your vote,

like how much influence your votes have in the consensus

is proportional to like what quantity

of economic resources you bring in.

So in the case of proof of work,

you prove what economic resources you have

because your economic resources are computers

and you prove that you have them

by just running them 24 seven

using these hash algorithms, right?

So this does solve the problem, right?

Because in order to attack the network,

you have to come in with more computers

and more money invested into computers and electricity

than the rest of the network puts together.

And that’s extremely expensive.

In proof of stake, instead of relying on people

with computers that are just constantly cranking out

hashes 24 seven, as you’re like a unit of economic resources,

you just use like holdings of coins inside the system, right?

So all of these blockchains,

they have some kind of coin in them.

Bitcoin has Bitcoin, Ethereum has ether,

they all have a coin.

So why not just use that as the economic resource

that you’re using to measure participation.

So that’s like the core distinction

between proof of work and proof of stake.

I like proof of stake

and I’ve liked proof of stake for many years,

basically because like it just requires

much less ongoing resource consumption, right?

Like with proof of work,

you have to like actually go and buy these physical computers

and these days, they have specialized hardware,

ASICs, application specific integrated circuits.

You have to go produce them and you have to go buy them.

And unless you have millions of dollars,

you have to buy them from one of these other people

who creates them and those other people often end up

taking a huge cut of the profits themselves.

And then you have to plug them in,

you have to just burn all of this electricity

that’s just running 24 seven.

So it consumes a huge amount of energy, right?

And not just energy, it also,

just to create the hardware, right?

Like people focus a lot on energy,

but like actually about half the cost of proof of work

mining is the cost of the hardware.

So hardware is a very big deal too.

And you need this really big and powerful,

very specialized hardware,

another kind that fills up these big warehouses.

So proof of stake,

you don’t really need that much electricity,

you just need just a little bit to run a regular computer.

You can run proof of stake validators on computers

that you already have.

So it’s just much less resource intensive.

And like, this is good for a few reasons, right?

Like one is, you know,

the kind of environmental rationale that, you know,

you’re not breaking the environment.

The second is that you’re not taking away electricity

and like other resources from other people.

I mean, like right now there’s,

I think just today I saw a story about like Iran

wanting to shut down some Bitcoin mining

because it was just grabbing up so much electricity

that it was, you know, outbidding the nearby towns

and they just didn’t have enough.

And then there was like Chia,

the one that’s doing proof of like hard disk mining

basically is just like grabbing up so many hard disks,

there’s a shortage, right?

So that’s the second reason.

And then the third more selfish reason is that

because participating in consensus

does not require so much energy expenditure,

you don’t need to pay people as much to participate, right?

So like Bitcoin and Ethereum,

they both issue somewhere around 4% of the total supply

every year right now to miners.

So Ethereum is about 4.7 million ether

and the current supply is about 115 million.

But with proof of stake,

like we expect it’ll be somewhere between 500,000

and one million per year.

So that means, you know,

the supply doesn’t have to increase so quickly.

So.

One of the pros that the people sort of argue for the proof

of work is that it is secure

because it’s much more difficult to sort of,

as you’ve highlighted, it’s difficult to participate.

Is there, what are your thoughts about the security

of the proof of stake mechanism?

Is there ways to make it secure?

So I think proof of stake is very secure

because in order to be able to attack the system,

you needs to have like basically as much stake

as the rest of the network, right?

So that means like right now, for example,

we have 5 million eth staking.

So you have to come up with 5 million eth

and then join the network.

And then the other, so 5 million eth is a lot, right?

It’s like, how much is it now?

Like $15 billion.

So that’s actually more than I believe the cost

of attacking the Bitcoin network.

And then the second thing is that recovering

from attacks is much easier in proof of stake

than in proof of work, right?

Because in proof of stake, you have, like, first of all,

we have for many kinds of attacks

that you do against this network,

we have this concept of like automatic slashing, right?

Which basically means that in order

to like revert a finalized block,

so if there’s one block that’s like accepted by the network

and you try to convince the network

to kind of revert that block and accept a different block,

in order to make that kind of attack,

you basically have to have your validator,

like a big portion of your validator

assigned to conflicting messages.

And this is something that like once these messages

are on the network, like you can go and prove,

like, look, these people did it.

And so we have this feature in the protocol called slashing

where you basically take all these people

who provably misbehaved and you burn their coins, right?

And you don’t burn anyone else’s coins.

Now, there are other cases, like for example,

if instead of reverting blocks,

the attack just tries to censor everyone, right?

Then everyone who got censored would just like

basically create the minority chain

and then the community would basically

have to do a soft fork, right?

They would just have to say like,

look, this chain is clearly attacking us,

this chain is the one not attacking us,

and so we’re gonna join this chain.

And then what happens is that on that new chain,

the attackers also lose a lot of coins, right?

So the difference between proof of stake and proof of work

is that in a proof of stake system,

like you can identify specific participants

and you can say, you know, these,

and like this isn’t like, you know,

a human going in and saying, I don’t like you,

I don’t like you, I don’t like you,

this is like automated, right?

So the slashing process is automated.

Yes.

Is there ways it can go wrong?

So that’s a painful process where the coins are burned.

It is painful, yes.

I think, I mean, the one big unknown, of course,

is like if an attack actually happens

and like if an attack happens that requires the community

to actually choose one of these minority forks,

then like what would the community

actually successfully coordinating on this look like, right?

Like it’s like, you know, we can talk about it

and we can, you know, write like science fiction novels

about it, but like until it’s happened,

you don’t really know the details of like what it looks like

and how difficult it is.

What are the channels of communication for the community?

If you can enlighten me a little bit, like what, you know,

in many ways in the political realm,

Twitter is often used as a way to kind of have

these emerging phenomena of large groups of people

coming to a consensus about a particular idea.

And then there’s battle for consensus.

What’s in the Ethereum community, how do people,

what are the sources of natural language based communication

that have an emergent belief structure that you would say?

Or is it all through money?

Is it all through trading that the communication happens?

There’s definitely talking as well.

I mean, like we have to agree on protocol changes somehow,

right, like there’s Twitter, there’s Reddit,

there’s GitHub, there’s all of the various Ethereum forums,

Ethereum magicians, Ethereum research.

There’s just in person communication.

Then there’s just kind of like the hidden web

of everyone talking to everyone on Telegram or Signal.

So it’s like some of everything, right?

But I think like the thing to emphasize around like,

can you actually come to consensus on, you know,

whether or not to fork the chain

because the attacker is censoring everyone,

just for example, is like everyone who’s running a node

is going to see almost the same thing, right?

Like they’re gonna be off by a few seconds

and like maybe they’ll be off by a few minutes,

they’ll disagree by a few minutes.

But like if it’s a serious attack, you know,

people are gonna know, right?

It’s not like one of those things where, you know,

oh, we’re trying to agree on like, I don’t know,

did Epstein kill himself or like some random political fact

where like in reality, no one knows a single thing

about what’s actually going on and they’re all speculating.

Like it is much more visible, right?

So we do have that, but you know, at the same time,

I’m happy to admit that like,

these are fairly untested mechanisms,

but like at the same time,

they’re also untested mechanisms in Proof of Work, right?

And like in Proof of Work, it’s even harder

because in Proof of Work, you don’t have the ability

to like identify and say, like, you know,

I’m going to these miners attacked

and so we’re not gonna let these miners in,

these miners did not attack, so we’re gonna keep them in.

Like you have to pretty much, you know,

either take out none of the miners

or you do a fork that changes the Proof of Work algorithm

which takes out all of the miners, right?

So the economics of like recovering from attacks

in Proof of Work, at least to me,

actually do seem like more unfavorable,

but you know, I’m sure the Proof of Work people you talk to

will give a very different and contradictory opinions

and that’s totally fine and amazing.

Some people describe MEV, minor extractable value,

as an existential risk to Ethereum.

What is MEV?

How important is it to solve MEV?

If it’s important, what ideas do you have?

Sure, how about after this one,

we’ll also talk about sharding because it’s amazing

and it’s part of you too.

Yes, we’ll return back to sharding

which is, we’ll return to the big picture

of the scaling problem as you mentioned.

I love this conversation, you know,

depth first search instead of breadth first.

So basically, okay, MEV, minor extractable value,

it is not different in Proof of Work and Proof of Stake,

right, so like if you want to call it, you know,

block proposer extractable value,

like it sounds a lot sexy, but you know,

we can call it BPEV instead of MEV, who cares?

So this is a problem in both Proof of Work

and Proof of Stake?

Yes, so the basic idea is that if you have the ability

to choose which transactions go into a block

and in what order, then you have the ability

to like take advantage of that position for economic gain

and for economic gain in a lot more ways

than just collecting transaction fees, right?

Like for example, there’s decentralized exchanges on chain

like Uniswap and like let’s say the price

of ETH versus USDC was 2,700 the previous block,

but then there was a bit of a market drop

and now it’s 2,680 where you can go on Uniswap

and you can just like gobble up the entire part of,

you know, the automated order book

that’s like between 2,700 and 2,680, right?

And that’s, and then at the same time, you like run a bot

and you know, you buy some ETH back at 2,680

and you’ve just like made about $10 of profit, right?

So, or well, $10 times, you know, whatever the depth is.

Right, so there’s lots of little things like that.

There’s also things that involve like front running

other people’s transactions.

So one example of this would be that if someone sends

a transaction that says, I don’t know,

buy me five ETH for whatever price that you can get,

then, but with a maximum of, let’s say $15,000,

then you can go and like, you can send each,

put a transaction right in front of that transaction

and you can like buy up that ETH first

and then you resell it to him at, you know,

$15,000 minus one, you know?

So there’s.

Then you get to make a little bit of money that way.

Exactly, so there’s a lot of these different

like arbitrage, front running, back running,

these different tricks that allow block proposers to.

To get some percentage on top, like overhead.

Exactly, and the reason why this is a challenge

is because it’s, I mean, like first of all,

it sometimes degrades user experience

because users get no less favorable trades,

but there are sometimes ways to like mitigate that

for applications, sometimes it’s not that bad,

but like the bigger risk that I think some people consider

more existential is that there’s just much more

economies of scale in figuring out

how to extract all this revenue, right?

Because if you’re just collecting transaction fees,

there aren’t really economies of scale,

there aren’t really benefits to centralizing, right?

Because it’s a very simple formula,

you just like grab up the transactions that pay you the most.

But with MEV, there’s all these sophisticated algorithms

and if you have lots of money,

then you can hire really smart people

to make amazing algorithms and then you can use

the other half of your money to get a lot of mining power

or a lot of stake and you get a lot of opportunities

to use your even better algorithms.

So there’s this risk that like as a result of this,

mining is basically, or even validating proof of stake

is going to centralize.

So I think the ecosystem is best replied

to this sort of risk and it’s the direction

where projects like Flashbots are going already

is if you can’t eliminate the centralization,

then you try to firewall it, right?

And the way that you firewall it is you basically say,

we’re going to try to deliberately create a marketplace

where people can just do the complicated work

of creating what are called bundles,

like bundles of transactions that are very profitable, right?

And then at the other side of the market,

you just have like block proposes reminders

that are just dumb notes.

And they go and ask the what are called searchers,

the bundle creators, and they just ask like,

hey, like how much can you give me if I put in your bundle?

And then they just take the highest offer, right?

So you sort of separate out the task

and you have the easy part and then you have the hard part

and you have like this special class of actor

called a searcher that does the hard part

and then the easy part, the people doing the easy part,

which is just miners and validators,

they kind of just talk to all the different people

doing the searching and they just accept the highest bidder.

So this is also just like an interesting example

of like economic design philosophy, right?

Like sometimes you can’t just like make centralization

go away, sometimes it’s inevitable,

but no, at least you can try to kind of contain it,

you can direct it or you can even sort of firewall it away

from core consensus,

the parts that really do need to be decentralized.

But you don’t see it as an existential risk,

it’s just a bit of a problem

that it has to be constantly dealt with.

It’s a risk, like there’s obviously a risk

that it’s a very severe problem

and that even this flash bots approach

has some fatal flaw or whatever.

But we’re definitely approaching it

with the mindset of this is a problem

and like, yes, we do have to do some work to solve it,

but we’re doing it and so far it’s being solved.

Okay, let’s talk about the other really, really fascinating

part of the future of Ethereum.

Let’s not call it Ethereum 2.0,

but the future of Ethereum

that also may require a hard fork,

I don’t know, you can correct me on this,

is well, broadly ideas for scaling.

Yes.

And more specifically sort of layer two

or layer one and two intersection ideas

of how to achieve scaling.

And at the core of that is the idea of sharding.

So first, what is sharding?

Okay, so there’s two major paradigms

for scaling blockchains, right?

As you said, layer one and layer two.

And layer one basically means

make the blockchain itself capable

of processing more transactions

by having some mechanism by which it can do that

despite the fact that there’s a limit

to the capacity of each participant in the blockchain.

And then layer two says,

well, we’re gonna keep the blockchain as is,

but we’re gonna create clever protocols

that sit on top of the blockchain

that still use the blockchain

and then still kind of inherit things

like the security guarantees of a blockchain.

But at the same time, a lot of things are done off chain.

And so you get more scalability that way.

So in Ethereum, the most popular paradigm

for layer two is rollups

and the most popular paradigm for layer one is sharding.

So one way to achieve layer one scaling

is to increase the block size.

Yes.

Block size wars, quote, unquote.

And you actually tweeted something about,

people are saying that Vitalik changed his mind about,

he went from being a small blocker to a big to small.

But you said, I’ve been a medium blocker all along.

So maybe you can also comment on where,

on the very basic aspect before we even get to sharding

of where you stand on this block size debate.

Sure.

So the way that I think about the trade off

is I think about it as a trade off

between making it easy to write to the blockchain

and making it easy to read the blockchain.

So when I say read, I just mean,

have a node and actually verify it

and make sure that it’s correct and all of those things.

And then by write, I mean send transactions.

So I think for decentralization,

it’s important for both of these tasks to be accessible.

And I think that they’re about equally importance.

If you have a chain that’s too expensive to read,

then everyone will just trust a few people

to read for them.

And then those people can change the rules

without anyone else’s permission.

