The 23-year-old whiz dives into who blockchains will someday help, how we transition from Ethereum for digital cats to higher social impact, and why even big companies like JPMorgan, Microsoft and BP are using Ethereum. He also walks through some important technical challenges Ethereum faces with scaling and the shift from a proof-of-work consensus algorithm to proof of stake. And he reveals why he isn’t a big believer in on-chain governance. Plus, he talks about his worries and gives us his predictions for 2018.

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Some of Vitalik’s blog posts that we discussed:

On token sales

Interactive coin offerings

Blockchain governance

Transcript

Laura Shin:

Hi everyone, welcome to season four of Unchained. The podcast where we hear from innovators, pioneers and thought leaders in the world of blockchain and crypto currency. I’m your host, Laura Shin, a senior editor at Forbes, covering all things crypto. If you love Unchained, please give the show a positive rating or review on itunes. Those ratings and reviews help people find out about the show. Also spread the word on Facebook, twitter, slack, telegram, and wherever you discuss crypto, and don’t forget to follow me on twitter @laurashin.

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My guest today is Vitalik Buterin, creator of Etherium. Welcome Vitalik.

Vitalik Buterin: 00:01:04

Thank you, it’s good to be here.

Laura Shin: 00:01:14

So you wrote the Etherum whitepaper a little over four years ago and Ethereum has been live now for about two and a half years and it’s now a project worth about 90 billion dollars. What were your feelings, expectations, and vision when you first conceived with the project? And how has the reality of Ethereum compare to what you initially thought?

Vitalik Buterin: 00:01:20

When I came up with the idea, I thought that the idea clearly made sense. And, the second thought I had is this is clearly the next logical step to take with blockchains. If we can go from blockchains to one application to blockchains with five applications to blockchains with built in general purpose programming languages. So, my next thought is why hasn’t anyone done it yet? And, my response to that fact was, well it has to be because there is some kind of fatal flaw in the design. And basically something that as soon as I released a whitepaper, five really smart cryptographers would come in, email me and basically tell me why I’m completely stupid in even suggesting something like this. And, to my surprise, this just totally ended up not happening and a lot of the cryptographers I respected at the time actually sent emails saying that, you know, wow this is a great idea, I’m excited to be following the progress.

Vitalik Buterin: 00:02:22

So that was my first reaction. Then, once it became a bit more clear that the idea made sense to at least try working on it, I thought OK, well this is an interesting project. I’ll work on it for a few months and then once it’s kind of out there, it’ll be it’s own thing and I’ll go back to doing Bitcoin magazine and I might go back to university. Then a bit later, you know, there was the Miami conference in January 2014 and that was when I basically realized, oh wait, this is vastly bigger than I ever imagined it would be and I’m probably going to end up spending a bit more of my time on it. And, the kind of community interest and the growth of the project just kind of kept on going up and up from there. And I’ve been pretty much surprised by each step.

Laura Shin: 00:03:15

Wait, just to go back to that, so when you thought that you would put this out there and then go back to university and stuff like that. What exactly were you envisioning? Why did you think that you wouldn’t need to be involved in? How small did you think this would be? And I don’t even know what you’re picturing there or what you were picturing then?

Vitalik Buterin: 00:03:38

The first version of Ethereum that I had conceptualized was actually much less ambitious than what I ended up coming up with a few months later. And, it’s definitely not as ambitious as what I’m thinking about right now. I don’t know if you’re familiar with protocols like Mastercoin? These are protocols that existed back in 2013 where they’re not their own independent blockchains. They’re kind of meta protocols on top of another protocol. So the idea would be that you would run a nod of another blockchain. So it could be Bitcoin. In my case, it was Primecoin or something else and then you would also run this other node and this other node would just kind of tell you a different way of interpreting the transactions in the underlying blockchain. So it’s kind of like embedded your language inside of another language.

Vitalik Buterin: 00:04:23

And the reason why I did this originally is that I thought that this would be something that would be worked on mainly by myself and possibly a couple of other people and I wanted to be just kind of as limited and simple as possible. So basically, I would make something as simple as possible that works. Then, get it out there and then, get it done fairly quickly and it would be fairly autonomous. And that’s what I naively thought at the time. Obviously that ended up being totally wrong. Now as the amount of interest in Ethereum grew all the way through December 2013 and January 2014. So just those first couple of months I realized, oh wait, there’s this entire kind of small army of 10 to 20 people who would be willing to help develop this sort of thing. And, building Ethereum as a meta protocol is a good design decision for saving work. But, it’s not really a good design decision for making a protocol. There’s just a whole bunch of good reasons why meta protocols like that just aren’t that good of an idea. At that point, I made the decision, OK, we’re not doing that, we’re going to make Ethereum a separate blockchain. And that already increased the workload and in part because it’s actually harder and in part because it unlocks a whole bunch of other possibilities. And, it just kind of kept growing from there. After Miami, the workload did continue outperforming my expectations. But that’s probably just myself not really having a good intuition about how long stuff is supposed to take. And, in general in software development, it’s a rule that pretty much everything takes three times longer than you expect.

Laura Shin: 00:06:16

We were saying that Ethereum has continued to surprise you as you’ve gone along and it’s turned out much different from your expectations. What are some of the other ways that it’s differed as you’ve gone along? This is now, four years ago that you were talking about. I’m sure your vision of what it would be and how it’s turned out has been quite different over this time period.

Vitalik Buterin: 00:06:37

Yeah. I would say just the sheer scale of attention, application usage, pretty much everything is a vastly bigger than I ever thought it would be. I would say that’s on two fronts. Where the first front is in Ethereum’s role inside of crypto. The second role is just the size of crypto itself, including bitcoin, including the various altcoins, including bitcoincash and so forth. I was definitely not expecting $15,000 prices. So that’s one very big thing that I was surprised about. Another thing that I was surprised about is probably just the various set of specific challenges we ended up happening. Things like the various set of logistical issues of setting up the foundation or the DAO fork, dos attacks, scaling challenges. When I was thinking of Ethereum, I wasn’t really thinking too deeply about a lot of that stuff. Overtime it’s just, certain things ended up happening.

Vitalik Buterin: 00:08:08

The third major thing I wanted to bring up is what Ethereum would be used for. Ethereum’s first vision was basically a general purpose platform for financial contracts. If “X” happens, then send $5 to account “Y” if “Z” happens then send $5 to account “B”. That was basically what I thought Ethereum would be for. Over time as the amount of attention grew, the amount of attention also became wider. And people started talking about, “oh, let’s use Ethereum for IOT stuff.” “Oh, let’s use Ethereum to implement democracy on the blockchain.” “Oh, let’s use Ethereum to implement identity systems, supply chain stuff, internet infrastructure, domain name systems.” And, so on and so forth, and that list just kept on growing very quickly. So that’s probably the third thing I should really mention I was surprised by.

