Mars Finance on June 22 had an exclusive interview with ETH founder Vitalik Buterin. Here is the full episode. (Credit goes to Mars Finance)

Vitalik Buterin, is a Russian-Canadian programmer and writer primarily known as a co-founder of Ethereum and as a co-founder of Bitcoin Magazine. Buterin was born in Russia. He attended the University of Waterloo in 2013 but dropped out in 2014.

On January 23, 2014, he proposed a brand new concept called Ethereum in the paper of ‘Ethereum: ANext-Generation Cryptocurrency and Decentralized Application Platform’ on his publication of Bitcoin Magazine. In July 2015, Buterin officially launched Ethereum. As of June 21, 2018, the market value of Ethereum was approximately USD 53.6 billion. After Bitcoin, Ethereum currently is the second-largest cryptocurrency. Buterin won the ‘Thiel Fellowship Award ‘in 2014 and the ‘Fortune 40 under 40 list ‘in2016.

Q: May I kindly know when the idea the Casper mechanism design came to your mind? What inspired you to create such a mechanism?

Vitalik Buterin : The original plan was to create Casper as a smart contract on ethereum, to make the design as easy to build as possible, and at the same time continue working on sharding. However, at this point we have made enough progress on full proof of stake and sharding that continuing along that roadmap would lead to a worse product and a lot of wasted effort. We would have to build the first version of Casper and almost immediately throw it out. The new roadmap is still "Casper then sharding", but the first version ofCasper is modified so that it is "along the way" to a full Casper and sharding implementation.There are other benefits; for example, we are looking at using BLS aggregation in the short term, and STARKs in the long term, for signature aggregation, which is an optimization that allows the Casper mechanism to process many more validators, which is what allows us to reduce the minimum validator size from 1500 ETH to 32 ETH. The core idea behind Casper is to combine together chain-based proof of stake with ideas from traditional Byzantine fault tolerance (BFT) research, like Lamport, Paxos, PBFT, etc. Many asked us, why not just use those traditional algorithms directly? However, we believed that those algorithms are both too complicated and not well suited to the format and needs of a blockchain, and so we studied the algorithms and created a version that we believe is simpler and more suited for a blockchain context.

The data availabilityissue ( see :

https://github.com/ethereum/research/wiki/A-note-on-data-availability-and-erasure-coding ) is one of the more challenging problems in sharding, and one that I find many other projects, especially those with a cryptographic mindset, tend not to take seriously enough.

Q: We are familiar with the early POW and POS mechanisms; but could you please kindly explain the working principle of the Casper mechanism in a simple way once again?

Vitalik Buterin : The challenge is, that it is not enough to just verify that the blockchain is valid, one must also verify that all of the data in the blockchain is available in the p2p network, and anyone can download any piece of the data if they want to. Otherwise, even if the blockchain is valid, publishing blocks that are unavailable can still be used as an attack that prevents other users from taking money out of their accounts, by denying them the ability to update their cryptographic witnesses.We have solutions, though they are somewhat complex; they essentially involve encoding the data redundantly and allowing users to randomly sample to check that most of it is online; if you can verify that most of it is online, you can use the redundancy to recover the rest of the data. Randomly distributed throughout the p2p network. The basic idea behind the current Casper implementation is that users can send 32ETH into a smart contract, and then once they are included in the blockchain they are added to the current validator set. Every block is created by a random member of the current validator set, and every 100 blocks the entire validator set needs to send a message "finalizing" some checkpoint. Filecoin is somewhat similar, but not quite the same. In Ethereum's case, there is this requirement that the blockchain must ensure that absolutely 100% of the data is valid and available; in Filecoin’s case it's ok if one or two files drop off. I actually think our approaches evolved separately.

Q: A public blockchain designer said they design Casper to prevent small miners’ verification rights in the Ethereum ecosystem by using the safe deposit. Currently, if you are an independent miner of BTC or ETH, you still have a chance to mine a block. However, under Casper’s design principle, small miners will not be able to verify a block. Does this mean that Casper may bring an uneven playing field and create more privileged nodes?