But if on the other hand,

it becomes really expensive to write,

then everyone will move on to basically

second layer systems that are incredibly centralized.

And that takes away from decentralization

and self sovereignty as well.

So this has been my viewpoints

pretty much the whole time, right?

It’s like, you need this balance

and going in one direction or the other direction

is very unhealthy.

In the Bitcoin case, basically what happened

was that Bitcoin originally,

at the very beginning, it didn’t really have a block size.

It just had an accidental block size of 32 meg,

or block size limit of 32 megabytes

because that just happens to be the limit

of the peer to peer messages.

But then…

Interesting, I didn’t even know that part.

Yeah, but then Satoshi back in 2010

was worried that even 32 megabyte blocks

would be too hard to process.

So he put the limit down to one megabyte.

And I think the…

I put, you mean sneaked in there.

Yeah, just like made an update to the Bitcoin software

that made blocks bigger than one,

I think it’s a million bytes invalid.

And I think the impression that most people had at the time

is that this is just a temporary safety measure.

And over time, as we become more confident in the software,

that limit would be raised somewhat.

But then when the actual usage of the blockchain

started going up, and then it started going up

first to 100 kilobytes per block,

then to 250 kilobytes per block,

then to 500 kilobytes per block,

there started coming out of the woodworks this opinion

that no, that limit should just not be increased.

And then there are all of these attempts at compromising.

First, there was a proposal for 20 megabyte blocks.

Then there was the 248 proposal,

which is a bit ironic because the 248 proposal

started off being a small block negotiating position.

But then when the big block people came back and said,

hey, aren’t we gonna do this?

They’re like, oh, no, no, no, we don’t want them.

We don’t want the block size increases anymore.

So there were these two different positions,

the small blockers.

I think they valued one megabyte blocks for two reasons.

One is that they just really, really believe

in the importance of being able to read the chain.

But two is that a lot of them really believe

in maintaining this norm of never hard forking, right?

So the difference between a hard fork and a soft fork

is basically that in a soft fork,

any block that’s valid under the new rules

was still valid under the old rules.

So if you have a client that verifies

according to the old rules,

then you’ll still be able to accept the chain

that follows the new rules.

Whereas with a hard fork,

you have to update your code in order to stay on the chain.

And look, they have this belief that soft forks

are kind of either less coercive than hard forks,

which by the way, I completely disagree with.

I actually think soft forks are more coercive

because basically they force everyone who disagrees

to sort of go along by default.

But, or they have this opinion that there’s like,

it’s more difficult to abuse soft forks

to do really mean things like,

or that like completely violate people’s expectations,

like increasing the supply, which is like,

I think there is some truth to that.

So because of these reasons,

they just say we’re only going to do soft forks

and we want to just not do any hard forks.

And they eventually discovered this idea

called segregated witness that allows for like

a very tiny block size increase

to like the equivalent of about two megabytes

with a soft fork.

It’s this really like weird and devious trick.

Like basically what they do is they take the signatures

of transactions and then they put them outside of the block.

And then they add an extra rule that says that like every,

for a block to be valid,

the block has to come with a separate,

like basically extension block

that contains all of the transaction signatures, right?

So when you measure it, according to the old rules,

like, hey, it adds up to less than a million,

but actually there’s this extension block

that the old protocol doesn’t even know about.

So.

It’s a hack that seemed to work to in a small way

extend the size of the block size.

So the small block side was like happy

with these very low levels of block size.

And then the big block side wanted to expand to,

at the very least go to four megabytes,

then maybe go maybe eight, 20.

There’s disagreements within there as well.

I definitely was favoring the big side

the whole way through, as you can probably tell, but.

Even though, so the argument against the big

is that it makes things more centralized.

Yes, because fewer people can run a note

that verifies the chain.

And also because any of these things

would require a hard fork

and hard forks are inherently risky.

Do you think there’s truth to that?

I’m pro hard fork.

I think hard forks are actually like

in a political economic sense,

they’re better than soft forks.

Well, let’s, okay, okay.

I think that’s a beautiful principle as stated

that soft forks may be more coercive than hard forks.

This is not just about cryptocurrency.

This is about politics and life.

That’s fascinating.

So you’re okay with hard forks.

In fact, you think hard forks is the right way

to make changes because then everybody’s forced

to make a decision.

Do you accept this change or not

as opposed to ideas being sneaked in behind the door

and that decision is forced on you?

Exactly, yeah.

Okay, so, but hard forks, some people say,

this is when they talk about sort of Ethereum,

is there’s some aspect to a hard fork

where you’re trying to upgrade a,

what is it, airplane while it’s flying.

And.

I think soft forks are also upgrading an airplane

while it’s flying.

But it’s a smaller upgrades.

That’s, there’s some truth to that.

Like there’s definitely a bit more risk of like a split

as a result of a hard fork than as a result of a soft fork.

And the split is highly undesirable, right?

Well, it depends.

Like if it’s a split because of a bug, then that’s horrible.

If it’s a split as a result of political differences,

then I think like a split is better than, you know,

one side being forced to basically just like suck it up

and accept the majority position even if it really hates it.

Well, there’s also political connections

throughout the history of the United States.

It’s like sometimes groups of people

that strongly disagree with each other

should be forced to work it out.

Even if they, even when a split seems like an easy thing

in the short term.

It depends.

And I think like, well, for blockchains in particular,

the costs of people being able to like peacefully do their,

go off and do their own thing are much lower, right?

Like, you know, okay, if you have a country

and you have two groups, then like often enough,

like fighting out the new rules requires, you know,

a civil war requires everyone to move and so forth.

But no, on a blockchain, like, you know,

the costs are lower and so.

So if you were to look at the way things worked out

with the block size wars and there was a split,

what is it, Bitcoin Cash and all this?

In Bitcoin.

Yeah.

Would you, like you looking, putting on your historian hat,

you mentioned offline you like Dan Carlin.

So if Dan Carlin wanted to do an episode

on the block size wars, do you think it could’ve turned out

better or do you, are you okay with the way it turned out?

I’m definitely disappointed with what happens

with the block, with the big block side.

I think the source of my disappointment is that like,

one of the things that you notice when just looking at

like this political disagreements generally,

especially when you have environments where, you know,

they’re authoritarian or like single party dominated

and then there’s some opposition party

and the opposition often has like very legitimate grievances.

But at the same time, the thing you notice is that often

enough the opposition just sucks, right?

Like it just doesn’t have, you know, political capacity.

It doesn’t have like the ability to come up with policy

because it’s entire culture is like designed around

resisting much more than it’s designed around like,

you know, actually debating serious policy trade offs.

And I worry or I guess not so much worry

because it’s already happened.

I unfortunately think that Bitcoin Cash ended up

being a victim of this, right?

Like first, no, there was a split with Bitcoin Cash.

And then of course, Craig Wright came in

and you know, Craig Wright was this basically scammer

who just keeps on pretending that he is Satoshi Nakamoto,

the inventor of Bitcoin.

Hey, Craig Wright’s legal team, do you hear me?

Yes, I still think your client is a scammer.

So sue me.

This is definitely gonna be death for a search

because I gotta ask you about Craig.

I guess these people have been contacting me

and I’m trying to figure out like,

what is up with this human being?

So for people who don’t know, there’s somebody who is,

let’s start this Satoshi Nakamoto, who is the creator

of Bitcoin, who’s anonymous.

And actually most really big people

in the cryptocurrency space do not like yourself

and others do not dare claim that they are even

for fun Satoshi Nakamoto.

In fact, if Satoshi Nakamoto is still alive

and is like, if say you were Satoshi Nakamoto,

it seems like the thing he would do is probably

or she is trying to remain anonymous.

On the flip side of that, there’s a guy named Craig Wright

who continually keeps claiming that he is in fact

Satoshi Nakamoto and keeps suing a lot of people.

So on him, if we could just linger on him,

what do you make of this character?

What are we supposed to make of this character?

Should he be ignored?

Is there any possible truth to his claims?

What do you make of him?

The analogy that’s at the top of my head

will get a bit political, but that’s fine.

You’ve had Michael Malice.

So I guess I view Craig Wright

as being kind of like a Donald Trump figure

in that he’s not very intellectual,

but I think he gets a big audience

because he says things that play to the resentments

that people have and he says things

that people wants to hear.

Like in the wake of this block size war,

the big blockers did feel very disenchanted.

They felt that Bitcoin always had this vision

that we were supposed to just keep increasing

the block size and Bitcoin is peer to peer cash.

It says so in the white paper.

And then this elitist clique of core devs

just came in and said, no, no, no,

we’re gonna impose this totally different vision.

And if you ever want your scalability,

you’ll have to wait for us to create

this totally unproven fancy technology

called the lightning network

that works under completely different principles.

And they were very angry at this.

And I mean, I think a lot of that anger is justified,

but at the same time, when people are in that mental state,

like it’s very easy for you to just kind of like latch on.

And if you find someone who expresses anger

at the same things that you’re angry at,

and also like it seems like someone who’s strong

and seems like someone who might be good to rally around,

it’s very easy to just like get behind that.

But that extra part about it where he’s

Satoshi Nakamura, I don’t understand why that’s necessary.

I think that’s, he could have done it without that,

but that just, it’s a marketing strategy.

Like it sort of gives him more salience.

Like there’s other big block personalities, right?

Well, what’s the difference with Craig Wright?

He’s not just a big block personality,

he’s potentially Satoshi.

And he did say all the big block things, right?

Like he talked about how,

oh, the concept of a fee market is fundamentally

like economically wrong and it should be a free market

and you should be able to have blocks as big as you want.

So like he repeated all the talking points.

And so a lot of people were kind of sucked into that, right?

And so he unfortunately was able to basically dominate

a big part of the Bitcoin cash community for a long time.

And then eventually, of course,

more and more people started to catch on.

He would just say technical things

that are completely wrong, right?

Like one example of this that I remember

is that he mixed up the concept of 256 bits

and two to the power of 256 bits, right?

So the difference is, it’s like the difference

between 80 and the concept of 80 digit numbers, right?

And because of this, like he made this arguments

that said that Bitcoin’s elliptic curve

is friendly to cryptographic pairings.

Like you don’t have to understand what that is,

but if you want to know,

I have articles on both at Vitalik.ca.

But basically he made this like technical argument

that really hedged on this point.

And then when people pressed him on,

it was like, yes, but no, no, like what?

Look, exactly, the height is like what?

Two to the 256 bits.

That’s a very tiny amount of information.

No, no, no, no, two to the 256 bits

is more than the amount of information in the universe.

And like he equivocated and kind of like preyed

on people’s inability to understand

that mathematical nuance.

And I called him out.

And eventually I even called him out in person

at this conference in Seoul.

Like I just stood up and asked,

hey, conference organizer,

why are you letting this fraud speak at this conference?

And I remember even some big blockers at the time

getting angry at me.

But eventually they did get rid of him.

And then Craig, well, basically Craig Wright

was forced to split off

because the rest of the community refused

to accept some network change that he wanted.

And so then there was the BCH and BSP.

And then in the Bitcoin Cash community,

there was this drama of,

are they going to add a developer fund

where they redirect 12 and a half percent of the revenue

from the miners to the devs?

And according to the libertarian not aggression principle,

is this technically theft?

Like his understanding of the technical depths

of cryptocurrency was lacking in a way

that Satoshi Nakamoto certainly would not.

Yes, exactly.

But the point is that even after Craig Wright got expunged,

the Bitcoin Cash community kept having these disagreements.

And now after this development funds dispute,

there was a further split between Bitcoin Cash and ABC.

So the branch continues to extend.

So in that way, it’s disappointing

to see those kinds of splitting that was never resolved.

It is.

I would have definitely like wanted to see more

of a kind of like the principled coin

with like tries to be Bitcoin,

but follows consistent big block values.

But I know maybe I should just like stop expecting projects

that I have no involvement in to care at all

about what my values are.

And like maybe Ethereum just like is.

I think you have a powerful voice

and you can inspire other projects

to live up to their best possible selves.

Okay, so that’s the layer one approach.

The other layer one within Ethereum

is the idea of sharding.

Yes.

What the heck is sharding?

Okay.

What does the future of sharding look like?

Right, so to summarize that big long tangent

that we just went into.

It’s a beautiful tangent by the way.

It’s the basic tangent.

And I think like crypto is just one

of the most underrated aspects of crypto

is I think how you can like analyze the sociology

and the politics and the anthropology.

And I’m sure Dan Carlin would have fun exploring

the space at some point.

But like the core trade off, right?

Is that if you scale blockchains the dumb way

just by increasing the parameters,

then eventually you just make it harder and harder

to participate as a node and you end up with a system

where there’s like 20 computers running the whole thing.

And it’s just very centralized.

So sharding basically says, well,

instead of just increasing the parameters,

what we’re going to do is we’re going to change

the blockchain architecture in such a way

that each individual node in the blockchain

only needs to store a small portion of the data

and only needs to process a small portion

of the transactions.

So you can think about it as being like inspired

by BitTorrent, right?

Like on BitTorrent, there’s no such thing

as a BitTorrent full node that has every movie, right?

You know, the work is like split up among a huge number

of computers and like that makes sense.

That’s, you know, the only sane way

to scale a system like that.

And if they actually tried making a version of BitTorrent

that required full nodes that store every movie,

then, you know, it would have like zero censorship

resistance and it would just like, you know,

be dead in an instant.

So the challenge with taking that model

and applying it to blockchains, right?

Is that blockchains aren’t just about like spreading data

around, they’re about agreeing on exactly what data

was spread around and ensuring that everything

that you agree on actually is correct.

And so you have this paradox where let’s say

you want to have a system that supports 10,000 transactions

a second, but each computer in the network

can only personally verify a hundred transactions a second.

So how can each computer get a guarantee

about the other 9,900 without actually going

and verifying them themselves?

And it turns out that there are some,

like a bundle of different tricks that can do that, right?

So like one of them is just random sampling.

So the idea behind random sampling is like,

let’s say for simplicity, this is a proof of stake chain

and you have 10,000 validators, validators are like,

you know, the stakers and like for simplicity,

we’ll assume they all have the same number of coins, right?