Laura Shin: 00:08:55

One other thing I wanted to ask you about when we talk about initial vision versus reality. I did see a 2016 WIRED article that you talked about how blockchains will empower the little guy and also dis-empower the big guy. And there was a quote in the article, you said, “And personally, I say screw the big guy. They have enough money already.” But, if I look at all the different things that Ethereum is doing. The Ethereum enterprise alliance counts companies like JP Morgan, BP, Microsoft as members. Why form an alliance like that, that would enable the big guy to use your technology? How do these kinds of companies figure into your vision for what Ethereum can bring about?

Vitalik Buterin: 00:09:41

That’s definitely a good question. I don’t remember the exact context into which I made the quote. I do really think that blockchain’s primary value is in empowering people that don’t have access to basically, in part, finance, in part contracting ability, in part just the ability to make other people trust them and things like that already. As far as where big companies can fit in, I do think that they have a role and I do think the smart ones that take the first step and are willing to kind of play with the technology rather than rather than against it, can survive and even benefit from the whole process. One example I could give the very practically is if you look at something like Microsoft for example, you might notice that Microsoft’s kind of roll and position in the space, just the tech space as a whole has really changed in the last 20 years. Where in the 1990’s they were this kind of evil big, bad monopolists that was constantly suing people and constantly abusing its monoploy position in various ways. And, the open source free software, cultural Zeitgeist is basically that these people are the devil and Linux is going to come in and save us. Now I say this as a continued proud linux user, But, over the last few years it seems as though people emphasize the desktop proprietary side, much less because basically everything’s moved over to the web.

On the web what you have is basically a kind of proprietary software that’s actually even worse. Because, something like Microsoft Windows, sure you don’t have the source code, and surely it could be doing all sorts of crazy stuff to you, but at least it’s running on your computer. At least people can kind of analyze it. At least you have basic control over things. Like, if you run this program on an offline computer, then it has no way of screwing you over by sending your personal data to anyone. But, with online software as a service, you know things like facebook. You really have even less control and basically none whatsoever. And, initially people didn’t realize this as much because the software as a service companies were a kind of new and shiny thing and they had this positive image. But, especially over the last couple of years, I think the tides are really turning and people are realizing, “You know, oh wait, that’s the actual problem.” And, this is where a lot of the kind of yearning around things like self-sovereign identity systems comes from. This idea that oh wait, Google, facebook and twitter basically control your identity and there are these big unaccountable centralized behemoths. Even if some of the people inside of them have good intentions, you know the founders that came up, don’t be evil slogan are still heavily involved. But even still their incentive and their pressure isn’t one that’s kind of naturally on the side of those things.

And with Microsoft on the other hand, first of all, I think their culture has improved a lot, especially with Satya Nadella becoming CEO and you know, you notice that they’ve become very actively interested in blockchains. They have growing open source divisions and inside of Azure they are willing to play nice with Linux distributions. Now things are very far from perfect, but it still seems like Microsoft as a company, at this point, actually is quite naturally aligned to be on the side of people controlling their own stuff. And the basic reason is that, web companies, you are not their customer, therefore you are their product. Whereas with Microsoft, you’re still their customer. So they have a bit more of a willingness and an incentive to basically refuse to completely sell out your data. That’s just one kind of fairly intricate example of how I think, you know, there are big guys that are fairly well positioned to be on the right side of things. And so as far as the corporations go, there’s a lot more of those and you know, there’s a lot, a lot of other examples of companies that are kind of fairly neutral but in service of their positioning, but that, you know, it could still be quite helpful to the industry and, to the technology. So even JP Morgan as one example. It just happens that they’ve been actually quite helpful in building out Quorum.

Vitalik Buterin: 00:14:40

And so I think the thing that I learned there is that I stopped viewing large corporations over the last few years as kind of singular evil behemoths. And, as I’ve come to understand them more. I’ve come to realize more that these are very complex institutions that are staffed by real people. And even if there was a lot of sociopaths in there, there’s also a lot of other people in there. And, realistically speaking, if you have a company of 50,000 people, there’s no chance in hell there’s not going to be at least a few hundred rabid blockchain enthusiast inside of there. And, that’s part of why you have JP Morgan actively contributing to Quorum. All these oil companies having internal blockchain projects. Microsoft in part doing a lot of things and so forth. Though in the Microsoft case, I do really think that the excitement about Ethereum and blockchain really does go pretty high up to the top. So that’s there.

Vitalik Buterin: 00:15:46

As far as governments go. And that’s definitely a kind of interesting and a multi-faceted story because they are on the one hand, people that have the ability to regulate the technology. And even though it’s theoretical immense to resist their censorship. Practically speaking, I think they’re right now the industry is really benefiting from quite a bit of lenience on their side over top of anything that we expected three to five years ago. And I think that maintaining that as much as possible is good. And also there are people in these governments that do you want to be active users of the technology. So when I visited Taiwan a few weeks ago, for example, there was a member of parliaments, I think Jason Shue who visited the meetups. He seemed excited about the possibilities of using blockchains to improve their democratic political system. So these things exist.

Laura Shin: 00:16:53

Well, I was going to ask you, here in the US, Vladimir Putin doesn’t have the best reputation. And I wanted to ask why you met with him. So, do you also kind of count him in the same bucket is what you were just describing or why did you meet with him?

Vitalik Buterin: 00:17:09

I think the meeting with him in particular was probably a bit over hyped, because it was basically, we ended up talking for maybe one or two minutes. I met him and I got to see his personality a bit and let him know that Ethereum and blockchain technologies and so-forth exist. And what we’re up to. And he’s like, “OK, great. The Russian people are building cool tech to improve the economy.” And I think that inside of the Russian government in particular, there are kinds of people lower down who are more interested and there are people lower down who are less interested.

Vitalik Buterin: 00:17:57

So one of the kind of champions of this space for example is the more active ones, Herman Gref from Sperbank. And if you look him up, he actually probably has at least in the US, one of the highest reputations that people in the kind of top level Russian establishment. I think he might have even been involved in getting Russia into the WTO about 15 years ago if I remember correctly. So it’s once again the sort of place that, on the one hand, Russia has great tech talent and it does have like all of the people who are really kind of thirsty for positive change. And, on the other hand, there is the side that starts stupid wars in Ukraine. So you have to kind of take one side and hope the other side doesn’t do too much damage. And, I guess the reason why I’m involved in part is basically just I think we do have a large community there and there’s also just the angle that with myself being a Russian citizen, I just have the practical ability to have these people listen to me more and accept the ideas more. So I figured, you know, if that exists then it’s still positive to try to take advantage of it and push things in a good direction.

Laura Shin: 00:19:19

Well, speaking of pushing things into good direction, you recently tweeted about how the market cap of all cryptos had reached more than half a trillion dollars. And I think now it’s like around 700 billion. But you then you said, “Oh, I don’t know if the companies have earned it.” And, you gave some examples, for instance, you were wondering how many un-banked people have been banked or how many Venezuelans were protected from hyperinflation. And here on the other hand, when we look at the actual things people are using crypto for, it’s things like initial coin offerings and Crypto Kitties. So how do you think we will get from these particular applications of crypto that basically benefit the already privileged. To the world changing ones that you idealized in your tweets?

