Vitalik Buterin - Creator of Ethereum, Talking NFTs & More Ft. Naval Ravikant | The Tim Ferriss Show | Transcription
Transcription for the video titled "Vitalik Buterin - Creator of Ethereum, Talking NFTs & More Ft. Naval Ravikant | The Tim Ferriss Show".
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We have an important preface, an important caveat, an important disclaimer before we get started. And here it is provided from my lovely lawyers. Here we go. I am not an investment advisor. All opinions are mine alone. There are risks involved in placing any investment in securities or in Bitcoin or in cryptocurrencies or in anything. None of the information presented today or really anytime since you might be listening to this anytime is intended to form the basis for any offer or recommendation or have any regard to the investment objectives, financial situation or needs of any specific person that includes you my dear listener. So everything you're going to hear is for informational entertainment purposes only. And with that said, please enjoy. Hello boys and girls, ladies and germs. This is Tim Ferriss and welcome to another episode of the Tim Ferriss Show where it is normally my job to interview world-class performers to tease out the habits, routines, etc. that you can apply. To your own lives. This episode is a special episode and it is a very detailed action-packed episode. At least it was for me. And in a sense, it pairs really well with an earlier episode. In 2017, I did an episode with Novall Ravakant who joins me again in this round two with Nick Zabo. And the title of that episode was the Quiet Master of Cryptocurrency. And it really covered everything related to Bitcoin. So BTC, smart contracts, all of those fundamentals. This volume two is going to cover everything Ethereum. And the two people joining me, I already named one, are Novall Ravakant, as I might have mentioned. And he is really the pilot for this conversation. So he takes the reins as the interviewer. You can find him on Twitter @Navall. He is the co-founder and chairman of AngelList. He is an angel investor and has invested in more than 100 companies, including many huge successes, including Twitter, Uber, Notion, Open Door Postmates, and Wish. Among many, many, many others, you can subscribe to Novall, his podcast on wealth and happiness, on Apple Podcast, Spotify, Overcast, wherever you get your podcasts. You can also find his blog @Navall. That's N-A-V dot A-L. The guest of honor and the real expert in this particular episode is Vitalik Buterin. On Twitter @VitalikButerin, V-I-T-A-L-I-K-B-U-T-E-R-I-N. Vitalik is the creator of Ethereum. He first discovered blockchain and cryptocurrency technologies through Bitcoin in 2011 and was immediately excited by the technology and its potential. He co-founded Bitcoin Magazine in September 2011. After two and a half years, looking at what the existing blockchain technology and applications had to offer, wrote the Ethereum White Paper. In November 2013, it is hard to believe that it was so relatively recent. He now leads Ethereum's research team, working on future versions of the Ethereum protocol. In 2014, Vitalik was a recipient of the two-year Teal Fellowship, tech billionaire Peter Teal's project that awards $100,000 to 20 promising innovators under 20, so they can pursue their inventions in lieu of a post-secondary institution. And boyo boy did that award turn into a hell of a lot of value for the world and a lot of people. And Vitalik, I believe, is now a ripe old 27 years old. You can find his writing and much more at Vitalik.ca. And for ease of reference and ease of finding, you can find the previous conversation with Nick Zabo on Bitcoin and smart contracts and other core concepts at tim.blog/Bitcoin. And you can also find this current conversation with Vitalik on all things Ethereum at tim.blog/athirium. That's E-T-H-E-R-E-U-M. Please enjoy this wide-ranging conversation with Vitalik Buterin and Novall Robicon. This episode is brought to you by Theragon. I have two Theragons and they're worth their weight in gold. I've been using them every single day. 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With their 30 day satisfaction guarantee, you either love it or you get your money back. So go to peakt.com/tim. That's P-I-Q-U-E-T-E-A.com/tim and use code Tim. T-I-M, check out to get 5% off of your first order plus free shipping when you purchase a bundle. That's Peak T. One more time, P-I-Q-U-E-T-E-A.com/tim and use code Tim for 5% off plus free US shipping on a bundle. After more minimal. I need this altitude. I can run flat out for a half mile before my hands start shaking. And I also need a personal question. Now we're the Sydney Propectite. What if I could be out of the way? I'm a cybernetic organism living tissue over a nether endoscope. Me, Tim, Paris, show. Tim, this is Navaal speaking. Tim, thanks for having us. We're joined by Vitalik Bitterin, who Vitalik is the, I believe, now 27-year-old creator of Ethereum, which is the most exciting cryptocurrency since Bitcoin and has incredibly broad ambitions and capabilities. Vitalik is a really interesting guy because not only did he create Ethereum or co-create it, he also is a multidisciplinary polymath. His blog at Vitalik.ca is full of lots of great ideas and insights and thoughts. He runs the Ethereum Foundation. He's sort of contributed to all kinds of things like automatic market makers, roll-ups, social recovery, wallets, decentralized finance, scalability of blockchains, governance, all kinds of great ideas in the cryptocurrency space. He also thinks a lot about public goods, radical markets, wealth distribution. He runs a very active Twitter account where he good-naturedly engages with all kinds of people who are constantly trying to get into fights with him, which is kind of people do on Twitter. We're very lucky to have him. I would say that for me, along with Nick Savo and who we interviewed here in 2017, who created BitGold and coined the term "smart contracts" and along with Zuko, who is the irrepressible founder of Zcash, I've always found Vitalik, Nick, and Zuko to be sort of the three people on Twitter that I early on learn a lot about crypto from. Welcome Vitalik, and thanks for taking the time to talk to us about yourself and Ethereum. Thank you very much for the introduction, it's good to be here.
Understanding Ethereum And Cryptocurrencies
Ethereum vs. Bitcoin (10:47)
I'm going to start just right off the bat. We're probably going to try and keep this fairly basic and high level. For those of you who are quite experienced with cryptocurrencies, this may be a very general conversation. At the same time, I'm going to ask Vitalik some hard questions. We're not going to let him get away with just the PR angle. We'll start with some basics. Let's assume we know what cryptocurrencies are. For those of you who are not that familiar with it, I would suggest you go back to the podcast that Tim and I did with Nick Savo back in 2017. I believe that's titled "The Quiet Master of Cryptocurrency." Once you're up to speed on that, this one will make a lot more sense. We're going to get right into not what is crypto or Bitcoin. We're going to get into what is Ethereum. How do you describe it today, Vitalik? The one sentence explanation of Ethereum that I sometimes give is a general purpose blockchain. This makes more sense if you already know what a blockchain is. It's a decentralized network of many different computers that are together maintaining this ledger or this database together. Different participants have very particular ways of plugging into that. They can send transactions that do very particular things, but no one can tamper with the system in a way that's outside of the rules. Ethereum expands on the Bitcoin approach. Instead of having rules that are designed around supporting one application, we're going to make something more general purpose where people can just build their own applications and the rules for whatever applications they build. It can be executed and implemented on the Ethereum platform. One explanation that I heard one person gave is that Bitcoin is like a spreadsheet where everyone only controls their own five squares of the spreadsheet, but Ethereum is a spreadsheet with macros. Everyone controls their own accounts, which is their own little piece of this universe, but then these pieces of the universe can have code and they can interact with each other according to pre-programmed rules. You can build a lot of things on top of that. Bitcoin builds a monetary system on top famously. Ethereum can build decentralized domain name systems in various decentralized financial contraptions, prediction markets, non-fungible tokens, all sorts of different schemes that people have been coming up with. The limit for what you build is basically your own creativity, but the core difference between building an application on Ethereum versus building it on some traditional centralized platform is this core idea that once you build your application, the application does not need to depend on you or any other single person for its continued existence. The application is guaranteed to continue running according to the rules that were specified and you do not have any ability to irregularly go in and tamper with it. That's a great overview. I like that Excel analogy of it's a spreadsheet with macros instead of a spreadsheet where you control your own cells. I'll also try and articulate in a few ways that I understand it around the edges because I think Ethereum is one of those things that's now quite a bit bigger than you. It probably has evolved in ways that even you didn't fully anticipate. In some sense, we're discovering Ethereum and no longer just building it. I also like to think of it as an unstoppable application platform, platform for building unstoppable applications, kind of like a world computer where let's say that we want to run very, very important computer programs where we don't trust the computer itself and we don't trust the other people to execute code on our behalf, then we create a single world computer where we check the code on the machines of many, many different people all around the world who are properly incentivized to maintain a single computing state. If Bitcoin is a shared ledger, then Ethereum is a shared computer for the entire world to run its most important applications. Somebody applications that people are building on it are possibly the most important applications of the future. Let's talk a little bit about those applications, about what this trustless world computer is doing. What are the applications today that are the most common and that you're most excited about? First of all, I think if the asset is a cryptocurrency and it itself is an application and the first application of Ethereum going beyond financial things a bit, I mentioned ENS the Ethereum name system. You can think of it as a decentralized name system. For example, when you go to ifiriam.org, there's DNS domain name system, which is this big type of table that maintains this mapping of if a person enters ifiriam.com, the server they actually have to talk to and talk to the website as some particular IP address. This DNS system that maintains this public relationship is a fairly centralized system with a very small number of servers running it. ENS is a fully decentralized alternative that is running on the Ethereum blockchain. You can use it not just for websites. You can use it just for accounts. For example, there's a messaging service called status. In terms of what it feels like to hear is that it's a messenger. It's similar to Telegram or Signal or WhatsApp or any of those. But the difference is that it is decentralized. There is no dependence on any single server or there's no dependence on status to company, which is nice because it makes the whole thing much more censorship resistance. It makes the whole thing just a much more guaranteed to survive regardless of what forces wish for its existence or wish against its existence in the future. DNS is this really important part of it because if you have a chat application, I need to have some name by which I can refer to. Things like Telegram and Signal and WhatsApp, that mapping is generally basically authenticated and controlled by a server. Whereas in the status, it's all just done by the Ethereum blockchain. That is one good example, I think, of a not financial but still very important Ethereum application. Going beyond those two cases, there's a lot of more complicated things. There's the DeFi decentralized finance space, which is this big category that has all sorts of interesting contraptions in it. For example, there's prediction markets. Platforms where you can go and bet on different outcomes. Who's going to win some sports game? There have been very successful prediction markets running on the Ethereum blockchain. There's just markets for trading between different kinds of assets. There's what's called synthetic assets. If you want to have access to some mainstream real-world asset, a dollar could be one example, but you don't have to like dollars. There's lots of other examples as well. There's versions of this that are purely virtual simulated versions that exist purely within the Ethereum environment. There's this entire very powerful financial toolkit that exists within the Ethereum ecosystem. On the whole, there's just a lot of these interesting things that happen. There's even games that are based on Ethereum. There's a whole bunch of different things. DeFi decentralized finance is this gigantic new category in which entire companies and protocols are being built in a decentralized way that allow you to do a lot of things that would have required Wall Street along with bankers and judges and lawyers and accountants to handle. But now it's done through smart contracts that are living on the Ethereum blockchain. These smart contracts are at the core of the Ethereum blockchain. We talked about these in the next Sable podcast, but he famously described it as an automated vending machine. As an example of a smart contract where you put in money in a certain slot and there's a certain set of rules and you press certain buttons and you get certain products in exchange. But these smart contracts, obviously, now are getting far, far more complicated and can actually be used not just to compose financial applications, but even applications that we don't normally think of as financial. One way to think about it, for those of you who are into computer programming, is imagine if every piece of a program, every function had an address from which anyone in the world could reach it, a unique identifier address, and it had a slot into which you could insert money. So you could call any function wherever it is in the world, you could insert money into it and it would do something on your behalf. And so that gives Ethereum applications this very interesting property called composability, where you can use them almost like Lego blocks, each one builds on the rest. And so the final product in DeFi ends up very, very advanced. In the traditional world when, let's say like Robinhood builds her application and then Schwab builds another application and wisdom tree builds a mutual fund or an ETF, those can't combine with each other. But in the Ethereum world of DeFi, all of these apps by default are open source, permissionless, programmable, and can connect right into each other. They can be identified, called, and paid for in a permissionless, trustless kind of way. So the infrastructure that gets built in DeFi and Ethereum, although it's very difficult to build and it's complex, once a piece is built, it is available to everybody and sort of stacks on to each other, almost to create one of those Japanese style Voltron robots that just gains in power. Yeah. Now, let me jump in here, just as a proxy. I'm not even a proxy. I am a listener, literally in this case.