If someone has more coins, we’ll just kind of split them up

and pretend they’re 10 stakers.

Then you do like some random shuffling

and you basically say, these random hundred validators

are assigned to validate this block.

These random hundred validators

are assigned to validate this block.

These random hundred validators

are assigned to validate this block.

And so each individual computer only gets assigned

to validate like a small piece,

but then the way that the information

about like what’s valid gets passed around, right?

Is that when these hundred participants validate a block,

they all sign a message basically saying like,

yes, we agree that this block is valid.

And then like they combine that signature into one

and then they broadcast that signature.

And then everyone else,

instead of verifying the blocks directly,

just verifies that signature, right?

And so if I see the signature,

I’m not directly convinced that that block is valid,

but what I am convinced of is that out of this committee

of this randomly selected group of a hundred validators,

let’s say at least 70 of them agree

that this block is valid.

And so if I trust that the majority

of these participants are all honest,

then because it’s all randomly selected,

the attacker can’t just like force themselves

into one committee.

And so the attacker is gonna be evenly spread out too.

And so if the entire set of validators is mostly honest,

every committee is gonna be mostly honest.

And so like bad blocks are not gonna go through, right?

So that’s like one simple form of sharding.

There was also other more clever things that you can do.

So for example, there’s this concept of a ZK snarks, right?

I’ll call it as your knowledge proofs.

So this is the idea that you can make a cryptographic proof

that says, I verified or I ran some complex computation

on this piece of data and I got this answer.

And so if you make these kinds of proofs,

then like if you see a ZK snark

that says some block is valid,

then you’re convinced that that block is valid.

And even if everyone in that committee is evil,

like they have no way of making a valid proof

for a bad block, right?

Like, because the proof itself,

like it is a proof that you did the computation

where that proof is much easier to verify

than just running the computation yourself.

And there’s once again, super awesome mathematical

or cryptographic magic behind making ZK snarks work.

But it gives you a little bit of a leg up

over the 51% honest assumption.

So it’s a little hack that improves upon the random

sampling thing.

Exactly.

And like, there’s other hacks, right?

Like there is another hack called data availability

sampling that allows you to make sure that the data

in the blocks was actually published.

But like, basically, like if you stack a couple

of these tricks on top of each other,

you can create a system where like I,

as an individual participant can be convinced

that everything that’s going on in this distributed

blockchain thing is correct without actually personally

checking more than like a percent of it.

So that’s sharding.

That’s sharding.

But the, as I understand, maybe correct me on this,

is in the space of Ethereum, the sharding happens

on some fixed number.

Like the split is on some fixed number.

I think it’s 64 is the currently sort of proposed number.

So how does that help scaling?

Is it just the fixed constant scaling by 64?

And is that a way to achieve those crazy,

the crazy amount of scaling that seems to be required

to use cryptocurrency for purchasing?

So doing like competing with credit cards

and Visa and so on.

So first, I think like the 64 can be hard forked up

over time.

So we’ve set it so that like there’s theoretically space

in the data structure for 1024 shards,

it’s just that 64 of them are turned on.

There are challenges with having more shards

because like you have to have logic that just like checks

and manages all of those shards.

And if there’s too many of them,

then that becomes too expensive.

But even still, you can improve quite a bit.

And then the other thing that we’re doing is

if what we’re getting maximum scalability

by combining rollups and sharding.

So this might be a good time to talk about rollups.

What are rollups?

Now we’re moving into layer two ideas.

Yes.

So the idea behind a rollup is basically that,

so instead of just publishing transactions

directly on chain and having everyone do all of the checking

of those transactions,

what you do is you create a system

where users send their transactions to some central party

called an aggregator.

And like, well, theoretically, you can have a system

where like the aggregator switches around

or where anyone can be an aggregator.

So it’s still like permissionless to send things.

Then what the aggregator does is they strip out

all of the transaction data that like is not relevant

to helping people update the state.

So when I say the state,

this is a very important kind of technical term

for blockchains.

I mean, like account balances, code,

like things that are like memory,

internal memory of smart contracts,

like basically everything the blockchain

actually has to keep track of and remember, right?

So you just put in,

you take all these transactions,

strip out all the data that’s not relevant

to telling people how to update the state.

And then you take the data that’s needed

to update the state,

and then you like really compress it, right?

So like, for example, if we say,

I, Vitalik, have an account that’s 0xAB58,

blah, blah, blah, blah, blah, and it’s 20 bytes.

Well, instead we can say,

well, I have an account that is number 1874224 in the tree.

And that goes down from 20 bytes

to just like an index and a position,

which is three bytes, right?

So you use all sorts of these fancy compression tricks,

and you basically just,

instead of publishing all these transactions,

you publish this like tiny compressed blob, right?

So the amount of data that goes on chain

goes down by maybe about a factor of 10, right?

And then the second thing is that

you don’t do the computation on chain,

instead you do the computation off chain,

and there’s one of two ways to do this, right?

One is called a ZK rollup,

which is you just provide a ZK SNARK that basically says,

hey, look, I did this computation,

and I have this proof that here’s, you know,

some hash of the result and it’s correct.

And then you stick it on chain,

and everyone verifies this one proof

instead of verifying all these transactions.

And then the other approach is called an optimistic rollup,

which is basically made of the scheme where,

like, first someone says like,

hey, this is what I think the result of applying

these transactions is.

And then someone else can say,

I disagree, the result is different.

And only if two people disagree,

do you actually just like publish all of the data

and run that whole block on chain.

So if there’s disagreements,

then you just like run everything on chain

and whoever was wrong, like loses a lot of money, right?

So like disagreements are very rare

and they’re very expensive.

And then a ZK rollup,

you don’t even rely on this like challenging game at all,

you just rely on a proof.

So the core principle is basically that

instead of lots of transactions

and everyone verifies every transaction,

it is you take the transactions,

you strip them down and compress them as much as possible,

then stick that on the blockchain.

You do need to stick something on the blockchain

just so that everyone else can like keep up to date

with the state so they know what all the contracts are,

what all the balances are and all of this,

but it’s a very small amount of data.

And then you use one of these other off chain games,

could be this optimistic game, could be a ZK snark

to just prove that somebody out there did the computation

and the result is correct, right?

So you’re pushing like 90% of the work off chain

and then, well, 90% of the data

and 99% of the computation off chain,

and then you still have 10% of the data

and 1% of the computation on chain.

And so your scalability goes up by a factor of about 100.

So these systems are already alive

for some applications, right?

So there’s something called loopering,

which is just a ZK roll up for payments, right?

So you can have assets inside of the loopering system

and you can go around and transfer them,

and you get like much lower transaction fees, right?

Like instead of $5, you’d have to pay like less than 5 cents.

But the only problem is that this only supports

a couple of applications right now,

like making one that supports anything

that you can do on Ethereum just takes a bit more work,

but that’s being done as well, right?

So like within a few months, I’m expecting fully Ethereum

capable roll ups to be available as well.

So roll ups, just summarizing,

do most of the work off chain,

put only a little bit on chain, factor of 100 scaling,

sharding, another factor of 100 scaling,

100 times 100 factor of 10,000,

hundreds of thousands of transactions a second,

and like, you know, there’s your scalability.

Okay, so you achieve scalability,

you can do a large number of transactions very quickly

and the cost of doing those transactions are much lower.

You wrote that in the long term ZK roll ups

are going to win in terms of layer two technology.

Specifically you wrote, in general,

my own view is that in the short term,

optimistic roll ups, as you were saying,

are likely to win out of general purpose EVM computation

and ZK roll ups are likely to win out for simple payments,

exchange and other application specific use cases,

just as you were saying.

But in the medium to long term,

ZK roll ups will win out in all use cases

as ZK SNARK technology improves.

Why do you think ZK roll ups are going to win

the big picture battle over layer two technologies?

So I think ZK roll ups, like once you accept

that the technology works are just like conceptually simpler

and they have nicer properties.

The reason is that they do not have this concept

of a challenge game, right?

Like, as I mentioned in an optimistic roll up,

the way that you ensure that the results are correct

is that you let one person submit

and like they just submit with no proof.

They just say, here’s what I think the result is.

And then if someone else disagrees,

they make their own submission.

And then if you have two disagreeing submissions,

then you actually publish it on Chase.

And then you see who’s right.

But for this to work, like you need to actually wait

for someone to disagree, right?

So like, for example, if I have an asset inside

of an optimistic roll up and I wants to withdraw it,

then I actually have to wait a week to withdraw it.

Because like, if the block that contains my withdrawal

turned out to be invalid,

then there needs to be space for someone

to disagree with it, right?

Whereas with a ZK roll up,

like you don’t need time for disagreeing

because you just have a proof, right?

As soon as a block is submitted,

there’s a proof and you know it’s correct.

So if disagreements, especially in the longterm are sparse,

then you don’t want to do the optimistic,

the game theoretic thing, you wanna do the ZK stock.

Right, the ZK stuff is just,

like you can win a ZK roll up,

you can withdraw immediately.

You don’t have to like worry about the economics

of proving as much, right?

There’s just like fewer issues.

The reason why ZK roll ups are not winning everywhere today

is because ZK stocks are still a crazy new technology,

right, like this is something that 10 years ago,

it existed only in theory and there was none in practice.

Then, eight years ago,

people were just getting excited about it

in Bitcoin conferences for the first time.

Like four years, starting four years ago

or three and a half years ago even,

that was the first time you were able to make

any ZK stock based anything on Ethereum.

And then people started making them

and ZK technology has only really become efficient enough

to do a lot of things within the past

maybe one and a half years.

So it’s new technology, it’s crazy technology,

it’s admittedly scary technology.

If you wanna learn more,

I also have an article about this on Vitality.ca.

It’s actually really, really good.

You’re, most of your writing, it goes,

it’s technical but it’s accessible.

I highly, highly recommend to check out Vitality’s articles

and blogs, whatever you call them on the website.

It’s brilliant summary of the work.

Actually, Ethereum documentation period is really good.

I think that’s somewhat crowdsourced.

That documentation is really, really accessible

and brilliant.

But let me ask about sort of other approaches

to layer two, like side chains.

So the one popular one is Polygon.

What are your thoughts about Polygon,

which is a layer two network?

Is it positive?

Is it negative for Ethereum?

Is it both?

Does it have a future?

Which is its own chain, but it’s using Ethereum.

It’s like based on Ethereum essentially.

Or maybe you can describe what it is.

So I think there’s a really big and important difference

in security models between rollups and side chains,

which is basically that rollups inherit

from the security of Ethereum, right?

So if I have coins inside of Loopring or Optimism

or Arbitrum or ZK Sync,

then even if everyone else in the world

who is participating in these ecosystems

hates me and wants to steal my money,

I can still personally make sure

that no matter what happens, I get my money out.

It might be a bit expensive for me to get my money out

and I have to do transactions on the main chain,

but I’ll be able to do it.

Whereas in Polygon, which is a side chain,

and so instead of being secured by Ethereum,

it’s also in part secured by its own

proof of stake consensus with its own token.

So if 70% of the whole,

or even 51% of the holders of Polygon tokens

wanted to take my money in Polygon, they can, right?

So that’s the, and like, to be fair,

like there aren’t even, like the supply,

I don’t think is even that widely distributed, right?

So like potentially you could,

this idea of 51% of the token holders

coming together and stealing everything,

like it’s not impossible, right?

Where does the scaling of Polygon come from?

Like why is it able to process much more transactions

than the Ethereum main chain?

What’s the idea there?

I think in part, like I imagine,

I’m not sure exactly what its capacity level is,

but like I imagine it has a higher capacity

because it’s a bit more willing

to take centralization trade offs.

And then another thing is that like,

if the Ethereum ecosystem,

like even if it did not do that, right?

If you think about an Ethereum ecosystem

hypothetically scaling with side chains,

then you would have a hundred copies of Polygon

and they would each have their own tokens,

they would each have their own chains.

And so even if each one of those chains

was only as scalable as Ethereum,

you could still, like the total sum of them

would still be a hundred times more than Ethereum.

Okay.

The thing that I want to say in Polygon’s favor

just to be very fair to them,

like I really, you know,

I definitely really, you know,

respect the work that they’re doing.

So, you know, start with a bit with that word

of not criticism caution, right?

Like it’s that they made this kind of deliberate trade off

for very pragmatic reasons,

which is that the Ethereum ecosystem needs to scale now.

And there are applications that want to do something now.

And, you know, if there aren’t Ethereum friendly options

for them, then like, they’re not going to just wait

peacefully and do nothing for 12 months.

And they’re going to go to, you know,

either Binance Smart Chain or, you know,

one of some other system or potentially something

that just has totally no alignment

with Ethereum values whatsoever.

But whereas, you know, with Polygon,

like the best thing that you can say in Polygon’s favor

and against optimism is that, you know,

optimism is not live and Polygon is live, right?

Like it just takes more work to create a system

that has these extra rollups, security features.

And so Polygon just said, we’re going to be the system

that makes the pragmatic trade off.

We’re going to go, you know, functionality first,

and then, you know, we can talk about adding back

the security later.

So I’ve talked to them and like, in principle,

I think they’re very, you know, open to the idea

of like adding more security and like becoming more,

becoming a rollup or at least, you know,

adding a Polygon chain that’s a rollup

at some point in the future,

which is definitely something I think they, you know,

absolutely should follow through on.

But like the fact that like they exist now,

and so, you know, applications can kind of bootstrap now

on a chain that, you know,

even though its security isn’t perfect,

at least it exists and people can go use it.

And then over time, you know, the chain matures

as the applications mature.

Like, you know, it’s, I think a very reasonable strategy

and I’m definitely really happy

that they’re part of the ecosystem.

Yeah, it’s kind of interesting.

The history of cryptocurrency has this tension

of really good ideas that are hard to implement.

So they take longer to implement

and ideas that are not as good, but are faster to implement.

This is like the story of like, you have like JavaScript

that basically took over the world

because it was quick to implement within 10 days.

And then like later kept fixing itself.

I don’t know what to make of that.

Sort of from an engineering perspective,

I’m more and more becoming comfortable

and accepting the fact that our whole world

will run a technology that’s not as good

as it could have been.

