we have an important preface an important caveat an important disclaimer before we get started and here it is provided from my lovely lawyers here we go i am not an investment advisor all opinions are mine alone there are risks involved in placing any investment in
securities or in bitcoin or in cryptocurrencies or in anything none of the information presented today or really anytime since you might be listening to this anytime is intended to form the basis for any offer or recommendation or have any regard to the
investment objectives financial situation or needs of any specific person that includes you my dear listener so everything you're going to hear is for informational entertainment purposes only and with that said please enjoy hello boys and girls ladies and germs
this is tim ferriss and welcome to another episode of the tim ferriss show where it is normally my job to interview world-class performers to tease out the habits routines etc that you can apply to your own lives this episode is a special episode and it is a very
detailed action-packed episode at least it was for me and in a sense it pairs really well with an earlier episode in 2017 i did an episode with nival ravikant who joins me again in this round two with nick zabo and the title of that episode was
the quiet master of cryptocurrency and it really covered everything related to bitcoin so btc smart contracts all of those fundamentals this volume 2 is going to cover everything ethereum and the two people joining me i already named one are naval ravicant uh as i might have
mentioned and he is really the pilot for this conversation so he takes the reigns as the interviewer you can find him on twitter at naval n-a-v-a-l he is the co-founder and chairman of angellist he is an angel investor and has invested in more than 100 companies including
many huge successes including twitter uber notion open door postmates and wish among many many many many others you can subscribe to naval his podcast on wealth and happiness on apple podcast spotify overcast wherever you get your podcast you can also find his blog at naval
that's nav.a-l the guest of honor and the real expert in this particular episode is vitalik buterin on twitter at vitalik buterin v-i-t-a-l-i-k b-u-t-e-r-i-n vitalik is the creator of ethereum he first discovered blockchain and cryptocurrency technologies through
bitcoin in 2011 and was immediately excited by the technology and its potential he co-founded bitcoin magazine in september 2011 and after two and a half years looking at what the existing blockchain technology and applications had to offer
wrote the ethereum white paper in november 2013 it is hard to believe that it was so relatively recent he now leads ethereum's research team working on future versions of the ethereum protocol in 2014 vitalik was a recipient of the two-year teal
fellowship tech billionaire peter thiel's project that awards 100 000 to 20 promising innovators under 20 so they can pursue their inventions in lieu of a post-secondary institution and boy oh boy did that award turn into a hell of a lot of value for the world and a lot of people
and vitalik i believe is now a ripe old 27 years old you can find his writing and much more at vitalik.ca that's v i t a l i k dot c a and for ease of reference and ease of finding you can find the previous conversation with nick zabo on bitcoin and smart
contracts and other core concepts at tim dot blog forward slash bitcoin and you can also find this current conversation with vitalik on all things ethereum at tim dot blog forward slash ethereum that's e-t-h-e-r-e-u-m please enjoy this wide-ranging conversation
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shake can i answer your personal questions [Music] i'm a cybernetic organism living tissue over metal endoskeletons tim this is naval speaking tim thanks for having us we're joined by vitalik buterin vitalik is the i believe now 27 year old
creator of ethereum which is the most exciting cryptocurrency since bitcoin and has incredibly broad ambitions and capabilities and vitalik is a really interesting guy because not only did he create ethereum or co-create it he also is a multi-disciplinary polymath
his blog at vitalik.ca is full of lots of great ideas and insights and thoughts he runs the ethereum foundation he's sort of contributed to all kinds of things like automatic market makers roll-ups social recovery wallets decentralized finance
scalability of blockchains governance all kinds of great ideas in the cryptocurrency space he also thinks a lot about public goods radical markets wealth distribution he runs a very active twitter account where he good naturally engages with all kinds of
people who are constantly trying to get into fights with him which is kind of what people do on twitter and yeah and we're very lucky to have him i would say that for me along with nick sabo and who we interviewed here in 2017 uh who created bit gold and coined the term smart contracts
and along with zuko who is the irrepressible founder of zcash i've always found vitalik nick and and zuko to be sort of the the three people on twitter that i early on learn a lot about crypto from so welcome vitalik and thanks for taking the time to talk to us about yourself
and ethereum well thank you very much for the introduction of it's good to be here yeah so i'm gonna start just right off the bat we're probably gonna try and keep this fairly basic and high level for those of you who are quite experienced with cryptocurrencies
this may be a very general conversation but at the same time i'm going to ask vitalik some hard questions we're not going to let him get away with it's just the pr angle and so but we'll start with some basics we let's assume we know what
cryptocurrencies are and for those of you who are not that familiar with it i would suggest you go back to the podcast that tim and i did with nick sabo back in 2017 i believe that's titled the quiet master of cryptocurrency correct uh so once you're kind of up to speed on
that this one will make a lot more sense but we're going to get right into not what is crypto or what is bitcoin we're going to get into what is ethereum so how do you describe it today vitalik uh sure so the one sentence explanation of ethereum that i sometimes give
is it's a general purpose blockchain so this of course makes more sense if you kind of already know what a blockchain is right it's this kind of decentralized network of many different computers that are together like maintaining this kind of
like a ledger or this kind of database together different participants have like very particular ways of plugging into that and they can send transactions that do very particular things but no one can tamper with the system in a way that's outside
of the rules and ethereum expands on the bitcoin approach of basically saying well instead of having rules that are designed around supporting one application we're going to make something more general purpose where people can just build their own applications and the rules for
whatever applications they build can be kind of executed and implemented on the ethereum platform so one explanation that i heard one person gave us that like bitcoin is like a yes spreadsheet where everyone only controls their own five squares of the spreadsheet but
ethereum is a spreadsheet with macros right so you know everyone kind of controls you know their own accounts which is kind of their own little piece of this universe but then these pieces of the universe can have code and they can like interact with each other according to
pre-programmed rules and you can build a lot of things on top of that right like bitcoin builds a monetary system on top kind of famously ethereum can build you know decentralized domain name systems again various decentralized financial contractions some you know prediction
markets you know non-functional tokens and all sorts of different schemes that people have been coming up with and the limit for what you build is basically your own creativity but like the core difference between building an application on ethereum
versus building it on you know some traditional centralized platform is this core idea that once you build your application in the application does not needs to depend on you or any other single person for its continued existence and the application is guaranteed to
continue running according to the rules that were specified and like you do not have any ability to kind of irregularly go in and tamper with it that's a great overview and i like that excel analogy of it's a spreadsheet with macros instead of just a spreadsheet
where you control your own cells i'll also try and articulate in a few ways that i understand it kind of around the edges because i think ethereum is one of those things that's now quite a bit bigger than you and it probably has evolved in ways that even
you didn't fully anticipate so in some sense we're discovering ethereum and no longer just building it i also like to think of it as kind of an unstoppable application platform so a platform for building unstoppable applications kind of like a world computer where
let's say that we want to run very very important computer programs where we don't trust the computer itself and we don't trust the other people to execute code in our behalf then we create a single world computer where we check the code on the machines
of many many different people all around the world who are properly incentivized to maintain a single computing state so if bitcoin is a shared ledger then ethereum is a shared computer for the entire world to run its most important applications so some of the applications that people
are building on it are among the possibly the most important applications of the future so let's talk a little bit about those applications about what this trustless world computer is doing what are the applications today that are the most common and that you're most
excited about so first of all i mean i think uh if the asset is a cryptocurrency and it itself is an application and of the first application of ethereum going beyond financial things a bit i mentioned ens the ethereum name system so yeah
that's you can think of it as a decentralized name system right so like for example you know when you go to ethereum.org there's dns domain name system which is this big that kind of table that maintains this mapping of well you know if
a person enters ethereum.com the server they actually have to talk to to talk to the website is you know like some particular id address and this dns system that maintains this kind of public relationship is a fairly centralized system with a very small number of servers
running it so ens is a fully decentralized alternative that is running on the ethereum blockchain and you can use it not just for websites right like you can use it just for accounts so for example like there is a messaging service called status it's like you know in terms of like what
it feels like to hear that you know it's a messenger it's similar to telegram we're signal or whatsapp or any of those um but the difference is that it is decentralized so there is no dependence on any single server or like there's no dependence on
status to company which is nice because it makes the whole thing much more censorship resistance it makes the whole thing just a much more guaranteed to survive you know regardless of what forces wish for for its existence or wish against its
existence in the future ens is this really important part of it because well if you have a chat application i need to have some name by which i can refer to you know the users that i want to talk to right like i want to type in and say i want to talk to nevada and things like
telegram and signal and whatsapp that mapping is generally basically kind of authenticated and controlled by a server but whereas in the status it's all just done by the ethereum blockchain right so that is one good example i think of a a kind of
not financial but still very important um ethereum application now going beyond those two cases there's a lot of kind of more complicated things um so there's the d5 decentralized finance space which is this big category that has all sorts of interesting contraptions in it
um like so for example there's some prediction markets so fly forbes where you can go and like bet on different outcomes like you know who's going to win some sports game or you know who's going to win some particular election there have been very successful
prediction markets running on the ethereum blockchain there's uh just markets for trading between different kinds of assets there's what's called synthetic assets um so if you want to have access to like some mainstream real world asset like you know what's older could be one
example but you know you don't have to like dollars like there's uh lots of other examples as well there's versions of this that are kind of purely virtual sort of simulated versions that exist um purely you know within the ethereum environment
now there's this entire kind of very powerful financial toolkit that exists within the ethereum ecosystem on the whole like there's just a lot of these uh interesting things that happen i mean there's even games that are based on um ethereum there's a whole bunch of
different things yeah in fact at d5 decentralized finance is this gigantic new category in which entire companies and protocols are being built in a decentralized way that allow you to do a lot of things that would have required wall street along with bankers and judges and
lawyers and accountants to handle but now is done through smart contracts that are living in the blockchain on the ethereum blockchain and these smart contracts are kind of at the core of the ethereum blockchain we talked about these in the next sabo podcast but
he famously described it as like an automated vending machine as an example of a smart contract where you you put in money in a certain slot and there's a certain set of rules and you press certain buttons and you get certain products in exchange but
these smart contracts obviously now are getting far far more complicated can actually be used not just to compose financial applications but even applications that we don't normally think of as financial one way to think about it for those of you who are into computer
programming is imagine if every piece of a program every function had an address from which anyone in the world could reach it a unique identifier address and it had a slot into which you could insert money so you could call any function wherever it is in the world you
could insert money into it and it would do something on your behalf and so that gives ethereum applications this very interesting property called composability where you can use them almost like lego blocks each one builds on the rest
and so the final product in d5 ends up very very advanced in the traditional world when let's say like robin hood builds their application and then schwab builds another application wisdom tree builds a mutual fund or an etf those can't combine with each
other but in the ethereum world of defy all of these apps by default are open source permissionless programmable and can connect right into each other they can be identified called and paid for in a permissionless trustless kind of way so the the infrastructure that gets built in defy