Intellectual property in blockchain (20:54)
And I'm happy to be the listener. So I'm both a proxy and an actual listener. But how does one think about intellectual property if all of these otherwise separate or previously separate applications and so on are now Lego pieces that are kind of natively interconnected? Is that a silly question? I'm just wondering if... No, no, it's a really good question. I mean, my high level view on it is that what blockchains do is through consensus, they protect the data. So the users own their own private data and then sort of the public data that's needed to make the blockchain work. Its integrity is protected by the blockchain. And that's what blockchains do. They get a whole bunch of people to cooperate on what the canonical output should be. But the code itself is completely open. It is kind of backwards to what we're used to. We're used to close source companies capturing value. But here, all the value is created by open source. But yeah, Vitalik, I'm sure, is a different view on this. But there's lots of copycats and clones and there's attacks and forks and so on. And it's kind of a Wild West out there. But generally, so far, it does seem like the original products and the best products are succeeding the best. And there's sort of always in the scoreboard of market cap and transactions and usage. But yeah, it's a Wild West out there. Yeah, and I think the blockchain environment is definitely one that operates under somewhat different rules than the traditional environments. Just one example of this is the idea for game. So one story that happened around the beginning of last year that I just love to tell because of how it combines together the values of the space so nicely is. There was this platform called Steam and in Steam, there's Steam, the platform and then there's Steam the company. Steam was its own blockchain and Steam the company, they did have some Steam tokens, but they didn't have the right to just do whatever they want with the Steam the platform because it wasn't decentralized. But they had some tokens and then Steam the platform had a voting mechanism and holders of Steam tokens could vote on changes. But then the Steam the company got bought out by Justin Sun, the infamous Trump person. And Justin Sun, basically, mixed started doing some things to increase his control over the Steam platform. The community was very unhappy with him and then see even took advantage of some of the voting mechanisms and some coins held in exchanges to seize control of at least the formal rules of the platform even further. But then what happened was that the users rebelled. What the users said is while we're creating a new platform called Hive and Hive is just a fork of Steam, it is going to have a start with the same or most through the same rules as Steam and we're even going to copy over most of the balances of the Steam tokens except if you participated in the attack, then your balance goes to zero in the new fork. And most of the users, like basically, have collectively moved over to this new fork and Justin Sun had this full control of an empire but then nobody cared about that empire anymore because everyone now cared about Hive. Like, forking is this primitive that exists and because of it, you do have this ability for just communities to exert collective agency and basically protect themselves from being exploited. But at the same time, if you as a project team are good to your community, then those same effects work in your favor. So those effects work in your favor because in our communities willing to support your project, if someone makes a copycat, then generally, there are people who are willing to support and provide any assistance to that copycat project. Unless, of course, you do something to betray the community's trust, in which case, that those kinds of situations and the situations that the copycat is for. I think legitimate developers have plenty of ability to build projects to gain from those projects of becoming successful. And there's a lot of ways in which the crypto space does end up assuring that. But at the same time, it's also not in environments where anyone's level of control is infinite. And then some ways, that's the other beautiful thing about the space. Vitalica, this great line is blog where he said, "We wanted digital nations, but we got digital nationalism."
Digital nationalism (25:30)
And there's a lot of truth in that. But basically, these are digital nations. And one of the analogies that I use for DeFi is that these are like crypto castles made of bath that are freely trading with each other. Just imagine people are building applications on top of Ethereum. They're protected by mathematics. Those are the walls and those castles, and there are moats, which are rivers of cryptography. But then they have free trade policy with each other so that creates a lot of innovation. But if one of them starts misbehaving, then as people can leave and go to the next crypto castle, or this is where the analogy breaks down, they can actually replicate it, just create a copy and move to that one, like in the Stephen Hive example. Well, that also is, I mean, it has comparables outside of the world of blockchain and cryptography in so much as if we look at, say, WordPress as an open source project, you have companies like automatic and Matt Mullenwick. You might people may notice that MATT in the middle of automatic TBTs, which layers then these for-profit services on top of an open source platform. Technically, someone could create a competitor. But like you said, there are these questions of viability, value add, and moral leadership, and so on. So there are certain elements that contribute to the Ethereum ecosystem, so to speak, that you can perhaps compare to other things to help educate people as well. I was just sort of connecting some of the styles. That's a good analogy with WordPress. The place where the analogies diverge is that WordPress, it's kind of a single-player game. Like each person owns their own blog, whereas in Ethereum world, you could use Ethereum to build a Twitter that everybody owns, and it requires social consensus to operate, but multiple people can put their data in. So it's this really weird thing where it's decentralized, it's open source, but it's still used to coordinate and bring people together. Blockchains combine this really weird combo of individualism and individual control and the ability to leave along with consensus and community and cooperation and build this giant public good. So it is its own thing. It's hard to figure out, but it's worth figuring out, because this is the next phase of the internet after mobile. Yeah, let me, if I could jump in just to kind of be the kid in the corner of the class, in the back of the class asking questions, I would love to hear from you, Vitalik.
Ethereum: concept to current day (27:53)
What was the initial vision for Ethereum and what has most surprised you if anything? I was doing a bit of reading just on the Genesis story, and first of all, I mean, maybe separately, maybe for another conversation. It seems like a lot was done right in the beginning, and I was reading a quote from a Wired piece in 2016, and this, please feel free to fact check if it's not accurate, but it says, you know, when I came up with Ethereum, my first thought was, okay, this thing is too good to be true, and I'm going to have five professional cryptographers raining down on me and telling me how stupid I am for not seeing a bunch of very obvious flaws. But, you know, dot, dot, dot, two weeks later, I was extremely surprised that none of this happened as it turned out. The core Ethereum idea was good, fundamentally, completely sound. I'd love to hear what the core idea was. Maybe we've already stated it and it's redundant, but the initial vision, and if anything, has been really surprising to you, that has transpired since those early days. So I think the core idea is, you know, to make a general purpose blockchain, and to kind of open the gates for people to build what they want to build on top of it, right? Like, the background kind of story for when Ethereum was starting to be formed was that this was just the time when the idea of a blockchain kind of beyond Bitcoin was just starting to gain legitimacy, and people were just starting to realize that, you know, there are these applications for blockchains other than just them running a currency, and ends will be a nice two ability platform that can actually support them. And so at the beginning, right, you had single-purpose blockchains. You had Bitcoin for currency. You had namecoin for its domain names. You would have like single-purpose protocols, like colored coins for issuing assets. The second step is what I call the Swiss Army Knife Protocols. So a Swiss Army Knife Protocol basically says, well, here's a list of, you know, 25 different applications that we've identified as being important, and let's build a blockchain to support all of them. So like Mastercoin was one example of what I call the Swiss Army Knife Protocol. And the problem with Swiss Army Knife Protocols is that two weeks later, you know, some 14-year-old teenager in Finland comes up with a 26 application. You have to go hard for it to protocol. So the next, the natural step is this kind of general purpose approach where instead of you are blockchain supporting 25 applications, you're blockchain supports a programming language. And whatever a system with whatever rules you want to build, you write that in a piece of code. And the nodes in the network can all execute the code and the network kind of helps to collaboratively enforce the rules of this code for the objects that are in your particular application. So that was kind of the technical perspective. And then there was also the perspective of, well, you know, what did I envision people building on top of it? It's actually surprising how it hasn't changed that much. I'm like, I remember some of the very earliest applications included kind of financial gadgets. So contracts for difference were one example, which is, you know, one very particular subset of the thing that today we call DeFi decentralized file storage, kind of like, you know, paid people to store a gigabyte of your data was one thing I was excited about. Decentralized name systems was excited about those, you know, decentralized training between different assets. Like a lot of the examples of just things that people wanted to do with blockchains at the time, like they just are the same as what people are doing today. So there are also new applications, right? So like non fungible tokens that I briefly mentioned NFTs, the idea here is basically just create a token that, you know, represents something other than a financial asset. And one example of this could be that an NFT can represent video game assets. And NFT could represent like a digital work of arch where he wants to sell kind of like basically breaking rights as being the original owner of it. And you know, there's a lot of these different use cases. And these right now the NFT and ecosystem has been extremely successful. And about a week ago, there was a yet a neon cat NFT that got sold for the equivalent of about $580,000. And so that's an example of a new thing. Another example of an old thing is DIOs, decentralized autonomous organizations. And so the idea here is, well, you know, let's build an organization where the rules for the decision making in that organization, you know, the equivalent like shareholder or board voting or whatever he wants to use, could just be written as rules in a smart contract. And then the program that executes those rules can be directly in control of whatever assets the organization is supposed to control. And, you know, we've seen a couple of examples of like, and if simple DIOs in action, a maker down of which kind of maintains, you know, a diet, a stable coin that's algorithmically targets a price of $1 is one example. You know, now there's also a rye, you know, there's a lot of examples of this. A lot of things that we expected from the beginning, prediction markets also have been part of, you know, what we were excited about using blockchain's for since 2014. And they're still around today. So a lot of old things and also some new things as well. Thank you. Yeah. I mean, yeah, some of the ones that Vitalik just laid out, like, I think your recent guest, Katie Hahn mentioned NFTs as NFTs is what she called it. Oh, no, I just because I wanted to try to force that. I wanted to try to force that into the lexicon. But yes, okay. Well, you want to stop NFTs. Yeah. So NFTs are this crazy idea that like owning a digital copy of something and having your name stamped to it somehow gives it more value. But it seems to work. It works with collectible trading cards. It seems to work with digital art. And then because of the compulsibility of the Ethereum infrastructure, you can reuse these NFTs items across different games, different museums, different virtual worlds. And so you own it in one place and you own it everywhere, which is a very powerful concept. So digital scarcity was born with Bitcoin, but now extending into things that are not fungible that are not exchangeable with each other. And that's been, frankly, for me, a surprising thing that is emerging Ethereum. Ethereum, it's funny because you're asking Vitalik, like, what did he expect and what did he not expect?
