back to indexVitalik Buterin: Ethereum 2.0 | Lex Fridman Podcast #188
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The following is a conversation with Vitalik Buterin,
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his second time on the podcast.
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Vitalik is the cofounder of Ethereum
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and one of the most influential people
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in cryptocurrency and technology broadly defined.
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Quick mention of our sponsors,
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Athletic Greens, Magic Spoon, Indeed,
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Four Sigmatic, and BetterHelp.
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Check them out in the description to support this podcast.
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As a side note, let me say that Ethereum, Bitcoin,
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and many other cryptocurrencies
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have been taking a wild ride of prices going up and down
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in the past few months.
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To me, the prices were never as important as the ideas,
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both technical and philosophical.
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Cryptocurrency has the potential to empower billions
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of people to participate in the global economy
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in a way that resists the manipulation
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by centralized power.
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Also with smart contracts, layer two technologies,
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data pools, NFTs, and of course,
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integration of artificial intelligence
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into the whole thing, we have the opportunity
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to build tools and worlds that transform physical
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and digital life as we know it,
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hopefully minimizing the suffering in the world
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and maximizing the fun.
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This is the Lex Friedman podcast
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and here is my conversation with Vitalik Buterin.
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Let's first talk about Shiba Inu, if we can.
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Also known as Shiba Token, code SHIB,
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for context, Shiba Inu was created in August 2020,
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modeled off of Dogecoin by the anonymous founder
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On May 10th this year, it had a market capitalization
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of over 13 billion.
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And maybe you can explain this, but in a crazy move,
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you were given half of SHIB's total supply.
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You burned, a.k.a. destroyed 90% of it.
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That's worth $6.7 billion.
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And you donated 10%, that's worth 1.2 billion at the time
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to an India COVID 19 relief fund,
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saying you don't want to be the locus of this much power.
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This is fascinating.
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Why and how were you able to walk away
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from this much money and this much power?
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So I should probably start by giving some of the backstory
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around these coins and this concept of giving me coins.
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So first of all, Shiba Inu, as you said,
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is this kind of knockoff of Dogecoin, right?
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And Dogecoin was this initial kind of fun coin
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that was created back, I think, around 2014 or so.
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And it was just created by Jackson Palmer
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who put it out as a joke for a couple of hours
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and a community formed around it.
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And at the beginning, people didn't take it very seriously.
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I actually remember putting about $25,000 into Doge
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sometime around 2016.
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And I just remember thinking to myself,
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okay, how am I going to explain to my mom
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that I just invested $25,000 into Dogecoins?
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And what even are Dogecoins?
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The only interesting thing about this coin
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is that there's a logo of a dog somewhere.
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But of course, that ended up being one of the best
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investments I've ever made and it did really well.
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And then at the end of 2020, Elon Musk, of course,
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started talking about Dogecoin and the market cap
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just shot up to about $50 billion.
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Actually, it shot up multiple times, right?
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Like the first time it went up from about 0.8 cents
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to about like 7 cents.
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And this just happened all in one day.
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And I remember this was when I was still in Singapore
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in the middle of COVID and I saw that the price
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just went up by 1000% and I was like,
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oh my God, my Doge is worth like a lot.
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And so I immediately called up some of my friends
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and told them to like drop everything and scramble.
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And I sold half the Doge and I got $4.3 million,
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donated the proceeds to give directly.
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And a few hours after I did this,
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the price dropped back down from about 7 cents to 4 cents.
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So I managed to sell the Doge at the top
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and I remember just that feeling
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like I was such an amazing trader.
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But then of course, the price went up from 4 cents
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then to 7 and then 50 and just like Doge becoming
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this big phenomenon where there's even a lot of people
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that have heard of Doge that have not heard of Ethereum
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is just like something even I wasn't predicting, right?
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And so after that, of course, we have Doge
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and then people are thinking, well,
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if the leading DOG token is worth $50 billion,
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then surely the second largest DOG token deserves
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at least seven or 8 billion, right?
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Like, I feel like that's the kind of what the mindset
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of these Shiba people is.
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So that of course, they did this other gimmick, right?
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Where they gave me half the Shiba token supply.
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They were actually not the first projects to do this.
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So around the end of 2020,
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there was this weird project called Teller.
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It's like T E L L O R.
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I think they're a chain link competitor
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or something like this.
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But I remember they just like dumped $50,000
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worth of their token into my wallet.
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And then they had their Twitter army
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just like basically run around saying,
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look, look at Vitalik's wallet, Vitalik holds Tellers.
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He's one of us, he's a supporter.
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And as soon as I discovered this,
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I just like publicly sold the Teller tokens on Uniswap.
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And this created a bit of a Twitter splat.
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Now, the Shiba people were more clever.
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The Shiba people, instead of dumping to that wallet,
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they dumped to my cold wallet, right?
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So in a cryptocurrency, right,
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there's this concept of like cold wallets and hot wallets.
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Basically, like the thing that actually owns your money
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is like this 80 digit number called a private key, right?
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And a hot wallet is when that private key
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is just stored in memory on your computer,
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on your phone, really easy to access.
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Cold wallet means it's either written down
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on a piece of paper or it's on a computer
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that's just never accessed the internet, right?
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So cold is very inconvenient,
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but cold is also much more secure, right?
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Because even if that computer has some viruses on it,
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like it's like air gapped,
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it's not actually going to be able to upload it.
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So this cold wallet and like all the money
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is out of the cold wallet,
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so it's safe for me to talk about my setup now, right?
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But it was a laptop that was sitting in Canada.
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And I also had two pieces of paper
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where I wrote down two numbers
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on those two pieces of paper.
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One was with me, one was in Canada.
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And if you add those two numbers together,
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you get the private key.
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So because of COVID travel restrictions,
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and this cold wallets in Canada,
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like it's very difficult for me to actually access it, right?
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And I'm not sure if they knew this,
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maybe they just got lucky,
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but basically they sent a lot of these dog tokens
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into this wallet where it was very difficult
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for me to access it.
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But then I saw these dog tokens,
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I saw more and more people talking about them.
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And then at some point I realized that like,
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hey, these things are worth billions of dollars.
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And like, no, there's lots of really good things
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that you could do with that amount of money.
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And it would actually be a waste to just like see it go.