and ethereum although it's it's very difficult to build and it's complex once a piece is built it is available to everybody and sort of stacks on to each other almost to create one of those japanese style voltron robots that just gains in power yeah naval let me jump in here
just as a proxy i'm not even a proxy i am a listener literally in this case and i'm happy to be the listener so i'm both a proxy and an actual listener but how does one think about intellectual property if all of these otherwise separate or previously
separate applications and so on are now lego pieces that are kind of natively interconnected is that a silly question i'm just wondering if no no it's a really good question i mean my high level view on it is that what blockchains do is through consensus they protect the data
so the users own their own private data and then sort of the public data that's needed to make the blockchain work its integrity is protected by the blockchain and that's what blockchains do they get a whole bunch of people to cooperate on what the canonical
output should be but the code itself is completely open it is kind of backwards to what we're used to we're used to closed source companies capturing value but here all the values created by open source but yeah vitalik i'm sure has a different view on
this but you know there's there's lots of copycats and clones and there's attacks and forks and so on and it's kind of a wild west out there but generally uh so far it does seem like the original products and the best products are succeeding the best and they're sort
of always in the scoreboard of market cap and transactions and usage but uh yeah it's it's a wild west out there yeah and i think um the blockchain environment is definitely a one that operates under somewhat different rules than the traditional environments right like
just one example of this is like the idea of forking right uh so one story that happened around the beginning of last year that i just love to tell because of how it kind of combines together the values of the space so nicely as uh there was this platform called steam
and in the steam uh there's steam the platform and then there's steam the company right and like steam was its own blockchain and steamed the company like they did have some steam tokens um but like they didn't have the right to like just do whatever they want with
this theme the platform because it was a decentralized thing but you know they had some tokens and then steam the platform had a voting mechanism and holders of esteemed tokens could vote on changes but then the steam the company got bought out by justin sun
you know the infamous tron person and uh justin's son like basically nick started doing some things to kind of increase his control over the uh steam platform the community was kind of very unhappy with him and then he even like kind of took advantage of you
know some of the voting mechanisms and some coins held in exchanges to sort of seize control of uh at least the formal rules of the platform even further but then what happened was that the users were built right what the users um said is well we're creating a new
platform called hive and hive is just a fork of steam it is gonna have a start with the same or mostly the same rules as steam and we're even going to copy over most of the balances of the steam tokens except if you participated in the attack then
you know your balance goes to zero when you fork and most of the users like basically that have collectively moved over to this new fork and you know justin's son had this full control of an empire but then uh you know nobody cared about that empire anymore because everyone now
cared about hive right so like forking is this primitive that exists and because of it you know you do have this ability for just communities to you know exert kind of collective agency and um like basically protect themselves from kind of being exploited um but at the
same time if you as a here project team are good to your community then like those same effects work in your favor right uh so those effects work in your favor because community is willing to support your project if someone makes a copycat then you know
generally very few people are willing to kind of support and provide any assistance to that copycat project unless of course you do something to betray the community's trust in which case you know that like those kinds of situations and the situations
that the copycat is for i think legitimate developers have plenty of ability to build projects to gain from those projects becoming successful and there's a lot of ways in which the crypto space does end up kind of assuring that but you know at the same time it's also not in
environments where anyone's level of control was infinite and in some ways that's the other beautiful thing about the space vitalik had this great line in his blog where he said we wanted digital nations but we got digital nationalism
um and there's a lot of truth in that but basically these are these are like digital nations and one of the analogies that i use for defy is that these are like crypto castles made of bath that are freely trading with each other just imagine like people are building
applications on top of ethereum they're protected by mathematics those are the walls in those castles and there are moats which are rivers of cryptography but then they have free trade policy with each other so that creates a lot of innovation
but if one of them starts misbehaving then it's people can leave and go to the next crypto castle or this is where the analogy breaks down they can actually replicate it just create a copy and move to that one like in the steam and hive example well that also is
i mean it has comparables outside of the world of blockchain and cryptography in so much as if we look at say wordpress as an open source project you have companies like automatic and matt mullenweg you might people may notice that m-a-t-t in the middle of automatic
yes which layers then these for-profit services on top of an open source platform and technically someone could create a competitor but like you said there are these questions of viability value-add and moral leadership and so on right so so there are sort of certain elements
that contribute to the ethereum ecosystem so to speak that you can perhaps compare to other things to help educate people as well i was just sort of connecting some of the stuff that's a good analogy with with uh wordpress the the place where the analogies
diverge is that wordpress it's kind of a single-player game like each person owns their own blog right in the ethereum world you could use ethereum to build a twitter that everybody owns and it requires social consensus to operate but multiple people can put their data
in so it's this really weird thing where it's decentralized it's open source but it's still used to coordinate and bring people together blockchains combine this really weird combo of individualism and individual control and the ability to leave
along with consensus and community and cooperation and build this giant public good so it is its own thing it's hard to figure out but it's worth figuring out because this is the next phase of the internet after mobile yeah let me if i could jump in just to
kind of be the kid in the corner of the class in the back of the class asking questions i would love to hear from you vitalik what was the initial vision for ethereum and what has most surprised you if anything you know i was doing a bit of reading just on the the genesis story and
first of all i i mean maybe separately maybe for another conversation it seems like a lot was done right in the beginning and i was reading a quote from a wired piece in 2016 and it's and this please feel free to fact check if it's not accurate but it
says you know when i came up with ethereum my first thought was okay this thing is too good to be true and i'm going to have five professional cryptographers raining down on me and telling me how stupid i am for not seeing a bunch of very obvious flaws
but you know dot dot two weeks later i was extremely surprised that none of this happened as it turned out the core ethereum idea was good fundamentally completely sound i'd love to hear what the core idea was maybe we've already stated it and it's
redundant but the initial vision and if anything has been really surprising to you that has transpired since those early days so i think the core idea is um you know to make a general purpose blockchain um and to kind of open the gates for people to
build what they want to build on top of it right like the background kind of story for when ethereum was starting to be formed was that this was just the time when the idea of a blockchain kind of beyond bitcoin was just starting to gain legitimacy and people were just starting to realize
that you know there are these applications for blockchains other than just them running a currency i mean it would be nice to ability platform that can actually support them and so at the beginning right you had single purpose blockchains you had bitcoin
uh for currency you had namecoin for domain names you would have like single purpose protocols like covered coins for issuing assets the second step is what i call the swiss army knife protocols so a swiss army knife protocol basically says well here's a list of you know 25
different applications that we've identified as being important and let's be able to watch it to support all of them uh so like mastercoin was one example of what i call the swiss army knife protocol and the problem with the swiss army knife protocols is that two weeks
later you know some 14 year old teenager in finland comes up with a 26 application you have to go hard for the protocol so the next the natural step is this kind of general purpose approach where instead of your blockchain supporting 25 applications your
blockchain supports a programming language and whatever a system with whatever rules he wants to build you write that in a piece of code and the nodes in the network can all execute the code and the network kind of helps to collaboratively enforce the rules of
this code for the um objects that are in your particular application so that was kind of the technical uh perspective and then there was also the perspective of well you know what did i envision people building on top of it it's actually surprising how it hasn't
changed that much i'm like i remember some of the very earliest applications included kind of financial gadgets so contracts for difference were one example which is uh you know one very particular subset of the thing that today we call d5 decentralized file storage uh like you
know paid people to store a gigabyte of your data um was one thing i was excited about um decentralized name systems was um excited about those you know decentralized training between different assets like a lot of the examples of just things that people
wanted to do with blockchains at the time like they just are the same as what people are doing today though there are also new applications right so like non-fungible tokens um that i briefly mentioned nfts the idea here is basically just create a yet token that you know
represents something other than a financial asset and one example of this could be that an nft can represent video game assets and nft could represent like a digital work of art where he wants to sell kind of like basically breaking rights as being the
original owner of it and you know there's a lot of these different use cases and these uh right now the nftm ecosystem has been extremely successful um about a week ago there was a yeah a neon cat nft that got sold for the equivalent of about 580 000 dollars
and so that's an example of a new thing another example of an old thing is that daos decentralized autonomous organizations and so the idea here is well you know let's build an organization where the rules for the decision making in that organization
you know the equivalent of like shareholder or board voting or whatever he wants to use could just be written as rules in a smart contract and then the program that executes those rules can be directly in control of whatever assets the organization is supposed to control
and you know we've seen a couple of examples of kind of simple daos in action and make or dial which kind of maintains um you know die the stable coin that you know algorithmically targets a price of one dollar is uh one example i mean now there's also rye
uh you know there's a lot of examples of this a lot of things that we expected from the beginning um prediction markets um also have been part of you know what we were excited about using blockchains for since 2014 and they're still around today so a lot
of old things and also some new things as well thank you extremely helpful yeah i mean yeah some of the ones that vitalik just laid out like i think your recent guest katie han mentioned nfts as nifties is what she called it uh no i did because i wanted to try to
oh you didn't sorry i wanted to try to force that into the lexicon but you got it okay well you watched this stuff yeah nifties yeah so nifty nifties are this crazy idea that like owning a digital copy of something and having your name stamped to it somehow gives it
more value but it seems to work it works with collectible trading cards it seems to work with digital art and then because of the composability of the ethereum infrastructure you can reuse these nifty items across different games different museums different virtual
worlds and so you own it in one place and you own it everywhere which is a very powerful concept so digital scarcity was born with bitcoin but now extending into things that are not fungible that are not exchangeable with each other and that that's been frankly
for me a surprising uh thing that is immersion ethereum you know ethereum it's it's funny because you're asking vitalik like what did he expect and what do you not expect i remember when ethereum first launched that a lot of computer scientists i
spoke with privately said it would never work because it's kind of this crazy idea that the way we're going to get a trusted computer in the cloud is we will each run a copy of all the computations on all of our computers and then we'll sync it up and make sure it matches
so that's the recipe for building the slowest computer in the world and but somehow we've we've gotten away with it and so i think the big debate now about ethereum has shifted from will it work to will its scale and when i talk to my friends in the crypto
community and say hey what do you want me to ask vitalik they send me a list you know of many many questions but the center piece is always the same and like how the heck is this thing going to scale and i would like to get in that conversation that is a more complicated
conversation it's technically sophisticated but basically we're saying hey we're going to have one giant mainframe computer in the cloud running everyone's applications so that we can all trust the computer instead of trusting each other but how is that going to scale isn't