Making Ethereum scale (34:21)
Proof of stake (41:45)
The core idea basically is that any decentralized consensus system where you don't have a central registry that keeps track of who the different humans are, you need some way for people to basically vote on which transactions are included in the network. And you need for that vote to be secure against what's called a civil attack. A civil attack is when one attacker just pretends to have one million different accounts. Normally, in Reddit and Google accounts and Twitter and all of the essentialized systems, this is done using centralized mechanisms. They sometimes require phone number verification and then phone numbers themselves often end up having some kind of KYC on top of them. There's various kind of AI techniques that try to detect bots. But in a decentralized system, we don't have the center of centralized registry of who gets to be an actual user. And we don't want to have that. And so to prevent this civil attack, to prevent one person from just generating a billion accounts and outvoting everyone else, the solution is economics. The solution is basically that the extent to which you can vote on just this very limited question of which transactions get included in what order is proportional to how many economic resources you put in. So in the case of proof of work, those economic resources come in the form of computing and hardware that you're running. Like when you're running this mining software on your computer, you're cranking out these hash solutions. Every hash solution gives you the right to generate a blog. And the number of hash solutions that you can generate is proportional to how many computers you put in. In proof of stake, it works a little differently. But the core principle is that your ability to and of participate in creating the outcome is proportional to how many coins that are in the system that you're staking. And so the reason why proof of stake is efficient is because in proof of work, the way that you're basically proved that you have a computer to the system is by just running the software on that computer 24/7 and generating half solutions. That's the only way to safely do it, because if you did not have to run the computer 24/7, if you only had to run in 12/7, well then you could have one computer that just pretends to be two different computers. But with proof of stake, if you have coins, those coins are saved in an account, that account hasn't associated public and private key. And you can just make a digital signature with a private key. So you don't have to run any computer for longer than a few milliseconds. That's the kind of core principle. That's supremely helpful. Thank you. Yeah, this is beyond the scope of this podcast. But it is actually hotly debated how much more efficient proof of stake is because there's also these blockchains, they have to issue coins in exchange for the security to the so-called miners or validators in the case of proof of stake. And people will spend a dollar to get a dollar, so to speak. If you're giving out free coins in the blockchain, then people are going to hustle in any which way possible. And in proof of work, they'll do it by buying more computing equipment to run more hashes to get the new coins coming out and proof of stake. They'll have to lock up funds or they'll have to obtain funds to do it. And there's a cost to doing that to obtaining those funds. So there's no real free lunch, but there are arguments for efficiency with proof of stake, especially as you get to securing very large amounts. The way that I would just briefly summarize the proof of stake case there is that proof of stake can actually survive, at least in the opinion of proof of stake supporters with much lower rewards than proof of work can. And the reason is, and because of how proof of stake works, the ratio between the cost of attacking a system and the cost of just running it becomes more favorable. But this is a long debate. I've written on it. I have a post on fatelics.ca. If you just scroll down to most recent one called proof of stake and then proof of sub work proponents have their own posts as well. So encourage you to read all of them.
Layer 2 vs. layer 1 (45:54)
So going back, so this is all layer one scaling switch from proof of work to proof of stake, start sharding the blockchain. And this gets you some tens of times improvement, like 20 times, 25 times improvement. 100 times. 100 times fantastic. So then there's layer two, which stacks on top. Yes. So layer two, as I mentioned is about creating protocols that live on top of the blockchain that only use the blockchain in very particular ways. So there's lots of techniques for this, right? Like the simplest layer to to explain, I think is a very special purpose kind of layer to call it a payment channel. So the idea behind a payment channel is like, let's say I am, you know, selling you in the fall and internet connection, and you're paying me per megabyte. I would say you're paying me, you know, like one cents per megabyte. Now, if we want to do this over the blockchain, the naive way to do it is every time a megabyte of data passes through the connection, you would just make an on chain transaction and you send me one set. The problem is this requires lots and lots of transactions and the transaction fees are actually much more expensive than one set. So it's just completely economic green on viable. So here's what we do instead. You put 10 dollars into a smart contract, right? So you send 10 dollars on the watch into an address, where according to the rules of the Ethereum network, once those funds are at that address, those funds are controlled, not by a human, but by a computer program. And that computer program will then have some rules that I'll explain later. So at the beginning, you send 10 dollars to this contract. And so far, you actually haven't made any payments because as I'll explain, the contract has rules that will allow you to get your money out. Now, here's what you do after one megabyte. After you know, we have one megabyte worth of internet data passing between us, you create an off chain message, and you visually sign that off chain message, that just has the number one cent just written on it. So you just write the, you know, the number one cent, and you attach your signature, and you send the story. None of this goes on chain. Then one more megabyte happens. You write out a digital message that has the number two cents, and you visually sign it, you send it to me. Oh, sometime later, every time a megabyte happens, you just send me one more of these messages, some you keep on incrementing the number. And let's say after a few hours of this, in total, we've had 347 megabytes, so worth of a communication. And you've sent me a message that says $3.47. And you are now no longer wants to use my internet. You know, you're assigned off for the day. And so, you know, we're done. So now here's what happens. I can then take your message and your message that says $3.47. I can attach my own signature to it, and I can publish it as a transaction going to the smart contract, and you have your 10 dollars in it. This smart contract has a rule that says, if I send one of your off chain messages, I call them tickets. If I send one of your tickets, if I kind of wrap one of your tickets in an actual transaction, and I actually kind of publish your ticket to the blockchain, then whatever amounts of money is on your ticket goes to me and the remainder gets refunded to you. Right. So I get my $3.47 and you get your $6.53 back. Now, it's actually incentive, I'll align, right, because I always have the ability to use the most expensive ticket that you sent me, and I don't really have any reason to use one of your older tickets. Right. So I'm always going to pick your later ticket, and so I'm always going to claim all of the money that I'm owed, and you get your money back. Now, if I disappear, then, after some period of time, you have the ability to just go in and take the money back for yourself. Right. So the idea is that it's this contraption where, you know, in reality, you've made a payment to me is 347 times, right? Like you we've had 347 interactions during which the amount of money that's entitled to me goes up and the amount of money that's entitled to you go down. But actually, there's only two actual blockchain transactions that are visible to and needs to be processed by the rest of the network. Right. So we make 347 payments, but the blockchain only sees two of them, and that's, you know, factor of 100 and then 78 to improvement there. Yeah. So if I can summarize this for a second, right, for kind of our listeners, basically what you're saying is let's say that you and I have a long lived contract for some service, rather than publishing every little aspect of that contract under the Ethereum blockchain and flooding it, we go off to the side, we do a whole series of transactions, but every time we do a transaction, each of us like stamp it and say, yeah, that little piece was done and we update the transaction between the two of us. And then when we're finished, either one of us can go back to the blockchain and submit the record of all the transactions and say, look, it's signed by both of us. So this is valid, but either one of us can submit it and the blockchain executes it. So the blockchain only needs to know when we left with how much money staked on this transaction, and when we came back and what the total change was, it doesn't need to keep track of all the intermediate pieces. Exactly, yes, that's a good summary. Now, channels are like, I think the simplest kind of layer two, but they're also the least powerful layer two. They can only do payments, they have a hard time doing many kinds of smart contracts. Channels exist and they are being used for more and more things, and they're great. But the thing that the Ethereum ecosystem is the most excited about is something called roll-ups. Now, I don't want to actually go in and fully explain roll-ups because they're even more complicated than channels. But for those who are interested, I do have an article. Once again, go to get a new version of the Ethereum. So it's a very powerful scalability technology. And the Ethereum community loves roll-ups because they're very easy to upgrade to because if you run an application on Ethereum, you can just run the exact same application inside of an Ethereum virtual machine compatible roll-up, which a couple of projects exist. And actually, I think a couple of days ago, optimism announced that they're going to launch if they remain that fairly soon. Yeah, roll-ups are fascinating. I've been looking into them a little bit and they're worth learning about. It's basically the idea is just that there's these very complex machines that are not on the blockchain, that are off the blockchain, that are running the transactions. But then they're submitting different kinds of proofs back to the blockchain to say, "Don't worry, this was a valid transaction." And the two different approaches, optimism is optimistic, where basically optimistic roll-ups say, "We assume people are doing the right thing, but we're watching. And if someone commits fraud or makes a mistake, then they get punished for that fraud, whereas there are these zero-knowledge-based roll-ups pioneered by Starkware and others, which are basically saying, "Hey, actually, we're going to submit proofs, which are much shorter than the actual computation that the computation was done properly." But I think these give together what another 100x speed up? Yes. So if you combine the ETH2 layer 1 speed up and the layer 2 roll-up speed up, then you get the 10,000 times speed up. Exactly. You can get somewhere over 100,000 transactions a second. And one other really nice feature of sharding, by the way, is that it's quadratic. Right? So if the efficiency of computers increases by factor of 2, then you can support twice as many shards, and each shard can be twice as large. And so the capacity of the whole system increases by factor of 