Vitalik Buterin: 00:20:07

Yeah. So first of all, I definitely will say that if I was worried at 500 billion. At 740 billion I’m even more worried. I’d say that a large part of it is that right now there is a lot of expectation that stuff will be built. And there are people who are building stuff. There’s that UN World Food Program that I keep talking about. There are various identity projects. There’s various stuff. And all these various different countries.

Laura Shin: 00:20:38

Some of those things are private blockchain though right? Are they public?

Vitalik Buterin: 00:20:54

A lot are, but one of the key reasons why a lot of it is going private is because the public blockchain scale ability is total crap. Basically, there’s a lot of stuff that’s being built on a lot of stuff that people want to build, but it’s really because of the technical obstacles that they can’t do it at this point.

Laura Shin: 00:21:05

So does that mean that you think some of these things will actually flourish more in private blockchains or do you think it’s just happening for now?

Vitalik Buterin: 00:21:14

I think in the short term, a lot of these things will definitely flourish more in private blockchains. In the medium term, I really hope that we can make public blockchain scale ability be good enough that, even the naturally private blockchains just end up being moved on to public blockchains. Because, the public blockchain based layer, the scale ability is good enough and why not? One example of this is that there was this technology called plasma, I’m sure you’ve heard a lot about that Joseph Poon came up with a few months ago. And this basically allows you to kind of have, you know what the Bitcoin people were promising back in 2013, which is kind of private chains anchored in a public chain. In the case of plasma, the anchoring actually is meaningful and there’s a good mathematical understanding of what the anchoring is, which basically is that, if you have one coin inside the plasma chain than even if the plasma chain totally breaks, then you could use that to recover one coin inside the public chain.

Vitalik Buterin: 00:22:20

And, so coins in the plasma chain are kind of actually equal to coins in the public chain without transactions in the plasma chain taking up actual public chain space. I came up with something a few days ago that I called minimal viable plasma, which is basically a way to take that protocol and maybe simplify it by a factor of five and still keep the basic properties. And this is something that I actually think will be developed very quickly and I really hope that a lot of the institutional token projects can just quickly spin up and basically start using it. If that happens then I think we’ll have something really interesting because even just that as a product, basically means that you have a system that can be used for issuing just tokens at enterprise scale, whether it’s companies, whether it’s governments, whether it’s random individuals, whether it’s chat applications, while paying very low public chain transaction fees. So the public chain transaction fees will be pretty much negligible compared to the software development work. And, at the same time you would get a lot of the public chain benefits which are basically interoperability and security. So that’s an example of something that I think could be valuable.

Laura Shin: 00:23:49

Wait, just so I understand what you’re describing. It sounds like you think the way we’re going to get to these world changing applications on blockchain is by having these institutions that already provide many of those types of services, like the world economic forum or other institutions like that, having them implement programs on blockchains. Is that how you think we’ll get there?

Vitalik Buterin: 00:24:15

There’s both paths right. First of all, the reason why the institutions can be helpful is because they have existing customers or existing users. They can adopt stuff very quickly. Then, regular people being able to just kind of transact with each other peer to peer, I think is a more transformative thing. I think the institutional aspect is transformative as well because you’re basically convincing companies to build applications where you do not have to trust the company in order to trust the application. And you know, this is something that existing institutions really are not used to at this point. But, the more peer to peer side I think it’s just going to scale a bit later because it doesn’t depend on just a few people changing their minds. It really depends much more on this kind of slower and more organic growth and kind of, people changing their culture and changing their expectations. That’s already happening on its own, right? The Ethereum blockchain has 1.15 million transactions happening on it every day. So that’s more transactions than for example, rides on Uber. That’s happened without a single mainstream ministry usecase being adopted. That’s just a collection of a large number of little use cases. And, just added up together, it ends up to have a very significant amount of economic impact. That’s doing 13 operations a second and that’s valuing the Ethereum blockchain enough to be paying something like half a million dollars every day in transaction fees. There is clearly stuff happening and I think it clearly is true that if we just enabled more scale ability than more stuff will happen.

Laura Shin: 00:26:07

Right. And, is that why you announce these grants?

Vitalik Buterin: 00:26:13

Right, exactly. So the kind of conclusion of all this is basically that there’s all these institutions that want to do stuff and there are just regular people that want to do stuff and for both of them, the bottleneck right now, basically is scalability. The grant program is definitely a large part of our multiple pronged strategy that we starting rolling out in 2014 to just deal with that.

Laura Shin: 00:26:40

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Laura Shin: 00:27:20

I am speaking with Vitalik Buterin, the creator of Ethereum. One thing I wanted to ask you about was you’re going to be moving Ethereum to a proof of stake algorithm. Why? So I want you to describe for me the security pros and cons of proof of stake versus proof of work and why you’re choosing to switch Ethereum to proof of stake.

Vitalik Buterin: 00:27:40

For proof of stake the pros are number one, I think that it can have higher security. What I mean by that is basically that I think proof of stake can be designed so it’s more expensive to attack it. And I think proof of stake can be designed so that it’s easier to recover from an attack. With proof of work, for example, if someone has more computing power than the rest of the network combined, they can’t just double spend once, right? What they can do is they can do what I call a spawn camping attack. Where they basically just kind of keep on preventing any other blocks from getting into the blockchain forever and just mining empty blocks forever and just continually rendering the blockchain usable.

Laura Shin: 00:27:40 How does that work?

Vitalik Buterin: 00:28:33

The way that you would do this, let’s say you have all of your hypothetical 51 percent hash power just on one laptop. I mean in reality it’s much bigger. But for sImplicity we’ll say that. Then you disconnect your laptop from the internet. Then you mine for two hours. Then you reconnect to the internet, publish all the blocks immediately. That’ll just totally erase all the other work that’s been done in the last two hours. And it will make your chain and be the longest chain, then turn the laptop back off then mine for two hours. Then keep on going and then just repeat this forever. So what that does is that first of all, it ensures that only your blocks are going to be part of the chain. And the second thing is it insurers that basically any other miner who participates, there will be times when it looks like they can mine, but then there blocks will still just be reverted anyway. So it just wastes all their time.