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So I made the decision that like,
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I would actually power through
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and figure out how to like safely,
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like basically get my private key.
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I actually had to call up my family,
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tell them to read out their number
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off of their piece of paper.
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I entered that into a fresh laptop
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that I bought from Target.
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Then I put in my other number on my piece of paper,
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added the two numbers together on the computer,
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And at the same time, like just scrambled for two days,
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setting up a new wallet
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where I could move my ETH to safely,
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like getting people to be multisig partners,
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just like doing all sorts of like stuff
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that 10 years ago you would expect
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to just be part of a cyberpunk science fiction novel,
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but now it's all real.
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So you're doing this all by yourself, essentially.
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Most of it by myself.
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So you have to keep it secret.
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Right, and I needed my family to actually like go
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and read the number on their piece of paper.
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And then in my new multisig wallet,
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like there's other people that are signatories,
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but I'm obviously not gonna reveal any details beyond that.
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So I did this, right?
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And I actually managed to like get the private key,
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make the first transaction that would just move all my ETH
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to the multisig wallet so it's safe.
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And then second transact,
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put the private key on my main computer,
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then started going in and just selling some
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of the dog tokens and then just like giving them
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to these different charities.
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Now, at the time I actually did not even like have any idea
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of how much you would be able to get, right?
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Because like on paper, the dog tokens are $7 billion,
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but like in reality, it's a very liquid market.
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Are you gonna crash it after you sell 1 million worth
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or are you gonna crash it after 10 million?
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Might you actually be able to get like an entire 200 million?
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So I definitely was just over the mindset,
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like, okay, I mean, I'll sell a bit,
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maybe I get some ETH and then donated some ETH
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to give well, donated some to other groups.
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And then, okay, have some dog tokens.
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Like I don't have an easy ability to sell more myself,
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but then I'll just like give them to these groups
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and like, hopefully they'll do good things with them.
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It was actually, I actually donated at 20%
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Yeah, so the COVID India group got one batch
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and then there's another group that got another batch.
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And I don't wanna say who they are
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cause I think that they wanna announce themselves
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Yeah, but you can see the fact
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that these transactions were made on the blockchain,
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but it was just very interesting and unexpected
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and just an insanely crazy situation.
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It's been a couple of weeks.
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First of all, thank you for helping me hang up some curtains.
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This is a first for the podcast
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and shows that you're a truly a special person
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to be willing to help.
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But now a couple of weeks later,
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do you regret any aspect of that decision?
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I'm sure there is some things
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that I probably could have done better.
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Like I was actually talking to some of these charities
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and I was impressed by just how much money they managed
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to get out of selling some of these coins.
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So I probably could have done better
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by just talking more with the traders
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and actually ensuring that they can do a better job
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of maximizing the value of all of them.
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But it was a very stressful time
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and I did have to act quickly.
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Like I did manage to make a lot of the donations
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before, a few days before the great crypto crash happened.
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So it was, it's difficult to,
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obviously there's parallel universes in which I did better,
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but at the same time,
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there's also lots of parallel universes
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where because I hesitated more
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and tried to spend more time thinking I missed
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So on that, it's like a luck of the draw
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and I'm just happy that everything was able to turn out
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as well as it did.
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But psychologically, you mentioned stress.
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It was stressful, right?
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I think, well, one of the really stressful parts
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was just the fact that I had to basically move
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all of my funds, including the 325,000 ether
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from one cold wallet into another hot wallet,
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or sorry, into another multi SIG wallet.
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And maybe the multi SIG wallet had a bug in it.
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Maybe there's like some mistake I'll make in the middle
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that causes the funds to get lost.
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You know, that part was stressful.
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And I was definitely stressing out for two days.
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I mean, triple checking the new wallet.
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I even did a bit of an audit of the code myself.
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I wrote my own JavaScript to DAP to make confirmations
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because Gnosis Safe didn't work with the status wallet well.
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So there was definitely,
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that whole thing was definitely a bit of a marathon.
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I was also a kind of definitely a bit worried
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about or uncertain, I guess, how the public
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and including the coin communities
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would perceive the whole thing.
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But I was actually impressed.
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Like I, for every poster that was saying like,
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no, you know, why did Vitalik like rug pull on us?
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He was, his wallet was supposed to be a burn address.
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You know, there's like 10 people that are like,
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oh, you know, I thought I was just in this
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because it's a fun pyramid gambling thing.
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But instead I ended up being part of this, you know,
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great public good thing for humanity.
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And that's like even more amazing.
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So the amounts of that that I got was very impressive.
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So, you know, all in all, you know,
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I think the dog people did great.
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Is there something you can extend
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to the bigger picture of it
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in the principles you apply to making this decision?
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Is there some principles, philosophies
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that you apply also to the decisions you make
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I think a big one for me is just this idea
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that crypto, you know, isn't just an opportunity
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to give people like slightly better ways
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to save value in all of these things.
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Like it's also an opportunity to like basically create
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these like new digital institutions
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that could serve the public good in new ways.
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And that's something that I've been interested in
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I actually even have this article in Bitcoin Magazine
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back in 2014, where I basically suggested this idea
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that, you know, you would have coins that represent causes
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and like people would just like buy and accept those coins
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because they support those causes.
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So I think it's called markets, institutions, and currencies,
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a new form of social incentivization or something like that.
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And I'm sure you can find it and throw it in the links.
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So that was interesting to kind of see becoming real.
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And like in general, I think, you know,
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public goods are very important
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and on the internet, public goods are even more important.
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Like every single Lex Friedman podcast is just on YouTube
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and no anyone can go and see it.
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Like there's no way for you to like, you know, sell it
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and so that some people can see it,
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but then other people can't see it.
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Like, you know, you could do that,
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but then you'd obviously be reducing your impact.
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So thank you for making the amazing Lex Friedman podcast
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so freely available.
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Well, that's actually a tense thing is how do you do it
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in a way that's not controlled in a centralized fashion?
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Cause actually YouTube feels free and open,
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but it nevertheless is one company
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making centralized decisions.
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And the first time I realized YouTube is not forever
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is when a lot of the Joe Rogan experience library
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was pulled from YouTube as part of the Spotify deal.