Just because the crappy solution is faster to implement

and it sticks.

What do you make of that tension?

I think the compromise that we’ve been taking

within Ethereum is like when we have to take

the crappy solution, we look for crappy solutions

that are forward compatible with becoming good over time.

When you build the quick and dirty thing,

you would still already have ideas in your head

about what the more complete thing

with all the security features added on would look like.

Even if it requires a hard fork?

Yes.

For example, with sharding, I think it’s likely

that the first version of sharding that comes out

is not going to have zkstarks and data availability sampling,

for example.

But we know what these technologies are.

We feel like we have wrapped our heads around them.

And so we know how to build a system

where we can put all the pieces in place

so that it becomes very easy to bolt those components

on in the future.

So if you do things that way, then at the beginning,

you can have your system that has the functionality,

but say has less security or less sustainability

or less of something else.

But then over time, it’s designed in such a way

that it has this easy on ramp to adding those things.

And if you don’t think explicitly

about being future compatible,

then you do often end up with a quick and dirty solution

that backs you into a corner.

And then there are definitely cases

where I think the Ethereum ecosystem has suffered from that.

And we have had to expand pretty significant effort

on, for example, removing features that we didn’t realize

that we actually can’t sustain.

Like one big example is just increasing the gas costs.

So like making some operations more expensive

because they should be expensive

because they actually take a lot of time in the process.

So that’s making something more expensive,

kind of like taking some functionality away.

So if you can like be cognizant

of where you’re likely going into the future,

and if you don’t know, like even be cognizant

of both the most likely paths that you’ll take in the future

and coming, like thinking about your roadmap

and coming up with a roadmap where you know

that like if you wants to do either of those things,

then you have a clean path toward it.

That’s probably the best kind of practical way

to get the best of both worlds that we have.

Okay, let’s talk about this wonderful process of merging.

Okay, so there’s the main net,

which is the Ethereum 1.0 chain,

or the, what should we say,

the chain that uses proof of work

as a consensus mechanism.

And then there’s, what is it called?

The beacon chain that uses the proof of stake mechanism.

And I believe the beacon has been deployed successfully,

is working, so that was in December of 2020.

There’s a bunch of questions around that

that’s fascinating as well,

but I think the most fascinating question

is about merging those two.

When do the two chains, one that’s proof of work,

one that’s proof of stake, merge?

And what are the most difficult parts of this process?

Right, so as you’ve said, right,

the way that we have set up this proof of stake transition

is that at first, the proof of stake chain

just launches on its own, right?

And this is the thing that happened in December.

And the proof of stake chain has been running

for close to six months now.

I mean, by the time people watch this,

it might actually be six months.

But it isn’t actually coming to consensus

on anything except for itself, right?

So the idea behind that is to just

give the proof of stake chain time to mature,

time for people to build the ecosystem around it,

time to make sure that there aren’t any bugs,

and just like prove to the community

that no proof of stake actually is real,

and a full transition is realistic,

because the thing that you’re transitioning to

already exists and already works.

And then at some point in the future,

you have this event called the merge,

where you basically take the activity

that’s being done inside of the proof of work chain,

and you actually move it over into the proof of stake chain,

so you get rid of the proof of work side completely.

So the way that the merge will work is,

it’s definitely gone through a few different iterations.

Like the earlier versions of this

actually required more work for users

and more work for clients.

It was much more like,

oh, there’s this new chain, there’s this old chain,

and then everyone has to migrate

from the old chain to the new chain,

and then at some point we’ll forget about the old chain.

The new version is designed

to be much more seamless for users, right?

So basically what actually happens is that

the old chain basically becomes embedded

inside the new chain, right?

So starting from the merge transition block,

every proof of stake chain block

is going to contain a block of the,

what we consider now to be,

what we consider to be the Ethereum chain today,

but we’ll call it the execution chain.

And then at the same time, to create one of these blocks,

you’re not going to need proof of work anymore, right?

So basically at the same time,

you would both get rid of the proof of work requirements

for one of these blocks to be valid,

but instead you require these blocks

to be embedded inside of the proof of stake blocks, right?

So you basically have like a chain inside a chain.

And this is, from an architecture perspective,

you might think it’s a little bit suboptimal,

but it actually has some nice properties

and makes it easier to kind of think about the consensus

and think about what we call the execution layer,

like transactions and contracts kind of separately

and upgrade them separately.

And it also just means that the upgrade process

is extremely seamless, right?

Because from the point of view of a client

that’s following the chain,

you basically have to update nothing, right?

You’re still following the same chain

and follows the same rules,

except instead of checking proof of work,

you’ll switch to checking that these blocks

are embedded inside of blocks of the proof of stake chain.

So there’ll be this merge block

that will mark this transition.

And over time, I guess the new chain

will contain the full record

of all the transactions that’s ever happened

on the previous chain, on the old chain.

So maybe I’m asking a dumb question here,

but in this process, is the new chain going to have

all the information of the past transactions?

The new chain is not going to hold information

from what happened in the Ethereum chain before the merge,

right, so Ethereum clients that people are going to use

around the time of the merge and soon after the merge,

they’re probably just going to sync

and check the proof of work chain up to the merge,

and then they’re gonna check the proof of stake chain.

But at some point in the future,

I think people will just stop bothering

checking the proof of work before the merge.

Got it, so that old history information is not important

for the future, like if you’re operating actively

on the new chain, that history is not important to you.

It’s not important, so it’s not strictly important

for just like any smart contract

or just like applications that run on the blockchain.

It can be important to users,

and it can be important for some applications,

but we’re basically saying that like maintaining

and serving that is not going to be a simultaneous

with the responsibility of every Ethereum node.

If you want that information, there can be separate

protocols for backing it up.

And like these other protocols actually exist, right?

Like there’s something called the graph,

which is doing some history retrieval.

Potentially, you can just take that entire chain

and stake it on BitTorrent.

Like there’s lots of ways to like archive it

and create kind of customized search protocols for it.

So what’s your sense why, so there’s a Python 2

and Python 3, and it took forever for people to switch.

What’s your sense why this merge has been taking longer

than perhaps was expected?

I think the biggest reason is just we’ve been

underestimating the technical complexity.

There’s a lot of technical complexity

in making a successful proof of stake chain.

There’s a lot of technical complexity

in actually figuring out the transition process.

There’s…

So that’s bigger than social complexity.

So the technical complexity you would say

is the bigger reason for any delays

than the social complexity?

I actually think so.

I think we’ve been very fortunate

to not have too much social complexity around the merge.

So not much drama.

No.

I think the biggest part of the reason

is just because we have been talking

about proof of stake and sharding

as being part of the roadmap

since almost the very beginning of the project, right?

Like the very first proof of stake blog post

is from January 2014, which was two months

after the project started

and maybe even a day after the announcement.

So proof of stake was not something

that we kind of put on anybody by surprise.

And then when the Dow fork happened

and the people on the ETC side split off,

I think it also just happens that a lot of the people

that were not willing to stomach the Dow fork

and then join the ETC side,

they were the more Bitcoiny types.

And the more Bitcoiny types do also tend to like proof

of work more.

And so like that also sort of ended up,

sort of like purifying the communities on both sides,

I guess.

So Ethereum Classic is not switching to proof of stake

and they’re happy with their setup.

And by the time that it came

to the beacon chain launching into now,

I think the community is very strongly in favor

of the proof of stake switch.

But let me ask the question that no engineer wants to hear,

which is the question of timeline.

When do you think the merge will happen?

Do you have a sense it might happen this year?

Do you have a sense it might be pushed

towards next year, 2022 or even beyond?

I think early 2022 is the most realistic.

There’s definitely still like an optimistic case

of it happening this year,

but the realistic thing to count on is definitely

the very early part of next year.

Is there specific things that stand out to you

that will make you feel good about progress

if you see it happening?

So the thing that we had last month

is we had this online hackathon called Rayanism,

where basically a bunch of the different client developers

that are going to be part of the transition,

like hacks together some test nets

of the post merge Ethereum chain.

So these were only test nets

of what would happen after the merge.

They were not test nets of the transition itself.

So the thing that people are working on now actually

is the transition.

So having a full specification

of both the transition and post transition,

and we have specifications now,

but in a realistic way,

they’ll probably needs to have a couple of changes

and have things that continue to be ironed out,

and then have a test net

that does both the transition and the post transition.

And then once you have a test network,

then you just have to do a lot of testing and audit it,

and then do some runs on not just a specialized test network

but on say an existing test network

like a Robson or Rinkeby

that Ethereum people already significantly use.

And if it works,

then you can deploy the transition on mainnet.

Just as a quick comment,

because this is fascinating.

In August of last year,

there was this Medalla.

I believe it’s pronounced Medasha.

It’s a South American subway station.

I forget where.

But spelled with two Ls.

Yeah, yeah,

because that’s how Spanish works, right?

Like the two Ls have a…

Medasha.

Yeah. Okay, cool.

Anyway, but I read about it in middle of August, August 14th,

there was an incident on that test net.

How does this process work?

What do you learn from those kinds of incidents

when stuff goes wrong in the test process?

I think that incident was that

there was a consensus failure of some kind as I remember.

Basically just different clients

interpreting things in different ways,

and then one of them getting kicked off the network.

And then it ended up taking a while

to actually get everyone to get back online.

A big part of the reason why it took weeks to resolve

is because it’s on a test network,

like the coins are valueless.

And so there’s not really this big push of any kind

for people to actually go and download the new clients

so they can start participating again.

And so it definitely took a while

until the chain started finalizing again.

And then also there was, I think,

another round of just not finalizing in October,

as I remember.

There were definitely things that we learned.

Like there were a lot of things,

especially that client developers

just learned about like optimization

and how to build their clients

in a way that they can process things efficiently.

There’s a lot that we learned

from just like seeing the full life cycle

of what happens when more than a third of the validators

go offline and then finalization stops.

And then that kind of weird unusual state

of the chain continues for a while.

And then eventually everyone who is not participating

just gets enough of their stake.

Like we don’t use the word slashed,

we use the word leaked for this,

but like basically also burned

until the people who are participating

go back up to two thirds

and then the chain goes back to finalizing.

So just seeing all of those edge cases play out live,

I think actually helped a lot

and probably helped to really contribute

to making us feel better about Mainnet.

I mean, there’s also an incident just recently

in April 24th of 2021

where this was on Beacon, I guess.

There was a bug discovered in the software client Prism

that prevented roughly 70% of validators

on the network from producing blocks.

I mean, maybe you can comment on what happened,

but broadly like the big picture,

what kind of stuff are you worried about

in terms of problems that might arise?

Are we talking about small bugs?

Are we talking about like emergent social,

unexpected social bugs?

What are the things that worry you

about the future of Ethereum

that you want to make sure you construct mechanisms

that prevent those things from happening?

So one of the lucky things there was

that this particular bug only prevented

proposed self blocks.

It did not prevent attestations.

So attestations is just a mechanism for voting on blocks.

And it’s the attestations that are actually responsible

for the chain finalizing.

So like coming to this more permanence agreements on blocks.

So the chain was actually quite stable all the way through.

I think the thing that we generally learned

from these experiences is just how valuable it is

to have this multi client network.

So this is one of these areas where I think Ethereum

distinguishes itself from like Bitcoin, for example.

That in Ethereum, we don’t have one single client

that everyone just runs, right?

There’s multiple implementations of the protocol.

And these multiple implementations,

they all process and verify the blocks

that each other can verify, right?

So they all speak the same language.

Now, sometimes when there’s a bug, they disagree.

And when two clients disagree because of a bug,

we call this a consensus failure.

And consensus failures are pretty serious, right?

And when you have a client’s monoculture like Bitcoin does,

then it’s more rare to have consensus failures.

Though you still have them actually.

Bitcoin had a consensus failure

between two different versions of the same client

back in 2013, but they’re less likely to happen.

But the interesting thing is that the multi client

architecture has actually, I think, saved Ethereum

much more than it’s heard it.

So even in this most recent incident, right?

Like Prism was not producing blocks,

but all the other clients were still producing blocks.

There’s four others, right?

Yes, it’s a Prism, Nimbus, Teku, and the Lighthouse.

And then also Ethereum back in 2016 had this fun events

that we call the Shanghai DOS attacks.

They’re called that because the attacks started

right on the first day of our annual conference at DEF CON

that happens to be in Shanghai that year.

So what happened basically was that someone came up

with a way to create blocks that were very slow

for one client to process, but not the other client.

So at that time, there were basically two Ethereum clients.

They were called Geth and Parity.

Right now, I think the top three ones are Geth,

Nethermind, and Basu.

But what happened as a result of us having two clients

is that the attacker was just not able to come up

with blocks that both clients were completely failing

at processing.

And so a lot of the miners and a lot of network participants,

they just kept on switching between the two implementations

depending on which one worked.

And that actually really helped the chain survive

through that month of attacks as the attacker just kept

on hammering at our system and identifying all

of the weaknesses and just forcing our clients

to do this rapid sprint of just optimizing the hell

out of everything and make sure there aren’t any

of those DOS blocks or DOS bugs remaining.

So that was another example.

And then as a counter example,

so something that also shows the point from the other side,

Bitcoin had this bug in 2010, the balance overflow bug.

Basically someone created a transaction that had two outputs

and those outputs were both of a few billion Bitcoin.

So like about two to the power of 63 Satoshis.

And then if you add those numbers together,

you’ll go above two to the power of 64.

And of course, computers like once you go above

to the power of 64, you wrap around.

And so the Bitcoin nodes thought that there was enough money

to pay for the transaction because it was asking for,

let’s say like a billion Satoshis or something,

but actually it was asking for two to the power

of 64 plus a billion.

And so the attacker just managed to create like billions

of Bitcoin out of thin air.

And this was not only discovered and fixed

after something like 12 hours,

but if there had been,

if Bitcoin had been a multiple implementation system,

then what would have almost certainly happened

is like one of the clients would have bugged out,

but the other clients would have probably

actually had a check for that, right?

And so there would have been a consensus failure,

but at least that would have like alerted everyone

that there is a problem very quickly.

And it also would have given everyone

just like obvious social permission to go and, you know,

pick whichever one of the chains is correct

and solve the problem.