Vitalik Buterin: 00:29:26

If this kind of attack happens on proof of work, the only possible approach is to change the proof of work algorithm. But then, if you change the proof of work algorithm to basically make the attacker’s ASIC’s useless. Then if the attacker has just a bit more resources then the attacker could just do the attack again. And the second time around, you know your algorithm, there hasn’t been enough time for special purpose hardware to develop. There is only going to be general purpose hardware mining on it and so if the attacker gets 51 percent of that, then you’re basically screwed. So I don’t think that proof of work has very good properties in terms of recovery from attacks. With proof of stake, what you can do is basically if the attacker does a 51 percent attack, then you can coordinate a minority soft fork and that basically takes away the attackers money. Then if the attacker gets more money, they attack again, then you can do another soft fork and take away the attackers money again. And you can repeat that process pretty much forever, right? So basically, if it’s a kind of battle between the attacker and the community, then the community can pretty much just keep on winning every single time. And eventually, you know, this attacker is going to get tired of burning like $500 million every two days or whatever the amount is. So that’s part of why I think proof of stake has higher security. It also has a lower cost. So you don’t need to pay very high block rewards. You just need to pay a fairly low interest rate. A third thing is obviously just the environmental friendliness aspect. I’d say those are probably the main pros.

Laura Shin: 00:31:06

Do you worry at all about switching it this late in the game?

Vitalik Buterin: 00:31:10

I definitely worry about it and we’re definitely going through the process fairly slowly and carefully. But, I personally do think that proof of stake is part of making this overarching philosophy I have of how blockchains can succeed. Basically, there’s a couple of philosophies here, right? Like the way that I would describe proof of work, Bitcoin philosophy is they say, “Well yes, blockchains are very expensive and blockchains are very expensive by design because you need to be very expensive in order to get censorship resistance and therefore the only blockchain applications that are really going to succeed are those applications that really, really need censorship resistance over and above everything else.” So you can probably find lots of proof of work advocates discussing this pretty explicitly.

Vitalik Buterin: 00:32:16

My philosophy that focuses on proof of stake and scale ability with sharding is that, if you make blockchains that just focus on the censorship resistance requiring stuff. Then firstly, the establishment is going to make your life very very hard. And, even if you can theoretically, technologically can win against them. Practically speaking, their interference is still going to be very successful at cutting down your potential user base by a factor of 10. You can’t just kind of sail directly against the wind and say, “rah rah, we’re very proudly opposing anyone who tries to stop us.” and we’ll just going to say, “na na” technologically, “you can catch me.” And do what you want that way. I think, if you wants to achieve real impact, then ultimately you are going to have to win public acceptability. Part of the way that you win public acceptability is by providing value to people other than these applications that would literally get shut down by banks and governments if those applications didn’t have blockchains to run on.

Now, the next part of that theory is that therefore blockchains absolutely need to have applications where even though they benefit from blockchains, they benefit from blockchain a medium amount. So they don’t benefit from blockchain enough to justify a $10 billion a year of proof of work mining and $23 transaction fees or whatever it is bitcoin has today. Basically you need the cost of consensus to be much lower and you need the cost per transaction to be much lower. And, I don’t even mean the 5-10 cents low like Ethereum has now. I mean 0.01 cents low. So the first of those two things, which is that consensus needs to be much cheaper in order for the these systems to be long term sustainable and that implies proof of stake. The second part is that each transaction needs to be cheaper. That implies our very heavy scalability focus. So that’s basically where I see the pros of proof of stake being.

Vitalik Buterin: 00:34:14

As far as the cons, I would say the main one is that it is a different security model and it’s a different security model that basically says that, in order to securely authenticate the blockchain, you have to log on to the internet at least once every few months. And if you don’t do that then in order to bootstrap yourself to the chain again, you basically have to trust a subgroup of people who have. And I think that in reality this is a totally fine security model because people basically already trust that security model for software updates. Even like Bitcoin core, Ethereum, Bitcoincash, any major cryptocurrency or blockchain implementation does release software updates every few months, half year or at most a year. And, people are totally happy to trust these software updates. So basically, why can’t we require users to log on as often as they log on already to receive new versions of the software. So that’s my response to that criticism. People also bring up this kind of rich get richer aspects that, “Isn’t proof of stake basically paying people who have a lot of coins and giving them the interest rates that giving them even more coins.” My response to that is, first of all, well, proof of work does that already. If you look at where the proof of work mining farms are it’s basically just a few big guys, with a huge amount of money and a huge amount of hash power.

Vitalik Buterin: 00:35:44

And the second part is that with proof of stake, we can kind of limit that aspect because, if proof of stake paid 10-15% annual interest rates, then I think that would be horrible and that would be a really legitimate criticism. But I am looking at seeing if we can knock those interest rates down so you know, something like 1-3%. And if they’re at that level, then you know, that’s basically less than, the difference between like what stocks and bonds pay. So, it’s not nearly as large a contribution to the undesirable kinds of inequality that people are worried about. So that’s probably how I’d addresses that argument. There are a lot of other various fine distinctions. One of the nice things about proof of work is that it is simple to implement and it has easy lite client protocols, I do think that’s actually a genuine advantage of proof of work. There are a genuine weaknesses where the only thing I can say for proof of stake is, “well just suck it up and deal with it because the benefits are much larger. ” But in general, I do believe that the benefits are much larger than the costs.

Laura Shin: 00:36:55

I think what’s interesting to me is just to hear you describe all this. It sounds like your vision is maybe a little bit more pragmatic, whereas some of the rhetoric I maybe hear from some of the other blockchains or at least from people such as like Bitcoin maximalists or something is a little bit more anti-establishment. But you, it sounds like are having a more pragmatic, user friendly focus. And, having a vision for a large swath of society, whether it’s institutions and wealthy people, as well as the little guy that we talked about at the beginning, using the blockchain.

Laura Shin: 00:37:38

To move to a slightly different topic. You have all these new competitors, smart contract networks that are popping up such as, Dfinity, Tezos, Cardano, Polkadot, EOS and several of them aim to solve problems that the Ethereum network is currently dealing with in terms of scaling, governance, lack of formal verification and smart contracts, which for listeners who don’t know is a way of sort of like mathematically proving that the smart contract will run as the programmer intends. Which was an issue in the DAO. So how much of a threat do you believe that these other platforms pose to Ethereum?

Vitalik Buterin: 00:38:17

They’re definitely going to get some adoption. Though, I do think that a lot of them are targeting somewhat different properties than what Ethereum does. So for example, one piece of technology that a lot of these platforms rely on is something caled DPOS, delegated proof of stake, which is basically a system where the entire network is run by something like 20 to 40 computers. And, the only way that other participants in the system can have an influence is basically by voting on who the participants are. And, this basically is the entire security model of the system. It’s basically a consortium chain where people with coins gets to control who the consortium is. I personally believe that this is nowhere near decentralized enough for a public blockchain system to really stay public in the long term.