Vitalik Buterin : However, under Casper’s design principle, small miners will not be ableto verify a block.I would say not true anymore. First of all, 32 ETH is ~100,000 CNY; I don’t think it's practical to be a PoW miner with less than that in any case, sincePoW mining requires economies of scale. And even with less than that amount, you can always join a pool.

Q: Is there any restriction to become validator? an extreme case: the rich people can easily have majority validators to control the shard even with random sampling. there must have critical security issues.

Vitalik Buterin : We expect there to be around 10,000,000 ETH staking in total, so taking over an entire shard requires at least ~40% of that, so it is very expensive.There are also ways to recover from attacks even in such cases.

Q: At the ‘2018 Conference on Ethereum Technology and Applications’, you mentioned that blockchain technology will be used in the financial industry firstly, and then in the gaming industry, identity authentication, value chain, and other industries will try this emerging technology.2018 is half way over, so why haven’t we seen blockchain applications widely adopted? What do you think are the most important factors preventing large-scale applications of blockchain?

Vitalik Buterin : Yes, I think that the financial industry and gaming are naturally the first two. In the financial case, the reason is that financial technology is generally harder to use and very "behind the times" compared to other forms of digital technology. Why can't I send money halfway across the world as easily as sending an email? I know within China sending money is fairly efficient, but in many places there are still no widely adopted good ways to just send money from one person to another online, and sending money across borders is hard everywhere. Gaming is a case where there are many companies interested in creating markets for in-game assets and this is an area that many people seem to be interested in.

Going beyond that, I think the main thing that blockchains can provide in other industries in the short term is interoperability. There are benefits from having a common platform where all providers of some service can interoperate with each other, so that users of one can more easily interact with users of another, but the reare also very large benefits to being able to doing this without creating a centralized monopoly. There are examples of this in finance (eg. what OmiseGO is doing, also AMIS in taiwan), and I expect to see similar concepts in other industries as well.

The main challenge with getting blockchain tech adopted in other industries is that the existing level of inefficiency is lower, and so it's more difficult to convince people to accept the inconveniences of current public blockchains like long confirmation times and high transaction fees. The technology is still being developed, and I expect a few years from now, the state of blockchain scalability will be much better, we will have good techniques to do efficient transactions, and better privacy solutions, and we will see more adoption. I personally think pure PoS is enough; adding more components just makes it more difficult to analyze.

Q: To be honest, many DAPPs don’t have very good design or practical usage. Would you like to give any advice to the developers in the Ethereum ecosystem?

Vitalik Buterin : I need to write this up in more detail; basically a mechanism called a minority soft fork, where users that are not part of an attacking majority collectively create a fork that ignores the attacker. I think state channels will do a lot in the short term to make dapps with better user experience and scalability simpler to build; Jeff Coleman from L4 and others have been doing a lot recently to make state channel tech more standardized and easier to use. They recently published a state channels paper( http://counterfactual.com/statechannels ). Plasma will help with scalability, and I think Plasma could be particularly helpful for enterprise use cases, a sit allows applications to be built in a half centralized half decentralized way, where they can benefit from the blockchain's safety but still get the efficiency of a centralized system. Also, developers should learn more about Vyper: http://vyper.online . It's a relatively new smart contract language with easier to read python-like syntax and more safety features. There was recently a beta release: https://github.com/ethereum/vyper/releases/tag/v0.1.0-beta.1.I have beentold that people in China like python, so maybe they will find Vyper pleasantto code in.I know there are teams working on chain interoperability, though I am notpersonally very close to them.

Q: Does the idea ever cross your mind that smart contracts might be the wrong direction for the development of blockchains?