So like, that’s, I think a big learning that we’ve had

from multiple of our experiences in the Ethereum ecosystem,

just like validating this multi client model.

And like, to be fair,

it’s a model that we get criticized for a lot, right?

Like Bitcoin people talk about, you know,

the risk of consensus failures that this creates.

VC types are like, well, you know,

isn’t it expensive and wasteful to fund three software teams

where you could just be making, you know,

one quote focused effort, you know,

they love the word focused.

And like, you know, Ethereum is not that,

but it’s amazing despite not being that.

Yeah.

Basically, yeah, so that was interesting.

And then there have definitely been other learnings as well,

just from like seeing the chain live

and seeing what actually is the staking experience like,

what are the actual incentives

for all the different participants.

So I definitely feel like we’re gaining a lot

from this sort of one year of trial running the chain

before we actually make all of Ethereum depend on it.

Let me ask perhaps a strange question,

but you know, proponents of Bitcoin will say things like,

Bitcoin fixes everything.

So why do we need Ethereum?

Versus like Bitcoin plus lightning network for scalability

and then using Bitcoin for,

with this proof of work for security.

So in this kind of, it is perhaps sort of a strange question,

but it’s a high level question.

Why do we need another technology?

Yes, it has a bunch of nice features,

but like doesn’t Bitcoin fix everything already?

So the thing that always attracted me about Bitcoin

is these values of decentralization,

creating these open provisional systems

that anyone can participate in

and that aren’t just going to flop over and die

if whoever created them gets bored

and that are resistant to like whoever runs them

breaking the rules and all of these things.

And I think that pretty strongly that these principles

are like really valid in importance

to much more things than just money, right?

Like Bitcoin is the blockchain for money

and Ethereum was built from the start

as a general purpose blockchain, right?

There is ether the asset on Ethereum,

but then you can also make decentralized financial things,

what we call DeFi today.

You can make like ENS, the decentralized domain name system.

You can put, make prediction markets on it.

You can make totally nonfinancial systems

that just like keep track of whether or not

some certificate was signed

or whether or not some like cryptographic key got revoked.

There’s this big long list of like just interesting things

that you could use about blockchains to do, right?

Like basically they are sort of the missing piece

that where without them,

the kinds of things that a decentralized computer network

can do is very limited.

And once you have them,

a lot of those limitations end up going away.

And so Ethereum was like always from the beginning

about that, right?

It’s about like, hey, this isn’t just money.

There’s so much more that you could do

if you could just go ahead and make any infrastructure

or digital institution or DAO

or whatever you wanna call it,

where the kind of the base layer of the logic

is just executed in this open and transparent way

where everyone can see what’s going on

or if you like your zero knowledge proofs,

at least everyone can see proofs that prove to you

that what’s going on follows the rules

and you don’t need to just constantly keep trusting

centralized actors.

Hence the smart contracts

as being a sort of a core technology as part of Ethereum.

Yes, exactly.

Smart contracts, the computer programs

that are running on Ethereum,

they are like the core

of what makes Ethereum general purpose.

Yeah, so I do think that there’s a lot more wrong

with the world than just money, right?

Like I’m not one of these people who thinks that

if you get rid of fiat currency

and you replace it with cryptocurrency,

then suddenly wars are gonna go away, right?

Because like, first of all,

like say your average revenue

is only a small portion of government revenue, right?

It’s like what, 5%, 10%, something like that.

Second of all, like if you are the sort of,

this is one of the things

I don’t even get about their philosophy.

Like, let’s say you’re the sort of person

who is an extreme and very distrusting libertarian

and you think that these governments are terrible, right?

Like we know today that governments

find a combination of things like welfare

and things like the military

that goes and like bombs people in Afghanistan, right?

And so the question you have to ask is like, okay,

you with your new, you know, magic newfangled cyber currency

that takes over the world,

take away the government’s ability

to have seniorized revenue

and so you reduce the government’s revenue by 10%.

If the government is that evil,

which portion of its expenses

is it gonna take that 10% from?

Is it gonna stop the bombing people in Afghanistan

or is it gonna cut welfare?

If you think it’s the first,

you have a very optimistic view of the government, right?

So that’s, I guess, my perspective

on like why the whole, you know,

we’re going to save the world and create peace

by like denying governments the right

to stealth taxation kind of perspective

doesn’t really make much sense for me.

And I do think that there is real value

that comes from a decentralized and open currency.

Like just the fact that there is a financial infrastructure

that anyone in the world can go ahead and use, right?

It’s, that’s something that can easily be

a big boon for people, right?

There’s a lot of places where the currency

and is much less stable than the dollar.

And, you know, these people like they don’t like,

well, if they use Bitcoin,

their only option is to get Bitcoins, right?

Which, you know, are also pretty volatile.

If they use Ethereum, then, you know, they can get ether,

but then they can also get stable coins, right?

And you might think that, you know,

oh, you’re not being ideologically pure.

Now you’re giving them stable coins,

which are mirroring dollars.

And obviously dollars are going to collapse too.

But the reality is that dollars are vastly more stable

than the Venezuelan Bolivar.

So like, there are really meaningful and beneficial things

that you can give to people by having a global

and open financial system.

But I think if you want to actually do that,

like you have to have much more than just a currency, right?

And then if you want to go beyond financial things,

then, you know, you have to obviously have much more

than a currency and then, you know,

you also have to actually take scalability seriously

because the nonfinancial applications,

like nobody’s going to pay $5 a transaction for them.

Can we return to dogs?

Sure.

Woof, woof.

No, no, no, no, no.

The other one’s categorically forbidden.

Yeah, categorically forbidden.

Is there any cryptocurrency based on cats actually?

I think there are.

Like, there was cat coin, there was nan coin.

For some reason, they just didn’t catch on as much

as the dog coins did.

Okay, so let’s talk about Dogecoin and Elon Musk.

Elon said that, quote, ideally,

Doge speeds up block time 10x,

increases block size 10x, and drops fee 100x.

Then it wins hands down, end quote.

You said in a blog post, partially responding to that,

that there are subtle technical reasons

why this is not possible.

To this, Elon said that you, quote, fear the Doge.

So let’s talk about this.

What are the technical hurdles for Dogecoin

that prevent it from becoming

one of the primary cryptocurrencies of the world?

And do you, in fact, fear the Doge?

I definitely feel obligated to correct the record.

I definitely do not fear the Doge.

Okay.

No, I love the Doge.

I actually visited the Doge in Japan a few years back.

She’s an amazing dog, she’s still alive.

Wait, the original Doge?

Yeah.

Oh, wow.

So, you know, we accept Doge every year

for our annual DEF CON conferences.

So, I definitely don’t think Ethereum

is opposed to Doge coins.

I kind of want to feel like Ethereum

is at least a little bit in spirit itself a Dogecoin.

And then, as I mentioned, I love Doge,

I bought a bunch of Doge, I still hold a bunch of Doge.

On the scalability question,

the challenge basically is the limits to scalability

and the trade offs with centralization, right?

If you just increase the parameters

without doing anything else,

then it just becomes more and more difficult

for people to validate the chain

and it just becomes more likely that the chain

becomes centralized and becomes vulnerable

to all kinds of capture.

So, does it need like some of the layer two technologies

that we’ve been talking about?

I personally think that if Doge wants to somehow bridge

through Ethereum and then people can trade Doge

thousands of times a second inside of a loop ring,

then that would be amazing.

If they want to just like take ZK roll up style technology

and just have thousands of transactions a second

on their own chain, then that would be a great outcome

as well.

So, is there ways for Ethereum and Dogecoin

to work together?

Okay, so there’s a power behind a person like Elon Musk

pushing the development of a cryptocurrency.

Is there ways to leverage that power and that momentum

to improve Ethereum, to improve some of the sort of

cryptocurrencies that are already technologically advanced

and pushing forward that kind of technology?

I definitely think there’s room for…

You know that meme of Doge like taking over,

like that storm?

I’ve seen it.

Is there a way to ride that storm, that wave of the Doge

that’s taking over?

I think if we can have a secure Doge to Ethereum bridge,

then that would be amazing.

And then when Ethereum gets its scalability,

any scalability thing that works for Ethereum assets,

you would be able to also trade wrapped Doge

with extremely low transaction fees

and very high speed as well.

Is there precedence for building secure bridges

between cryptocurrencies?

Is that, I mean, how difficult is this kind of task?

It’s definitely something that’s in its infancy.

There definitely have been some cross chain interaction

things that have been done before.

So, the earliest is probably the concept of merge mining,

right, when a chain just makes its entire

proof of work algorithm dependent on

the proof of work algorithm of another chain.

So, I think famous Dogecoin actually merge mines

to Litecoin, which is, I think in retrospect,

not looking like a very good choice

because now Dogecoin is bigger than Litecoin.

But, you know, if there’s potentially some way

for Dogecoin to merge mine with an Ethereum proof

of stake of some kinds,

then that could be an interesting alternative.

So, that’s one type of chain interaction.

As far as bridges, like one chain reading another chain,

early in Ethereum’s history,

there was this project called BTC Relay.

It’s a smart contract on Ethereum

that just verifies Bitcoin blocks.

I think people stopped really caring about it

and maintaining it because there just weren’t enough

applications that were actually interested

in using it at the time.

And then the transaction fees got too high

to actually maintain it.

So, I think if we want to make a BTC Relay 2.0,

that becomes cheaper because, you know,

it uses snarks or something like that,

then you probably could.

But maybe now’s the time when you actually

can do that sort of one way verification.

But the one challenge though,

is that if he wants to have a bridge

that allows you to move assets between chains,

then you don’t just need one way verification,

you need two way verification, right?

And Ethereum can verify anything

because Ethereum smart contracts

can just run arbitrary code.

But if you want Bitcoin to be able to do things

based on what happens in Ethereum lands,

then Bitcoin would have to basically,

well, they can do everything with soft forks

because that’s their religion,

but they’ll do it that way.

And if Doge wants to make a fork

where that allows for two way transferability

with Ethereum, then they could.

I mean, I think that would be a lovely collaboration

to make if there’s interest.

I think there might actually even be some multi SIG funds

that has some funding.

It’s just a bounty for someone

to make a bridge between the two.

Oh, could you maybe try to psychoanalyze Elon Musk

for a brief second?

So what are your thoughts about Tesla and Elon Musk’s

journey through the cryptocurrency world?

So first with Bitcoin and then with Dogecoin.

So acquiring, holding a large amount of Bitcoin.

And I believe, at least considering the acquiring

and holding a large amount of Dogecoin.

Positives, negatives, what do you think the future

for Tesla and SpaceX in the cryptocurrency space looks like?

Do you think they’ll consider Ethereum?

I’m sure that if they stay in the cryptocurrency system

at all, then they have to at some point.

Bitcoin number one, Dogecoin number,

I mean, come on, it deserves to be number three.

And then, or number two.

And then Ethereum can be whatever that other number is.

If Ethereum only becomes a Dogecoin somehow,

maybe change the logo to incorporate a dog of some sort.

Almost like Doge sneaking behind.

Oh, that would be fascinating.

For when the merge happens.

And I think, Elon, you definitely,

I think you would make a mistake

if you were to kind of ascribe too much sophisticated,

malevolent, or any deep intentionality to the whole process.

I think he’s just a human being and he likes dogs,

just like I like dogs.

Yeah, I think that is literally the reasoning

behind the whole Dogecoin thing.

There is some aspect to which,

I mean, the guy helped launch a car into space, right?

Like you could ask, like, what is the purpose of that?

I think the purpose of that is fun.

I think he truly is more and more, especially lately,

embodying the whole idea that the most entertaining outcome

is the most likely and he’s fully embracing

the most entertaining outcome.

And in many ways, Dogecoin is the most

entertaining cryptocurrency.

As cryptocurrency becomes more and more impactful

in the world, people are getting

more and more serious about it.

And so he’s selecting the cryptocurrency

that is the least serious and the most fun.

And there’s something to that,

like coupling fun with technological sophistication

and somehow figuring out a way to do that well.

I want the world to be fun.

I think the world being fun is great.

Okay, let me ask about a couple

of other technologies if it’s okay.

Sure.

What are your thoughts about Chainlink

and hybrid smart contracts that utilize

off chain external data sources?

And I think it’s definitely necessary for a smart contract

so that do a lot of things to use off chain data

of some kind, right?

Like if you want to have a stable coin,

you need a price oracle so you know

what price you’re targeting.

If you want to have some fancy no crop insurance gadget,

like I think EtherRisk has been doing

a lot of good work with that.

And I think it was either Kenya or Sri Lanka or both,

like they’re making a lot of good progress

in some of those places.

Like you need some kind of oracle to tell you,

did it actually rain in this particular area?

If he wants to have like assets that mirror

other financial assets, you need an oracle.

If you want to have a prediction market,

you need an oracle.

And so projects that provide oracles

are definitely really important.

There are definitely different kinds of use cases.

Like Augur is more about events

and the Augur oracle is designed,

I think differently from Chainlink, right?

Like Chainlink emphasizes the whole,

we have a fast automated thing

that just gives you data quickly.

Whereas Augur is more, we don’t give a crap about speed.

And look, we don’t need to give a crap about speed

because if you want to get your money out

on a prediction market that where in reality it’s resolved,

you can probably just sell your coins for 99 cents anyway.

So I mean, I think Chainlink is definitely

taking a good and important part of the oracle design space.

And I’m definitely happy that there’s

that project taking the task on.

I mean, at the same time, I do think that

their frog army on Twitter can get a bit intense at times,

but like.

I mean, is there a way to incorporate

sort of oracle network type of ideas into Ethereum?

I personally would prefer the Ethereum base layer,

like stay away from trying to provide too much functionality

because like once you have the Ethereum base layer

making a claim about like say the US dollar

to Ethereum price, like at some sense,

you’re basically saying that like Ethereum

as a base platform starts making

what could be geopolitical statements, right?

Like for example, imagine if there was some civil war

and the US split up and you had two currencies

that both claims to be the US dollar,

well, Ethereum would have to pick one

for the sake of everyone who was already using that oracle.

So does that mean that the blockchain would be

taking a position in this big mega political debate?