that going to be the slowest computer of all time and so now we're in a situation where ethereum uh it's actually cleverly named it runs on so-called gas quote unquote and there's a limited amount of gas per block in the ethereum blockchain
and frankly uh the gas the price of gas has gone up these decentralized finance applications they can be very lucrative they're trading large amounts of money and people are eager to use them but the price of each of these transactions is going up i was trying to do a small d5
transaction the other day and it was a hundred dollar transaction and the price was five dollars just to execute the transaction and that's a very very high transaction fee and i know vitalik and crew been working for years on the ethereum two project to bring
that cost down by the way as an aside that is one place where ethereum really differs from bitcoin bitcoin is saying we're digital gold this thing is immutable don't change it and the fights in the past have been about changing bitcoin or not there's a
big famous schism over that but now with ethereum you know the question is the philosophy is we do change it we do improve it we do make it better but in the process there is a greater chance that things can go wrong that it can break so now we're entering ethereum two which
is the scalable version of ethereum so vitalik do you wanna give us a quick overview of ethereum two at a very high level and then we can kind of dig into the pieces i'm sure um so i think one other thing that's important to kind of add just to you know give a
complete picture of scaling is that there's these two families of scaling layer one scaling and layer two scaling where layer one scaling basically says well let's make the blockchain itself better and layer two scaling says well let's come up with
protocols that are gonna sit on top of the blockchain and that use the blockchain in more clever ways to provide the same kinds of security guarantees that a blockchain has um but that provide much more scalability because you're not just kind of doubly staking
like literally everything and doing everything on the blockchain directly and so like bitcoin for example uh you know especially after the scaling war is like focused very exclusively on layer two right whereas you know say bitcoin cash is very layer one
focused and this is a this is a classic thing in computing like so for example when i go to a website the domain name system is at a different layer right the dns servers and then the http server as a server of the web page or another layer on top and there's a caching layer where some
of the data might be kept closer to me and then on my own computers where i run the javascript because i don't want to run that javascript way back on the http server or the dns server so there is a long rich history in computing of stacking layers upon layers
as you get closer to the point of the user that's the point at which you use more compute and you execute more and more of the code so basically the idea here is decentralize only what you need to decentralize and so ethereum is going to split into
or it's going to have multiple layers and i think what you're saying is layer one is really ethereum and that's the least scalable part but that's where the security comes in and layer two is where the code is run and that's a that that has different properties which
you're gonna get into right well the way that i would describe it is like in comparison to you know bitcoin which is very early too focused on bitcoin cash which is very earlier one focused ethereum takes a moderate approach so we do both kinds of scaling
right so there is the eth2 um effort which you mentioned um which uh you know it is later on scaling right it is basically saying well we're going to make this big upgrade of the ethereum blockchain we're going to move it from a proof of work uh to a proof of stake
uh where you know proof of work is this current consensus mechanism that keeps the blockchain secure that runs on having a large number of computers just constantly cranking out these kind of mathematical hash solutions uh 24 7 and proof of stake is a much
more energy efficient alternative there's also sharding which is a layer one scaling solution that says that instead of every node in the network having to download and process everything every node in the network only has to download and process a small portion of all of the data
yeah the blockchain protocol is designed in a clever way that still ensures enough safety despite having that constraint so think of it as you know like combining at least some of the advantages of uh you know a bitcoin style blockchain and bittorrent right
like bittorrent is very layer one scale like there's there's nobody who downloads um you know every movie or even like an index of every movie yeah so before we get to layer two so so layer one is you're saying it's proof of stake which is moving from proof of work
to proof of stake and uh sharding which is breaking it into pieces and having uh you know different pieces do different things and then try to reconcile them on the proof of stake side i mean that itself is a whole big debate that could
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investments for the long term and you can get started today at wealthfront.com tim so the proof of work i'm familiar with proof of stake could we just define what that means the core idea basically is that any decentralized consensus system
where you know you don't have a central registry that keeps track of you know who the different humans are you need some way for people to like basically vote on like which blocks go and which transactions got included in the network and you need for that vote to be secure against
what's called a civil attack a civil attack is when one attacker just pretends to have one million different accounts normally like uh in you know like reddit and like google accounts and twitter and all of these centralized systems like this is done using centralized
mechanisms right like they sometimes require phone number verification and then phone numbers themselves some often end up having some kind of kyc on top of them there's various kind of ai techniques that try to detect bots but in a decentralized system that you
know we don't have this set of centralized registry of who gets to be an actual user right and we don't want to have that and so to prevent this civil attack right to prevent one person from just generating a billion accounts and out voting everyone else
the solution is economics right the solution is basically that the extents to which you can vote on just this very limited question of which transactions get included in what order is proportional to how many economic resources you put in so in the case of proof of work
those economic resources come in the form of computing hardware that you're running right like when you're running um this mining software on your computer you're cranking out these hash solutions every hash solution gives you the right to generate a block
and the number of hash solutions that you can generate is proportional to how many computers you put in in proof of stake it works a little differently but the core principle is that your ability to kind of participate in creating the outcome
is proportional to how many coins that are in the system that you're staking and so the reason why proof stake is efficient is because in proof of work like the way that you are basically prove that you have a computer to the system is by just like running the software on
on that computer 24 7 and generating hash solutions right like that's the only way to safely do it because if you did not have to run the computer 24 7 like if you only had to run in 12.7 well then you know you could have one computer
that just pretends to be two different computers but with proof of stake if you have coins those coins are saved in an account that account has an associated public and private key and you can just make a digital signature with a private key so you don't have to
like run any computer for longer than a few milliseconds that's the kind of core principle that's supremely helpful thank you yeah this is beyond the scope of this podcast but it is actually hotly debated how much more efficient proof of stake is because there's also
these blockchains they have to issue coins to in exchange for the security uh to the so-called miners or validators in the case of proof of stake and people will you know spend a dollar to get a dollar so to speak if you're giving out free coins on the blockchain
then people are going to hustle in any which way possible and in proof of work they'll do it by buying more computing equipment to run more hashes to get the new coins coming out and proof of stake they'll have to lock up funds or they'll have to obtain funds to do it there's a
cost to doing that to obtaining those funds so there's no real free lunch but there are arguments for efficiency with proof of stake especially as you get securing very large amounts the way that i would just briefly summarize the state case there is that
like proof of stake can actually survive at least you know in the opinion of group stake supporters with much lower rewards than a proof of work can and the reason is and like because of how proof of stake works the ratio between the cost of attacking a system and the
cost of just running it like becomes uh like more favorable but you know this is a long debate um i've written on it i have a post on vitalik.ca but if you just scroll down the most recent one called proof of stake and then you know proof of work proponents have their own posts as
well so encourage you to read all of them so going back so this is all layer one scaling switch from proof of work to proof of stake uh start sharding the blockchain and this gets you some tens of times improvement like you know 20 times 25 times
improvement and through 100 times 100 times fantastic yeah so then there's layer 2 which stacks on top yes so layer two as i mentioned is about creating protocols that live on top of the blockchain that only use the blockchain in very particular ways so there's lots
of techniques for this right like the simplest layer to to explain i think is a very special purpose kind of lawyer too called a payment channel so the idea behind the payment channel is like let's say i am you know selling you neval and um internet connection and
you're paying me per megabyte let's say you're paying me you know like one cent per megabyte now if we want to do this over the blockchain the naive way to do it is every time a megabyte of data passes through the connection you will just make an unchained
transaction and you send me one cent the problem is this requires lots and lots of transactions and the transaction fees are actually much more expensive than one cent so it's just completely economically non-viable so here's what we do instead you put ten dollars into
a smart contract right so you send ten dollars on the blockchain to an address where according to the rules of the ethereum network once those funds are at that address those funds are controlled not by a human but by a computer program and
that computer program will then have some rules that i'll explain later right so at the beginning you send 10 dollars to this contract and so far you actually haven't made any payments because as i'll explain the gas contract has rules that will allow you to get your money out
now here's what you do after one megabyte um after you know we have one megabyte worth of internet data passing between us you create an off chain message and you digitally signed that offstring message that just has the number one sent um just written on it
right so you will just write the you know the number one cent and you attach your signature and you send this to me none of this goes on chain then one more megabyte happens you write out a digital message that has the number two cents and you additionally sign it you send it
to me oh sometime later every time a megabyte happens you just send me one more of these messages and you keep on incrementing the number and let's say after a few hours of this in total we've had 347 megabytes so worth of communication and you've sent me a message that says
3.47 and you are now like no longer wants to use my internet you know you're signing off for the day and so you know we're done so now here's what happens i can then take your message and your message that says 3.47 i can attach my own signature to it and
i can publish it as a transaction going to the smart contract and you have your ten dollars in the smart contract has a rule that says if i send one of your off-chain messages i i call them tidbits if i send one of your tickets if i kind of wrap one of
your tickets in an actual transaction and i actually kind of publish your ticket to the blockchain then whatever amount of money is on your ticket goes to me and the remainder gets refunded to you right so i get my three dollars 47 cents and you get your six dollars and 53
cents back now it's actually incentive aligned right because um i um always have the ability to use the most expensive ticket that use the most recent ticket that you sent me and i don't really have any reason to use one of your older tickets right so
i'm always going to pick your later ticket and so i'm always going to claim all of the money that i'm owed and you get your money back now if i disappear then after some period of time you have the ability to uh just to go in and take the money back for yourself
right so the idea is that it's this contraption where you know in reality you've made a payments to me 347 times right like you we've had 347 interactions during which the amount of money that's entitled to me goes up and the amount of money that's entitled to you go down
but actually there's only two um actual blockchain uh transactions that uh are visible to and needs to be processed by the rest of the network right so we make 347 payments but the blockchain only sees two of them and that's you know a factor of
178. uh two improvement there yeah so so if i can summarize this for a second uh right for kind of our listeners um basically what you're saying is let's say that you and i have a long-lived contract for some service rather than publishing every little aspect of that contract
under the ethereum blockchain and flooding it we go off to the side we do a whole series of transactions but every time we do a transaction each of us like stamp it and say yeah that little piece was done and we update the transaction between
the two of us and then when we're finished either one of us can go back to the blockchain and submit the the record of all the transactions and say look it's signed by both of us so this is valid e but either one of us can submit it and the blockchain executes it
so the blockchain only needs to know when we left with how much money staked on this transaction and when we came back and what the total change was it doesn't need to keep track of all the intermediate pieces exactly yes that's a good summary
now channels are like i think there's the simplest um kind of layer two but they're also the least powerful layer two they can only do payments they have a hard time doing many kinds of smart contracts channels exist and they are being used for more and more things um and