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And it made me realize we need to,
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it's like the realization that fiat money is centralized
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is realizing that, you know, this is not forever
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and you might want to come up with schemes to distribute it,
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to decentralize the control of it
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in a way that audio for podcasts is just an RSS feed.
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And I think one of the kind of philosophical things
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that I hope to achieve is kind of decouple
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the concept of public goods,
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which are incredibly important
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and are the lifeblood of modern civilization
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from the idea that there is or can be
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one central organization that represents the public
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and like perfectly understands and can impose their idea
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of what is the good, right?
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Like it's, when people talk about public goods,
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it just often comes with this baggage of, you know,
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either centralization or conformism.
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And I think like it doesn't have to, right?
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Like often the most important public goods
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are the ones that are created by, you know,
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the crazy individualists that disagree with everyone else.
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So trying to make this kind of synthesis
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where you combine the values of decentralization
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and the values of open source,
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but you're not naive about it.
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And like, you know, you realize that
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for these things to be produced,
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there needs to be a way for it to be sustainable.
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There needs to be some way of supporting people
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who are working these projects.
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But at the same time,
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you want to avoid that turning into
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a vector of centralization,
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like trying to sort of get all of the good things
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without the bad things.
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To me, that's a big part of sort of
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what my grand experiment in crypto is about.
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And like, we are doing things
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in different kinds of things for this, right?
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Like there's the Gitcoin Grants quadratic funding
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in the Ethereum ecosystem.
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There's obviously these dog coins
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that just happens, I guess, accidentally.
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There's other projects that, like for example,
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you know, Uniswap has their Uniswap DAO
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that just has a huge amount of funding.
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And like, we haven't seen yet how that's going to be deployed,
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but, you know, it could be potentially deployed
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to do lots of really good and amazing things.
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Do you see Ethereum as essentially a mechanism
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to fight for social causes?
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I definitely see Ethereum as being a mechanism
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to fight for definitely some specific things
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that are social causes.
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Like just, you know,
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the fact of creating an open financial system
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that anyone can participate in
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no matter where they are in the world,
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that's a social cause.
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Just, you know, giving people the ability
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to organize and create projects,
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even if it's five people in five different countries.
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I think that kind of inclusiveness,
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I think that's a social cause
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and it's a core crypto value.
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But then at the same time, like the other important
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and if part of the magic of Ethereum
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that you have to balance that against
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is that it is also this open platform
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where ultimately, you know,
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the things that are on Ethereum
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is just the things that the community makes of it.
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Well, you kind of briefly opened the door,
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so let's go there.
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When it comes to government regulation of crypto,
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what's the best case scenario?
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What's the worst case scenario?
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In terms of, you know, as you've kind of mentioned,
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Ethereum challenges the power centers of the world
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and how do you see the interplay between governments
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and this new technology that resists centralized power?
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Best case and worst case.
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The best case is that, you know,
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blockchains continue to prosper
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and we figure out scalability
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so that people can actually start doing things on block,
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like, you know, all of the amazing use cases
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that people have been talking about
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instead of today where a lot of the great stuff
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gets priced out because, you know,
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transaction fees are at five to $10
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and then we see a lot of different amazing applications
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happening on blockchains.
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You know, it could be like DAO is creating new ways
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for people to interact and organize with each other
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and new ways for artists to get funded
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and just all sorts of these amazing things
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and there's just enough public support
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and just enough people that see that, you know,
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look, crypto is clearly doing a lot of good things
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and, you know, there are definitely areas
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where there's tensions,
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but in those areas where there's tensions,
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like, there could be some kind of creative
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and interesting approaches that get figured out, right?
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Like, you know, the concept of corporate taxes,
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for example, right?
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Like, you know, that would disappear as a revenue stream
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if theoretically corporations just all get replaced by DAOs
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but, you know, like maybe there's some other creative way
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by which DAOs themselves can kind of be code,
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you know, have some kind of encoded governance
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that ensures that they have at least some kind of bias
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towards serving the global public good
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and, you know, maybe DAOs can do enough of that
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that people are happy with it.
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And, you know, there are going to be things
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that people are unhappy about.
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There's always gonna be the people
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that, you know, wants to surveil everyone
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but if the kind of effect of crypto
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from just empowering people is greater than that
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and greater than that in a way
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that people can just easily see,
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then, you know, that would be a good scenario, right?
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And we'll just become kind of incorporated and accepted
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the same way as happened with the internet.
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But in the worst case scenario would, of course,
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be just like people suddenly, you know,
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flipping and going into moral panic mode
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and just, you know, oh my God,
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like this technology is used by like, you know,
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insert bad group over the day.
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And then I don't think governments have the ability
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to ban crypto to the extent of just complete
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like preventing blockchains from existing
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but they definitely have the ability
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to really marginalize it, right?
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Like if you just ban all exchanges,
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like in ban all links from the Fiat ecosystem to crypto
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and, you know, you ban all kind of mainstream employers
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from accepting or paying in cryptocurrency,
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then like you can successfully like turn it into a,
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like, you know, a fairly kind of niche countercultural thing
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that has much less impact than otherwise would.
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So it's somewhere between the good scenario
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and the bad scenario.
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I'm obviously hoping for the good.
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Well, that's interesting also the tension
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between governments and companies.
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Like if you have a bunch of billionaires
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or a bunch of companies like Tesla investing in Bitcoin
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and then governments resisting that,
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it's interesting who wins out in that worst case scenario.
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And almost when companies and rich, quote unquote,
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respectable people embrace cryptocurrencies,
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Bitcoin, Ethereum, so on, even the dot coins,
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it's almost sends a signal to everybody else
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that this is a revolution that's here to stay.
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On this one little tangent that you brought up,
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this is almost an outdated idea, but it's still with us,
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which is cryptocurrencies are used for illegal activity,
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for drugs, for crime, and so on.
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Is there some sense that worries you
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that if cryptocurrency, if Ethereum runs the world,
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then making money from crime will be easier?
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There's always that possibility, but like at the same time,
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I think if you look at, you know, the world as a whole
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and like the way all the other technological trends
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are going, like, you know, in person surveillance
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is just going up every year, right?
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Like if you commit a crime in, you know, meat space,
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it's getting harder and harder to get away with it.
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So like, you know, if you wants to do something,
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and this is something that's just like happening
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as a result of, you know, just better technology
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and information transparency,
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like a lot of it's hard to prevent even if you really tried.