So I think like for just those kinds of reasons,

I would personally like prefer Ethereum itself

to be more of this sort of pure platform

that just analyzes transactions

just mathematically using deterministic consensus rules.

And then if you need the oracles, that can be layer twos.

Like I think Ethereum like benefits

from not trying to do everything at layer one

and having this like very robust layer two ecosystem

where you have all these projects doing interesting things.

Yeah, focus on the basic technology avoid the politics.

Gotcha.

Let me ask a bit of a human question.

Charles Hoskinson, someone you’ve worked with

in the early days of Ethereum,

there appears to my outsider view

to have been a bit of a falling out.

Is there positive inspiring human story

to be told about why you two parted ways?

I kind of want to let the various books

about Ethereum speak for themselves,

but I feel like since that time,

I think Charles has clearly progressed

and matured in a lot of ways.

And people who follow Charles closely

have definitely told me that like 2021 Charles

is very different from a 2014 Charles.

And I’m sure it’s 2021 Vitalik is much different

from 2014 Vitalik as well.

I’m kind of interested how the 2030 and 2040 Vitalik

and Charles look like as well.

Oh, interesting.

Like the progression of the humans.

Is this going to be one of those things

where like everyone comes full circle

and then 2030 Vitalik and Charles are best friends?

Yeah, not necessarily best friends,

but some kind of are able to reminisce

in ways that puts some of the tension of the past behind.

I think such things are possible.

I think people definitely absolutely have a right to,

and I think should strive to just constantly change

and reinvent themselves.

Is there something you could say about your thoughts

about the Cardano project that Charles Hoskinson leads?

They’ve worked on some interesting ideas

that mirror some of the ideas in Ethereum,

proof of stake, working on smart contracts

and all those kinds of things.

Is there something, again, positive,

inspiring that you could say?

Are they a competitor?

Is it complimentary technology?

There’s definitely interesting ideas in there.

I do think Cardano takes a bit of a different approach

than Ethereum in that they really emphasize

having these big academic proofs for everything,

whereas Ethereum tends to be more okay with heuristic arguments

in part because it’s just trying to do more faster.

But there’s definitely very interesting things

that come out of IOHK research.

Can you comment on that kind of idea?

I, as sort of having a foot in research,

enjoy Charles’s kind of emphasis on papers

and deep academic rigor.

What’s the role of deep research rigor

in the world of cryptocurrency?

Interesting.

I’m actually the sort of person

who thinks deep rigor is overrated.

The reason why I think deep rigor is overrated

is because I think in terms of why protocols fail,

I think the number of failures that are outside the model

is even more important, is bigger and more important

than the failures that are inside the model.

So if you take selfish mining, for example,

that original discovery from 2013

that showed how Bitcoin does,

even if it has a 50% fault tolerance,

assuming everyone’s honest,

it only has a zero to 33% fault tolerance,

depending on your network model,

if you assume rational actors.

And to me, that was a great example

of an outside the model failure, right?

Because traditional consensus research,

just up until or before the blockchain days,

did not think about like incentivization much, right?

There was a little bit of thought about incentivization.

There’s like a couple of papers

on the Byzantine altruist rational model,

but it wasn’t that deep.

It was mostly operating under the assumption

that we’re gonna make consensus

between 15 participants and these are institutions.

And if something goes wrong,

then we can figure out whether or not

it was deliberate offline.

And if they did something evil, we can sue them.

Whereas in the crypto world, you can’t sue that, right?

And so that whole discovery basically arose

just because the model of traditional consensus research

just didn’t cover those possibilities.

And then once you go out of the model,

those other issues do exist, right?

So, but then at the same time,

there definitely are protocols that turn out to be,

that do have failures inside the model.

Like this reminds me of the time

when I think I found a bug

in a proposed consensus implementation

from either BitShares or EOS.

This happened around the end of 2017.

So that was definitely inside the model

because like they had a very clear idea

of what they were trying to achieve.

They had a very clear description

and like there’s a very clear mathematical argument

for why the description doesn’t lead

to what they’re trying to achieve.

But ultimately what you’re trying to achieve

can never be fully described in formal language, right?

Like I think this is the big discovery of,

the AI safety people, for example, right?

Like just having a specification of what you want

is an insanely hard problem.

And like the more powerful the optimizer

that you’re giving the instructions to,

the more you have to be careful.

And so, I think there are the kind of these two sides.

And then the other thing is that

a lot of the academic approach ends up

basically optimizing for other people

inside of the academic system.

And it doesn’t really optimize for like curious outsiders.

Whereas like I personally totally optimize

for curious outsiders, or at least I feel like I strive to.

So I guess like that’s my case for why I like

tends to behave in ways that, you know,

occasionally traditional academic types

criticize as being reckless.

But I mean, on the other hand, you know,

there’s definitely real benefits that come from

like just taking a rigorous approach,

especially when, you know, you know what the thing,

like, you know what the specification is

of what you’re trying to get.

And like, you’re trying to kind of improve your ways

or provide protocols that actually provide that.

And like, you know exactly what you’re looking for.

I feel like realistically, you probably wants to do

both kinds of analysis.

And like, sometimes you even want to do

both kinds of analysis in stages, right?

Like you have, you want to do more quick and dirty things

and even wants public feedback on the quick and dirty stuff.

And then later on you formalize it more

and then you get more feedback.

Like in general, I guess I feel like the norms of research

in the future, like the internet has just changed so much.

There’s no way that it’s not going.

And you know, it’s even changed like collaboration structures

and like the patterns in which we work with each other.

There’s no way that the correct structure

for collaborative research is the same

as what it was 15 years ago.

But like, what combination of these existing components

and of new ideas it is, like that’s something

that’s, you know, totally legitimate

to kind of fight it out.

And I think it’s great that there’s different ecosystems

that have different attitudes to things.

Like, you know, I think, you know,

there’s a big possibility that, you know,

things that the Ethereum,

ways that the Ethereum ecosystem approaches some problems

is totally wrong.

And if there’s other ecosystems with different principles

and they do well, that’s something that we can learn from.

In the spirit of the depth for a search,

can you comment on AI safety?

And some people are really worried

about the existential risks of artificial intelligence.

Is there something you could say that’s hopeful

about how we avoid in the same kind of line of reasoning

about creating formal models versus kind of looking

outside the model into what the real world actually is like?

Is there some lessons from that we can take

and map onto the AI safety world

where the potentials of the technology,

whether it’s in autonomous weapon systems

or just the paperclip problem

that we can avoid AI destroying the world?

So my impression is actually that, like,

this is more of a kind of far away impression

and it could be wrong, that it might even be

that one of the challenges is that AI is not formal enough.

Like, because AI is very practitioner oriented, right?

Like, it’s all about like, hey, I found a couple of hacks

and look, I ran them and look,

they seem to improve classification accuracy

from 0.684 to 0.773.

So a lot of the time there just isn’t actual science behind

why this hack works and why this other hack doesn’t work.

You just sort of like trial and error your way into it.

And I could see how that approach works,

but at the same time, like,

that approach is not good for eligibility, for example.

Like, it’s not good for like understanding

what the heck is actually going on,

like how these kinds of systems conceivably might fail.

Like, there’s even, you know, a debate on like,

can you take GPT3 like things and just scale them up

and their intelligence will continue to improve

or is there just like some types of reasoning

that they’re fundamentally bad at

and like they’re not gonna get good at it

no matter how much you like scale this exact same approach

and add more hardware to it.

So having like thinking about what’s going on

more explicitly, I mean, my understanding

is that a big part of AI safety research

is trying to do that sort of stuff, right?

Formalize.

Yeah, formalize, try to improve just AI eligibility,

like trying to understand, you know,

if the AI makes some classification

so we can actually see like what happens

and like what’s going on in the middle, right?

Whereas with crypto or with traditional cryptography,

you know, it’s like very much not,

well, okay, I mean, I shouldn’t quite say that.

It’s, traditional cryptography is this interesting mix

of being very formal and being very informal

because it’s very formal with,

given these security assumptions,

prove that the protocol works

under these security assumptions.

The places where it’s very informal is like,

well, how do we even know that there isn’t

an efficient algorithm for factoring numbers?

Yeah, we kind of tried it for 40 years.

And then, you know, so far,

no one’s found anything better

than the general number field sieve.

And like, okay, fine, we’ll just assume it’s fine.

You know, how do we know you can’t find the discrete log

between two elliptic curve points?

Like, nope, did it a couple of decades,

no one’s found anything faster

than like baby step, giant step stuff.

So that’s,

and like, there’s definitely ways

in which that approach really makes sense, right?

Because at least you can concentrate your analysis

on a small number of building blocks.

And like, you know, you do have some intuitive reasoning

about those building blocks,

but like at least there is a small number

of building blocks and lots of people are looking at them.

And then everything else just sort of gets formally built

on top and you actually can like mathematically reduce

the security of big things to building blocks, right?

Like you can have mathematical proofs

that say, you know, if you make a ZK Synarch

of a yes statement when in reality that statement is false,

then you can use that to like extract information

out of elliptic curves that, you know,

it completely breaks the problem or something like that.

So.

So ZK Synarch is an example where formalism is beneficial.

Absolutely, yeah.

And so maybe you can have the same kind of stuff

in the AI safety within AI systems

that you can get a hold of some kind of aspect

of the systems that you can control provably.

And then in blockchains and cryptocurrency,

I think the one area where consensus mechanisms

is still more an art than a science

is that these aren’t just like technological systems,

they’re crypto economic systems, right?

And they make assumptions about people.

And which assumptions you can make about people

is not something that you can prove with math.

Right, even just the basic 51%.

Exactly.

Honest.

Can you trust the 51%?

If you can’t trust the 51%,

can you trust the other 49% to be able to coordinate

on like making their own fork?

What will happen to coin prices?

Like how do people as human beings react to these events?

Like there’s all of these assumptions.

But no, at the same time,

look, if you can write down the assumptions,

then you can like do formal things with them.

I almost forgot to ask you

about one of the most exciting aspects of Ethereum.

I mean, it’s non technical.

I think it’s a societal, it’s social, which is NFTs.

So what do you think about the explosion of NFTs

in the recent months, especially in the art world

and beyond, and what does the future look like?

So this is maybe the social impact on the world,

on the individual creators of all kinds.

Like is that something you’ve actually expected to see,

NFTs having this kind of impact?

And beyond, what do you think will happen

in the digital space with NFTs,

in virtual reality, in gaming, all those kinds of things?

I was definitely surprised by like NFTs in particular.

Like I even actually think might be on record somewhere

on some tech conference panel.

Like they were asking, you know,

it was one of those overrated or underrated sections

and ask about NFTs and I thought,

and I said like, hey, I think NFTs are overrated.

And, you know, in retrospect,

that turned out to be quite wrong.

I think, like, I guess I just personally

can’t really relate to this concept

of like spending a lot of money on a thing.

Like there’s nothing, you know,

there’s no clear kind of understanding

of why that thing would maintain its value.

Uniqueness of a thing having value.

Right, exactly.

That’s like, I definitely like cannot really understand,

you know, the psychology behind like buying,

you know, paying $200,000 for original art painting.

I’d be like, you know, if I had a mansion,

just like give me photocopies of everything.

You can hang three photocopies of the Mona Lisa section.

Why would I even have the Mona Lisa?

I think I’d probably just like have some Nyan Cats

or something.

That’s one thing where mathematics

or theoretical computer science cannot formalize

why the heck NFTs are valuable.

Exactly.

But the thing that makes me very happy about the space

now that it has happened is that,

and this gets back to the conversation

that we had at the beginning, right?

Like I’m interested in this concept

of decentralized public goods funding, right?

Like I want things that are good and valuable

to as much as possible also be things

that can economically sustain the people

who produce them, right?

Because if you don’t have that,

then either the public goods just don’t get produced at all

or people make like centralized versions

that have some of the properties and try to be substitutes,

but actually just like concentrate control

in a very small group, right?

And both of those things are not very nice.

So the nice thing about NFTs would be,

well, if you’re an artist and you can just mint NFTs

and this is a source of revenue,

then like great, that’s another stream of revenue

for creative work that often does still get underfunded

and that’s amazing.

Okay, let me ask you a weird question.

We talked about Craig Wright a little bit,

but a lot of people write to me, one of two emails.

One email is calling any coin outside of Bitcoin a scam

and then the other email is saying,

my favorite coin is the best coin,

it’s going to save the world, whatever that coin is.

And so I sit back and I look, I have no idea.

I try to figure out like the humans that I trust

in this space, just the basic human qualities,

but do you think some coins are scams?

Do you think some coins, maybe another way to ask it,

are scamier than other coins?

How are people that are looking outside of this space

where there’s all of these cryptocurrencies

supposed to figure out what is a scam and not,

or how to use the right kind of language

when talking about them?

Because there’s the harshness of the language

from the Bitcoin maximalists that doesn’t just say

everything’s a scam, including Ethereum,

but they use terms like shit coin

that says it’s not only a scam, it’s like a waste of time.

I mean, every word you can use, they say that.

That’s very harsh.

And then some people just apply the word scam

much, much more conservatively and just refer to coins

that legitimately are trying to scam people

out of their money as scams.

So what do we do with this word scam?

Should it ever be applied to coins?

And is it a binary thing or is it a gray area?

I think it’s definitely a gray area.

There’s definitely things that are really and actually scams.

I mean, Bitconnect would be one example

of something that’s way on the scam spectrum.

Did you see their 2017 promotional video, by the way?

Of Bitconnect?

Yeah, hey, hey, hey, what’s up, what’s up, what’s up?

Bitconnect!

It was this three minute, 48 second video

that was just of this guy making this totally crazy rant.

And it was at some conference in Vietnam

where they were, of course, trying to convince

a whole bunch of people to buy this coin

and they had these claims about how it would go up in value.

That was definitely the peak of these pure,

completely scammy coins.

And that was definitely really terrible.

And I feel like we have less,

despite cryptocurrency as a whole being bigger,

we actually have quite a bit less of that now.

But then, of course, there’s this spectrum

of things that are not completely scams

and then things that are not scams

and that are technically totally fine projects

but where their community is just incredibly sketchy

and then all the way to things

that are where the community is nice

but maybe the project is just fundamentally incapable

of achieving what it’s trying to do

or in the community doesn’t realize

and then really good projects, right?