Vitalik Buterin: 00:39:16

And, I wrote a blog post about this a few weeks ago. One of the examples I got into was how one of these blockchains ended up basically being captured by two political parties that basically bribe everyone to vote for them. So there’s basically, if you think that just voting is enough to ensure a system’s decentralization, just look at US politics is the line that I usually give them. I think that these systems can get some users, but at the same time, with Ethereum we are also trying to kind of aim for this angle of higher decentralization, which in our case basically means, we want the system to be able to process 50,000 transactions per second while only running on a collection of nodes running on people’s laptops. This is one of our informal design goals, avoiding the need for various kinds of masternodes with fancy, specialized hardware. And also designing systems that do have a substantial degree of trustlessness and emphasis on algorithmic kind of governance, rather than heavy political processes. As you said, we’re pragmatic and we don’t believe that any of those things can go away a hundred percent, but at the same time we’re not willing to use that as an excuse to basically lean on that sort of stuff exclusively in our security model.

Laura Shin: 00:41:01

To speak about governance and your blog post, I was wondering how you plan to implement governance in Ethereum because as we just discussed, some of these blockchains they have onchain governance and you wrote in your blog posts. I’ll just quote this for people who didn’t read it, the abstract says that you believe quote, “tightly coupled onchain voting is overrated.” And I have a feeling they’re, you’re referencing things like Tezos. You also said, “the status quote unquote, informal governance as practiced by Bitcoin, Bitcoin Cash, Ethereum, Zcash and similar systems is much less bad than commonly thought.” You also said, “people who think that the purpose of blockchains is to completely expung soft, mushy human intuitions and feelings in favor of completely algorithmic governance, emphasis on completely are absolutely crazy.” I really liked that phrasing there. And then you also said. “loosely coupled voting as done by carbon votes in similar systems is underrated.” So why do you have all these opinions and how do you think people should be thinking about Blockchain governance?

Vitalik Buterin: 00:42:16

There’s a few examples that is use in my post. Regarding tightly coupled onchain voting being overrated. I think my main argument against it basically is that it really runs the risk of creating a system where people believe that if the government’s algorithm outputs the decision, then the decision is legitimate. But there’s plenty of situations where a decision that’s approved by 60 percent of coin holders really should be viewed as an illegitimate one. So even something like, like if there is some convenient way to separate a 60 percent of coin holders, into group A and 40 percent is a group B. Well you could imagine a decision that just finds some way to double the coin holdings of everyone who is part of group A. And then the 60 percent group or the group A are going to vote for it. This is like the standard two wolves and a sheep voting on what’s for dinner problem. Basically I worry that if you have a blockchain that really deeply enshrines tightly coupled governance, then that sort of stuff will end up happening. And possibly even worse stuff will end up happening. Like I mentioned, these bribing attacks that happened to Lisk. I do think that there’s basically 5 or 10 different ways that various more or less subtle forms of bribing attacks can happen. And, I basically view this in the same way that Bitcoiners view the nothing at stake problem of proof-of-stake. I personally don’t think that the requirements to log on every year is an issue. They think that this is something that even if it works OK for a while, ultimately is the death knell of decentralization. And there I disagree. But that’s the kind of opinion that I have about this Blockchain voting stuff.

Laura Shin: 00:43:59

Just one thing I wanted to add there was about the on chain voting is it is sort of one of those things where if you know what is going to be the threshold, then you can game the system. So, people will always be trying to do that.

Vitalik Buterin: 00:44:16

Totally. So as far as informal governance goes, I think that people, often don’t realize the extent to which the systems within a formal governance actually, have governance. And the governance actually does work quite well at both ensuring that the protocol changes that are made are changes that are good. And preventing one person from having too much power over the system. On the one hand, people say for example, that Ethereum is completely centralize around myself. And, it’s true for example, that I run the long term research agenda. But, if you look at the actual process that we’ve institutionalized between, Geth, C++, Parity and Harmony developers for actually taking changes that people either on the research team have come up with or people in the community have come up with, and, turning them into things that get implemented and become part of the protocol. That actually is something that has been fairly institutionalized, meaningfully de-centralized that actually works quite well. Right. Basically, we have these open core developer calls that happened every two weeks and participants from everyone of the major implementations, like, Geth, Parity and so forth, participate in the calls. We discuss them and generally end up adopting changes by consensus and it ends up, I would say, working fairly well and people who are actually part of the process or who actually watch it closely tend to be fairly happy with it.

Laura Shin: 00:46:00

This was something that was going to ask you about because, I do see this criticism of how Ethereum is governed, sometimes it’s people just saying, “Oh, Vitalik is a benevolent dictator.” But then other people saying, “He’s the single point of failure for Ethereum.” Do you think that you are? For instance, you did say in twitter the other day, “If things continue in this immature fashion, I’m going to leave.” Let’s say you really did decide to leave and you were so angry you didn’t put any succession process in place. What would happen then?

Vitalik Buterin: 00:46:36

So first of all, I want to correct the record on a small thing, which was I didn’t say that I will leave if things continue to being a immature. I said that I will leave if price memes and people being immature continue to be the only thing that gets accomplished. So there’s a real difference between those two that people didn’t capture. I am definitely not going to abandon the refugees in Jordan that the UN World Food Program applications on top of Ethereum are working on feeding just because there was people saying stupid stuff on twitter. Where I am going to leave is if that stuff doesn’t materialize and the only thing that’s happening is people say stupid stuff on twitter.

Laura Shin: 00:47:24

I’m with you there. I will stop covering the space also if the same thing happens. So I think we both agree on that.

Vitalik Buterin: 00:47:32

As far as what happens if I do leave. I would actually say that the extents to which I am a single point of failure is probably dropping fairly rapidly. For example, over the last six months we’ve really scaled up our research team. And, we have a team in python that’s developing the sharding specification. That’s pretty much has a fairly high degree of autonomy at this point. And, I personally have actually quite a bit of confidence in these people. I think that if I get run over by a bus tomorrow, I really do believe that they will be able to carry version 1 of basic sharding to completion basically on their own. As far as proof of stake, we have the alpha Casper FFG testnet. So the algorithm is very close to basically being what it needs to be. On the plasma side, the situation is fairly similar. We are definitely trying hard to basically make sure that we have a large and growing core group of people that understand the ideas and understand the vision enough that basically any of them can execute it through regardless of what happens.

Laura Shin: 00:48:56

Is there a governmental kind of infrastructure around you? Three years from now, what will the Ethereum foundation’s organizational structure look like?

Vitalik Buterin: 00:49:15

Right. If we replace that question with the question of will Ethereum be meaningfully independent of myself. There are two, kind of threat models that you can have, right? The first is, what if I disappear? You know, what if I get kidnapped, what if I get run over by a bus? And the second is, what if I become corrupt or evil in some way. For the first one, I think basically I answered that question by basically saying that the research team is growing, we’re rapidly adding smart people and this is basically the only way to really solve the problem. As far as solving the second issue goes. I think that part of that is going to resolve itself over time because as these research sheds and development teams grow, they’re going to inevitably started having their own opinions that they contribute to discussions and we’ll get harder for any one person to force things through.