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So the world where like things go dark to such an extent,
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you know, as the police hawks sometimes like to say,
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to such an extent that like, you know, oh my God,
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the criminals are committing crimes with impunity
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and we can't see anything, like that just seems unlikely.
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But, you know, on the other hand,
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like the world where there just, you know,
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is no privacy, for example, or the world where there just
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like is no ability to kind of act outside of the confines
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of, you know, mainstream institutions,
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like that's something that's more realistic
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and that seems like something that could lead
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to a lot of kind of a lot of scary things, right?
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And like, even from a government's point of view, right?
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Like I think governments over the last few years,
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a lot of them, they're very worried about sovereignty.
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You know, they're worried about like,
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if their country is economies and, you know,
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social environments are just completely dependent
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on basically foreign tech companies controlled
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by foreign governments, like, you know,
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governments are not on team government, right?
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It's like, you know, the Indian government is on,
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you know, team India, then the Russian government
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is on team Russia and so forth, right?
link |
So like, you know, they don't want the US to be able
link |
to like have this big backdoor into everything.
link |
So, I mean, I do think that a balance is needed,
link |
but at the same time, I do think,
link |
I guess I definitely like worry more
link |
about the possibility that just like without things
link |
to like crypto kind of acting outside of institutions
link |
becomes too impossible.
link |
And I don't even necessarily mean outside of governments,
link |
even just, you know, outside of corporations,
link |
like becomes too impossible.
link |
And there's just like terrible things
link |
that come as a result.
link |
I mean, if things going in the other direction,
link |
like it obviously is a risk, but no,
link |
at the same time, I think in the longterm,
link |
like a crypto can potentially even like offer defenses
link |
as much as attacks against that sort of thing.
link |
Yeah, many throughout history,
link |
many of the most destructive things came
link |
from centralized institutions versus sort of
link |
from the people operating in the shadows.
link |
And, you know, I've been talking to a bunch
link |
of psychedelics folks that people doing researches
link |
like Rick Doblin in Johns Hopkins,
link |
there's a lot of exciting research on psychedelics.
link |
And one thing you could say about operating
link |
at the edge of legality,
link |
it could actually accelerate the adoption
link |
of particular things like whether it's marijuana
link |
or psychedelics, they can help people out.
link |
It's almost accelerates the policy.
link |
It forces the policy to catch up
link |
to where the people stand.
link |
So there's a positive way of doing things
link |
that are in the gray area of legality
link |
and creating a market that allows people
link |
to in a safe way be able to participate
link |
in this gray area of legality.
link |
The other thing to keep in mind, of course,
link |
is that the set of like the kinds of things
link |
that just like payment processors as companies
link |
try to restrict you from is much larger
link |
than the set of things that's illegal, right?
link |
Like part of that is because they wanna be
link |
super conservative and like the more layers you have,
link |
the more they're like conservative
link |
because they're scared of what the layer below them
link |
Sometimes they have their own moral opinions
link |
They go after lots of people, right?
link |
Like they make life really hard for sex workers,
link |
for example, psychedelics, as you mentioned,
link |
there's a lot of activity,
link |
even including stuff that is totally legal
link |
that just there's this like shadow
link |
like PayPal credit card governments
link |
or whatever you wanna call it.
link |
And that makes it just hard to participate in this stuff.
link |
So I think like reducing the number of intermediaries
link |
is definitely normally a good thing.
link |
All right, let's talk about one of the most exciting
link |
technologies like technically, philosophically,
link |
like socially, financially in every way,
link |
which is Ethereum 2.0.
link |
There's a million things to talk about,
link |
but step one is probably a good thing to do,
link |
which is can you briefly summarize your vision
link |
how Ethereum 2.0 will make Ethereum more scalable,
link |
secure and sustainable?
link |
Sure, so I think recently we've actually been
link |
kind of deemphasizing the ETH 2.0 branding, I guess.
link |
So the reason behind that was that originally
link |
we envisioned something more like a big grand event
link |
where all the good things would happen at the same time
link |
and it would be a new blockchain,
link |
and it would be a new protocol
link |
and people would have to take a lot of effort
link |
But later we've slowly changed the roadmap
link |
over to something that's much more incremental, right?
link |
So proof of stake happens kind of over time
link |
and then sharding gets added over time
link |
and all of these features get added over time.
link |
And so the experience for just a regular Ethereum user
link |
still feels very seamless, right?
link |
It's like maybe a little bit more complex
link |
than the hard forks that we've already done
link |
from a user's point of view, but not by that much, right?
link |
So the big two things that are happening, right?
link |
These are what used to be considered
link |
the two flagship features of ETH 2.0
link |
and now they're just the flagship features
link |
of the next devolution of Ethereum,
link |
as proof of stake and sharding.
link |
So proof of stake is a consensus algorithm.
link |
It's a, or a consensus mechanism, I should say.
link |
The difference is that like an algorithm
link |
is something that you run by yourself.
link |
A mechanism is like interactions between people
link |
and it could even include incentives and all of that.
link |
So a consensus mechanism,
link |
so by which nodes in the network agree on
link |
which blocks came in, which transactions came in,
link |
what order, make sure that once a block gets accepted,
link |
it can't get reverted and all of these things
link |
that we expect from a blockchain.
link |
So existing blockchains, including Bitcoin,
link |
including the Ethereum of today,
link |
and including a lot of them, they use proof of work, right?
link |
So the reason why we need proof of anything
link |
is because they serve this function that I call
link |
an economic civil resistance.
link |
So that's obviously a big word for,
link |
especially if you've never heard of symbols before,
link |
but like the basic idea is, right,
link |
that you have a network and you have lots of computers
link |
that agree on like which blocks to accept.
link |
And sometimes you get two blocks that get published
link |
at the same time and you just have to agree on an order.
link |
So there has to be some kind of voting game.
link |
But then the question is, well, in this voting game,
link |
who gets to vote, who gets to participate?
link |
Now, you can't say one person, one vote, right?
link |
The reason why you cannot say one person, one vote
link |
is because you need some kind of like authority
link |
or some kind of mechanism to say who the humans are.
link |
And if you don't have that,
link |
then a bad guy could just come in with a virtual machine
link |
or with a computer that has on it 10 billion virtual machines
link |
that have 10 billion virtual nodes.