uh they're great but the thing that the ethereum ecosystem is the most excited about is something called roll-ups now i don't want to actually you know go in and fully explain rollups because they're even more complicated than channels but for those who are interested i do
have an article um once again you know go to vitalik.ca scroll down like uh i think it's called an incomplete guide to rollups and so i described channels and also this thing called plasma then also roll-ups and roll-ups are really powerful because
they can support not just payments they can support the full generality of applications like exactly the same applications that you can run directly on the ethereum blockchain itself but if you do those things inside a rollup they become 100 times cheaper so it's this very powerful
scalability technology and the ethereum community loves rollups because they're very easy to upgrade to because if you run an application on ethereum you can just run the exact same application inside of an ethereum virtual machine compatible roll-up of which
a couple of projects exist and actually i think a couple of days ago optimism uh announced that they're going to launch their mainnet fairly soon yeah roll ups are fascinating i've been looking into them a little bit and uh they're worth learning about it's
basically the idea is just that there's these very complex machines that are not on the blockchain that are off the blockchain that are running the transactions but then they're submitting different kinds of proofs back to the blockchain to say
don't worry this was a valid transaction and the two different approaches optimism is optimistic where basically optimistic roll-ups say we assume people are doing the right thing but we're watching and if someone commits fraud or makes a mistake then they get punished for that fraud
whereas there are these uh zero-knowledge-based roll-ups you know pioneered by starkware and others which are basically saying hey actually we're going to submit proofs which are much shorter than the actual computation that the computation was done properly
but i think these give together what another 100x speed up yes so if you combine the eth2 layer one speed up and the layer two uh roll up speed up then you get the ten thousand times speed up exactly you can get like some somewhere over one hundred thousand transactions a
second and one other really nice uh feature of uh sharding by the way is that like it's a quadratic right so if the efficiency of computers increases by factor of two then like you the you can support twice as many shards and each shard can be twice as
large and so your the capacity of the whole system increases by factor of four right and so we actually expect that capacity to increase like going even far beyond 100 000 over you know the next couple of decades so is it a stretch to say then that it
would that sharding that sharding increases capacity is a square of moore's law as opposed to justin moore's law yes that this is now if we get to a hundred thousand plus transactions per second that's a lot i mean to give a given uh comparable metric there's a
there's about a hundred thousand tweets per second at twitter during peak times and obviously these transactions are going to be much more sophisticated than or could be much more sophisticated in a single tweet they can actually be arbitrary computer programs
running on the side so that's quite a bit of scalability so so then i think the question comes up well well where is it you know a lot of people i know who are building apps on top of eth have now had to come up with backup plans there are competitive blockchains
that are coming up which trade off decentralization security for speed so what they'll do is they'll say well we'll only have 20 validators run by our friends or maybe like 100 people that we know and trust but in exchange it's a lot faster like
now we don't have to get consensus from unknown people all over the internet we don't need these complicated contraptions and then they can basically run much faster so a number of projects are looking at these as as backup plans but i know that they don't necessarily want to use these
because these are less decentralized they don't really fully live up to the original promise of blockchains to the same extent so the real question i think in everybody's mind is like is there a timetable for these you know can we can we reliably target a
date for certain kinds of improvements because people are betting their businesses on this great and the very important question uh so i mean i'll start off with the progress of youth too so i think it's important to reiterate because i think a lot of people haven't
fully absorbed this the eth2 chain is already running right so there's already a proof of stake chain uh it does not yet have sharding but the proof of stake system is running the thing that that has not yet happened is um the event that we call the merge
which is where we basically actually take on the existing activity on ethereum and we fully move it over from the proof of work chain to the proof of stake chain and then the proof of work changes that basically becomes irrelevant from there the reason why we took this kind of
multi-step approach where we first start the proof of stake system and then you know we let both run in parallel for some time and then we merge at the end is just to give proof of stake some time to prove itself before the entire ecosystem is asked to um upgrade
over you know the proof stake thing exists it's been stable you're running um ever since cell launch and at some point fairly soon like you know we are going to actually go and merge all all of the proof of work activity onto it um so shorting
is um also going to happen um and sharding right now is in the there's a spec there's prototypes of parts of it i will admit that we were actually prioritizing the merge kind of even more than shortening recently the reason why for this actually has to do with the other thing
which is rollups right like the thing to remember is that if you have rollups but you do not have sharding you still have 100x factor scaling right you still have the ability for the blockchain to go up to somewhere between 1000 and 4000 transactions a second
depending on how complex these transactions are and so with rollups as i mentioned the optimism you know fully evm capable roll up is likely to um launch an initial maintenance release some in around a month or so um there's also a project called arbitrum
which is also an evm capable roll up there is actually simpler roll-ups that are only capable of processing simple transactions and exchanging between assets like loopring and zk-sync and those roll-ups have already been running stably for about a year right so rollups
aren't even theory they've been a practical part of scalability of ethereum for a few users for almost a year and the thing that's left is basically taking that same model and just fully extending it to kind of not just support transactions but also
arbitrary applications right so roll-ups are coming very soon and we're fully confident um that by the time that we need any more scaling than that that you know sharding will have already been um ready for a long time by then so you're basically saying fully
very confident that something like uh you know an optimism or a zk based rollup will be solving a 100x scalability problem within the next few months i think so i mean i think um like there's definitely a lot of people who are not going to be comfortable moving
over just because you know it's new technology and new technology always has risks but i expect there will be plenty of applications and possibly even non-financial applications like the nifties and you know domain names and so forth to start off just because
like the risks are lower if things do break and then kind of creeping up to higher and higher value things as people become more comfortable over time so do you think that ethereum could have a scaling schism like bitcoin did bitcoin split famously into bitcoin and
bitcoin cash over the block size debate a few years back which is all around scaling and people some people were saying bitcoin should be digital cash and so therefore it needs these big blocks and it needs to handle more transactions and other
people said no no bitcoin is a swiss bank account it's digital gold and it needs to be secure and lots of small nodes have to be able to run it so we care more about security than we do about handling small transactions and the the small block people won and so bitcoin forked
and now of course what we call bitcoin is a small block bitcoin that won that debate do you think that there's a possibility that miners some miners and people will stay on eth1 instead of eth2 i think so except i do think that the risks are much lower a big part of
the reason why is because we've been very open about proof of stake and sharding being the vision basically from the first day and ethereum did already have the schism right of ethereum and ethereum classic and uh a lot of the proof-of-work
proponents did actually move over the to ethereum classic already because they recognized that you know ethereum classic community and ideology was one that's more aligned with continuing proof of work forever and so you know why um stay on the chain where the core
developers and lots of people are eagerly expecting a prostate change if you can just move on to a platform already that kind of accepts your values um so i think that was one of the factors that did um actually end up making the e3 transition kind of a bit more secure um another
thing also is that i don't really think there's a deep schism of ideologies within ethereum in the way that there wasn't bitcoin right like i think in ethereum everyone is roughly on board with the idea that you know you have some layer one scaling and you have some weird two
scaling there are some kind of longer term disagreements like uh like you know justin drake one of our researchers for example is much more into making layer one more powerful whereas i'm more in favor of a simpler lawyer one and um having layer two is do more
things that's not a kind of extremely deep and fundamental disagreement but like you know either approach is gonna have lots of scalability and it's gonna deliver a great uh environment sets for ethereum users so that's interesting you
don't you don't even really run ethereum you have disagreements with developers and they could even change it in a way that you don't like has that happened yet has has there been a case where something has been implemented into ethereum that maybe the community or the other
developers wanted which you sort of disagreed with there's definitely been changes that i have wanted to push forward that i mean i gave up on fairly quickly because i know enough court developers or the community ended up disagreeing on them there's been changes
that were kind of pushed forward by some people who are not myself and then where i just kept completely silenced so like blog reward decreases um for example i was completely silent or mostly silenced brock powell was mostly silent as hell it was obvious
that the brockport side was losing things that i was trying to push forward i mean those are harder to find just because like i tend to just naturally understand what the community what it would accept and i don't really try to push things that
i don't think would be successful i mean there's like some minutiae around um you know scaling strategies and uh statelessness and state management strategies where myself and some other core developers have some different opinions and so there's a lot of back and forth where we
try to sort of satisfy each other's concerns yeah my sense from afar is you're more coordinating than dictating and you're doing what are you running the ethereum foundation is there an organization you're part of or are you just kind of a roving individual with a
laptop and a few friends who just kind of writes blog posts and submits uh proposals i mean some of both and i do you know i do the proposal submitting i have do you know some some writing proof of concepts um and you know in python i do some kind of trying to coordinate
people the ethereum foundation as an organization exists so the executive director of that is um ayamiya gucci and she has been doing a lot of the logistical things for about the past three years and has done an amazing job and you know i end up
uh you know coordinating and working with her quite a lot on uh various things but even the ethereum foundation like it has an important role because it has this kind of a large pool of capital and this kind of high level of kind of public legitimacy but it's uh
not nearly the only organization within ethereum right like there's a lot of proposals that got initiated on the outside there's a lot of proposals that got a really huge amount of community support coming from the outside even organizations other than the
ethereum foundation that have a lot of resources within the ethiopian ecosystem so like for example for the first few years consensus um did quite a lot in consensus is still doing a lot but now there's also a uniswap whose treasury has just grown a huge amount and they here
are even wealthier than the ethereum foundation is so it i think in practice it does end up being this kind of loose collaborative effort between a lot of different different groups so uni-swap is interesting uniswap is uh for those of you don't know it's an
application built on top of ethereum but it has its own token and it's the it's a one of the first uh automated market makers a decentralized platform for exchanging cryptocurrencies with each other without having to use a centralized authority like a coin base
or a gemini or a coin list instead you just go on to you go to unit swap and it's a smart contract it's not owned or run by anybody except the community and a few developers and there's a token associated with it but you can just automatically trade
with this smart contract to turn say your ethereum into a stable coin to get the equivalent of dollars or back this shows how the ethereum ecosystem is very different than the bitcoin ecosystem in the bitcoin ecosystem there's only one coin there's bitcoin
and they don't really tolerate other tokens in their orbit whereas with ethereum you have a lot of other tokens in the orbit and you'll see blockchains that are competing with ethereum that are trying to you know they're making different trade-offs and you know whether it's
flow or ava or near or whatever there's a whole bunch of those but then there's also people who are built on top of you like balancer and curve and unit swap and whatnot and so what's your view on all these other tokens how many tokens are there going
to be how do you determine which one makes sense and which one doesn't and do other blockchains make sense at layer one or should other tokens only emerge at layer two now that ethereum exists now this is definitely a very important topic tokens are one of those uh things that's