Vitalik Buterin: 00:50:00

And the second thing that I mentioned is that, even if the research agenda is still run by this kind of very informal process that’s still between a few people like myself. You know, Vlad, Carl and a few other developers. The part of the agenda that actually decides what changes get implemented into the Ethereum protocols. That part I think is really meaningfully de-centralized already and probably more decentralized than a lot of other blockchain projects. As far as the Ethereum foundation goes, that’s something that we have been working on and we do want to give better governance to the Ethereum foundation already. Though, that’s the only one of two tracks, right? The second a two tracks is making sure that Ethereum can grow and prosper even independently of the Ethereum foundation if necessary. For example, the Ethereum enterprise alliance being a separate organization is part of that vision of decentralizing the ecosystem a bit.

Vitalik Buterin: 00:51:13

There’s also going to be other what I would informally call, sister organizations, to the Ethereum foundation. Some of which are already being quietly developed. And you can look forward to announcements farely soon. That’s part of it and the other party is Ethereum is fairly unique in that we have this large number of full client implementations. So Geth, Parity, Harmony, C++, Python and so forth. And that was a deliberate strategy to ensure decentralization of the development layer, right? Because like basically there isn’t one repo that controls the entire project. There isn’t one core dev team that controls the entire projects. And if the GoEthereum team becomes evil, then we have Parity. If the Parity team becomes evil then we have Go. If both become evil, then we could put some more resources into Harmony and people can switch to that. So I think the actual kind of implementation and release side of the cycle really does have, a meaningful decentralization that people are looking for already. And, part of the reason why we split up this grant program and the foundation is to help support that. Although I mean, I do agree that governance of the foundation itself is something that can also improve a lot.

Laura Shin: 00:52:33

I want to go back to what we were talking about earlier in the conversation about how Ethereum is actually being used and how that maybe had differed from what you imagined. So obviously, this past year we saw the initial coin offerings, just really, really took off. And, Ethereum was the main platform where they were holding those ICO’s. Especially now when we’re seeing so many of them. And also there are a number where, maybe he might say, they’re at the very least un-serious and at the very worst scams. How do you feel about the fact that Ethereum is the main platform for this activity?

Vitalik Buterin: 00:53:20

I would say that first of all, every single scam that’s happening is definitely unfortunate. But, it’s kind of an inevitable part of a rapidly evolving economy. In the crypto currency and ICO space, very few people and that’s including regular people on the street, including regulators, including people fairly deep into this space, a lot of the time have a good idea of how to judge many of these projects. And, that basically means that projects that, in my opinion really shouldn’t be proliferating, proliferate for some time. And, I think that up until now, I definitely don’t think that scams are the majority of projects that are taking place. Especially among the successful ones. I do think that a lot of the stuff that’s being funded actually is a genuine innovation that’s hopefully going to mature and come out over the next couple of years. And, I personally do think that the space actually is growing up more and more. I’d expect that in 2018, 2019, any new ICO’s that end up happening in this space. I think, first of all, are not going to raise as much money as the previous ones did. Probably even despite the fact that right now the cryptocurrency prices are three times higher than they were before.

Laura Shin: 00:54:56

So why do you think that just because there’s too much noise or why?

Vitalik Buterin: 00:55:04 Because I think if there is an extremely good one then possibly, but in general there is already less hype and people are already noticing that, “oh wait.” The first round of these projects, didn’t do remotely as well as the crypto currencies that people will give up in order to participate. And I think that’s having a fairly significant effects. And also, regulation is definitely have a significant effect. Also, the increasing number of these projects is having decreasing effect. It’s a lot easier to argue that you have a 1% chance of changing the world when there’s only 4 other projects out there, then when there is 40 other projects out there. I do think that the future of these projects is going to ends up being smaller. The other reason why I think that’s the case is that a lot of these fairly early stage projects. Or, projects by people who have already spent a lot of time establishing themselves in this space in 2014 to 2015. I think that most of the people that have that property have basically figured out what they’re doing at this point. Projects that are run by people totally new coming into the space, I think are likely to be less successful. That’s just my own opinion,

Laura Shin: 00:56:34

Although frankly it’s been a little bit dispiriting to see how some of the people having these ICO’s that really don’t have a background in this space are still able to raise a lot of money. So, to go back to what I mentioned earlier about the ponzi schemes and scams that are going on. So here we’ve seen this year or last year now that there’s been a lot of debate over how much responsibility platforms like facebook and twitter have in monitoring things like fake news or trolls on their sites. So do you think Ethereum or the Ethereum community, do they have a responsibility to monitor or audit the different projects that launch ICO’s on Ethereum?

Vitalik Buterin: 00:56:34

Ethereum platform, definitely no, Ethereum community, yes.

Laura Shin: 00:57:20

What do you mean by that?

Vitalik Buterin: 00:57:27

If the Ethereum platform itself starts actively policing what applications are built on it, then that basically kills the whole idea of censorship resistance way more than anything that happed with the DAO dip. So that’s basically just a non-starter both philosophically and probably technologically as well, because actually implementing something like that would require hard forks pretty much every day to weed project out that we disapproved of. We’re not even going there. I think is the general lesson that we learned. As far as the community goes, I think there are a lot of things that the community can do to encourage good projects to appear and get more attention and discourage bad project to get less attention.

Vitalik Buterin: 00:58:28

One key example of this is, what kinds of things do people at the top say, right? Do people at the top go around pumping every single ICO under the sky? You know, do they talk about, like how you like buying whatever cryptocurrency is going to make them super rich? Or, do they emphasize other things. Even just like the culture of people who participated on the subreddits. So what gets up voted on the Ethereum subreddit and what gets down voted. What do people talk about at conference, what are people allowed to talk about at conferences. What do conference organizers emphasize. What do the people who end up going to conferences choose to talk about. So I think there’s a lot of these kind of smaller social decisions that really can be the deciding factor between whether projects that less reputable or probably outright scammy, end up succeeding or whether they just ended up being ostracized and kicked out.

Vitalik Buterin: 00:59:31

In general, I do think that the Ethereum Community has been doing a reasonable job on a lot of that. So if, for example, if you look at most crypto currency subreddits, you basically see a lot of like, “Crypto currency X is going to the moon! Buy Buy Buy, Hodle… you’re a fool for selling… Invest your life savings… take out a loan and invest more.” and things like that. But, if you look at the Ethereum subreddit, that just doesn’t happen at all. Right? You know, there is kind of our Ethtrader which has this kind of sandbox in a corner where a lot of that stuff gets pushed to. But that’s one step removed from our Ethereum which tends to actually be focused on technical discussion. And I think that’s a community decision that we’re fairly proud of and that I think has been quite successful. That’s one example of a thing that can be done.

Laura Shin: 01:00:42

One other thing that I wanted to ask you about was you’ve written about the difficulties with having ICO’s in terms of ensuring a wide distribution but then also ensuring that people can participate or that they can get in at the valuation that they think is reasonable. So you wrote about interactive coin offerings. What are those and what problems are they solving for ICO’s?