link |
And then just like say, look, I'm 99% of the network,
link |
I should control everything.
link |
So to prevent this, what proof of work and proof of stake
link |
both do is they basically say, well, the weight of your vote,
link |
like how much influence your votes have in the consensus
link |
is proportional to like what quantity
link |
of economic resources you bring in.
link |
So in the case of proof of work,
link |
you prove what economic resources you have
link |
because your economic resources are computers
link |
and you prove that you have them
link |
by just running them 24 seven
link |
using these hash algorithms, right?
link |
So this does solve the problem, right?
link |
Because in order to attack the network,
link |
you have to come in with more computers
link |
and more money invested into computers and electricity
link |
than the rest of the network puts together.
link |
And that's extremely expensive.
link |
In proof of stake, instead of relying on people
link |
with computers that are just constantly cranking out
link |
hashes 24 seven, as you're like a unit of economic resources,
link |
you just use like holdings of coins inside the system, right?
link |
So all of these blockchains,
link |
they have some kind of coin in them.
link |
Bitcoin has Bitcoin, Ethereum has ether,
link |
they all have a coin.
link |
So why not just use that as the economic resource
link |
that you're using to measure participation.
link |
So that's like the core distinction
link |
between proof of work and proof of stake.
link |
I like proof of stake
link |
and I've liked proof of stake for many years,
link |
basically because like it just requires
link |
much less ongoing resource consumption, right?
link |
Like with proof of work,
link |
you have to like actually go and buy these physical computers
link |
and these days, they have specialized hardware,
link |
ASICs, application specific integrated circuits.
link |
You have to go produce them and you have to go buy them.
link |
And unless you have millions of dollars,
link |
you have to buy them from one of these other people
link |
who creates them and those other people often end up
link |
taking a huge cut of the profits themselves.
link |
And then you have to plug them in,
link |
you have to just burn all of this electricity
link |
that's just running 24 seven.
link |
So it consumes a huge amount of energy, right?
link |
And not just energy, it also,
link |
just to create the hardware, right?
link |
Like people focus a lot on energy,
link |
but like actually about half the cost of proof of work
link |
mining is the cost of the hardware.
link |
So hardware is a very big deal too.
link |
And you need this really big and powerful,
link |
very specialized hardware,
link |
another kind that fills up these big warehouses.
link |
So proof of stake,
link |
you don't really need that much electricity,
link |
you just need just a little bit to run a regular computer.
link |
You can run proof of stake validators on computers
link |
that you already have.
link |
So it's just much less resource intensive.
link |
And like, this is good for a few reasons, right?
link |
Like one is, you know,
link |
the kind of environmental rationale that, you know,
link |
you're not breaking the environment.
link |
The second is that you're not taking away electricity
link |
and like other resources from other people.
link |
I mean, like right now there's,
link |
I think just today I saw a story about like Iran
link |
wanting to shut down some Bitcoin mining
link |
because it was just grabbing up so much electricity
link |
that it was, you know, outbidding the nearby towns
link |
and they just didn't have enough.
link |
And then there was like Chia,
link |
the one that's doing proof of like hard disk mining
link |
basically is just like grabbing up so many hard disks,
link |
there's a shortage, right?
link |
So that's the second reason.
link |
And then the third more selfish reason is that
link |
because participating in consensus
link |
does not require so much energy expenditure,
link |
you don't need to pay people as much to participate, right?
link |
So like Bitcoin and Ethereum,
link |
they both issue somewhere around 4% of the total supply
link |
every year right now to miners.
link |
So Ethereum is about 4.7 million ether
link |
and the current supply is about 115 million.
link |
But with proof of stake,
link |
like we expect it'll be somewhere between 500,000
link |
and one million per year.
link |
So that means, you know,
link |
the supply doesn't have to increase so quickly.
link |
One of the pros that the people sort of argue for the proof
link |
of work is that it is secure
link |
because it's much more difficult to sort of,
link |
as you've highlighted, it's difficult to participate.
link |
Is there, what are your thoughts about the security
link |
of the proof of stake mechanism?
link |
Is there ways to make it secure?
link |
So I think proof of stake is very secure
link |
because in order to be able to attack the system,
link |
you needs to have like basically as much stake
link |
as the rest of the network, right?
link |
So that means like right now, for example,
link |
we have 5 million eth staking.
link |
So you have to come up with 5 million eth
link |
and then join the network.
link |
And then the other, so 5 million eth is a lot, right?
link |
It's like, how much is it now?
link |
So that's actually more than I believe the cost
link |
of attacking the Bitcoin network.
link |
And then the second thing is that recovering
link |
from attacks is much easier in proof of stake
link |
than in proof of work, right?
link |
Because in proof of stake, you have, like, first of all,
link |
we have for many kinds of attacks
link |
that you do against this network,
link |
we have this concept of like automatic slashing, right?
link |
Which basically means that in order
link |
to like revert a finalized block,
link |
so if there's one block that's like accepted by the network
link |
and you try to convince the network
link |
to kind of revert that block and accept a different block,
link |
in order to make that kind of attack,
link |
you basically have to have your validator,
link |
like a big portion of your validator
link |
assigned to conflicting messages.
link |
And this is something that like once these messages
link |
are on the network, like you can go and prove,
link |
like, look, these people did it.
link |
And so we have this feature in the protocol called slashing
link |
where you basically take all these people
link |
who provably misbehaved and you burn their coins, right?
link |
And you don't burn anyone else's coins.
link |
Now, there are other cases, like for example,
link |
if instead of reverting blocks,
link |
the attack just tries to censor everyone, right?
link |
Then everyone who got censored would just like
link |
basically create the minority chain
link |
and then the community would basically
link |
have to do a soft fork, right?
link |
They would just have to say like,
link |
look, this chain is clearly attacking us,
link |
this chain is the one not attacking us,
link |
and so we're gonna join this chain.
link |
And then what happens is that on that new chain,
link |
the attackers also lose a lot of coins, right?
link |
So the difference between proof of stake and proof of work
link |
is that in a proof of stake system,
link |
like you can identify specific participants
link |
and you can say, you know, these,
link |
and like this isn't like, you know,
link |
a human going in and saying, I don't like you,
link |
I don't like you, I don't like you,
link |
this is like automated, right?