Vitalik Buterin : I think many people misunderstand smart contracts. There is an impression that smart contracts are for doing things like "I pay you 10 ETH to build a website, so I put the 10 ETH into a smart contract. The smart contract detects if you built the website, and automatically pays the 10 ETH if it detects that the website is finished". The problem with this approach is of course that verification is too difficult; apiece of smart contract code by itself cannot tell if something is a website. The right way to think about smart contracts is as economic mechanisms; they do not do everything by themselves, rather they set rules by which different parties can interact with each other, and some of those parties can be arbitrators, or potentially you can use game theory to create smart contracts that create good incentives even without any arbitrators. For example, there is an idea called 2-of-2 escrow, where if there is a dispute both people's money gets burned. This seems harsh, but it does create a strong incentive for both parties to act honestly, even in the absence of an arbitrator to determine who in a dispute was right or wrong.

Even state channels andPlasma both depend on sophisticated smart contract logic to implement the mechanisms. A pure "payment-focused" design such as Bitcoin has a hard time implementing such constructions; it cannot do Plasma, and it can only do state channels in a more limited and complicated way compared to richer systems like ethereum.

One challenge that I see with that model is that if you create a general-purpose system, then because of Turing completeness you know that the system will still be general purpose in20 years, and so still usable in 20 years. If you create a special-purpose system for some industry, on the other hand, the needs of that industry change rapidly, and so the specification of the protocol would need to change every few years, forever. This is not very good for a base layer public chain, because it puts a lot of load on the governance mechanism to keep agreeing on new protocol rules, which leads to centralization. However, I *do* think industry-specific Plasma chains have potential.

Q: Can you elaborate the plasma for enterprise solution?

Vitalik Buterin : Basically, an enterprise entity (or potentially even government, eg.

central bank) can create a plasma contract(specifically, Plasma Cash: https://ethresear.ch/t/plasma-cash-plasma-with-much-less-per-user-data-checking/1298 ),and they can operate their centralized service (eg. a currency system, an exchange) as a Plasma chain. They only need to publish one transaction to the public blockchain perhaps every minute, and an unlimited number of transactions can happen on the server side, fairly similarly to the traditional centralized way. But the server also sends each user Merkle proofs which allow them to verify their own history, and if the server ever goes down or gets hacked, the users will be able to tell, and the Plasma contract will guarantee that they will be able to move their assets into an Ethereum-based ERC20, and possibly migrate to a different Plasma chain. I'm already talking to a group in Russia that's interested in using this approach.

Q: At 2:11 AM on June 15, the Mainnet of EOS was successfully launched. EOS hopes to solve the problems of latency and data throughput by using parallel chain and DPOS. From the perspective of performance, it seems that EOS has"surpassed" Bitcoin and Ethereum. I notice that. I read the EOS whitepaper and found that BM (Dan Larimer) defined EOS as‘Blockchain 3.0’. It is interesting to see that many people in the blockchain industry have the following idea：

BTC = Blockchain 1.0;ETH = Blockchain 2.0;EOS =Blockchain 3.0

Do you agree with it? What is Blockchain 3.0 in your perspective? Have you followed the EOS technical metrics?

Vitalik Buterin : From the perspective of performance, the Cray supercomputer probably surpassed Bitcoin and Ethereum in 1976. I don't really like talking in terms of 1.0, 2.0, 3.0 these days, but if there is such a thing as blockchain 3.0 then scalability is definitely a big part of it.I know that EOS's performance is higher than that of bitcoin and ethereum but I believe not too much harder; I recall hearing a few hundred TPS on some recent testnet. Ultimately, I do strongly believe that achieving the kind of scalability that is needed for large-scale applications needs much more than just throwing more computing power at the problem; it requires fundamentally new approaches and a lot of thinking to implement them. This is why I think the work on state channels, plasma and sharding is so valuable. EOS is definitely an interesting experiment, one that is trying to do things very differently from ethereum and other platforms. It's not just a technical experiment; it's also a political science experiment, as they are attempting to create a kind of digital government in cyberspace on their blockchain, with a constitution, an executive branch (the 21 delegate nodes), a judicial branch (arbitrators), etc, and it is a very explicit part of their philosophy that "code is not law" and this digital government is expected to very actively solve people's problems. That said, this kind of approach is risky, and so I expect there to be many applications that find it too risky and are interested in blockchains precisely because they want a platform that is safer and more difficult to change. EOS already froze 7 accounts, and very quickly without warning; this can certainly help people recover from theft and scams, but it poses challenges. What happens when you try to build an application on EOS, which the EOS establishment does not like? EOS itself was able to run its ICO and its token on the Ethereum blockchain, and we had no power to stop it; do you think that the EOS arbitrators will be similarly friendly to an EOS competitor running an ICO and issuing a token on EOS? Are you *sure*?