4. Right? And so we actually expect that capacity to increase going even far beyond 100,000 over the next couple of decades. So is it a stretch to say, then, that sharding increases capacity as a square of Moore's law, as opposed to just at Moore's law? Yes. This is the... Now if we get to 100,000 plus transactions per second, that's a lot. I mean, to give a comparable metric, there's about 100,000 tweets per second at Twitter during peak times. And obviously, these transactions are going to be much more sophisticated than it, or could be much more sophisticated in a single tweet. They can actually be arbitrary computer programs running on the side. So that's quite a bit of scalability. So then I think the question comes up, well, where is it? A lot of people I know who are building apps on top of ETH have now had to come up with backup plans. There are competitive blockchains that are coming up, which trade off decentralization and security for speed. So what they'll do is they'll say, well, we'll only have 20 validators run by our friends, or maybe like 100 people that we know and trust. But in exchange, it's a lot faster. Like now we don't have to get consensus from unknown people all over the internet. We don't need these complicated contraptions. And then they can basically run much faster. So a number of projects are looking at these as backup plans. But I know that they don't necessarily want to use these because these are less decentralized. They don't really fully live up to the original promise of blockchains to the same extent. So the real question, I think in everybody's mind is like, is there a timetable for these? Can we reliably target a date for certain kinds of improvements? Because people are betting their businesses on this. Great. And that very important question. So I'll start off with the progress of ETH2. So I think it's important to reiterate because I think a lot of people have its fully absorbed this. ETH2 chain is already running. So there's already a proof of stake chain. It does not yet have sharding, but the proof of stake system is running. The thing that has not yet happened is the event that we call the merge, which is where we basically actually take on the existing activity on Ethereum. And we fully move it over from the proof of work chain to the proof of stake chain. And then the proof of work chain just basically becomes irrelevant from there. The reason why we took this kind of multi-step approach, where we first start the proof of stake system. And then we have led both running parallel for some time. And then we merge at the end is just to give proof of stake some time to prove itself before the entire ecosystem is asked to upgrade over. The proof of stake thing exists. It's been stably running ever since so long. And at some point fairly soon, we are going to actually go and merge all of the proof of work activity onto it. So sharding is also going to happen. And sharding right now is in the there's a spec, there's prototypes of parts of it. I will admit that we were actually prioritizing the merge kind of even more than sharding recently. The reason why for this actually has to do with the other thing, which is rollups, right? Like the thing you never remember is that if you have rollups, but you do not have sharding, you still have 100 X factor scaling, right? You still have the ability for the blockchain to go up to somewhere between 1000 and 4000 transactions a second, depending on how complex these transactions are. And so with rollups, as I mentioned, the optimism, you know, fully EVM capable rollup is likely to launch an initial mean that release some in around a month or so. There's also a project called Arbitrum, which is also an EVM capable rollup. There's actually simpler rollups that are only capable of processing simple transactions that are exchanging between assets, like loop ring and ZK sync. And those rollups have already been running stably for about a year, right? So rollups aren't even theory. They've been a practical part of scalability of Ethereum for a few users for almost a year. And the thing that's left is basically taking that same model and just fully extending it to kind of not just support transactions, but also arbitrary applications, right? So rollups are coming very soon. And we're fully confident that by the time that we need any more scaling than that, then, you know, sharding will have already been ready for a long time by then. So you're basically saying fully very confident that something like, you know, an optimism or a ZK based rollup will be solving a 100 X scalability problem within the next few months. I think so. I mean, I think there's definitely a lot of people who are not going to be comfortable moving over just because, you know, it's new technology and new technology always has risks. But I expect there'll be plenty of applications, possibly even non-financial applications like the NFTs and, you know, domain names and so forth to start off just because like the risks are lower if things do break and then kind of creeping up to higher and higher value things as people become more comfortable over time. So do you think that Ethereum could have a scaling schism like Bitcoin did Bitcoin split famously into Bitcoin and Bitcoin cash over the block size debate a few years back, which is all around scaling. And people some people were saying Bitcoin should be digital cash. And so therefore it needs these big blocks and it needs to handle more transactions. And other people said, no, no, Bitcoin is a Swiss bank account is digital gold and it needs to be secure. And lots of small nodes have to be able to run it. So we care more about security than we do about handling small transactions and the small block people won. And so Bitcoin forked and now of course what we call Bitcoin is a small block Bitcoin that won that debate. Do you think that there's a possibility that some miners and people will stay on ETH one instead of ETH two? I think so, except I do think that the risks are much lower. A big part of the reason why is because we've been very open about Proof of Stake and sharding being the vision basically from the first day. And Ethereum did already have this gizmo right of Ethereum and Ethereum Classic. And a lot of the Proof of Stake proponents did actually move over to Ethereum Classic already because they recognized that Ethereum Classic community and ideology was one that's more aligned with continuing Proof of Work forever. And so you know why I'm staying on the chain where the core developers and lots of people are eagerly expecting a Proof of Stake change if you can just move on to a platform already that accepts your values. So I think that was one of the factors that did actually end up making the ETH two transition kind of a bit more secure. Another thing also is that I don't really think there's a deep schism of ideology is within Ethereum in the way that there was in Bitcoin. Like I think in Ethereum everyone is roughly on board with the idea that you either have some layer one scaling and you have some layer two scaling. There are some kind of longer term disagreements like you know Justin Drake one of our researchers for example is much more into making layer one more powerful whereas I'm more in favor of a simpler layer one and having layer two is doing more things. That's not a kind of extremely deep and fundamental disagreement like you know either approach is going to have lots of scalability and it's going to deliver a great environment for Ethereum users. So that's interesting you don't even really run Ethereum. You have disagreements with developers and they could even change it in a way that you don't like.
When Vitalik disagrees with developers (01:01:42)
Has that happened yet? Has there been a case where something has been implemented into Ethereum that maybe the community or the other developers wanted which you sort of disagreed with? There's definitely been changes that I wanted to have pushed forward that I gave up on fairly quickly because you know enough for developers or the community ended up disagreeing on them. There's been changes that were kind of pushed forward by some people who were not myself and then where I just kept completely silent. So like block reward decreases for example I was completely silent or mostly silent. Proctpal was mostly silent as it was obvious that the proctpal side was losing things that I was trying to push forward. I mean those are harder to find just because like I tend to just naturally understand what the community would accept and I don't really try to push things that I don't think would be successful. I mean there's like some minutiae around scaling strategies and statelessness and state management strategies where myself and some other core developers have some different opinions and so there's a lot of back and forth where we try to satisfy each other's concerns. Yeah my sense from afar is you're more coordinating than dictating and you're doing what?
Organizational coexistence within Ethereum (01:03:02)
Are you running the Ethereum Foundation? Is there an organization you're part of or are you just kind of a roving individual with a laptop and a few friends who just kind of writes blog posts and submits proposals? I mean some of both. I do the proposal submitting. I have some writing proof of concepts and in Python I do some kind of trying to coordinate people. The Ethereum Foundation as an organization exists so the executive director of that is Iamia Grichie. She has been doing a lot of the logistical things for about the past three years and has done an amazing job and I end up coordinating and working with her quite a lot on various things. But even the Ethereum Foundation it has an important role because it has this and of a large pool of capital and this high level of kind of public legitimacy but it's not nearly the only organization within Ethereum. There's a lot of proposals that got initiated on the outside. There's a lot of proposals that got a really huge amount of community support coming from the outside. Even organizations other than the Ethereum Foundation that have a lot of resources within the Ethereum ecosystem. So for example for the first few years consensus did quite a lot in consensus is still doing a lot but now there's also a Uniswap whose treasury has just grown a huge amount of a year or even wealthier than the Ethereum Foundation is. So I think in practice it does end up being this kind of loose collaborative effort which means a lot of different groups. So Uniswap is interesting. Uniswap is for those of you who don't know it's an application built on top of Ethereum but it has its own token and it's one of the first automated market makers a decentralized platform for exchanging cryptocurrencies with each other without having to use a centralized authority like a coin base or a Gemini or a coin list instead you just go on to you go to Uniswap and it's a smart contract. It's not owned or run by anybody except the community and a few developers and there's a token associated with it but you can just automatically trade with this smart contract to turn say your Ethereum into a stable coin to get the equivalent of dollars or back. This shows how the Ethereum ecosystem is very different than the Bitcoin ecosystem. In the Bitcoin ecosystem there's only one coin there's Bitcoin and they don't really tolerate other tokens in their orbit whereas with Ethereum you have a lot of other tokens in the orbit and you'll see blockchains that are competing with Ethereum that are trying to you know they're making different trade-offs and you know whether it's Flow or Ava or Nia or whatever there's a whole bunch of those but then there's also people who are built on top of you like Balancer and Curve and Uniswap and whatnot and so what's your view on all these other tokens how many tokens are they going to be how do you determine which one makes sense and which one doesn't and do other blockchains make sense at layer one or should other tokens only emerge at layer two now that Ethereum exists?