really like playing with fire right like on the other hand um fire is that crucial to human civilization but on the other hand fire is uh if you're evil you can burn up your family if you're not careful so the the thing with tokens right is that
the crypto space is not the only space that tried to build decentralized things right like there are a lot of decentralized projects that are outside the crypto space like um diaspora the decentralized alternative to facebook the people tried to build around 2010
is one good example but the challenge with um this kind of pre-blockchain or non-blockchain decentralization or crypto is that it's harder to kind of align the incentives and motivate people to actually wants to participate in you know building and growing the community at a
large scale like you can get idealists but the problem with idealism is that idealism is not very socially scalable cryptocurrency on the other hand um you know can uh appeal to the kind of universal values right like where you know the real universal value is
getting rich for a lot of people yeah and it seems with ethiopia you've done a bit of both you've got a bit of both you've got people who have ether getting rich and then there's also a movement yeah right exactly and i like i think that balance is important right like i think
the failure of a lot of non-blockchain crypto shows the uh inability to do things at scale without that financial incentive but at the same time you know the project a lot of the more at least in my opinion amoral projects within crypto that just care
about uh you know the pump and uh the volume and um you know getting a powerful and expensive token that they can get rich off of like those projects end up not really doing well in the long term either right and there's been plenty of projects where just like vc
funds gave you know hundreds of millions of dollars of capital to them but you know the reality is that like hundreds of millions of dollars of capital just can't buy you a soul right and so a lot of people end up kind of stumbling and falling on that to
some extent yeah i think some of that is just driven by the pre-mine phenomenon where bitcoin had a so-called fair launch although you can debate how fair it was but you know how far the distribution is today but uh everyone sort of started mining at the
same time or everyone who was aware of it whereas a lot of coins that have come subsequently the team has a pre-mine where they get a bunch of the coin in advance and as the amount of the pre-mine goes up and the competition moves from hey let's mine as much bitcoin as
possible to hey let's just create the winning blockchain and then get the big pre-mine so it's just move the competition from mining to creating or forking uh so it's almost sort of inevitable once pre-mines became a little bit accepted that there would be so many
different blockchains yeah no i think that's uh definitely fair too like ethereum once again it's kind of fairly kind of moderate there like there was a free mine but you know the pre-mine was only about 12 percent of actually about 10 of the total supply
and you know people did have the opportunity to mine or to combine the sale and so a lot of people had the opportunity to kind of become part of the ecosystem but i mean i do think that you know the less monetary kind of the movement aspects of this is important right like
if you're just um you know go to coin market cap and you look at some of the like top 10 coins other than like say bitcoin and ethereum but you can't always give a good answer for you know what values does that token represent whereas you know for bitcoin
you can for a theorem you can for z cash for example i think you can so i think there definitely is this kind of a complicated balance between different factors basically the coin can help but too much emphasis on the um on just the coin can hurt and it's
challenging i think uniswap actually did really well with their coin because uh like on the one hand you know you could kind of criticize it and say you know oh this was only just a measure that it was kind of reactionary that was reacting to you know kind of sushi swap
trying to kind of swoop in and uh basically try to push everyone to quickly migrate over and they had a coin and so people you know got into sushi swap because they just wanted to get rich off of it and so unislop reacted by making their own coin
um but at the same time like they did this one really cool thing which has a big part of the initial distribution was this very uh kind of egalitarian air drop right like basically if you had used the eunice swap even once before the air drop began
you would get 400 unit tokens so at the time those uh uni tokens were worth about three and a half dollars and so the joke was like you know unislop actually delivered on giving everyone a stimulus check and uh you know people really loved that and uh you know the the supply distribution
distribution of uni was again very widely dispersed and the whole thing was this kind of dao where a lot of people could uh participate in decision making so i think like there's ways to do tokens while there's ways to do tokens poorly yeah the backdrop on unit swap uh sushi
swap is unit swap was this automated market maker this decentralized exchange that launched and then they sort of got attacked they got cloned by this other one called sushi swap you know joking uni sushi and then they tried to like steal the
unisoft community by saying hey come here and we'll pay you more by giving you tokens and then unisa was forced to actually create a token which we then gave away to their community which are called airdrops it's like helicopter drops of money except now it's made up tokens
so there's all this interesting stuff that goes on in crypto where trying to build and maintain communities you have to figure out how to distribute the spoils but contrast how this is compared to say facebook or twitter you don't see mark zuckerberg air
dropping facebook stock on the users and you don't see jack dorsey air dropping twitter revenues and the users but that's exactly what happens in blockchain land and you know ethereum might have had a small pre-mine but i do remember early on looking at ethereum and i think
i i talked to biology srinivasan one of your other guests about it tim where we were looking at eth back in the day when it was first launching and we were just really confused because it seemed like there was this one brilliant technical guy surrounded by like 15
other people who all had the title co-founder and it was very confusing to evaluate as an investor so we ended up not investing to our detriment but that's that's my way of saying that this was not a vitalik get-rich-quick scheme i don't think vitalik even had
you know was even the single largest token holder i think there were many other people who frankly you know had a lot less to do with ethereum success who ended up holding a huge number of tokens so to the extent that vitalik is the one who's working on it
and pushing it forward it's a labor of love and i've always been super impressed by how his team is very altruistic and really kind of wants to make the world a better place maybe they're young and naive but it's you know it's refreshing to see that so
i think you know in terms of branding a lot of people look at ethereum as like lift to bitcoin's uber right there's sort of a crypto right-wing libertarianism versus a crypto left-wing uh sort of libertarianism now let me jump in for one second here if i
may ask a naive question or a novice question maybe and if if i'm completely looking at this the wrong way i'd love to be corrected uh thinking of ethereum and comparing it to say bitcoin and considering the possible regulatory threats to bitcoin and i think probably a
a stronger focus on cryptocurrency than blockchain by regulators and just by extension if we're thinking of ethereum on some level as both cryptocurrency but also as a world computer maybe as if amazon had its own cryptocurrency right bezonians or
whatever whatever they might call it and then aws that even if there were a crackdown on currencies that ethereum would have some resilience and anti-fragility in that respect does it mean that ethereum in its entirety is less subject to regulatory threat
or that it can thrive in the face of regulatory threat along the lines of that which uh bitcoin could face i mean comparing the enough regulatory situation of uh ethereum and bitcoin i mean i think like both benefit from being highly international right like bitcoin has a
strong community in the us and has a strong community in china it has a strong community and you know the eu and lots of other places ethereum is very similar in that regard you know there's these very strong communities and lots of
different countries you know including countries that are uh you know not kind of geopolitically on the same age with each other so there's a lot of i mean of resiliency yeah in that sense now of course the other kind of aspect of uh politics is that like it's not
just about what they can do it's also about like what they want to do the reality is that regulators have cracks down on cryptocurrencies significantly less than they theoretically could right like they theoretically could like make something like one basically go overnight
right and like i think the reality is that you know they yeah don't uh in part because like they do see a lot of the positive value that's uh coming out of these platforms right and there's even regulators that wants to use you know public blockchains and i you
know even things like ethereum to build applications on top of them you know they get see value in some of the kind of advantages that the things like stable coins for example could provide or even you know non-financial applications of various kinds
yeah if you wanted to build a fraud-proof voting application you'd probably do it in ethereum yeah cryptocurrencies are inherently designed to be sovereign resistant right they're they're designed to be stateless and so the geographic redundancy is one aspect of it and
some countries try to ban it like i think uh for a while people think china tried to ban it and that sort of failed and right now india is talking about banning it and that will end in tears right that's not going to go well when you leave your country out of the
innovation the next 10 years so hopefully they don't do that but there's also redundancy in terms of design for example going to proof of stake is a different kind of redundancy than being just all proof of work so you're not subject to the same kinds
of attacks i think being used for all kinds of applications now could you speak to that yeah so proof of work is you shut down minors and minors of hardware and equipment you know where they live right they need a physical presence whereas proof of stake is validators we
just need an internet connection and so they're kind of harder to stop and harder to find in theory and then you also have just what applications are running on top of these platforms so if you're just running digital gold that's one application but if you're also running
as vitalik said uh you know functioning prediction markets public goods uh financial systems voting systems gaming systems nifty tokens art galleries right and all those kinds of things then it gets very hard to shut it down and i actually think eventually
all internet traffic will be encrypted and all of it will require cryptocurrencies to kind of just allocate scarce resources like even today there are things that we do on the internet that are centralized like caching and routing and spam filtering that should be
decentralized and involve crypto payments for efficiency and once we sort of start getting to those applications it'll be very hard to turn off crypto without turning off the internet it's the native money of the internet and so if you take away value transfer
from the internet the internet as we know it will be stunted at best and more likely just cease to function at some levels thank you back to you yeah oh yeah yeah no not at all no yeah it's i mean there's there's there's there's an infinite number of
rabbit holes we can go down coming back to ethereum for a second so there's bitcoin which is clearly digital gold there's ethereum which is the world computer and you know with digital gold high price is good you want your gold to go up in value except to the extent these
days digital gold bitcoin has been going up but it actually gives me some trepidation i tell people it's like my insurance policy is becoming more valuable my life insurance policy right i don't know how i feel about that but with eth it's not clear the price
going up is always that good for adoption it's it's good for the people who are pumping and holding but is it so good for the people who are trying to use it i mean well do you have any thoughts on the price of ethan how much for example we don't even know
exactly how much if there is going to be the future right the supply curve is a little bit undefined and some people say oh it could be too big this thing will get inflated whereas the other arguments say no there are certain applications we're going to
have for which you have to lock up ether or even destroy eth to use these applications so each may end up being more valuable do you have a what is your current point of view and where the east supply heads and what the eth price means for the ecosystem
yeah so one thing that i think you alluded to a little bit is that there's this proposal called eip1559 which kind of redesigns how the transaction fee market works and you know there's a lot of kind of very wonky a kind of economic math for um kind of why the specific
changes that it makes that makes sense but one of the consequences of that change is that the majority of fees instead of going to the miner whoever creates the block would get burned like it would just literally get deleted out of existence and so if demands to use ethereum is
high enough uh then there would actually be more east than uh they're being destroyed than is being created and so you know the the joke that shows sometimes make is you know if bitcoin know if uh fix supplies sound money then you know if you have a
decreasing supply does that make us some ultrasound money and it actually is not even that far fetched the possibility like if you look at the transaction fees for the last month like they actually have been on a lot of days greater than the yeah block rewards for that
for that day um so it's interesting because like it basically creates this more direct connection between people using the ethereum blockchain and um you know eth having some value right like um at the beginning the way that eth was even described when we were
doing the sale is that this is like gas you know you're buying this token that you needs to use and if you want to expense transactions and if the token is actually a consumable right then it actually behaves even more like um well i guess you know gasoline as the
original metaphor right like if people wanted to use it they would actually have to consume it and so the value of it is actually something that kind of depends on the ethereum network being useful and let's say yeah like it's a bit of a different um kind of