I think that one component that needs to be built that can make smart contracts work better is oracles, for providing information to smart contracts about the outside world.I know that Oraclize has been working on centralized oracles for a long time, though I am also interested in the decentralized oracle projects. Augur has a built-in decentralized oracle for determining the "true" result of some event, and there is a project called Reality Check run by Edmund Edgar inJapan that is trying to do something similar. I think this will be very valuable to making smart contracts work well when it goes live.

Q: The first 21 EOS Block Producers (BPs) have been elected along with the EOS Mainnet launch. But it seems that you are not optimistic about it. As you said, the 21 Block Producers are not 21 independent entities, and there maybe inherent connections between the nodes. Naturally, the network may be controlled by BP monopolies.

In order to respond to your question, BM released an article called ‘The Limits of Crypto-economic Governance' to explain the original intention and purpose of the DPOS election mechanism.

BM thinks that you are committed to find a 'black box' for the crypto-economy, which assumes that it cannot rely on equity (chaebolism) or individuals (democratic politics) to vote. But he believes that human nature is good. The main differences between you and BM seem to lie on the basic assumptions. Would you like to respond to BM's remarks right here right now?

BM released an article called ‘The Limits of Crypto-economic Governance’

Vitalik Buterin : I think my philosophy is that we want base-layer blockchains to work under as wide a range of situations as possible, and it really is difficult to predict what kind of interests and values coin holders will have in the future.The reason why economic incentives are so useful is that they are a kind of lowest common denominator; no matter whether someone is rich or poor, an individual or a corporation or a robot, American or Chinese or North Korean, we know that offering incentives to them can affect their behavior and drive them to act in some way. That said, economic incentives make much less sense in environments where we have close relationships with each other and know each other well, and in those cases relying on goodwill can generally work much better. Ethereum is a base-layer blockchain platform for the world, so it cannot make assumptions about who is participating in it or who is running the proof of stake validator nodes. Applications on top of Ethereum, on the other hand, can in many cases make more assumptions and rely on approaches that are more social than economic. I think there is definitely room for decentralized platforms that look more like "platforms for a community" than"platforms for the world", though it remains to be seen whether those kinds of platforms are best built as independent platforms, or as layer 2plasma chains on top of public blockchains like ethereum. If a base layer blockchain runs on code, you can build layer-2 systems on top of it that bring humans back in. If a base layer blockchain includes room for high levels of human intervention, it is much more difficult for layer-2systems on top of that to take those humans out.

Regarding popularizing Ethereum, I think that now is not the time to go out to the entire world and say "Ethereum is great, you should all get into it now", because there is still little to get into. The only thing that an average person can really do at present is buy and trade crypto tokens, and I think that's the wrong thing to focus on. What is important now is to build the technology so it eventually *can* handle a larger volume of users, and to try to make connections with communities that can help us achieve those goals. This is why we have made a lot of connections with academic cryptographers, and are now reaching out to the economics and mechanism design community. Recently, there have been more and more economists starting to talk about blockchains a lot, including Glen Weyl, some authors from Marginal Revolution, and more; I think it's very good to get ideas from them about where blockchains can provide value to society.