link |
So the slashing process is automated.
link |
Is there ways it can go wrong?
link |
So that's a painful process where the coins are burned.
link |
It is painful, yes.
link |
I think, I mean, the one big unknown, of course,
link |
is like if an attack actually happens
link |
and like if an attack happens that requires the community
link |
to actually choose one of these minority forks,
link |
then like what would the community
link |
actually successfully coordinating on this look like, right?
link |
Like it's like, you know, we can talk about it
link |
and we can, you know, write like science fiction novels
link |
about it, but like until it's happened,
link |
you don't really know the details of like what it looks like
link |
and how difficult it is.
link |
What are the channels of communication for the community?
link |
If you can enlighten me a little bit, like what, you know,
link |
in many ways in the political realm,
link |
Twitter is often used as a way to kind of have
link |
these emerging phenomena of large groups of people
link |
coming to a consensus about a particular idea.
link |
And then there's battle for consensus.
link |
What's in the Ethereum community, how do people,
link |
what are the sources of natural language based communication
link |
that have an emergent belief structure that you would say?
link |
Or is it all through money?
link |
Is it all through trading that the communication happens?
link |
There's definitely talking as well.
link |
I mean, like we have to agree on protocol changes somehow,
link |
right, like there's Twitter, there's Reddit,
link |
there's GitHub, there's all of the various Ethereum forums,
link |
Ethereum magicians, Ethereum research.
link |
There's just in person communication.
link |
Then there's just kind of like the hidden web
link |
of everyone talking to everyone on Telegram or Signal.
link |
So it's like some of everything, right?
link |
But I think like the thing to emphasize around like,
link |
can you actually come to consensus on, you know,
link |
whether or not to fork the chain
link |
because the attacker is censoring everyone,
link |
just for example, is like everyone who's running a node
link |
is going to see almost the same thing, right?
link |
Like they're gonna be off by a few seconds
link |
and like maybe they'll be off by a few minutes,
link |
they'll disagree by a few minutes.
link |
But like if it's a serious attack, you know,
link |
people are gonna know, right?
link |
It's not like one of those things where, you know,
link |
oh, we're trying to agree on like, I don't know,
link |
did Epstein kill himself or like some random political fact
link |
where like in reality, no one knows a single thing
link |
about what's actually going on and they're all speculating.
link |
Like it is much more visible, right?
link |
So we do have that, but you know, at the same time,
link |
I'm happy to admit that like,
link |
these are fairly untested mechanisms,
link |
but like at the same time,
link |
they're also untested mechanisms in Proof of Work, right?
link |
And like in Proof of Work, it's even harder
link |
because in Proof of Work, you don't have the ability
link |
to like identify and say, like, you know,
link |
I'm going to these miners attacked
link |
and so we're not gonna let these miners in,
link |
these miners did not attack, so we're gonna keep them in.
link |
Like you have to pretty much, you know,
link |
either take out none of the miners
link |
or you do a fork that changes the Proof of Work algorithm
link |
which takes out all of the miners, right?
link |
So the economics of like recovering from attacks
link |
in Proof of Work, at least to me,
link |
actually do seem like more unfavorable,
link |
but you know, I'm sure the Proof of Work people you talk to
link |
will give a very different and contradictory opinions
link |
and that's totally fine and amazing.
link |
Some people describe MEV, minor extractable value,
link |
as an existential risk to Ethereum.
link |
How important is it to solve MEV?
link |
If it's important, what ideas do you have?
link |
Sure, how about after this one,
link |
we'll also talk about sharding because it's amazing
link |
and it's part of you too.
link |
Yes, we'll return back to sharding
link |
which is, we'll return to the big picture
link |
of the scaling problem as you mentioned.
link |
I love this conversation, you know,
link |
depth first search instead of breadth first.
link |
So basically, okay, MEV, minor extractable value,
link |
it is not different in Proof of Work and Proof of Stake,
link |
right, so like if you want to call it, you know,
link |
block proposer extractable value,
link |
like it sounds a lot sexy, but you know,
link |
we can call it BPEV instead of MEV, who cares?
link |
So this is a problem in both Proof of Work
link |
and Proof of Stake?
link |
Yes, so the basic idea is that if you have the ability
link |
to choose which transactions go into a block
link |
and in what order, then you have the ability
link |
to like take advantage of that position for economic gain
link |
and for economic gain in a lot more ways
link |
than just collecting transaction fees, right?
link |
Like for example, there's decentralized exchanges on chain
link |
like Uniswap and like let's say the price
link |
of ETH versus USDC was 2,700 the previous block,
link |
but then there was a bit of a market drop
link |
and now it's 2,680 where you can go on Uniswap
link |
and you can just like gobble up the entire part of,
link |
you know, the automated order book
link |
that's like between 2,700 and 2,680, right?
link |
And that's, and then at the same time, you like run a bot
link |
and you know, you buy some ETH back at 2,680
link |
and you've just like made about $10 of profit, right?
link |
So, or well, $10 times, you know, whatever the depth is.
link |
Right, so there's lots of little things like that.
link |
There's also things that involve like front running
link |
other people's transactions.
link |
So one example of this would be that if someone sends
link |
a transaction that says, I don't know,
link |
buy me five ETH for whatever price that you can get,
link |
then, but with a maximum of, let's say $15,000,
link |
then you can go and like, you can send each,
link |
put a transaction right in front of that transaction
link |
and you can like buy up that ETH first
link |
and then you resell it to him at, you know,
link |
$15,000 minus one, you know?
link |
Then you get to make a little bit of money that way.
link |
Exactly, so there's a lot of these different
link |
like arbitrage, front running, back running,
link |
these different tricks that allow block proposers to.
link |
To get some percentage on top, like overhead.
link |
Exactly, and the reason why this is a challenge
link |
is because it's, I mean, like first of all,
link |
it sometimes degrades user experience
link |
because users get no less favorable trades,
link |
but there are sometimes ways to like mitigate that
link |
for applications, sometimes it's not that bad,
link |
but like the bigger risk that I think some people consider
link |
more existential is that there's just much more
link |
economies of scale in figuring out
link |
how to extract all this revenue, right?
link |
Because if you're just collecting transaction fees,
link |
there aren't really economies of scale,
link |
there aren't really benefits to centralizing, right?