Blockchain tokens are like fire. (01:05:24)
Now this is definitely a very important topic. Tokens are one of those things that's really like playing with fire right like on the other hand fire is crucial to human civilization but on the other hand fire is very evil and you can burn up your family if you're not careful so the thing with tokens right is that the crypto space is not the only space that tried to build decentralized things right like there are a lot of decentralized projects that are outside the crypto space like Diaspora the decentralized alternative to Facebook that people tried to build around 2010 is one good example but the challenge with this kind of pre-blockchain or non-blockchain decentralization or crypto is that it's harder to kind of align the incentives and motivate people to actually once to participate in you know building and growing the community at a large scale like you can get idealists but the problem with idealism is that idealism is not very socially scalable cryptocurrency on the other hand you know can appeal to like kind of universal values right like where you know the real universal values getting rich for a lot of people yeah and it seems with if you've done a bit of both you've got a bit of both you've got people who have either getting rich and then there's also a movement yeah right exactly and I like I think that balance is important right like I think the failure of a lot of non-blockchain crypto shows the inability to do things at scale without that financial incentive but at the same time you know the project a lot of them more at least in my opinion a moral project so within crypto they just care about you know the pump and the volume and you know getting a powerful and expensive token that they can get rich off of like those projects end up but not really doing well in the long term either right and there's been plenty of projects where just like VC funds gave you know hundreds of millions of dollars of capital to them but you know the reality is that like hundreds of millions of dollars of capital just can't buy you a soul rich and so a lot of people end up kind of stumbling and falling on that to some extent yeah I think some of that is just driven by the pre-mind phenomenon where Bitcoin had a so-called fair launch although you can debate how fair it was but you know how fair the distribution is today but everyone sort of started mining at the same time or everyone who was aware of it whereas a lot of coins that have come subsequently the team has a pre-mind where they get a bunch of the coin in advance and as the amount of the pre-mind goes up and the competition moves from hey let's mine as much Bitcoin as possible to hey let's just create the winning blockchain and then get the big pre-mind so it's just move the competition from mining to creating or forking so it's almost sort of inevitable once pre-minds became a little bit accepted that there would be so many different blockchains yeah i think that's uh definitely fair too like i mean we're like if area once again is a kind of fairly a kind of moderate there like there was a pre-mind but no the pre-mind was only about 12 percent of actually even about 10 percent of the total supply and you know people did have the opportunity to mine or to combine the sale and so a lot of people had the opportunity to kind of become part of the ecosystem but i mean i do think that in of the less monetary kind of the movement aspects of this is important right like if you're just them you know go to coin market cap and you look at some of the top 10 coins other than like say Bitcoin and Ethereum like you can't always give a good answer for you know what values does that token represent whereas you know for Bitcoin you can for Ethereum you can for zcash for example i think you can so i think there definitely is this kind of complicated balance between different factors basically the coin can help but too much emphasis on the um on just the coin can hurt and it's challenging i think Uniswap actually did really well with their coin because like on the one hand you know you could kind of criticize it and say you know oh this was only just a measure that it was kind of reactionary that was reacting to you know kind of sushi swap trying to kind of swoop in and uh basically try to push everyone to quickly migrate over and they had a coin and so people you know got into sushi swap because they just wanted to get rich off of it and so Uniswap reacted by making their own coin but at the same time like they did this one really cool thing which is a big part of the initial distribution was the severe kind of egalitarian airdrop right like basically if you had used Uniswap even once before the airdrop i began you would get 400 Unitokens so at the time those Unitokens were worth about three and a half dollars so the joke was like you know Uniswap actually delivered on giving everyone a stimulus check and you know people really loved that and uh you know the the the supply distribution distribution of Uniswap was going to vary widely dispersed and the whole thing was this kind of Dow where a lot of people could kind of participate in decision making so i think like there's wasted you tokens while there's wasted your tokens poorly yeah the backdrop on Uniswap uh sushi swap is Uniswap was this automated market maker this decentralized exchange that launched and then they sort of got attacked they got cloned by this other one called Sushi swap you know Jokon Unisushi and then they tried to like steal the Uniswap community by saying hey come here and we'll pay you more by giving you tokens and then Uniswap was forced to actually create a token which way then gave away to their community which are called airdrops it's like helicopter drops of money except now it's in made up tokens so there's all this interesting stuff that goes on in crypto we're trying to build and maintain communities you have to figure out how to distribute the spoils but contrast how this is compared to say Facebook or Twitter you don't see Mark Zuckerberg air dropping Facebook stock on the users and you don't see Jack Dorsey air dropping Twitter revenues on the users but that's exactly what happens in blockchain land and you know Ethereum might have had a small pre-mind but i do remember early on looking at Ethereum and i think i talked to Balaji Shrinivasan one of your other guests about it Tim where we were looking at ETH back in the day when it was first launching and we were just really confused because it seemed like there was this one brilliant technical guy surrounded by like 15 other people who all had the title co-founder and it was very confusing to evaluate as an investor so we ended up not investing to our detriment but that's that's my way of saying that this was not a Vitalik get rich quick scheme i don't think Vitalik even had you know was even the single largest token holder i think there were many other people who frankly you know had a lot less to do with Ethereum's success who ended up holding a huge number of tokens so to the extent that Vitalik is the one who's working on it and pushing him forward it's a labor of love and i've always been super impressed by how his team is very altruistic and really kind of wants to make the world a better place maybe they're young and naive but it's you know it's refreshing to see that so i think you know in terms of branding a lot of people look at Ethereum as like lift to Bitcoin's uber right there's sort of a crypto right-wing libertarianism versus a crypto left-wing sort of libertarianism now let me jump in for one second here if i may ask a naive question i'll or a novice question maybe and if if i'm completely looking at this the wrong way i'd love to be corrected thinking of
Cryptocurrencies and regulation (01:13:14)
Ethereum and comparing it to say Bitcoin and considering the possible regulatory threats to Bitcoin and i think probably a stronger focus on cryptocurrency than blockchain by regulators and just by extension if we're thinking of Ethereum on some level as both cryptocurrency but also as a world computer maybe as if Amazon had its own cryptocurrency right bizonians or whatever that whatever they might call it and then AWS that even if there were a crackdown on currencies that Ethereum would have some resilience and anti-fragility in that respect does it mean that Ethereum in its entirety is less subject to regulatory threat or that it can thrive in the face of regulatory threat along the lines of that which Bitcoin could face i mean comparing the and if regulatory situation of Ethereum and Bitcoin i mean i think like both benefit from being highly international right like Bitcoin has a strong community in the US and has a strong community in China it has a strong community and you know that you do and lots of other places Ethereum is very similar in that regard and others these very strong communities in lots of different countries you know including countries that are not kind of geopolitically on the same age with each other so there's a lot of inter-resiliency in that sense now of course the other kind of aspect of politics is that it's not just about what they can do it's also about like what they want to do the reality is that regulators have cracks down on cryptocurrencies significantly less than they theoretically could right like they theoretically could like make something like coin basically go overnight right and like i think the reality is that you know they yet don't in part because they do see a lot of the positive value that's coming out of these platforms right there's even regulators that wants to use you know public watchings and i you know even things like Ethereum to build applications on top of them you know they see value in some of the kind of advantages that the things like stablecoins for example could provide or even you know not financial applications of eremia's kinds yeah if you wanted to build a fraud-proof voting application you'd probably do it in Ethereum yeah cryptocurrencies are inherently designed to be sovereign resistant right they're they're designed to be stateless and so the geographic redundancy is one aspect of it and some countries try to ban it like i think of the for a while people think China tried to ban it and that sort of failed and right now India is talking about banning it and that will end in tears right that's not going to go well when you leave your country out of the innovation the next 10 years so hopefully they don't do that but there's also redundancy in terms of design for example going a proof of stake is a different kind of redundancy than being just all proof of work so you're not subject to the same kinds of attacks i think being used for all kinds of applications no all could you speak to that yeah so proof of work is you shut down miners and miners of hardware and equipment you know where they live right they need a physical presence whereas proof of stake is validators we just need an internet connection and so they're they're kind of harder to stop and harder to find in theory and then you also have just what applications are running on top of these platforms so if you're just running digital gold that's one application but if you're also running as Vitalik said you know functioning prediction markets public goods financial systems voting systems gaming systems nifty tokens art galleries right and all those kinds of things then it gets very hard to shut it down and i actually think eventually all internet traffic will be encrypted and all of it will require cryptocurrencies to kind of just allocate scarce resources like even today there are things that we do in the internet that are centralized like caching and routing and spam filtering that should be decentralized and involve crypto payments for efficiency and once we sort of start getting to those applications it'll be very hard to turn off crypto without turning off the internet it's the native money of the internet and so if you take away value transfer from the internet the internet as we know it will be stunted at best and more likely just cease to function at some levels thank you back to you novald yeah oh yeah yeah no no yeah it's i mean there's there's there's an infinite number of of rabbit holes we can go down coming back to ethereum for a second so there's bitcoin which is clearly digital gold there's ethereum which is the world computer and you know with digital gold high price is good you want your goal to go up in value except to the extent these days digital gold bitcoin has been going up but it actually gives me some trepidation i tell people it's like my insurance policy is becoming more valuable at my life insurance policy right i don't know how i feel about that but with eth it's not clear that the price going up is always that good for adoption it's it's good for the people who are pumping and holding but is it so good for the people who are trying to use it i mean do you have any thoughts on the price of eth and how much for example we don't even know exactly how much eth there is going to be the future right the supply curve is a little bit undefined and some people say oh it could be too big this thing will get inflated whereas there other arguments saying no there are certain applications we're going to have for which you have to lock up eth or even destroy eth to use these applications so eth may end up being more valuable do you have a what is your current point of view on where the eth supply heads and what the eth price means for the ecosystem yeah so one thing that i think you alluded to a little bit is that there's this proposal called eip1559 which kind of redesigns how the transaction fee market works and you know there's a lot of kind of very wonky a kind of economic math for kind of why the specific changes that it makes make sense but one of the consequences of that change is that the majority of fees instead of going to the minor whoever creates the block would get burned like it was just whatever it did to lead it out of existence and so if demands to use the area is high enough then there would actually be more eth than they're being destroyed as being created and so you know the joke that so sometimes you make is you know if a bitcoin know if a fixed supply is sound money then you know if you have a decreasing supply does that make us some ultrasound money and it actually is not even that far-fetched to possibility like if you look at the transaction fees for the last month like they actually have been on a lot of days greater than the block rewards for that for that day so it's interesting because like it basically creates this more direct connection between people using the etherium blockchain and you know if i'm having some value right like at the beginning the way that eth was even described when we were doing the sale is that this is like gas you know you're buying this token that you need to use and if you want to spend transactions and if the token is actually a consumable right then it actually behaves even more like well i guess you know gasoline as the original metaphor right like if people want to use it they would actually have to consume it and so the value of it is actually something that sort of depends on the etherium network being useful and let's say yeah like it's a bit of a different kind of guiding principle than something like bitcoin right where bitcoin just derives value from you know bitcoin the currency derives value from bitcoin the currency and bitcoin the blockchain is this kind of thing off in the side that well okay fine it has to exist whereas in etherium like it's much more of a system where the blockchain is the point and you know the ether the asset gains value from the blockchain doing its job successfully that's interesting so bitcoin the value is in the currency or in the bitcoin itself whereas in ether the value is in the blockchain being used in the ether is the byproduct of it yeah to use my strained castles made of math analogy you know i i i think it was bitcoin is like the big impregnable citadel the fort knocks into which you're putting your gold and you and that thing has high walls and is guarded really well and they don't change much and you know it's the same as it was in 2009 or 2011 so that no one can break in but ether is sort of this dynamic network of little city states that are trading with each other so the more trade there is the more free flow of information and goods the more valuable the whole system becomes but no single point of it is necessarily as impregnable like for example i do expect that we'll see more hacks and break-ins and failures in the eth ecosystem as a whole not an eth itself but in the ecosystem around eth then we will in the ecosystem around bitcoin necessarily but at the same time eth is dynamic and growing and adaptive which just makes it more of a you know an evolving creature yeah i mean i i'd agree with that with one reservation which is that i mean i think the bitcoin ecosystem does have its own kind of taking time bond demons too like tether is one example yeah there are pieces around the bitcoin ecosystem that are semi-centralized or un of unknown trustworthiness and do rely on untrusted untrusted third parties i should say but you know as the bitcoin people say like not your keys not your coin right and trusted third parties or security holes so they're aware of that i think the bitcoin maximalist which i believe is a term that you co-coin the bitcoin maximalists would say well that's not bitcoin right that's something else right so i mean one of the things to think about here and i think you care about this more than most people in crypto which is nice is that you do seem to care about wealth inequality the genie coefficient and the distribution of coins and one of the criticisms about crypto that i see a