So if you wanna go a step,

like if that’s 100% scam,

then what would I call say 80% scam?

Well, like Bitcoin SV is one example.

This is a Craig Wright’s fork of Bitcoin.

Theoretically, it’s a blockchain, right?

It’s a fork of Bitcoin.

It has some 512 megabyte blocks.

If you really wanted to, you could use the blockchain.

It satisfies the property

so that you can send transactions onto it.

You can probably use it as a backup

to store your files if you really wanted to

just because it has so much space.

It might fail, but at the same time,

as we basically said, Craig Wright is a scammer

and half the community is just totally batshit insane.

So the humans of a particular cryptocurrency

is what makes for a scam and not like the humans at the top

that have a voice guiding the community.

Yeah, I think in the case of BSV,

the humans, they make just completely wrong

and just obviously wrong claims

about what BSV is capable of accomplishing

and what it can say we could accomplish.

And there’s just a lot of aspects of it

that make it feel like a money grab.

So that’s one example.

And then you gotta go a bit further

and then you have the trons of the world.

And that’s a platform, you can use it,

you can do stuff on it.

But at the same time, they did plagiarize the IPFS white paper

and then they…

So there’s scammy qualities.

See, the thing that throws me off a lot,

it’s very difficult for me, is that most coins,

but the ones that make me feel like are scammy

have a large community of people

that are super positive about it.

Like, and they’ll write to me.

Now that said, sort of on the flip side of that,

Bitcoin people are also very positive.

There’s some sense in…

The reason I was having like squinty eyes

looking at Bitcoin for quite a while

is like, why is everyone so positive?

I was getting total cult vibes.

Like the ideas are not grounded in truth,

but are grounded in an obsession

of like when you can artificially conjure up a truth,

which is why I was a little bit like worried about Bitcoin.

I think I’ve learned a lot since then

to where like, I learned to separate the community

from the ideas.

And I think Bitcoin is a revolutionary idea on many fronts,

but still a community that’s like dogmatically excited

about something, whatever that is, makes me skeptical.

Maybe it’s just like my upbringing,

but when everybody’s really excited about something,

it makes me skeptical.

But it also makes me difficult to decide

what is this scam or not,

because some of the most exciting ideas in this world

have a community of people who are excited about it, right?

Because it’s, I don’t know.

I think space exploration is super exciting.

And there’s people, I know a lot of them

that are exceptionally excited about space exploration.

Does that mean it’s a scam?

No.

So I don’t know what to do with that.

And so most I just try to stay away, I suppose,

but it’s unfortunate because I’m sure there’s a lot

of exciting technologies in that space.

Like in the case of Bitcoin,

like I would definitely not call Bitcoin a scam.

Right.

But I would also not call Litecoin a scam.

There’s people who call Litecoin a scam

because they just like say, oh, look,

it has no fundamental use case.

And the concept of being silver to Bitcoin’s gold

is just like stupid.

And like milli Bitcoin is the silver to Bitcoin’s gold.

But at the same time, like if you have these people

who just, they do seem to earnestly believe this.

And like they’re trying to just like make Litecoin

be a Litecoin as best as they can.

Then like, to me that’s enough for it to not be a scam.

And then, so yeah, I think the biggest gray area

is definitely between like projects that are earnest

but they have just all sorts of these

like different combinations of flawed qualities to them.

I mean, the ones that legitimately is a scam

is when the key people that are at the head of the project

are intentionally lying.

And I think as long as the intent

is to try to do good in the world,

even if your actual implementation of that is flawed,

I think that’s not a scam.

It could be flawed ideas, it could be wrong ideas,

but it’s not a scam.

I’m learning to navigate this space.

Yeah, it’s definitely a very challenging space

to navigate, I mean, it’s in some ways

the reflection of the world at large.

Yeah, and as we’ve said, maybe offline

that the fact that money is involved

makes it a little bit more complicated

that lives can be ruined by the choice of technologies

that are taken on.

So it makes it more real, more painful,

more like elevated the impact of this.

Like imagine like Mac versus PC wars

if everyone who bought a MacBook had 10 Apple shares

inside of it, and everyone who had a PC

had 10 Microsoft shares inside of it.

And then you had the elites who bought their Macs

back in 1983, and then they spent $500 debt,

and now they have $40 million,

and they just think that they’re these gurus

who understands the future of finance and geopolitics,

and they make theories about why Apple is the one

that’s gonna bring freedom to the world,

and Windows is secretly allied with the axis of evil.

Oh, that’s brilliant.

So yeah, this is so brilliant.

So I think the right way to think about this

is we map some of the cryptocurrency battles

into the space of like EMAX versus VIM,

or Apple versus PC, if there were some stock

that came along with each implementation of each PC,

each Mac, that’s fascinating.

This is 100% correct, 100% correct.

Because then that really energizes the armies

of people debating over this in a way

that something without money does not.

Okay, let me ask you about something really fascinating

that you are also excited about, which is longevity,

antiaging.

You have donated money to the SENS Foundation,

so you have an interest in this whole space

of lifespan research.

What’s your vision here?

Or what do you hope to see in antiaging

and longevity research?

I think I hope to see the concept

of seeing your parents and grandparents die

just slowly disappear from the public consciousness

as an experience that happens

over the course of half a century,

the same way that getting lost in a city

slowly disappeared over the public consciousness

over the last 50 now that we have smartphones.

The thing you have from Nick Bostrom,

the essay pinned in your Twitter argues

that essentially death is almost unethical.

The fact that we don’t do something about this thing that,

this, in the essay, is a dragon

that keeps murdering everybody around us,

including our parents and grandparents,

is, the fact that we don’t try to do something aggressively

about that dragon doesn’t make any sense.

So you think this is a battle worth fighting,

a battle for immortality, or at least longevity?

I’d say absolutely.

And I’d say a battle where we really have started

over the last five years in particular

to see the first cracks of humanity

starting to make things that look like

they’ll turn into victories.

Do you think humans can eventually live forever?

And maybe as a side comment to that,

what technology do you think will enable that

as a genetic modification?

Is it cloning, is it uploading your mind?

Define forever, like are we talking 1,000 years,

a million, 10 to the 14, 10 to the 45?

Well, let’s start, as I tweeted today,

eventually everything, the universe will be filled

with supermassive black holes.

So that forever, maybe like backtracking to where.

We’ll have 10 to the 16 years to figure it out.

Yes, exactly.

Yeah, maybe travel between the multiverse,

between the different universes of the multiverse.

I mean, but forever meaning like, you know, millennia.

I definitely think that we can get there.

I definitely think that it’s the sort of thing

that’s going to take an insanely huge amount of work.

And I definitely think it’s the sort of thing

where once we figure out the first crop of problems

and like people start living to 150,

we’ll just realize that there’s like 10 other problems

that kill you half as slowly and we’ll have to do more work.

But the good news is that this is Aubrey’s longevity

escape velocity argument that if you get everyone

to live to 150 now, then you have half a century

to fix all those other problems as well.

So I’m optimistic for that reason.

I think you definitely do not want to underestimate

human ingenuity, especially over the longterm.

Like just to look at what happens to computers

between the ENIAC in 1950 and we’re around 2020, right?

Like that’s a span of 70 years.

So like, you know, both of us, I think,

with just present day technology,

I have like at least 70 more years to live.

So just like imagine what kind of sea change

will happen in biomedicine during that time.

And the other thing that made me optimistic

is that I actually think COVID has been this kind of event

that’s really kind of pushed biomedicine

and especially like activist approaches to biomedicine

really into the public consciousness, right?

Like it basically, it’s put people into this mindset

that, you know, wait, but like, you know,

it’s not just like, you know, the bits and tweets

that are gonna save the world, you know,

the bio is actually like super important and huge.

And, you know, ultimately what’s ending COVID basically,

you know, is the vaccines

and the vaccines have just been, you know, amazing.

And if you can take that energy and also like this,

I think philosophical attitude that I’ve noticed,

like the way that I would describe

the philosophical attitude here,

this is going more depth first,

is that I think the way that I kind of interpret

part of what I would call late 20th century ideology

is that there is this mentality that, you know,

nature is good and disruptions from nature are bad

and generally you wanna minimize disruptions from nature.

And like this exists everywhere in the political spectrum.

So there’s nature as in literal nature.

And my view is that like the right wing version of that

is markets as nature, right?

Like, you know, the way that like that kind of philosophy

talks about, you know, markets

and like the goal of not interfering with them,

like, you know, it is very kind of like nature styled.

And then of course, you know, the conservative one,

which is like traditional culture that existed

before the activists started controlling everything

as also being a kind of nature.

But the 21st century attitude and like really COVID,

you know, has flipped a lot of minds

because with COVID what’s happened is that,

well, no, like it’s not, nature is not safe, right?

The default is that is like, you know, untold misery

and suffering in tens of millions of people dying.

The only way out for us is through

like basically human ingenuity.

And that frame of mind is one that’s like much more friendly

to one, this other change of minds that I want to see,

which is like basically treating aging

as an engineering problem, right?

Like the default is all 7.8 billion human beings

that are currently on this earth are gonna die

and they’re gonna live their last decade of life

in debilitating pain.

And the only way to stop that is human ingenuity.

And, you know, we don’t have that solution yet,

but, you know, if we work hard, we will.

And more and more people on the biology side,

computational biology are basically converting

the mess of the human biology into an engineering problem.

And once that conversion is happening,

looking at the genetic code, the proteins,

all those kinds of things, once that conversion happens,

you can now apply the tools that we know

how to solve engineering problems to solving it that way.

And then there’s also the other version, which is, you know,

why do we romanticize this meat vehicle

that ultimately is just the thing that carries the brain,

maybe we can more and more convert ourselves

into the digital realm.

This is where like Neuralink have the computer interfaces

and then achieve immortality in the space of information

and the digital space versus the biology space.

That stuff’s interesting too, I agree.

Again, I think, you know, we have enough resources

and we should just try all the parallel tracks.

You know, it’s great that we have people

just trying to make our bodies work.

It’s great that we have people trying to upload

or improve brain scanning.

It’s also great that we have just like people

improving cryonics.

So like we could just like, you know,

go to sleep in the freezer and eventually,

hopefully sometime in the future, you know,

Hal Finney is gonna be able to wake up,

all of this, you know, anyone who gets cryo chronically

frozen today will be able to wake up,

but you know, that’s a bet, right?

That’s the last resort.

And then the other interesting thing

about the like extreme uploading approach, right,

is we’re excited about space.

And one of the points that a lot of science

or like hard science fiction types make

is that, you know, if you want to explore space,

that’s a lot easier if you’re not a human, right?

Like one example of this is that, you know,

in the context of humans, we’re talking about like,

oh, we’re gonna be able to go to the moon,

oh, we’re gonna be able to go to Mars,

but there’s this project called Starshot, I believe, right?

That’s basically trying to send spacecraft

to mini spacecrafts to Alpha Centauri,

and they literally believe that they’re going to be able

to get spacecraft over to Alpha Centauri

like four light years away by like the 2060s.

Now, I mean.

By traveling close to the speed of light, yeah.

Exactly, like, so the way it works is, you know,

you have these light sails,

like you basically take these a spacecraft

and you shine a laser at it,

and the laser is insanely strong,

quickly accelerated at a hundred Gs or,

no, I think it was 10,000 Gs

until it gets to 20% of the speed of light,

and then, you know, it goes on your merry way, right?

So if you wants to be in,

like personally explore the Alpha Centauri system

within like two centuries or one century,

then, you know, being a robot is like,

by far the most practical way to do it,

because there’s no way that a human being

can survive 10,000 Gs.

So it’s definitely interesting longterm,

but at the same time,

there’s definitely a lot of like psychological hangups

and a lot of like deep philosophy

that we’ll just have to grapple with to get there.

I think what it hangs on the topic

of whether we can convert consciousness

into an engineering problem.

So like, is consciousness tied to our biology?

Because the moment we can convert consciousness

into a digital form,

then we can send it with that light sail

to Alpha Centauri.

Until then, a robot is not carrying anything

except maybe some basic knowledge like Wikipedia.

It’s not carrying the flame of human consciousness.

I have high hopes for converting consciousness

into an engineering problem.

In fact, I think it’s not as difficult as people think.

I’m like, yeah, I agree with that.

I’m definitely in the camp that consciousness

is a property of the algorithm

and not a property of a brain structure.

The other fun, like the kinds of philosophical things

we’d have to grapple with is like,

once you upload yourself, like you can hit Control C,

you know, like it wouldn’t be lovely

to have like 10 copies of Alex Friedman

and then like we could just interview everyone.

So this is, I mean, this is, I have to ask this question.

It’s a difficult one,

which I don’t think it’d be wonderful, first of all.

Sure.

So in the following way,

and this has to do with immortality as well,

there’s something about scarcity that creates value.

Or there’s a bunch of philosophers,

Viktor Frankl, Bernard Williams, Ernest Becker,

they argue that death or the scarcity of life

creates meaning.

The reason we, life is beautiful,

the reason so many moments of experience

of love or delicious food,

all those things are made delicious

because they’re finite, because they end,

and because we don’t have that many of them.

And there’s a kind of worry

that if we extend the human lifespan,

if we achieve immortality, or if we, God forbid,

clone me multiple times,

then you lose the richness of what it means

to have this life, to have this experience.

Is that worry you at all?

Do you think there’s some aspect

to which death does in fact give meaning to life?

I guess like the one historical parallel,

and this might be a bit unfair,

is that there have been philosophers

that have said things like,

war gives meaning to human collectives,

and the struggle for supremacy between nations and races

is this big driver of progress

that ensures that everyone strives to be their best.

And of course, this viewpoint got into the head

of a crazy Austrian guy, and 20 years later,

his soldiers were shooting at my grandparents.

So these days we don’t really have that,

but yet life still feels meaningful.

We’ve still found other ways to,

there’s still a striving for technological progress.

There’s still a striving for self improvements in general.

And it turns out that you don’t actually need

to have existential conflicts in order to have that.

Now, maybe you need conflict,

but we have other kinds of conflict, right?