Q: Do you think GAS fees will affect the future development of Ethereum? Do you and your team have a solution? In contrast, transaction fees on the EOS blockchain are basically free. Have you ever worried about some DApps leaving for the EOS blockchain?

Vitalik Buterin : Transaction fees in EOS being free is a misconception. Transaction fees are not free; rather, instead of paying transaction fees directly, you have to pay transaction fees indirectly, by holding EOS tokens instead of holding whatever other tokens you wanted to hold. I wrote a long post here about why I think this is a bad idea, and will likely eventually simply lead to a more complicated version of a fee market:

https://ethresear.ch/t/against-replacing-transaction-fees-with-deposits/940. I think that ultimately the only way to make fees less of an issue is to solve scalability, so that supply can catch up to demand, and we are very actively working on that with state channels, plasma and sharding. CryptoKitties and games definitely help drive interest and adoption, andI think at this point the interest in the gaming industry is clear; I hope thatwe can also start moving beyond just gaming fairly soon.

Q: Recently, the BTC core developer team said they are likely to migrate their code to other platforms, such as Google-backed GitLab. so, has Ethereum considered moving the code out of GitHub in the future?

Vitalik Buterin : I personally think it is very unhealthy when startups see their main business model as being VC followed by a hope of acquisition by a big company.It creates something closer to a centrally planned command economy than a free market, because the incentives are set by a small group of big companies, and not the customers.Regarding the Parity proposal, there was EIP 999, but EIP 999 saw an egative reaction in the github and reddit threads and had a 55% no vs 39% yes result in the etherchain coin vote ( https://www.etherchain.org/coinvote/poll/35 ), so seems like there is little interest in pushing that forward. At this point, I think it is very possible that ethereum will never see any more coin recoveries, because there are enough cases that are politically contentious that any attempt to set a bar will lead to people just below the bar complaining that they were not included. Though it is also possible that when we move to sharding, there will be some kind of one-time "cleanup" of the public chain that will restore funds to as many people as possible. That said, I do not think it is my place to make that decision or even heavily influence it.

Q: Have you ever considered disappearing like Satoshi Nakamoto or just thought of taking a full year off?

Vitalik Buterin : The Ethereum Foundation is still ultimately a traditional organization; until we somehow find ways to replace it with a DAO completely, it's still an organization, it can hire people, it can fire people, etc. That said, we can only fire people from the organization, not the community; there are plenty people whom we've "fired" (or who quit) from the ethereum foundation, but who went on to do great work by themselves inside the ethereum community.This is the beauty of ethereum's decentralized nature. it's not EF that decides, it's the market.

Q: If so, will Ethereum development still follow the direction that you expect it to?

Vitalik Buterin : It's not at all clear that the rumor of my death was responsible for the price drop; that was at a time when a price downturn was taking place already. And I do believe that the DAO fork happened with the bulk of the community supporting it; the carbon vote, various community polls, etc, all showed something like 80% of people in favor of the fork. That said, as I said earlier, I do expect things like the DAO fork to become more and more difficult over time. I think at this point the Ethereum team other than myself is definitely competent enough to finish the Casper and sharding roadmaps on their own; even if I were to disappear I have full faith that they will do a good job.

The ETH issuance is actually now down to only 7 million per year. I definitely believe that now that it is difficult for PoW to remain egalitarian, there's no reason to increase supply through PoW to make the distribution more fair. A supply cap seems absolutely reasonable to implement eventually, when we are confident that it will work well.

Q: There are rumors that you will leave Ethereum to join Google. Is this rumor true?

Vitalik Buterin: I think they'll participate in the blockchain industry, but I don't think they will be able to control it. Unlike the internet, where the idealists saying it would lead to more decentralization were only a small part of the story, in the blockchain, maintaining decentralization is a core interest, and so many people will push back against the companies attempting to control the industry. And ultimately, they don't really have a way to control platforms like Ethereum. That Google thing was a joke; the email was clearly from a recruiter spamming everyone that their algos determined is a remotely competent developer.

The End~