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March 16, 2020 - Lex Fridman Podcast

01:34:50

Vitalik Buterin: Ethereum, Cryptocurrency, and the Future of Money | Lex Fridman Podcast #80

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

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