Vitalik Buterin: 01:01:26

What problem is an interactive coin offering solving for ICO’s? The idea is that there are two kinds of ICO’s. There’s a capped ICO and an uncapped ICO. In a capped sale, the main challenge basically is, oh, what happens if the sale ends in one minute. And, basically whoever is the best at sending the transaction and first wins. And I think that’s an approach that’s just incredibly unfair. It’s incredibly inefficient and the long run equilibrium, I think it’s basically that miners are gonna always be the ones that get in ahead. The other kind of sale is that uncapped one. And in an uncapped sale, that’s also bad because people have no certainty about what the valuation is that they’re participating at. So the compromise between the two is a dynamic cap or interactive models. Where people can basically in an interactive ICO send in though an ETH smart contract. Then when they send ETH they also have to specify what is the maximum valuation they are willing to participate at. And, as soon as you have, “X” dollars worth of people that are willing to participate at valuation “X”. Basically, that is the valuation. And people who are ok with that valuation, the contract accepts them and they end up participating and people who specify that they, that they wanted a lower valuation, their coins end up getting refunded. So the idea is that the contract just basically calculates what the supply demand intersection is and accepts everyone who was ok with a higher price and doesn’t accept people who wanted a lower price. With that kind of model, I think that we can solve at least some of the problems from both sides.

Vitalik Buterin: 01:03:20

That’s one of my ICO ideas. I also have other ICO ideas that are interesting. I talk a lot about what I call the DA ICO. This is a decentralized, autonomous, interactive coin offering/organization. And the idea here is basically, it’s like a mini special purpose DAO, where people throw their money in, but then instead of the money immediately going to that team, the money goes into a DAO. And, at that point, all of the people who’ve participated or all the token holders have to vote on like what is the amount that the team can spend per month. Basically the voting mechanism has two levers that it can press. The first lever they can press is give the team more money or give the team more money in the sense, of increase the amounts that the team could get per month. And, the second lever that it can get or that they can press is basically decide that the team sucks, the project isn’t going well and they wants to have all the money be refunded. Basically, people could vote on kind of pressing this nuclear button that just basically ends the project. The idea there is that you have a mechanism where the team has certainty that if they perform reasonably then they are going to have an ongoing budget. But, at the same time, it’s a reasonable budget and it’s not like they have access to $25 million immediately. And, at the same time, there’s this kind of ongoing accountability to the people that participated in the sale. So this is just another example of how smart contracts can help in solving some of the issues with existing ICO’s. So, it’s basically incorporating some DAO elements. But, also not going all the way into a DAO, because it’s still designed around one project. And, the benefit that you get out of that is that it basically makes a lot of the game theory issues much simpler.

Laura Shin: 01:05:19

I really like that. I actually hadn’t heard that one before and I really like how it solves yet another trust issue with the ICO space, where you might think that a project sounds really good, but if you put your money in, there’s no guarantee that the developers, you know, could have just painted some lovely picture but then have no real intention to actually carry it through. I wanted to actually ask you, what types of blockchain applications do you think will be the first mainstream breakout we’ll see? With wide adoption?

Vitalik Buterin: 01:05:19

CryptoKitties has clearly had a breakout.

Laura Shin: 01:05:58

I mean really mainstream. I don’t know if that’s quite big enough.

Vitalik Buterin: 01:06:03

Well, it’s going to happen in stages, right? A lot of the stuff that’s happening right now I think has a chance of really breaking out into the mainstream. But basically, usability has to go up and transaction fees have to go down. So, if those two issues are solved than things like cryptic currency payments, things like CryptoKitties, things like DNS, things like that…

Laura Shin: 01:06:34

Why CryptoKitties? When you say things like CryptoKitties, what is it about that, that you think will take off?

Vitalik Buterin: 01:06:39

I actually think that the idea of digital collectibles is a totally fine idea. And, it seems to be something that like, it’s gotten my non-technical family members using Ethereum DAPPS for the first time. When you see that, then you realize you have something that actually has best market potential. Now granted, it’s not a kind of feed the poor, bring world peace, save the world sort of thing. But, at the same time, you know, it is something real, it is something that gets people excited. It is something that I think is a great example of something that benefits from the blockchain to a moderate extent. Because it’s not the sort of thing that would get, literally shut down by governments if it was on a central server. But, at the same time, the idea of a collectible just really does just become more interesting if it’s not dependent on a single company for its ongoing existence. That’s just one reason why I think it’s an interesting example to look at as an example of a paradigm.

Laura Shin: 01:07:48

And what do you think would be the first type of blockchain application that would go mainstream but also provide a social good?

Vitalik Buterin: 01:07:59

I think crypto currency payments and remittances and things like that are starting to be useful already. I think some of the identity stuff is going to get out fairly soon. Also, once some of the decentralized exchange infrastructure comes out. There’s some projects I talk about OmiseGo a lot. The idea there is that it’s a project that’s trying to use public blockchain based de-centralized exchange in order to improve interoperability between various different digital payment wallets in developing countries. And, that’s something that actually really does benefit from being on a decentralized platform that’s not controlled by any one company. And, that’s an example of something that’s looking to launch at least a basic version next year. So I think things in the payments and identity space are definitely something to look toward. Another thing that I’m personally interested in is at the intersection of blockchains and strong cryptography. So this includes things like blockchain based privacy, preserving polling systems. Based on things like ring signature and zero knowledge proofs. And, I’m actually thinking of, even right now we’re trying to like look for applications that would be a willing to be the first to benefit from that sort of thing.

Laura Shin: 01:09:34

Yeah. I was going to ask you that. So Ethereum is going to add privacy. So why do you think it’s important to add that when we already have privacy coins, like Zcash, Monero and Dash?

Vitalik Buterin: 01:09:54

Zcash, Monero and Dash add privacy to money. Ethereum’s advanced cryptography experiments can add privacy to all the other applications other than money. Examples include, things like, as I mentioned, privacy, preserving polling systems on the blockchain and privacy, preserving smart contract systems, privacy, preserving digital identity layers. So if you think about the original pitch of Ethereum, “Bitcoin does money”, “Namecoin does domain names”, “Ethereum does everything” and then you can think of it as, “Zcash is privacy for money” and “Ethereum’s privacy experiments are privacy for the other stuff.”

Laura Shin: 01:10:36

One other thing I was going to ask you was how disruptive do you think crypto will be to governments?

Vitalik Buterin: 01:10:40

I think it’s definitely going to be disruptive in some ways. I like the philosophy behind at least crypto currency as being, to make national borders as irrelevant for payments as they are for email. And, practically speaking, yeah, that’s a very disruptive thing. I do think that governments are going to have to change a lot of the ways in which they think about things right now. Especially with things like the internet and the sharing economy applications. At least they’ve had an opportunity to get use to the first wave of this sort of thing. And, I think blockchain based applications are to some extent are going to be the second wave of a similar trend. So similar in some ways, but also different in other ways because you don’t have the kind of big corporations at the center controlling everything.