guiding principle than something like bitcoin right where bitcoin just derives value from you know bitcoin the currency drops value from bitcoin the currency and bitcoin the blockchain is this kind of thing often decide that well okay fine it has to exist
whereas in ethereum like it's much more of a system worth of watching is the point um and you know the east the asset gains value from the blockchain um doing its uh its job successfully that's interesting so bitcoin the value is in the currency or
in the bitcoin itself whereas in eth the value is in the blockchain being used and the eth is the byproduct of it yeah to use my strained castles made of math analogy you know i i i think it is bitcoin is like the big impregnable citadel the fort knox into
which you're putting your gold and you and that thing has high walls and is guarded really well and they don't change much and you know it's the same as it was in 2009 or 2011 so that no one can break in but eth is sort of this dynamic network of little city states that are trading
with each other so the more trade there is the more free flow of information and goods the more valuable the whole system becomes but no single point of it is necessarily as impregnable like for example i do expect that we'll see more hacks and break-ins and
failures in the ecosystem as a whole not an eth itself but in the ecosystem around eth than we will in the ecosystem around bitcoin necessarily but at the same time eth is dynamic and growing and adaptive which just makes it more of a you know
an evolving creature yeah and i i'd agree with that with one reservation which is that i mean i think the bitcoin ecosystem does have its own uh kind of taking time bomb demons too um like a tether is one example yeah there are pieces around the bitcoin
ecosystem that are semi-centralized or on of unknown trustworthiness uh and do rely on uh untrusted untrusted third parties i should say uh but you know as the bitcoin people say like not your keys not your coin right right and trusted third parties or security holes
um so they're aware of that i think the the bitcoin maximalist which i believe is a term that you co-coined um the bitcoin maximalists uh would say well that's not bitcoin right that's something else um so i mean one of the things to think
about here and i think you care about this more than most people in crypto which is nice is that you do seem to care about wealth inequality the genie coefficient and the distribution of coins and one of the criticisms about crypto that i see a lot is like well okay so
you're getting rid of the old oligarchs with this new financial system but you're just replacing them with new oligarchs who are the original bitcoin and eth holders and how do you think about the distribution of wealth in a crypto run economy as opposed to a fiat
currency uh aka the u.s dollar and uh you know the euro-run economy this is definitely one i think one of the challenging kind of questions for the the community to grapple with um and this is actually one of the reasons um why i kind of really like ethereum's uh kind of
more you know multi-currency welcoming ecosystem right like you know sure okay you have eth and uh you know there's a yeah limited set of opportunities to kind of get you if directly from the tap and at some points uh you know the supply is going to
stabilize and if you're buying ether just you're buying it from a previous people but at the same time there are these new applications that are launching you know you have your um uni as i mentioned where the distribution was i mean i thought quite egalitarian right
like the as i mentioned you know the the 400 um uni stimulus checks that just go to everyone who ever used the application at least once and they could try really hard to not favor wealthy users too much and then there's i think tornado cash had an airdrop
a couple of weeks back uh there's more of these assets coming in and i think like that kind of churn is um healthy like it you know it breathes new life into the ecosystem you know it brings a new life into the wealth distribution and it does create opportunities for new people to
be able to come in and kind of participate on a somewhat level footing as well but then if we want to compare all of this to the fiat ecosystem like it's a difficult comparison to make just because um you know the getting out of institutions are so different and it's
kind of difficult to you know match one up against the other right like fiat currency is you know they basically get created by kind of a combination of uh you know the the central bank and to the commercial banking and ecosystem and in terms of where the
the kind of new newly generated value comes in like you know both sides of that gets uh some share essentially and like there's bad things that come out of it there's also good things that come out of it um so like i mean i know like this is a controversial position among the
libertarians but like i actually like the idea that you know if you have a fiat currency then the government can print it and just use that as a source of government revenue and the reason why i like it is because i think if the government can earn
can get money through unobtrusive means that reduces the extent to which it has to rely on getting money through more intrusive means and you know rely on taxation and kind of more direct right the problem is when it's unobtrusive it's very easy to do it very sneakily
right and these tax taxes have to be collected now whereas uh printing can kick the can down the road for the next person to solve right right this is uh arguments in the other direction yeah there's a there's a moral hazard there and i think we're watching it play out
where we printed eight trillion dollars last year and who's gonna pay for it right now the nice thing about cryptocurrency of course is that like the ecosystem is much more transparent um and so you know it's easier to analyze and understand what the rules are and
like within the context of a crypto ecosystem you know as i mentioned you can still do very egalitarian things um you can still you know reward people who were very important early contributors to things that ended up being very important um so
you know you can still do um all of those things and you know we do have a responsibility to get the balance right but the environment is just inherently a more kind of open and honest one just because you know these are decentralized systems and everyone
does just they see exactly what's going on yeah it's certainly more transparent like you can tell what the money supply of ethers at any given point good luck doing that with the us dollar money supply or you can tell what the inflation on youth is at any given point
and as you say there's opportunities to build more applications in top of eath and maybe eth is the app store for decentralized applications but some of those applications can go on to capture just as much value and create just as much value as eth itself
so i think that'll be uh it the really interesting development in the last year is just to see applications on top of eth really creating and capturing and building lots of wealth and value and so in that sense this 2021 and 2020 run up seemed a little
different to me than 2017 run up which was based on just you know a lot of hype frankly um so as we see sort of crypto playing out you've also had some very interesting thoughts on everything from radical markets to political philosophy to kind of what happened in 2020 and so
on and we could spend a whole podcast on that but just at a very high level you had a really good post on your blog saying endnotes on 2020 and it was about a lot more than just crypto so what else are you really interested in these days i mean
is it agi is it life extension is it public goods is it different kinds of voting schemes what's really on top of mind for you that's not directly crypto related some of all of those uh so like i think the changing uh kind of way in which economics works is
definitely one of those really important topics there's a couple of different kind of changes that's happening like one of them that i talked about is just public goods becoming more important right like a lot of the ways that like people thought of economics like 50 or 100
years ago they just that kind of focused on private goods like cars houses food you know things like that but there's also public goods right which are projects that benefit um a large and unselective group of people and so no individual person who benefits um has
the incentive to personally funds the whole thing but it's hard to push people to pay for it because like you can't you know deny the benefits of the thing to people who don't pay for it for example right and so scientific research is one example of a public good
my blog is one example of a public good open source software is an example of a public good and like on the internet public goods are even more common than private goods are uh and so like our economics um just has to uh you know just take that fact seriously
and a lot of what's been happening in the blockchain space in some ways just is you know the crypto world trying to grapple against those things so basically these public goods are where the costs are concentrated like if i want to fund scientific research i do it out of
my own pocket but it benefits all of humanity so the benefits are distributed and so these tend to be under supply they tend to be too few of them and so there are there are schemes out there to tackle some of them i think you've talked about quadratic funding as
an example yes what is quadratic funding so quadratic funding is this um interesting mechanism that basically says anyone can donate money to public goods through the mechanism but to compensate for this kind of under provision that you talk about the
mechanism provides a subsidy to every public good and that subsidy depends not just on the amount that was contributed but also on the total number of people who contributed right so like for example if there's two projects they both got a hundred dollars but one
of them got let's say 80 dollars from one person and 20 from another person and the second project just got one dollar from each of 100 people the second public good is much more public than the first public good and the tragedy of the commons on the second one is much greater
right and so the fact that the that the second one managed to get to a hundred dollars despite the 100 way tragedy of the commons implies that it's a really important project and so the quadratic funding mechanism actually gives a much greater subsidy to the you
know one dollar from 100 each of 100 people project um than it does from the project that got just uh a hundred dollars from um you know a split between two people and so we've been experimenting with the quadratic funding there's this uh thing called git coin
grants that happens a few times a year uh and that's had about like seven or um or eight rounds by now i forget the exact number um just for public goods within the ethereum ecosystem and that's worked really well um so that's been one of the you know
interesting experiments that i've been following question on quadratic funding just to hop in here since i'm involved with a few different types of scientific research are those funders in those experiments that you've run anonymized or de-anonymized because i'm
thinking through the example you gave and how there are other plausible explanations for why there might be two funders i'm just thinking about for instance reputational risk associated with certain types of scientific research uh right there are other plausible
explanations but those largely hinge on named names versus them being anonymous so how do you think about other contributing factors depending on how you're conducting the experiments sure so first of all like in quadratic funding unfortunately you do need to
have some kind of model of for identity because you know he needs to prevent the two people from just pretending that they are 100 people right but with cryptography you actually can do fancy things that give you most of the benefit from having anonymity despite
needing to have an identity system basically you can have a system where people can make all these contributions and they're you know done in such a way that the system identifies like how many unique contributors there are for each project
but where the system does not get an idea like nobody actually gets any idea of exactly which particular person um donated how much money to which particular project this is done using this really important and fascinating topic of a zero knowledge proof cryptography
in zero knowledge proof cryptography like basically the idea is that it allows you to make cryptographic proofs that some statement is true um so like i can make a cryptographic proof that says that you know i have 100 coins or that you signed a message
that contains like some um some fact about me and it was signed with your key and you can make these proofs but where the proof does not reveal the contents of the thing that it's proving right so like for example i can prove that i have an account that has at least
100 coins but i don't have to prove which account it is i don't have to prove exactly how many coins i have and there's a lot of this very fancy mathematical magic that basically creates this protocol where if you give me a proof then i know that the statement is true
because if the statement is false you would have had no way to generate the proof but if i have just the proof i can learn nothing else beyond the fact that that particular statement is correct so this is incredibly powerful cryptography it's uh it's behind zcash for example there's
also with your end applications like tornado cache um that are using it there's zero knowledge proofs also have these really nice scalability proofs um so the proofs are very quick to verify even if the statement that they're proving is incredibly complex
and zk roll ups like some of these scaling solutions end up really benefiting from using them so very powerful technology and i think it's also very significant for me social perspective because you know we have this broader kind of anonymity versus accountability debate
right of like you know the benefits of privacy versus the benefits of like basically persistent reputations and zero knowledge cryptography is really powerful because it may it's in a lot of cases allow us to get both good things at the same time like
you could get us the benefits of uh the things like persistent reputations while at the same time getting uh a lot of the benefits of anonymity seems very powerful just to follow up on that thinking of scientific research i'm going to ask you what areas
you might have particular personal interest in i know you have some interest in life extension uh as evidenced by the the dragon slaying parable on your website or that you link to from your twitter bio but it strikes me that the quadratic funding experiments would also be
heavily dependent on equally simplistic or simplified communication of competing not necessarily competing but contrasted scientific studies right because there are some instances just in my experience where scientific studies that require a lot of