link |
Because it's a very simple formula,
link |
you just like grab up the transactions that pay you the most.
link |
But with MEV, there's all these sophisticated algorithms
link |
and if you have lots of money,
link |
then you can hire really smart people
link |
to make amazing algorithms and then you can use
link |
the other half of your money to get a lot of mining power
link |
or a lot of stake and you get a lot of opportunities
link |
to use your even better algorithms.
link |
So there's this risk that like as a result of this,
link |
mining is basically, or even validating proof of stake
link |
is going to centralize.
link |
So I think the ecosystem is best replied
link |
to this sort of risk and it's the direction
link |
where projects like Flashbots are going already
link |
is if you can't eliminate the centralization,
link |
then you try to firewall it, right?
link |
And the way that you firewall it is you basically say,
link |
we're going to try to deliberately create a marketplace
link |
where people can just do the complicated work
link |
of creating what are called bundles,
link |
like bundles of transactions that are very profitable, right?
link |
And then at the other side of the market,
link |
you just have like block proposes reminders
link |
that are just dumb notes.
link |
And they go and ask the what are called searchers,
link |
the bundle creators, and they just ask like,
link |
hey, like how much can you give me if I put in your bundle?
link |
And then they just take the highest offer, right?
link |
So you sort of separate out the task
link |
and you have the easy part and then you have the hard part
link |
and you have like this special class of actor
link |
called a searcher that does the hard part
link |
and then the easy part, the people doing the easy part,
link |
which is just miners and validators,
link |
they kind of just talk to all the different people
link |
doing the searching and they just accept the highest bidder.
link |
So this is also just like an interesting example
link |
of like economic design philosophy, right?
link |
Like sometimes you can't just like make centralization
link |
go away, sometimes it's inevitable,
link |
but no, at least you can try to kind of contain it,
link |
you can direct it or you can even sort of firewall it away
link |
from core consensus,
link |
the parts that really do need to be decentralized.
link |
But you don't see it as an existential risk,
link |
it's just a bit of a problem
link |
that it has to be constantly dealt with.
link |
It's a risk, like there's obviously a risk
link |
that it's a very severe problem
link |
and that even this flash bots approach
link |
has some fatal flaw or whatever.
link |
But we're definitely approaching it
link |
with the mindset of this is a problem
link |
and like, yes, we do have to do some work to solve it,
link |
but we're doing it and so far it's being solved.
link |
Okay, let's talk about the other really, really fascinating
link |
part of the future of Ethereum.
link |
Let's not call it Ethereum 2.0,
link |
but the future of Ethereum
link |
that also may require a hard fork,
link |
I don't know, you can correct me on this,
link |
is well, broadly ideas for scaling.
link |
And more specifically sort of layer two
link |
or layer one and two intersection ideas
link |
of how to achieve scaling.
link |
And at the core of that is the idea of sharding.
link |
So first, what is sharding?
link |
Okay, so there's two major paradigms
link |
for scaling blockchains, right?
link |
As you said, layer one and layer two.
link |
And layer one basically means
link |
make the blockchain itself capable
link |
of processing more transactions
link |
by having some mechanism by which it can do that
link |
despite the fact that there's a limit
link |
to the capacity of each participant in the blockchain.
link |
And then layer two says,
link |
well, we're gonna keep the blockchain as is,
link |
but we're gonna create clever protocols
link |
that sit on top of the blockchain
link |
that still use the blockchain
link |
and then still kind of inherit things
link |
like the security guarantees of a blockchain.
link |
But at the same time, a lot of things are done off chain.
link |
And so you get more scalability that way.
link |
So in Ethereum, the most popular paradigm
link |
for layer two is rollups
link |
and the most popular paradigm for layer one is sharding.
link |
So one way to achieve layer one scaling
link |
is to increase the block size.
link |
Block size wars, quote, unquote.
link |
And you actually tweeted something about,
link |
people are saying that Vitalik changed his mind about,
link |
he went from being a small blocker to a big to small.
link |
But you said, I've been a medium blocker all along.
link |
So maybe you can also comment on where,
link |
on the very basic aspect before we even get to sharding
link |
of where you stand on this block size debate.
link |
So the way that I think about the trade off
link |
is I think about it as a trade off
link |
between making it easy to write to the blockchain
link |
and making it easy to read the blockchain.
link |
So when I say read, I just mean,
link |
have a node and actually verify it
link |
and make sure that it's correct and all of those things.
link |
And then by write, I mean send transactions.
link |
So I think for decentralization,
link |
it's important for both of these tasks to be accessible.
link |
And I think that they're about equally importance.
link |
If you have a chain that's too expensive to read,
link |
then everyone will just trust a few people
link |
And then those people can change the rules
link |
without anyone else's permission.
link |
But if on the other hand,
link |
it becomes really expensive to write,
link |
then everyone will move on to basically
link |
second layer systems that are incredibly centralized.
link |
And that takes away from decentralization
link |
and self sovereignty as well.
link |
So this has been my viewpoints
link |
pretty much the whole time, right?
link |
It's like, you need this balance
link |
and going in one direction or the other direction
link |
is very unhealthy.
link |
In the Bitcoin case, basically what happened
link |
was that Bitcoin originally,
link |
at the very beginning, it didn't really have a block size.
link |
It just had an accidental block size of 32 meg,
link |
or block size limit of 32 megabytes
link |
because that just happens to be the limit
link |
of the peer to peer messages.
link |
Interesting, I didn't even know that part.
link |
Yeah, but then Satoshi back in 2010
link |
was worried that even 32 megabyte blocks
link |
would be too hard to process.
link |
So he put the limit down to one megabyte.
link |
And I think the...
link |
I put, you mean sneaked in there.
link |
Yeah, just like made an update to the Bitcoin software
link |
that made blocks bigger than one,
link |
I think it's a million bytes invalid.
link |
And I think the impression that most people had at the time
link |
is that this is just a temporary safety measure.
link |
And over time, as we become more confident in the software,
link |
that limit would be raised somewhat.
link |
But then when the actual usage of the blockchain
link |
started going up, and then it started going up
link |
first to 100 kilobytes per block,
link |
then to 250 kilobytes per block,
link |
then to 500 kilobytes per block,
link |
there started coming out of the woodworks this opinion
link |
that no, that limit should just not be increased.