Wealth inequality (01:23:08)
lot is like well okay so you're getting rid of the old oligarchs with this new financial system but you're just replacing it with new oligarchs who are the original bitcoin and eth holders and how do you think about the distribution of wealth in a crypto run economy as opposed to a fiat currency aka the u.s dollar and you know the euro run economy this is definitely one i think one of the challenging kind of questions for the the community to grapple with um and this is actually one of the reasons why i kind of really like ethereum's kind of more you know multi-currency welcoming ecosystem right like you know sure okay you have eth and you know there's a limited set of opportunities to kind of get new if directly from the tab and at some point uh you know the supply is going to stabilize and if you're buying you through just you're buying it from a previous people but at the same time there are these new applications that are launching you know you have your uni as i mentioned where the yeah distribution was i mean i thought quite egalitarian right like they're as i mentioned you know the the 400 uni stimulus checks that just go to everyone who ever used the application at least once and they could try really hard to not favor wealthy users too much and then there's a big tornado cash and had an eardrop a couple of weeks back you know there's more of these assets coming in and i think like that kind of churn is um healthy like it you know it breathes new life into the ecosystem you know it breathes a second of new life into the wealth distribution and it does create opportunities for new people to be able to come in and kind of participate on a somewhat level footing as well but then if you want to compare all of this to the fiat ecosystem like it's a difficult comparison to make just because you know the kind of institutions are so different and it's kind of difficult to you know match one up against the other right like fiat currency is you know they basically get created by kind of a combination of you know the central bank and to the commercial banking and ecosystem and in terms of where the kind of new newly generated value comes in like you know both sides of that get some share essentially and like there's bad things that come out of it there's also good things that come out of it so like i know like this is a controversial position among the libertarians but like i actually like the idea that some you know if you have a fiat currency then the government can't print it and just use that as a source of government revenue um the reason why i like it is because i think if the government can earn can get money through unobtrusive means that reduces the extent to which it has to rely on getting money through more intrusive means and you know rely on like taxation and that kind of more direct right the problem is when it's unobtrusive it's very easy to do it very sneakily um and and if these taxes have to be collected now whereas uh printing can kick the can down the road for the next person to solve right right this is uh argument to the other direction yeah there's a there's a moral hazard there and i think we're watching it play out where we printed eight trillion dollars last year and who's going to pay for it right you know the nice thing about cryptocurrency of course is that like the ecosystem has much more transparent um and so you know it's easier to analyze and understand what the rules are and like within the context of a crypto ecosystem you know as i mentioned you can still do very egalitarian things um you can still you know reward people who were very important early contributors to things that ended up being very important um so you know you can still do um i have all of those things and you know we do have a responsibility to get the balance right but the environment is just inherently a more kind of open and honest one just because you know these are decentralized and if some everyone does just they see exactly what's going on yeah it's certainly more transparent like you can tell what the money supply of ETH is at any given point good luck doing that with the u.s dollar money supply or you can tell what the inflation on ETH is at any given point and as you say there's opportunities to build more applications on top of ETH and maybe ETH is the app store for decentralized applications but some of those applications can go on to capture just as much value and create just as much value as ETH itself um so i think that'll be uh it's the really interesting development in the last year is just to see applications on top of ETH really creating and capturing and building lots of wealth and and value and so in that sense this 2021 and 2020 run-up seemed a little different to me than the 2017 run-up which was based on just you know a lot of hype frankly so as we see sort of crypto playing out you've also had some very interesting thoughts on everything from radical markets to political philosophy to kind of what happened in 2020 and so on and we could spend a whole podcast on that but just at a very high level you had a really good post on your blog saying end notes on 2020 and it was about a lot more than just crypto so what else are you really interested in these days i mean is it AGI is it life extension is it public goods is it different kinds of voting schemes what's really on top of mind free that's not directly crypto related some of all of those uh so like i think the changing uh kind of way in which economics works is definitely one of those really important topics there's a couple of different kind of changes that's happening like one of them that i talked about is just public goods becoming more important right like uh of one of the ways that like people thought of economics like 50 or 100 years ago they just kind of focused on private goods like cars houses food you know things like that but there's also public goods right which are projects that benefit a large and unselective group of people and so no individual person who benefits has the incentive to personally find the whole thing but it's hard to push people to pay for it because like you can't you know denying the benefits of the thing to people who don't pay for it for example right and so scientific research is one example of a public good my blog is one example of a public good open source software is an example of a public good and like on the internet public goods are even more common than private goods are and so like our economics just has to you know just take that fact seriously and a lot of uh what's uh been happening in the watching space in some ways just is you know the crypto world trying to grapple against in those things so basically these public goods are where the the costs are concentrated like if i want to find scientific research i do it out of my own pocket but it benefits all of humanity so the benefits are distributed and so these tend to be under supplied there tend to be too few of them and so there are there are schemes out there to tackle some of them i think you've talked about quadratic funding as an example yes what is quadratic funding um so quadratic funding is this um interesting
Vitalik'S Views On Funding And Predictions
Quadratic funding (01:30:30)
mechanism that basically says anyone can donate money to public goods through the mechanism but to compensate for this and if under provision that you talk about the mechanism provides a subsidy to every public good and that subsidy depends not just on the amount that was contributed but also on the total number of people who contributed right so like for example if there's two projects they both got a hundred dollars but one of them got a say $80 from one person and twenty dollars from another person and the second project just got one dollar from each of a hundred people the second public good is much more public than the first public good and it's the tragedy of the commons on the second one is much greater right and so the fact that the second one managed to get to a hundred dollars despite the 100 wage tragedy of the commons implies that it's a really important project and so the quadratic funding mechanism actually gives a much greater subsidy to the you know one dollar from a hundred each of a hundred people project that it does from the project that got just a hundred dollars from um you know a split between two people and so we've been experimenting with the quadratic funding there's this thing called getcoin grants that happens a few times a year and that's had about like seven or eight rounds by an hour forget the exact number um just for public goods within the Ethereum ecosystem and that's worked really well so that's been one of the kind of interesting experiments that i've been following. Question on quadratic funding just to hop in here since i'm involved with a few different types of scientific research are those funders in those experiments that you've run anonymized or de-anonymized because i'm thinking through the example you gave and how there are other plausible explanations for why there might be two funders i'm just thinking about for instance reputational risk associated with certain types of scientific research. There are other plausible explanations but those largely hinge on named names versus them being anonymous so how do you think about other contributing factors depending on how you're conducting the experiments? Sure so first of all like in quadratic funding unfortunately you do need to have some kind of model of four identity because you know he needs to prevent the two people from just pretending that they are 100 people right but with cryptography you actually can do fancy things that give you most of the benefit from having anonymity despite needing to have an identity system. Basically you can have a system where people can make all these contributions and they're done in such a way that the system identifies like how many unique contributors there are for each project but where the system does not get an idea like nobody actually gets any idea of exactly which particular person donated how much money to which particular project. This is done using this really important and fascinating topic of a zero knowledge proof cryptography and zero knowledge proof cryptography like basically the idea is that it allows you to make cryptographic proofs that some statement is true so like i can make a cryptographic proof that says that you know i have 100 coins or that you assigned a message that contains like some fact about me and it was signed with your key and you can make these proofs but where the proof does not reveal the contents of the thing that it's proving right so like for example i can prove that i have an account that has at least 100 coins but i don't have to prove which account today as i don't have to prove exactly how many coins i have and there's a lot of this very fancy mathematical magic that basically creates this protocol where if you give me a proof then i know that the statement is true because if the statement is false you would have had no way to generate the proof but if i have just a proof i can learn nothing else beyond the fact that that particular statement is correct so this is incredibly powerful cryptography it's uh it's behind z-cash for example there's also a theorem application so like tornado cash um that are using it there's zero knowledge proofs also have these really nice scalability proofs um so the proofs are very quick to verify even if the statement that they're proving is incredibly complex and zk roll-ups like some of these scaling solutions end up are really benefiting from using them so very powerful technology and i think it's also very significant from a social perspective because you know we have this broader kind of anonymity versus accountability debate right of like you know the benefits of privacy versus the benefits of like basically persistent reputations and zero knowledge cryptography is really powerful because it may be in a lot of cases allow us to get both good things at the same time like you're gonna get us the benefits of uh the things like persistent reputations while at the same time getting a lot of the benefits of anonymity seems very powerful just to follow up on that you know thinking of scientific research i'm going to ask you what areas you might have particular personal interest in i know you have some interest in life extension as evidenced by the the dragon slang parable on your website or that you link to from your twitter bio but it strikes me that the quadratic funding experiments would also be heavily dependent on equally simplistic or simplified communication of competing not necessarily competing but contrasted scientific studies right because there are some instances just in my experience where scientific studies that require a lot of scientific knowledge or due diligence would have fewer funders compared to others but that doesn't necessarily reflect less importance or impact potential yes no this is also a very important point um and i think the solution to this is that like quadratic funding by itself doesn't tell up all the problems and you have to combine quadratic funding with other mechanisms um so i can give two examples one example of how you could do this is you could just set up an organization where the organization has some smart people and you know those smart people do a good job of picking who the scientists are that are really worth funding and then that organization gets a five or ten year history and people see that oh you know yes this organization does have a surprisingly good track record of funding you know the studies that actually do end up turning out to be meaningful five years down the line and then people will just that contribute through the quadratic funding scheme to this organization and the organization be able to have leverage its own reputation now if that organization ends up you know doing bad things and abusing um it's this kind of public trust that it's earned then you know people of crudgy very easily just stop contributing to it and start contributing to it into another group so that's one approach another approach is that there could be clever ways to combine quadratic funding with venture capital so the idea here is that imagine if when people make a public good they create a coin associated with that public good and they just want people buy the coin and when people buy the coin their revenue is just go to the people who wish you it and then what you can do with quadratic funding is you can basically um kind of collectively buy out these coins right so you can just say okay you know this coin is a coin that represents a project so that gave the world a say a million dollars worth of value and so we're going to quadratically find a million dollars into the coin and so anyone who bought that coin would be able to benefit right and so the idea is that like if there are intelligent investors that are able to recognize that something will be valuable you know ten years in the future then like basically they will be able to make a profit off of this and if anyone has something that like is maybe difficult for the kind of wider public to determine is valuable at the beginning but then is likely to lead to some important outcome that just everyone recognizes is really valuable sometime in the future then you know kind of these investors can fill the gap right so like you have these two approaches like you can either rely on reputation and kind of do it retrospectively or you can rely on this kind of combination of quadratic funding with you know tokens and investments into it prospectively so I think both of those are really interesting I love this possibility to combine also right I mean you could potentially have all of the elements that you described combined and know all you you sound like you want to jump in I was just thinking that the
Naval on campaign financing (01:39:23)
campaign financing kind of works a little bit like this or maybe accidentally maybe the system is just navigated to it through kind of a complex systems level intelligence but if you look at campaign financing for when people run for office there's a maximum limit they can get per donor right and so an individual can only gift a certain amount to a congressman or to a senator or presidential candidate and then the feds also have matching funds on top of that so it's a combination of these schemes because by limiting the amount that any one person can give you're sort of creating a quadratic although it's not truly quadratic like I you know someone very wealthy I guess they could give a lot more through a a side vehicle but then that's less efficient because they're not allowed to coordinate with the main campaign so there is kind of a really badly implemented version of quadratic funding with matching dollars already in existence and federal campaign financing. That's a good point. Yeah yeah Vitalik what areas of scientific inquiry or research are on your short list of most personally interesting at the moment?