scientific knowledge or due diligence would have fewer funders compared to others but that doesn't necessarily reflect less importance or impact potential yes now this is also a very important point and i think the solution to this is that like quadratic funding by itself doesn't
solve all the problems and you have to combine quadratic finding with other mechanisms so i can give two examples one example of how you could do this is you could just set up an organization where the organization has some smart people and you know those smart people do a
good job of picking who the scientists are that are really worth funding and then that organization gets a five or ten year history and people see that oh you know yes this organization does have a surprisingly good track record of uh funding
you know the studies that actually do end up turning out to be meaningful five years down the line and then people will just contribute through the quadratic funding scheme to this organization and the organization be able to leverage its own reputation
now if that organization ends up you know doing bad things and abusing um it's this kind of public trust that it's earned then you know people could very easily just stop contributing to it and start contributing to it to another group so that's one approach another approach
is that there could be clever ways to combine quadratic funding with venture capital so the idea here is that imagine if when people make a public good they create a coin associated with that public good and they just let people buy the coin
and when people buy the coin the revenues just go to the people who issue it and then what you can do with quadratic funding is you can basically um kind of collectively buy out these coins right so you can just say okay you know this coin is a coin that represents a project
that gave the world uh say a million dollars worth of value and so we're gonna quadratically find the million dollars into the coin and so anyone who bought that coin would be able to benefit right and so the idea is that like if there are intelligent
investors that are able to recognize that something will be valuable you know 10 years in the future then like basically they will be able to make a profit off of this and if anyone has something that like is maybe difficult for the kind of wider public to determine is
valuable at the beginning but then is likely to lead to some important outcome that just everyone recognizes is really valuable sometime in the future then you know kind of these investors can fill the gap right so like you have these two approaches like you can either
rely on reputation and kind of uh do it retrospectively or you can rely on this kind of combination of quadratic funding with um you know tokens and investment to do it prospectively um so i think uh both of those are really interesting i love this uh possibility to combine
also right i mean you could potentially have all of the elements that you described combined and i know all you you sound like you want to jump in i was just thinking that the campaign financing kind of works a little bit like this maybe accidentally maybe the system is
just navigated to it through kind of a complex systems level intelligence but if you look at campaign financing for when people run for office there's a maximum limit they can get per donor right and so an individual can only gift a certain amount to a
congressman or to a senator or presidential candidate and then the feds also have matching funds on top of that so it's a combination of these schemes because by limiting the amount that any one person can give you're sort of creating a quadratic
although it's not truly quadratic like i you know someone very wealthy i guess they could give a lot more through a side vehicle but then that's less efficient because they're not allowed to coordinate with the main campaign so there's kind of a really badly
implemented version of quadratic funding with matching dollars already in existence in federal campaign financing that's a good point yeah uh yeah vitalik are what areas of scientific inquiry or research are on your short list of most personally interesting at the
moment yeah so you brought up life extension life extension is definitely really important to me um like i think in the coronavirus has um actually even had the positive side effect of uh kind of speeding this along in some ways but there's a lot of extremely promising
things happening in uh biotech i think there's a very significant chance that like where we're standing today is basically is for biotech the equivalent of where computers were in 1950 right and so if you imagine you know the difference between the eniac and um you know
like a modern kind of laptop or smartphone that's the difference that we're going to see between the biotech of the 2020 and the wyotech of 2090. and so if right now we can already come up with uh vaccines for a virus well a year for deployment to start but really the whole
the whole thing actually happens much faster and uh you know most of the delay can be blamed on like bioconservatism but that's in a whole other discussion if you go from even there and then you know add 70 years of progress to that like it seems
it's very easy to see just even the process of aging turning into something that just becomes reversible and it being a regular thing for people to live um you know one and a half for two centuries and then um go even further from there there's just a huge kind of nice
humanitarian outcome that can come from that you know basically like the concept of uh your grandmother dying is just going to kind of slowly leave the public consciousness the same way that the concept of getting lost in a city um slowly left the public consciousness
over the last 25 years as we got better cell phones and and i think that's a really lovely and just kind of much better world to spend a lot of resources to shoot for do you think that's realistic though given all the three letter agencies that
slow down experimentation and development because i worry it's more like nuclear power right where they can't tolerate a single death so the innovation isn't really allowed right so this is where i say a controversial thing which is i think i'm very happy that
the coronavirus has helped to delegitimize bioconservatism to the extent that it has yeah i agree with that the modern vaccine was ready on jan 13th right yes and like even things like human challenge studies right like the defaults i think bioethics opinion
around a year ago i was like you know oh my god this is unethical and you know now like in the uk they're actually happening no this is great yeah no it is good if it breaks down bioconservatism to some extent because the pace of innovation is too low it's
like what we've done to nuclear power if we do that to biotech and we kind of have already to some extent but if we do it even more then there's no chance of you know grandma living forever there's not even a chance of me living you know 50 years longer let alone
grandma living forever um you know you're 27 i i'd love to see where you're at 47. you're going to be a you know really interesting guy you already are but you're going to be an even more interesting guy even more interesting at 447. yeah i hope you guys can both come to my
1000th birthday party well are you are you on some kind of caloric restriction or intermittent fasting um so so far i yeah well i do like the poor man's intermittent fasting which is that i just usually don't eat breakfast i do again the usual exercise
nothing too fancy uh i eat kind of at least a couple of the basic supplements that the that the life extension cool people are recommending nothing too much fancier than that so far uh though you know very closely watching the space and then i'm sure
i'll end up doing much more things so you know like 10 or even 5 years from now do you take rapamycin i do not take rapamycin um metformin is the one that i take um ashwagandha is another that i take and just for those people listening who who should know this number one this
none of this is medical advice number two uh metformin just as an example none of these things should be taken without advice of a medical professional metformin is used in the treatment of type 2 diabetes glucophage but i'm also familiar with it how do you
decide what to implement versus not implement for yourself personally um i just um and ask around a lot of people in the life extension community uh yeah you know read the studies uh yeah you know look at just what are some of the high level results um
and then just kind of narrow down to a couple of things it is remarkable how many people in various sub communities have been using a lot of these interventions longitudinally i remember when i was working on my second book looking into trans resveratrol and finding even at
that time this was 2008 2009 people who had for years been using want to say 500 milligrams per day so you were able to identify certain long-term effects and side effects granted anecdotally but still having an n of i don't know maybe a thousand people on
this forum so there is a lot to be gleaned uh from these from these groups yeah there's even a new one making the rounds of glucagon like peptides glp1 i'm sure you've seen some study floating around on that but yeah these things are very unknown i
wish these were more out in the open and that there was a very very strong anti-aging research community that was functioning out in the open that was trading notes on what works and what doesn't and able to run some kind of human trials you know more efficiently
because uh fighting aging is a is a very time sensitive task it is yeah it's uh i suggest so literally half the deaths of world war ii for every um a year that you know it gets delayed or that number of lives saved for every year that gets brought earlier yeah one analogy i
heard that i liked was you know we're all born time billionaires with billions of seconds of life and then we spend those and now you get someone like warren buffett and i'm sure he would trade 100 billion dollars for more billions of seconds
uh but he can't right in fact healthcare is the ultimate inelastic good on your deathbed you'll spend any amount of money to live even an hour longer so certainly the economic incentives are there the personal incentives are there but because of this concept that you know people who
don't know what they're doing are going to hear something and run out and like ingest some substance and then die you know drink bleach or take too much rapamycin because of that kind of fear we're not allowed to do any real innovation or discovery and it's
literally killing us outright and if we just reframed it as well no it's not that we're dying of aging we're dying because you won't let us do the innovation do the research it might take on a different take but i was actually a little disappointed with
the coronavirus response because i thought we would have had faster trials of the vaccines but the fact that they were still kind of slow and even now the deployment is being held up because we have to create these perfect vaccine delivery packages instead of just a kind of quick and
dirty vaccination and we have to go through these very regimented protocols rather than just saying everybody just line up and let's just go as quickly as possible because we insist on doing things in kind of this bureaucratic overly controlled way we're still slowing
things down and if coronavirus would get us to accelerate our normal processes into a wartime footing then what will yeah i i also just want to add that i think given my experience with a highly stigmatized field of scientific research which is
psychedelics and psychedelic compounds for intractable or difficult to treat psychiatric conditions i think that life extension or the community itself and proponents thereof could spend a lot of their oxygen and calories trying to convince regulators and three-letter acronyms to
classify aging as a disease and therefore allocate funding and i think that that is going to be very difficult and possibly wasteful compared to decentralized or distributed funding from citizen philanthropists or donors of various types i think
a lot of it's going to come down to to independent financing since that has been the case even all the way up to phase 3 trials for compounds that show tremendous effect sizes in the treatment of depression and ptsd and so on yeah i think another important thing
also is just kind of international outreach and more connections because ultimately you know the us is not the center of the universe um and there's plenty of very smart people and you know the eu like singapore china india canada whatever other places you know
there's a lot of great talent there that i think could um help all of humanity solve these problems faster so if we can just work together on the problem more hopefully prevent stupid nationalism from adding too much friction between things yeah i think a lot of the newer
generation rather than just being patrons of the arts they're trying to figure out how to become patrons of science and instead of just doing venture capital we'd all like to figure out a model for venture research because we need more science right science is
upstream of technology and the faster we can move science the more it'll benefit us across the board so i don't know where else you want to take this tim but i have some kind of more of the closing questions type for vitalik if you're ready for those
i want to take this where you want to take this novel okay yeah so one question i kind of have is given all the tumultuous change in 2020 because coronavirus was a trigger but it was a trigger for accelerating a lot of things that were already happening
like where do you think the world heads in the next few years where maybe your peers might disagree with you what are your contrarian views or your kind of uniquely held individualistic views on how things are going to play out that are not yet consensus
and this is unfair because aging was a good one you you made a solid you went out on a limb on it example that's like the contrarian in the world but definitely not contrarian among kind of my circles i guess yeah when i went through your writings i mean
the idea that there will be many blockchains and many tokens right is quite different the idea that yes the internet has increased the number of public goods rather than the number of private goods is actually quite contrarian because we think of it as going more and more
private property but on the internet it's one to many so there's all these public goods and i think you were the first one to really hammer that point home in a big way and then i think this aging thing is another one so i'm just digging seeing if there's any
more yeah no um another thing might like uh that might have been um iconoclastic two years ago but is very much not today would be kind of just geographic decentralization even with the ethereum like we me we took a very active effort of um you know not making it too centralized