Vitalik Buterin: 01:11:50

There’s also ways I think governments can use blockchain technology. There is a lot of interest that I’ve had even for people inside governments on things like, state issued cryptocurrencies that would be used inside of the governments in order to improve transparency of finance. Or, improving the security of various kinds of voting systems. Voting systems are something that you have to be very, careful when you talk about because basically if you try to add technology to a voting system, it’s very easy to accidentally make things worse. But, I’m not even thinking about national elections. I’m even thinking about like much smaller stuff. So you know, the US equivalent would be like the petition website that Barack Obama put out I think around five to seven years ago. Even kind of lower grade, lower scale things like that are I think possibly really good kind of first targets for blockchainification.

Laura Shin: 01:11:50

What do you worry about?

Vitalik Buterin: 01:13:08

I worry about, first of all the possibility that the speculative side of cryptocurrencies will continue to grow and succeed without the practical value of the cryptocurrencies growing and catching up to compensate. I worry a lot of the time of about the to wealth distribution consequences that some of that might have. So basically where you just have totally random people who happened to have bought a few thousand bitcoins since 2010 and now they basically end up being multi-millionaires and they could be on their way to becoming billionaires without really having done any work. And, I do worry about what kind of effect that will have on society. I noticed that there’s a lot of people who kind of cheer the wealth redistribution that’s coming from cryptocurrency. Because they think, it’s old money that’s being disempowered and flashy new tech money that’s being empowered. But, I’m skeptical that people who are involved in crypto currency are better people than people who are involved in the banking system. I think if cryptos succeeds, it’s not because it empowers better people. It’s because it empowers better institutions. And better incentive structure and better way for existing people to interact with each other. I used to believe, if you saw some of the things that I wrote maybe four years ago, that the idea that crypto distributes wealth to what I thought are better people is going to be a large positive social consequence. But after watching the way that Bitcoin maximalists treat Ethereum. The way that the Bitcoin scaling debate happened, the way that all of these, various scam projects are going. I’ve really realized that no. It’s definitely, absolutely no. It’s not true that a crypto people are any better than people anywhere else in the world. I actually really do worry about what happens if wealth transferred to these people, and the resulting kind of super empowerment of these kinds of people ends up being the largest social consequences of the blockchain space.

Vitalik Buterin: 01:15:28

I also worry about the possibility that the growth of the amount of interest in the technology will outpace the technology’s ability to scale enough to meet the demand. Probably one of the big stories of 2017 was the Bitcoin’s transaction fee crisis. And, Ethereum’s transaction fees are definitely not in crisis mode, but they definitely have started to go up to what I consider uncomfortably high levels. I do worry about the possibility that those things are not going to be fixed on time. But, we’ll see. I do think that we are starting to and will continue to engage in a very aggressive scaling strategy for 2018 and that I hope will end up delivering very real and massive transaction volume growth. Especially through things like plasma within the scope of this year.

Laura Shin: 01:15:28

And do you have any crypto predictions for 2018?

Vitalik Buterin: 01:16:43

Crypto predictions are very hard to make because a lot of the predictions I ended up making just continually end up being consistently wrong. And the stuff that ends up happening just ends up being stuff that’s totally unexpected. If you look at the big stories of 2017, right? Well, I did successfully predict Bitcoin split into core and cash. That’s one place where I was successful. I probably did predict Bitcoin dominance continuing to decline. I did not predict that transaction fees would go all the way up to $20. Actually there was this kind of sad moment that I had about a few weeks ago where I just paid something like a $6 transaction fee in order to reload my namecheap account with bitcoin. And that transaction ended up being delayed by a couple of hours and I basically just said, “screw that. I’m using my credit card.” And I’m like, ok, when cryptocurrency is inferior to credit cards for just simple payments and buying stuff on the internet, I really kind of deeply inside kind of feel and know that the space kind of lost its way to some extent. I definitely did not predict the price increases. I definitely did not predict in a lot of this stuff that’s happened outside of the Ethereum space. Like the sheer size and scale of the various ICO’s for example. For 2018 I guess my concrete projections I do think ICO’s are going to be quieter through 2018 than they have been through 2017. I think that Bitcoin’s dominance is probably going to continue to erode and the space is going to continue to diversify.

Vitalik Buterin: 01:18:47

I think the conversation in the public mind is already rapidly moving toward, “it’s not one thing, it’s an asset class.” And that’s something that 2017 has a really cemented and I think that’s something 2018 is going to cement further. I predict that plasma will be out and there will be meaningful things running on it. I predict, ongoing great progress on the Casper and sharding side. And, if it’s the case that Casper isn’t out by 2018. It will be because we made a strategic decision to prioritize sharding over Casper. So that’s something that I think totally could end up happening. Though I do think that proof of stake and scalability are both important.

Vitalik Buterin: 01:19:41

I would predict that there are going to be more applications that come out. But, there’s also going to be on the institutional side, fake blockchain applications. So applications that claims to run out of blockchain, but actually aren’t meaningfully de-centralized in any way. Those exist already, right? There’s plenty of applications. There’s a few I know about in China. I’m sure there’s some in other countries where they claim to have a blockchain running for over a year in production. But actually all the servers are run by one company. So I think we’ll end up just seeing more of that from the portion of the institutional space that likes blockchain as a buzzword but really doesn’t get it.

Laura Shin: 01:20:20

Well, I will add one prediction that isn’t my own, but that I saw both Fred Wilson and Olaf Carlson-Wee made on TV. And both of them said that they thought that we would see the marketcap of Ethereum surpassing that a Bitcoin. So, that’s out there for listeners. One other thing I would add is also Olaf was on the podcast and he was a fantastic guest. You should go back and listen to that episode. Vitalik is there anything I didn’t ask you that you want to mention? Anything that you know has been like floating around your brain that you haven’t gotten a chance to talk about?

Vitalik Buterin: 01:20:56

No, I think we’ve gone through everything.

Laura Shin: 01:21:00

All right. Well it’s been fantastic having you as a guest. Where can people get in touch with you or see your work?

Vitalik Buterin: 01:21:06

Thank you very much. It was great to be here.

Laura Shin: 01:21:08

Ok, and your twitter or anything like that.

Vitalik Buterin: 01:21:08

Vitalik Buterin, just my name.

Laura Shin: 01:21:16

Well thanks for coming on the show. Thanks so much for joining today’s episode. To learn more about Vitalik and to find previous episodes of this show with other innovators in the blockchain and crypto space. Check on my forbes page, forbes.com/sites/laurashin. Also, be sure to follow me on twitter @laurashin. New episodes of Unchained come out every other tuesday. If you haven’t already, please rate, review and subscribe on itunes or wherever you get your podcasts. If you liked this episode, share it with your friends on facebook, twitter, or linkedin. Unchained is produced by me, Laura Shin with help from Elaine Zelby and fractional recording. Thanks for listening.