Scientific research Vitalik supports + living to 1,000 (01:40:17)
Yeah so you brought up life extension life extension is definitely really important to me like I think I in the coronavirus as I'm actually even had the positive side effect of kind of speeding this along in some ways but there's a lot of extremely promising things happening in biotech. I think there's a very significant chance that like where we're standing today is basically is for biotech the equivalent of where computers were in 1950 right and so if you imagine you know the difference between the NEAG and you know like a modern kind of laptop or smartphone that's the difference that we're going to see between the biotech of a 2020 and the biotech of 2019 and so if right now we can already come up with vaccines for a virus well a year for deployment to start but really the whole the whole thing actually happens much faster and you know most of the delay can be blamed on like bioconservatism but that's in a whole other discussion. If you go for even there and then you know add 70 years of progress to that like it seems very easy to see even the process of aging turning into something that just becomes reversible and it being a regular thing for people to live you know one and a half to centuries and then go even further from there. There's just a huge kind of nice humanitarian outcome that can come from that you know basically like the concept of your grandmother dying is just going to kind of slowly leave the public consciousness the same way that the concept of getting lost in a city slowly left the public consciousness over the last 25 years as we got better cell phones and I think that's a really lovely and just kind of much better role to spend a lot of resources to shoot for. Do you think that's realistic though given all the three letter agencies that slow down experimentation and development because I worry it's more like nuclear power right where they can't tolerate a single death so the innovation isn't really allowed. Right so this is where I say a controversial thing which is I think I'm very happy that the coronavirus has helped to delegitimize bioconservatism to the extent that it has. Yeah I agree with that the Moderna vaccine was ready on Jan 13th. Yes and like even things like human challenge studies right like the default I think biowethics opinion around a year ago is like you know oh my god this is unethical and you know now like in the UK they're actually happening. No this is great. Yeah it is good if it breaks down bioconservatism to some extent because the pace of innovation is too low it's like what we've done to nuclear power if we do that to biotech and we kind of have already to some extent but if we do it even more then there's no chance of you know grandma living forever there's not even chance of me living you know 50 years longer than a lone grandma living forever. You know you're 27 I'd love to see where you're at 47 you're going to be a you know really interesting guy you already are but you're going to be an even more interesting guy. Even more interesting at 447. Yeah oh well that'll be fun. Yeah that'll be fun. Well I hope you guys can both come to my 1000th birthday party. Are you on some kind of caloric restriction or intermittent fasting? So so far I yeah well I do like the poor man's intermittent fasting which is that I just usually don't need breakfast. I do again the usual exercise nothing too fancy. I eat kind of at least a couple of the basic supplements that though that the life extension cool people are recommending. Nothing too much fancier than that so far though you know very closely watching the space and then I'm sure I end up doing much more things so you know 10 or even five years from now. Do you take rapamycin? I do not take rapamycin. Midformin is the one that I take. Ashervagantis another that I take. And just for those people listening who who should know this number one this none of this is medical advice number two metformin just as an example none of these things should be taken without advice of a medical professional. Metformin is used in the treatment of type 2 diabetes glucophage but I'm also familiar with it. How do you decide what to implement versus not implement for yourself personally? I just and ask around a lot of people in the life extension community. Yeah you know read the studies so yeah you know look at just what are some of the high level results and then just kind of narrow it down to a couple of things. It is remarkable how many people in various sub-communities have been using a lot of these interventions longitudinally. I remember when I was working on my second book looking into transverse veritral and finding even at that time this was 2008-2009 people who had for years been using want to say 500 milligrams per day so you were able to identify certain long-term effects and side effects granted anecdotally but still having an end of I don't know maybe a thousand people on this forum. So there is a lot to be gleaned from these groups. Yeah there's even a new one making the rounds glued on like peptides GLP1. I'm sure you've seen some steady floating around on that but yeah these things are very unknown. I wish these were more out in the open and that there was a very very strong anti-aging research community that was functioning out in the open that was trading notes on what works and what doesn't and able to run some kind of human trials you know more efficiently because fighting aging is a very time sensitive task. It is yeah it's a half the deaths of world war two for every year that you know it gets delayed or however that number of life saved for every year that gets brought earlier. Yeah one analogy I heard that I liked was you know we're all born time billionaires with billions of seconds of life and then we spend those and now you get to some of like Warren Buffett and I'm sure he would trade a hundred billion dollars for more billions of seconds but he can't right. In fact health care is the ultimate inelastic good on your deathbed you'll spend any amount of money to live even an hour longer so certainly the economic incentives are there the personal incentives are there but because of this concept that you know people who don't know what they're doing are going to hear something and run out and like ingest some substance and then die you know drink bleach or take too much ruppomycin because of that kind of fear we're not allowed to do any real innovation or discovery and it's literally killing us outright and if we just reframed it as well no it's not that we're dying of aging we're dying because you won't let us do the innovation do the research it might take on a different take but I was actually a little disappointed with the coronavirus response because I thought we would have had faster trials of the vaccines but the fact that they were still kind of slow and even now the deployment is being held up because we have to create these perfect vaccine delivery packages instead of just a kind of quick and dirty vaccination and we have to go through these very regimented protocols rather than just saying everybody just line up and let's just go as quickly as possible because we insist on doing things in kind of this bureaucratic overly controlled way we're still slowing things down and if coronavirus would get us to accelerate our normal processes into a wartime footing then what will yeah I also just want to add that I think given my experience with a highly stigmatized field of scientific research which is psychedelics and psychedelic compounds for intractable or difficult to treat psychiatric conditions I think that life extension or the community itself and proponents thereof could spend a lot of their oxygen and calories trying to convince regulators and three-letter acronyms to classify aging as a disease and therefore allocate funding and I think that that is going to be very difficult and possibly wasteful compared to decentralized or distributed funding from citizen philanthropists or donors of various types I think a lot of it's going to come down to independent financing since that has been the case even all the way up to phase three trials for compounds that show tremendous effect sizes in the treatment of depression and PTSD and so on I think another important thing also is just kind of international outreach and more connections because ultimately you know the US is not the center of the universe and there's plenty of very smart people and you know the EU like Singapore China India or Canada whatever other places you know there's a lot of great talent there that I think could help all of humanity solve these problems faster so if we can then just work together on the problem more hopefully prevents stupid nationalism from adding too much friction between things yeah I think a lot of the newer generation rather than just being patrons of the arts they're trying to figure out how to become patrons of science and instead of just doing venture capital we'd all like to figure out a model for venture research because we need more science right science is upstream of technology and the faster we can move science the more it'll benefit us across the board so I don't know where else you want to take this Tim but I have some kind of more of the closing questions type for Vitalik if you're ready for those I want to take this where you want to take this of all okay yeah so one question I kind of have is given all the tumultuous change in 2020 because coronavirus was
Vitalik’s predictions (01:49:54)
a trigger but it was a trigger for accelerating a lot of things that were already happening like where do you think the world heads in the next few years where maybe your peers might disagree with you what are your contrarian views or your kind of uniquely held individualistic views on how things are going to play out that are not yet consensus and this is unfair because aging was a good one you you made a solid you went out on a limb on aging aging is an example that's like the contrarian in the world but definitely not contrarian among a kind of my circles I guess yeah when I went through your writings I mean the idea that there will be many blockchains and many tokens right is quite different the idea that yes the internet has increased the number of public goods rather than the number of private goods is actually quite contrarian because we think of it as going more and more private property but on the internet it's one to many so there's all these public goods and I think you were the first one to really hammer that point home in a big way and then I think this aging thing is another one so I'm just digging seeing if there's any more yeah no another thing like that might have been like on a classic two years ago but is very much not today would be kind of just geographic decentralization even with the Ethereum like we made we took a very active effort of you know not making it too centralized in any one country or any or any one city in any one place and I feel like we've been fitted a lot from that but now of course some you know everyone is geographically decentralizing and coinbase has announced that you know like none of its management so live in San Francisco and so forth it's very hard to associate Ethereum with a single country I think it was created by mostly Canadians and your blog has a dot CA top level domain well it depends well I'm a Canadian but then right my blog has a dot CA the foundation is Swiss and now there's some guessing a poor in entity as well a lot of the initial developers were German you know a lot of developers are from the US as well but one of the most efficient if too quiet is based in Australia so I feel like we've had it actually like so those values seriously and that it did it well and and Ethereum has spent your the foundation has spent a lot of time in East Asia I think I've seen you kind of go from conference to conference in East Asia and Korea and Japan and places like that spreading the word so it is quite decentralized geographically what advice do you have for someone who wants to get into Ethereum and doesn't just want to go and buy the token right who actually wants to
Advice For Newcomers And Language Learners
Vitalik’s advice to newcomers and language learners (01:52:09)