in any one country or any or any one city in any one place and i feel like we benefited a lot from that but now of course um you know everyone is uh geographically decentralizing and coinbase has announced that like none of its uh managements that
live in san francisco and so forth it's very hard to associate ethereum with a single country i think it was created by mostly canadians and your blog has a dot ca top level well i'm canadian but then right my blog has a dot ca the foundation is
swiss and now there's um a yes singaporean entity as well a lot of the initial developers were german um you know a lot of uh developers are from the us as well um one of the most efficient these two clients is based in australia so i feel like we kind of actually
like took the those values seriously and then and did it well and and ethereum has spent you've the foundation has spent a lot of time in east asia i think i've seen you kind of go from conference to conference in east asia and korea and japan and
places like that spreading the word so um it is quite decentralized geographically what advice do you have for someone who wants to get into ethereum and doesn't just want to go and buy the token right who actually wants to dive into the ecosystem what what is the person to do to get
involved in the theorem community and the ecosystem where where are the points of leverage i think just learning to build an application and actually trying to build an application is i think one a great place to start if that's the sort of thing that interests
you like even if you don't turn it uh out as a full-time developer it's like forcing yourself through the process still helps you just understand that you know what are the different pieces and actually what function do they serve another example another approach
and there's well now obviously you get kind of temporarily suspended but generally there's a lot of local communities that you know kind of in-person meetups and all that that people can be part of and that's often a great opportunity to uh gets to meet other
ethereum people and there's a lot of materials online although generally i am a much more big fan of uh hands-on learning so kind of learning by doing instead of learning by taking in information um so you know highly recommend like just trying to build one application
for uh a lot of people then otherwise yeah there's just a lot of different uh communities and like you do have to just like go in and start taking part in them yeah for those of you who are curious i think vitalik's blog has spawned quite a few of the things in
the ethereum ecosystem like i think it was one of your musings that led to the creation of uniswap and recently you've been talking about rollups and social wallets and uh and all kinds of other things that we built on top although i
maybe this is the first year where i feel like the community is outpacing your ideas with nifties and with some of the games that are coming up on top of eth and so on it does seem like that there's a lot of innovation going it's hard to keep up it's very very hard to keep up that's a
good thing for those of you also looking for what's next down the rabbit hole uh vitalik briefly mentioned zero knowledge proofs i would say that you know the the beginning of the rabbit hole the entrance is bitcoin then you go a little further down you
find eth but then when you find zero knowledge proofs that's the big mind-blowing moment where you realize just what crypto is capable of and there are analogs for what crypto can do that almost cannot be done in the real world it's sort of like when you go into
physics and when you encounter quantum mechanics it sort of makes you rethink that no not everything necessarily maps onto exactly how i observe it the same way when you get to zero knowledge proofs you realize that the levels of creativity and crypto that
enables are greater than what we might have had pre-crypto so that's also an interesting space to kind of learn about and i think zero knowledge proofs have probably been incorporated into an emerging ethereum system ecosystem even more than we expected right because a
lot of people called it moon math early on it was considered too hard to be practical but people have been chipping away at it yeah that's that the moon math is definitely significantly less moony than it was even one or two years ago like
even snarks another term for these as your knowledge proofs some have just become considerably simpler uh sometime around one and a half years ago i might even try to make another post um one of my most recent ones on nevitalik.cm where i tried to talk about
like how roughly housing case snarks work i actually feel like i made an explanation that at least the high school version of myself would have understood which is like it's still not perfect but it's like significantly more understandable than any of the previous
ones have been so i feel like the ideas are definitely trickling down oh so i i do have another answer to the question of like what things are you thinking about that other people are not thinking about yet um i think this is uh kind of taking a kind of cultural and social context
seriously which sounds obvious but in some ways it really isn't right like even within the crypto space i feel like a lot of people in their models of uh you know is bitcoin going to beat governments um or are these things going to be censorship resistance
they tend to look at it purely from a yet technical point of view and they basically are kind of implicitly assuming that you know the governments are going to try as hard as they can um and uh the crypto space is going to try as hard as it can and it'll be a battle and
one side and you know that person's preferred side is going to win but the reality is that governments are not trying as hard as they can and a big part of the reason why is that government is not even so much an entity as it is a battlefield right and
like what are the soldiers fighting on the battlefield a lot of it is just the cultural movements and a lot of the success of cryptocurrency and blockchains i think they could really have to do with the way that they have kind of interplayed with a lot of the
important cultural trends of the last 10 years like this including things um like people's distrust of financial institutions after 2008 i think people's distrust of centralized tech companies um after uh 2020 is also going to play a big part also just um another fascinating thing i
think is like even like one thing that surprised me is how cryptocurrency managed to appeal to a lot of people who would not normally think of themselves as libertarians and that's something that i think like did end up even blindsiding a lot of people
and the reason why that happened has to do with kind of very deep and specific aspects of like how people think i mean kind of how people think ideologically right like a lot of people think of like say authoritarians for example as just people who hate freedom
and want to restrict things but like the reality is there's lots of people who are like in favor of very specific restrictions or even in favor of restrictions that benefit their own team but they're just as easy very easily flipped to being very pro-freedom when
you know it's their own team that's being threatened or even when you just kind of take things out of the cultural context of uh you know what should the government do and into the cultural context of well you know like how should technology work
so there's a lot of these kind of very subtle effects um that determine you know whether blockchains and some of the ideals behind blockchains that kind of succeed and fail and these are kind of very subtle properties of like how humans think and even
how humans interact with each other are extremely important in a lot of ways and the reason why they're important is they just determine the effectiveness with which people can coordinate right like you know humans are naturally kind of very attuned to a kind of social trends
and humans have a lot of motivations that have to do directly with um you know what position they have within uh kind of social trends and contexts that are made up by other people uh and this is just a space that uh the you know watching in cryptocurrency space is going to
navigate well um and if it navigates it poorly then i think blockchains will be stopped by governments or like they won't be stopped entirely but you know the amount of usage can easily be more than 90 percent lower than in otherwise would be but on the other
hand if blockchains can you know successfully show to a kind of large enough coalitions that this is a valuable and this is a good thing for the world um then they can be very successful and like this is just something that you know the space needs
to have a better understanding of and take seriously yeah i think there's a lot of good points he just made what i like is that government is not an entity or an enemy in the battlefield it may just be the battlefield that all of these factors can kind of
win simultaneously i think you made this point in your blog at in one place where you said that in 2020 you know big government won big social media one big centralized applications won but decentralized also won so there you can have multiple winners
these aren't necessarily either or you've also made a an argument in one of your blog posts which is also beyond the scope of this podcast but i think is worth digging into for people interested in game theory where you basically point out that a lot of the
toy models that we consider when we're evaluating how these things will end up have a so-called nash equilibrium they have a solution in game theory because a lot of individuals are making decisions independently but because majority coalitions rule and people can collude or they can form
coalitions that you end up in these unstable cycles where you have a majority win one round and then the definition of the majority reshuffles and then they win the next round and so we see this in politics where it seems like okay now the democrats are in
charge forever and oops no now the republicans are in charge forever and oops no now the democrats are in charge forever again and subtly underneath what's going on is the definition of democrat and republican is unstable they're just coalitions that are being
formed and reformed as needed so yeah these are lots of great thought-provoking points i i'd really love to touch base with a vitalik who's 37 you know ripe old age of 37 out of his thousand-year methuselah like lifespan so naval i don't know if you have uh
questions remaining so i i really just have one question and that is a pet curiosity of mine it's related to language learning so you have studied quite a few languages i looked at a clip of you answering questions in a q a at some point i don't know the year in
mandarin and i was very impressed i went to two universities in china and nijang joang jang hawa so i wanted to ask if you could give advice now having tested many things used many approaches for someone who wants to learn mandarin what would your current recommendations
be to them sure so for any language my usual approach is like i think at the beginning like you do need some kind of explicit program so like one thing that i've used is the pims over podcasts so that's p-i-m-s-l-e-u-r so it's just a series of these 90
minutes oh sorry 90 30 minute podcasts or 2700 minutes or about two days in total that you know you listen to one of them every day and they just like teach you the language from nothing up to you know some very basic level um over the course of these 90 episodes so you start from that
but then even after that you don't have nearly enough to understand anything um so from there sometimes you can find other um podcasts like and eventually you graduate to just like regular podcasts in that language so like things that are not even optimized
for language learning well like at the beginning you do want to find like resources that are optimized for learning flashcard apps i'm helped for chinese specifically for memorizing the characters or at least you know the first they're kind of you
know 500 or a thousand or so there's plenty of flashcard apps they're all about equally good and then once you kind of get past some levels and you get to a level where the best way to get even better is to just talk to people another um kind of path that works somewhat at the
beginning actually is like if you just go into like you know a city and you just like start like reading various signs on the street and you try your best to just understand what you know what they mean i mean if you uh see a word that you don't understand you look
it up like that's um often useful i also use duolingo as well that's been helpful in some cases so just like a combination of these techniques and like you have to when you start it's difficult and then when you get past some points like you get to a point
where you can just kind of level up just from uh talking to people from there yeah great advice and i'll just add to that that google translate with image translation can be a incredible savior in lands where you don't understand the orthographies of
in japan my brother doesn't speak japanese but we traveled there and he was able to more or less accurately translate kanji the hans and the chinese characters using google translators it was remarkably accurate it's improved a lot and as i understand it you know another
thing that you've done is is watching now i'd like to clarify here is it watching films in other languages or is it watching english language films with subtitles in your target language which is also something i've done it is watching films in other languages
sometimes we'll subtype those in english got it thank you naval would you like to to wrap up no thank you thank you vitalik it's really been an honor i think along with uh you know nick sabo and hal finney and wei dai and a few other
you know very influential people and zuko and so on you've just been incredibly influential in the development of blockchains and i believe that blockchains are the third wave of the internet after the web and mobile and they're quite fundamental to how the internet
does and will operate in the future you're probably the youngest one of that group so uh you're going to be involved in for hopefully a very long time uh and it's going to change uh the computing as we know it uh i'm betting on it i know many people
are and so thanks for your work and thanks for taking the time to help bring this to a broader audience and i'm i think i'm not even the youngest already like hayden from uniswap is even younger than i am and like you know the unislop treasury has more funds in it than neither in
valuation treasury so this revolution proceeds fast man yeah when i was first starting out my first company i remember i was 25 and ceo and company was valued highly in the cto of the company he was in his mid 30s he said huh he said so you're used to being the
smartest young guy in the room right just wait till you get old and here we are thank you gentlemen thank you hey guys this is tim again just a few more things before you take off number one this is five bullet friday do you want to get a short email from me
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