Like we have competition between businesses,

competition between political ideologies,

competition between projects.

And so these are, like whatever the psychological needs are,

like they’re just our substitutes for it.

So I guess like, yeah, so if we trying to say,

I feel like once we start living to the age of 200,

then like, I’m just intuitively expecting

that we’ll see substitutes emerge in the same way.

Yeah, we’ll create conflicts of other sorts

that lead to less human suffering than wars do.

Like we’ll just start playing Diablo four, five, six,

cause you die in video games.

So maybe we’ll get some of the inkling of scarcity

through the activities we partake in

as opposed to our own body dying.

I mean, I feel shitty when I, like you can,

I remember in Diablo three, you can play in hardcore mode

where if you die in the game, your character’s dead.

Maybe we’ll get the richness that we currently get from life

by having like little artificial versions

of ourselves that die.

Interesting enough, as I’ve just like personally

spent more time in this world, I’ve started realizing

that there is a concept of like real finiteness

that still exists and it might even still be a thing

that provides meaning that doesn’t require anyone

to actually die.

Like for example, like how many people from middle school

or even high school are yours?

Like do you still talk to regularly?

I happen to be close friends with like four or five of them.

Okay, well, like in my case, the answer is zero

for middle school and two for high school.

But you’re right.

Right.

It dropped close to zero.

Exactly, it dropped a lot, right?

And so like there’s a lot of these just like relationships

that end up being very finite.

A person changes their, I feel like a person changes enough

of their worldview after 25 years.

Was there even a study about this?

Something like a person and themselves 25 years later

are about as different as like two different people

or something like this.

So, I mean, just like you can have conflict

without bloodshed, I think you can have finiteness

and even the necessary sorrows of finiteness

that give meaning without like literally anyone

having to end their life.

And hopefully if we do extend our life,

we’ll figure out ways to extend the period of time

where there’s neuroplasticity

to where we could change our worldviews continually

throughout that time.

So you can have these different phases of life.

I thought it would be fun to hear you speak a little Russian.

Do you speak Russian?

Yes, of course.

How did your Russian roots help you?

That’s an interesting question.

What can you say in Russian about that?

What can I say about my Russian roots?

When I just look at other projects,

other people in the blockchain industry,

sometimes when I look at what Russian people are doing,

what other people are doing,

I can sometimes feel that these people who are Russian

have something that feels similar to me,

but I don’t know how to explain it.

Do you think there’s, so for people who don’t speak Russian,

that Vitalik said that there is something to the spirit

of the people that are Russian

that are working in the cryptocurrency world

that is a little bit different

and it’s something that connects to some kind of aspect

of your own self, some kind of roots there.

And it’s kind of interesting.

Do you think that there’s, does it make you sad

that there’s these two different worlds

that are sort of in part disconnected by language?

And I’m sure the same could be the case with China

and other parts of the world,

where the language slows the transmission of the beauty

of the culture in a certain kind of way

where you can’t truly collaborate.

Like you can all speak English,

so you’re collaborating on maybe a technical level,

but you’re not collaborating on the level

of some deep human connection.

Do you see that being able to speak both languages?

There’s definitely benefits, I think,

to be able to speak multiple languages.

And once you can, you discover that even your mindset changes

while you’re speaking in one language versus the other.

People have told me this, like, when I speak Russian,

I sound more, I guess, to the point and pragmatic.

When I speak Chinese, I sound more cute.

When I speak English, I’m something else.

I guess there’s definitely a richness that you’re missing

if you’re only in one of these language bubbles.

But I guess the arguments on the other side would be that

if everyone spoke the same language,

then there would just be one bubble.

This is the challenge, I think.

There are actually benefits to having cultural diversity,

and you definitely don’t want the entire world

to be too conformist.

Well, one of the interesting things about crypto

is that it’s just a culture that actually manages

to somehow have its uniqueness and even preserve its independence

from all of these surrounding countries

despite being embedded in all of them.

So it spans outside of the geographic boundaries,

and language in some ways does as well.

And the way these cultures, these bubbles are created,

I mean, they overlap in interesting ways.

It’s almost like a hierarchy,

and the same is the case of the crypto world.

There’s communities associated with these cryptocurrencies.

There’s communities within those communities, and it’s…

Yeah, I mean, I think it’s definitely sad

whenever these groups are fighting each other,

and it’s definitely good for them if people can cooperate more.

But at the same time, just having groups of people

that have different kinds of life experiences,

there’s definitely something to benefit from that.

So let me ask one last question.

I don’t think I asked you last time

the ridiculous question about the meaning of life.

You know, Dostoevsky said,

beauty will save the world.

Krasata spacet mir.

Some people believe money is a big part of happiness,

and you’ve turned…

First of all, you’ve made a lot of money.

You turned away a lot of money.

You turned away a lot of power.

So you’re a fascinating person to ask,

what do you think is meaning to life?

The thing that I’ve realized with money

as I have experienced both having little of it

and having a lot of it is that the benefit of…

You can get the most out of money if you think of it

not as something that lets you do and have more things,

but as something that lets you worry about fewer things, right?

Like, if your savings are just nonzero at all,

then you don’t have to worry as much about losing your job.

And if you feel like you have a job

that just really conflicts with your values,

then if you have even six months saved up,

that just makes it easier for you to say,

bye bye, I’m going to do something else.

If you have more money, then you can not worry about

even what you’re doing needing to be profitable at all.

Once you get more money, then you can choose transportation options

and food options that just have less hassle in your life

and allow you to be lazier.

So, this aspect of just reducing troubles

and opening up room for other things, I think, is a big part of it.

If you instead think of money as being this positive

or this thing that gives you stuff

and you try to derive meaning from the stuff,

I think that’s much more likely to be a road to basically squandering that opportunity.

So, yeah, and I guess my philosophy on that is definitely more subtractive than additive there.

But once you have enough money that you don’t have to worry about the money,

you’re burdened with another question, which is of meaning.

Do you think there’s meaning to it all?

Or it seems like your own life,

you’re trying to build cool stuff that alleviates some level of suffering in the world.

Well, I mean, one way to think about it is like,

think back to how you thought about life when you were in school, right?

In school, this act is interesting to think about, right?

Because in a lot of ways, it’s just totally outside of bounds of the kinds of systems,

like social systems that we live in as adults,

or maybe not, like maybe things like academia are intended to replicate parts of school.

Like, first of all, school is very totalitarian, right?

Like, you have to follow the teacher’s instructions,

the bulk of your schedule is like forced to be in particular areas,

and you can control the real purview from leaving the grounds during this period of time,

assign a lot of homework.

But at the same time, also, school is a bit of a post scarcity utopia

in that you just don’t have to worry about getting resources for yourself.

And we’ve both lived through 12 years of that, right?

So, what does that say about us?

And I think one thing of aspects, obviously, is that there’s definitely an easiness to living life

if all of your decisions are made for you.

And one of the challenges of adulthood, I guess, is moving to this world

where all your choices are much more self directed,

and you just have to learn to live and deal with that.

Yeah, dealing with the burden of freedom, in some sense.

It’s actually interesting, because in some ways, I feel like even my first five years

of doing Ethereum things, my life was not even all that self directed,

because a lot of it was just responding to obligations.

Like someone said, oh, come to speak at this event in Korea.

Okay, come to speak at this thing in Taiwan.

Okay.

For Ethereum to launch, we need this particular piece to be done and tested.

Okay, work on that.

We need some proof of stake algorithm, work on that.

And the last year of COVID life, basically, I was holed up in Singapore for much of it.

And it gave me a lot more alone time.

I had much less travel.

And that was definitely a very new and interesting experience for me.

Would you characterize it by sadness, melancholy, hope, dreaming, innovative period?

How would you characterize that alone time?

Some of all five, definitely some self discovery.

I definitely did make this very deliberate decision that, okay, I have this time,

and I’m going to actually make something meaningful out of it.

So one example of the things I did is I just actually started

listening to your audio books and podcasts much more.

Just this year, I basically discovered that the podcast space is real for the first time,

I guess.

Like before that, there would be things that I would get interviewed for,

but I was not mentally incorporate this idea that podcasts are a thing that you can go listen to.

And this year I did.

My friend, Carl Lafleur, one of the optimism people, recommended hardcore history to me.

And so I went ahead and just listened to all the hardcore histories.

And then after that, I listened to like 10 Luxfried mids and then a bunch of others.

And after that, I also got into audio books.

Oh, I listened to the entire The Rise and Fall of the Third Reich, the whole thing, 45 hours.

That was fascinating.

So let me ask about Dan, because Dan is going to love hearing this.

I’m going to send it to him.

Do you have a period of history, whether it’s Dan or in general,

that you draw for your own life, like kind of thinking about the world,

about human nature that you go to?

Is it World War II?

Is it Wrath of the Khans, the Genghis Khan?

Is it some other more ancient history?

Is it World War I?

Is there something that kind of echoes with you in the voice of Dan or anyone else that you connect to?

I feel like the 1930s and 40s are fascinating because they force you to really grapple with

the question of where does evil come from, right?

The sort of mental puzzle that I’ve always had in my head is, on the one hand,

things like the Holocaust happened.

But on the other hand, if you just go and have a coffee with people,

then a hundred times out of a hundred, everyone just seems so nice.

Yeah, exactly.

How do you kind of reconcile the macro and the micro there, right?

And that’s the sort of thing that’s very difficult if you don’t have a lot of,

I guess, the right kind of personal experience,

especially if your personal experience starts off being sheltered, like it was for me, right?

I know the stereotype is that the nerds get bullied in school, but actually for me,

in my school experience was just being treated with kindness by everyone.

Yeah.

So that definitely made it harder to understand things.

I remember actually being pretty blindsided when I started Ethereum.

And then within six months, there started being fights over who would get more shares

if Ethereum turned out to be a company.

And then I suggested we should just make it to be a non profit,

and somehow that ended up upsetting people.

So the fascinating thing for me is that I’ve been obviously reading and listening to the history,

and then at the same time, just observing things happening in the crypto world.

And so one of my interesting mental intuitions that I’ve gotten is that I think most evil

doesn’t come out of greed, it comes out of fear.

And one example of this in Ethereum lands, right, is I think the part of Ethereum history

where I thought that the Ethereum community was at its lowest,

and even when I personally was at my lowest.

Now, if you go back to the Dow fork in 2016, right, so the Dow hack happened,

and then we made this controversial decision to change the Ethereum protocol.

And then there was that Ethereum Classic split.

And as soon as that Ethereum Classic split happened, there was a lot of anger everywhere.

And there started especially being anger when the price of ETC started taking up.

So this was the time when Ether started off being $13 and Ethereum Classic started at zero,

but then suddenly there was this one day when like ETH dropped to 12.5,

ETC went up to 0.5, and then they dropped more.

And people were saying things like,

oh, this whole Ethereum Classic is just a psyop by the Bitcoin community

and just the wealthy Bitcoiners trying to destroy Ethereum.

And in the back of my mind, I knew that that wasn’t entirely true.

There definitely were Bitcoiners.

But at the same time, I think blaming disagreements on foreign interference,

like this is the sort of thing that countries, governments do all the time,

it’s a very convenient excuse because it allows you to just blame these things

that are happening on the foreigners and avoid actually grappling with the facts that like,

well, no, actually you have people in your very own community

who just disagree with you and have a different belief.

And I feel like the Ethereum community during that time

did not do a very good job of grappling with that.

And I feel like I during that time did not do a very good job of grappling with that.

And so there was a lot of blaming the Bitcoiners.

There were also even a lot of people calling for us to use trademark law

and basically sue exchanges and try to prevent them from listing Ethereum Classic.

And to me, that was very unethical, right?

Like basically using the government as a weapon to try to attack the other cryptocurrency

and destroy it goes completely against the ideals of freedom

and things that at least in theory were supposed to stand for.

But in that particular time, basically what was happening was that the ETC price was rising.

And at the same time, the ETH price was dropping in lockstep.

And there were a lot of Bitcoin people basically saying this is the end of Ethereum.

And I think a lot of people really were afraid that

Ethereum would be just like completely destroyed as a result of this.

And so that’s where the anger came from.

Exactly. Yeah, exactly.

It came from the fear.

And that’s what allowed people to rationalize in abandonment of principles

that I think they would not have accepted in other circumstances.

And I definitely, to some extent, played along with this myself.

And I do definitely regret that to some extent.

Well, I definitely regret the excesses completely.

And then obviously, Bitcoin block size war, similar sort of stuff happened.

So that insight was interesting because it does mentally make a lot of sense

when you’re actually afraid that unless you act in some way

that your entire world is going to collapse.

It’s much easier to just rationalize forgetting your principles

and doing whatever you have to just save the specific thing that you care about.

It feels like the right thing to do, the brave thing to do is in the face of fear

to still have compassion, to still have love as opposed to hate.

So the darkest moments, the toughest moments of human history

are those where fear is everywhere.

And despite that, the way to get out of that is through love, not giving into the fear.

And again, that’s the lesson that you draw from all those moments of history.

Yeah.

Well, I like you have in terms of those coffee and the kindness that people have,

it does seem that everybody has the capacity for evil

and everybody has the capacity for love.

And you just have to create mechanisms and incentives

that prioritize the latter over the former.

Vitalik, you’re one of the most interesting people I’ve gotten a chance to talk to.

Thank you so much for talking to me.

I hope we get a chance to talk again.

I hope I can at least be some small part.

This would be awesome in a podcast with you and Dan Carlin.

That would be an awesome conversation.

Thank you so much for doing so much incredible technical innovation

that inspires the computer scientists, the economists,

inspires the world and what technology can do.

And now with longevity, I do hope we live a very long time

and play Diablo to make that long time fun.

Thank you so much for talking today.

Thank you too, Alex.

This was great.

Thanks for listening to this conversation with Vitalik Buterin

and thank you to Athletic Greens, Magic Spoon,

Indeed, Four Sigmatic and BetterHelp.

Check them out in the description to support this podcast.

And now let me leave you with some words from Nelson Mandela.

When a man is denied the right to live the life he believes in,

he has no choice but to become an outlaw.

Thank you for listening and hope to see you next time.