dive into the ecosystem what is a person to do to get involved in the theorem community in the ecosystem where where the points of leverage I think learning to build an application and actually trying to build an application is I think one great place to start if that's the sort of thing that interests you like even if you don't turn it out as a yeah full-time developer it's like forcing yourself through the process still helps you just understand like you know what are the different pieces and actually what function do they serve another example another approach and there's well now obvious way to kind of temporarily suspend it but generally there's a lot of local communities that you know kind of in-person meetups and all that that people can be part of and that's often a great opportunity to get to meet other ethereum people there's a lot of materials online although generally I am a yeah and a much more big fan of hands-on learning so kind of learning by doing instead of learning by taking in information and so you know highly recommend I just trying to build one application for a lot of people otherwise yeah there's just a lot of different communities and make you do have to just stick and go in and start taking part in them yeah for those of you who are curious I think Vitalix blog has spawned quite a few of the things in the ethereum ecosystem like I think it was one of your musings that led to the creation of Uniswap and you'd recently been talking about roll-ups and social wallets and and all kinds of other things like me built on top although I maybe this is the first year where I feel like the community is outpacing your ideas with nifties and with some of the games that are coming up on top of ETH and so on it does seem like that there's a lot of innovation going it's hard to keep up it's very very hard to keep up but that's a good thing for those of you also looking for what's next down the rabbit hole Vitalix briefly mentioned zero knowledge proofs I would say that you know the beginning of the rabbit hole the entrance is bitcoin then you go a little further down you find ETH but then when you find zero knowledge proofs that's the big mind-blowing moment where you realize just what crypto is capable of and there are analogs for what crypto can do that almost cannot be done in the real world it's sort of like when you go into physics and when you encounter quantum mechanics it sort of makes you rethink that no not everything necessarily maps onto exactly how I observe it the same way when you get to zero knowledge proofs you realize that the levels of creativity and crypto that enables are greater than what we might have had pre-crypto so that's also an interesting space to kind of learn about and I think zero knowledge proofs have probably been incorporated into an emergency theorem system ecosystem even more than we expected right because a lot of people call it moon math early on it was considered too hard to be practical but people have been chipping away at it yeah no it's i mean moon the moon math is definitely significantly less moony than it was even one or two years ago like even snarks so another term further is zero knowledge proofs have just become considerably simpler sometime around one and a half years ago i might even try to make another post i'm one of my most recent ones on nevitalik.ca where i tried to talk about like how roughly how does the case narks work i actually feel like i need an explanation that at least the high school version of myself would have understood which is like it's still not perfect but it's like significantly more understandable than any of the previous ones have been so i feel like the ideas are definitely trickling down oh so i do have another answer to the question of like what things are you thinking about that other people are not thinking about yet i think this is kind of taking a kind of cultural and social context seriously which sounds obvious but in some ways it really isn't right like even within the crypto space i feel like a lot of people in their models of you know is bitcoin going to beat governments or are these things going to be censorship resistance they tend to look at it purely from a yet technical point of view and the basic ways are kind of implicitly assuming that you know the governments are going to try as hard as they can and the crypto space is going to try as hard as it can and it'll be a battle and like one side and you know that person's preferred side is going to win but the reality is that governments are not trying as hard as they can and a big part of the reason why is that government is not even so much in entity as it is a battlefield right and like what are the soldiers fighting on the battlefield a lot of it is just their cultural movements and a lot of the success of cryptocurrency and blockchains i think they really have to do with the way that they have kind of interplayed with a lot of the important cultural trends of the last ten years like this including things like people's distrust of financial institutions after 2008 i think people's distrust of centralized tech companies after 2020 is also going to play a big part also just another fascinating thing i think is like even like one thing that surprised me is how cryptocurrency managed to appeal to a lot of people who would not normally think of themselves as libertarians and that's something that i think like did end up uh and even blindsided a lot of people and the reason why that happens has to do with kind of very deep and specific aspects of like how people think um it's kind of how people think ideologically right like a lot of people think of like say authoritarians for example as just people who hate freedom and want to restrict things but like the reality is there's lots of people who are in favor of very specific restrictions or even in favor of restrictions that benefit their own team but they're just as easy very easily flipped to be in very pro-freedom when you know it's their own team that's being threatened or even when you just kind of take things out of the cultural context of uh you know what should the governments do and into the cultural context of well you know like how should technology work so there's a lot of these kind of very subtle effects um and that determined you know whether blockchains and some of the ideals behind blockchains that kind of succeed and failed and these are kind of very subtle properties of like how humans think and even how humans interact with each other are extremely important in a lot of ways and the reason why they're important is they just determine the effectiveness with which people can coordinate right like you know humans are naturally kind of very attuned to a kind of social trends and humans have a lot of motivations that have to do directly with you know what position they have within a kind of social trends and context that are made up by other people and this is just a space that the you know watching in cryptocurrency space is going to navigate well and if it navigates in poorly then I think blockchains will be stopped by governments or like they won't be stopped entirely but you know the amount of usage can easily be more than 90% lower than in otherwise would be but on the other hand if blockchains can you know successfully show to a kind of large enough coalitions that this is a valuable and this is a good thing for the world then they can be very successful and like this is just something that you know the space needs to have a better understanding of and take seriously yeah I think there's a lot of good points you just made uh what I like is that government is not an entity or an enemy of the battlefield it may just be the battlefield that all of these factors can kind of win simultaneously I think you made this point in your blog at in one place where you said that in 2020 you know big government won big social media won big centralized applications won but decentralized also won so there you can have multiple winners these are honestly either or you've also made a an argument in one of your blog posts which is also be on the scope of this podcast but I think it's worth digging into for people interested in game theory where you basically point out that a lot of the toy models that we consider when we're evaluating how these things will end up have a so-called Nash equilibrium they have a solution in game theory because a lot of individuals are making decisions independently but because majority coalitions rule and people can collude or they can form coalitions that you end up in these unstable cycles where you have a majority win one round and then the definition of the majority reshuffles and then they win the next round and so we see this in politics where it seems like okay now the democrats are in charge forever and oops no now the republicans are in charge forever and oops no now the democrats are in charge forever again and subtly underneath what's going on is a definition of democrat and republican is unstable they're just coalitions that are being formed and reformed as needed so yeah these these are lots of great thought-provoking points I'd really love to touch base with a Vitalik who's 37 you know ripe old age of 37 out of this thousand year muthu is a lot like life span so nival I don't know if you have questions remaining so I really just have one question and that is a pet curiosity of mine it's really delanguage learning so you have studied quite a few languages I looked at a clip of you answering questions in a q&a at some point I don't know the year in mandarin and I was very impressed I went to two universities in china and nijanggoing jangda kanghawa so I wanted to ask if you could give advice now having tested many things used many approaches for someone who wants to learn mandarin what would your current recommendations be to them sure so for any language my usual approach is like I think at the beginning like you do need some kind of explicit program so like one thing that I've used is the pamsover podcast so that's p-i-m-s-l-e-u-r so it's just a series of these 90 minutes or sorry 90 30-minute podcasts or 27 hundred minutes or about two days in total that you know you listen to one of them every day and they just they teach you the language from nothing up to you know some very basic level over the course of these 90 episodes so you start from that but then even after that you don't have nearly enough to understand anything so from there sometimes you can find other podcasts like and eventually you graduate to just like regular podcasts in that language so like things that are not even optimized for language learning well like at the beginning you do want to find like resources that are optimized for learning flashcard apps i'm helped for chinese specifically for memorizing the characters or at least you know the first time out of you know 500 or a thousand or so and there's plenty of flashcard apps they're all about equally good and then once you kind of get asked some level then you get to a level where the best way to get even better is to just talk to people another kind of path that works somewhat at the beginning actually is like if you just go into like you know a city and you just like start like reading various signs on the street and you try your best to just understand what you know what they mean i mean if you let's see it where you don't understand you look it up like that's often useful i also use dual lingo as well then helpful in some cases so it's just like a combination of these techniques and like you have to you know when you start it's difficult and then when you get asked some points like you you get to a point where you can just kind of level up just from talking to people from there yeah great advice and i'll just add to that that google translate with image translation can be a incredible savior in the lands where you don't understand the orthographies of in japan my brother doesn't speak japanese but we traveled there and he was able to more or less accurately translate kanji the hansu the chinese characters using google translate it was remarkably accurate it's improved a lot and as i understand it you know another thing that you've done is is watching now i'd like to clarify here is it watching films and other languages or is it watching english language films with subtitles in your target language which is also something i've done it is watching films in other languages sometimes we'll subtype those in english got it thank you neval would you like to to wrap up no thank you thank you vatala it's really been an honor i think along with uh you know nix sabo and halafini and we die in a few other you know very influential people in zuko and so on you've just been incredibly influential in the development of blockchains and uh i believe that blockchains are the third wave of the internet after the web and mobile and they're quite fundamental to how the internet doesn't will operate in the future you're probably the youngest one of that group so uh you're going to be involved in it for hopefully a very long time uh and it's going to change uh computing as we know it uh i'm betting on it i know many people are and so thanks for your work and thanks for taking the time to help bring this to a broader audience i mean i'm i think i'm not even the youngest already i'm like hiding from uniswap is even younger than i am and that you know the uniswap treasury has more funds in it than neither in valuation treasury so you know this revolution proceeds fast man yeah when i was first starting out my first company i remember i was 25 and ceo and company was valued highly in the ct of the company he was in his bid 30s he said huh he said so you're used to being the smartest young guy in the room right just wait till you get a little and here we are thank you gentlemen thank you hey guys this is tim again just a few more things before you take off number one this is five bullet friday do you want to get a short email from me would you enjoy getting a short email for me every friday that provides a little morsel of fun before the weekend and five bullet fridays a very short email where i share the coolest things i've found or that i've been pondering over the week that could include favorite new albums that i've discovered it could include gizmos and gadgets and all sorts of weird shit that i've somehow dug up in the other world of the esoteric as i do it could include favorite articles that i've read and that i've shared with my close friends for instance and it's very short it's just a little tiny bite of goodness before you head off for the weekend so if you want to receive that check it out just go to four hour workweek.com that's four hour workweek.com all spelled out and just drop in your email and you'll get the very next 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