link |
And then there are all of these attempts at compromising.
link |
First, there was a proposal for 20 megabyte blocks.
link |
Then there was the 248 proposal,
link |
which is a bit ironic because the 248 proposal
link |
started off being a small block negotiating position.
link |
But then when the big block people came back and said,
link |
hey, aren't we gonna do this?
link |
They're like, oh, no, no, no, we don't want them.
link |
We don't want the block size increases anymore.
link |
So there were these two different positions,
link |
the small blockers.
link |
I think they valued one megabyte blocks for two reasons.
link |
One is that they just really, really believe
link |
in the importance of being able to read the chain.
link |
But two is that a lot of them really believe
link |
in maintaining this norm of never hard forking, right?
link |
So the difference between a hard fork and a soft fork
link |
is basically that in a soft fork,
link |
any block that's valid under the new rules
link |
was still valid under the old rules.
link |
So if you have a client that verifies
link |
according to the old rules,
link |
then you'll still be able to accept the chain
link |
that follows the new rules.
link |
Whereas with a hard fork,
link |
you have to update your code in order to stay on the chain.
link |
And look, they have this belief that soft forks
link |
are kind of either less coercive than hard forks,
link |
which by the way, I completely disagree with.
link |
I actually think soft forks are more coercive
link |
because basically they force everyone who disagrees
link |
to sort of go along by default.
link |
But, or they have this opinion that there's like,
link |
it's more difficult to abuse soft forks
link |
to do really mean things like,
link |
or that like completely violate people's expectations,
link |
like increasing the supply, which is like,
link |
I think there is some truth to that.
link |
So because of these reasons,
link |
they just say we're only going to do soft forks
link |
and we want to just not do any hard forks.
link |
And they eventually discovered this idea
link |
called segregated witness that allows for like
link |
a very tiny block size increase
link |
to like the equivalent of about two megabytes
link |
It's this really like weird and devious trick.
link |
Like basically what they do is they take the signatures
link |
of transactions and then they put them outside of the block.
link |
And then they add an extra rule that says that like every,
link |
for a block to be valid,
link |
the block has to come with a separate,
link |
like basically extension block
link |
that contains all of the transaction signatures, right?
link |
So when you measure it, according to the old rules,
link |
like, hey, it adds up to less than a million,
link |
but actually there's this extension block
link |
that the old protocol doesn't even know about.
link |
It's a hack that seemed to work to in a small way
link |
extend the size of the block size.
link |
So the small block side was like happy
link |
with these very low levels of block size.
link |
And then the big block side wanted to expand to,
link |
at the very least go to four megabytes,
link |
then maybe go maybe eight, 20.
link |
There's disagreements within there as well.
link |
I definitely was favoring the big side
link |
the whole way through, as you can probably tell, but.
link |
Even though, so the argument against the big
link |
is that it makes things more centralized.
link |
Yes, because fewer people can run a note
link |
that verifies the chain.
link |
And also because any of these things
link |
would require a hard fork
link |
and hard forks are inherently risky.
link |
Do you think there's truth to that?
link |
I'm pro hard fork.
link |
I think hard forks are actually like
link |
in a political economic sense,
link |
they're better than soft forks.
link |
Well, let's, okay, okay.
link |
I think that's a beautiful principle as stated
link |
that soft forks may be more coercive than hard forks.
link |
This is not just about cryptocurrency.
link |
This is about politics and life.
link |
That's fascinating.
link |
So you're okay with hard forks.
link |
In fact, you think hard forks is the right way
link |
to make changes because then everybody's forced
link |
to make a decision.
link |
Do you accept this change or not
link |
as opposed to ideas being sneaked in behind the door
link |
and that decision is forced on you?
link |
Okay, so, but hard forks, some people say,
link |
this is when they talk about sort of Ethereum,
link |
is there's some aspect to a hard fork
link |
where you're trying to upgrade a,
link |
what is it, airplane while it's flying.
link |
I think soft forks are also upgrading an airplane
link |
while it's flying.
link |
But it's a smaller upgrades.
link |
That's, there's some truth to that.
link |
Like there's definitely a bit more risk of like a split
link |
as a result of a hard fork than as a result of a soft fork.
link |
And the split is highly undesirable, right?
link |
Like if it's a split because of a bug, then that's horrible.
link |
If it's a split as a result of political differences,
link |
then I think like a split is better than, you know,
link |
one side being forced to basically just like suck it up
link |
and accept the majority position even if it really hates it.
link |
Well, there's also political connections
link |
throughout the history of the United States.
link |
It's like sometimes groups of people
link |
that strongly disagree with each other
link |
should be forced to work it out.
link |
Even if they, even when a split seems like an easy thing
link |
in the short term.
link |
And I think like, well, for blockchains in particular,
link |
the costs of people being able to like peacefully do their,
link |
go off and do their own thing are much lower, right?
link |
Like, you know, okay, if you have a country
link |
and you have two groups, then like often enough,
link |
like fighting out the new rules requires, you know,
link |
a civil war requires everyone to move and so forth.
link |
But no, on a blockchain, like, you know,
link |
the costs are lower and so.
link |
So if you were to look at the way things worked out
link |
with the block size wars and there was a split,
link |
what is it, Bitcoin Cash and all this?
link |
Would you, like you looking, putting on your historian hat,
link |
you mentioned offline you like Dan Carlin.
link |
So if Dan Carlin wanted to do an episode
link |
on the block size wars, do you think it could've turned out
link |
better or do you, are you okay with the way it turned out?
link |
I'm definitely disappointed with what happens
link |
with the block, with the big block side.
link |
I think the source of my disappointment is that like,
link |
one of the things that you notice when just looking at
link |
like this political disagreements generally,
link |
especially when you have environments where, you know,
link |
they're authoritarian or like single party dominated
link |
and then there's some opposition party
link |
and the opposition often has like very legitimate grievances.
link |
But at the same time, the thing you notice is that often
link |
enough the opposition just sucks, right?
link |
Like it just doesn't have, you know, political capacity.
link |
It doesn't have like the ability to come up with policy
link |
because it's entire culture is like designed around
link |
resisting much more than it's designed around like,
link |
you know, actually debating serious policy trade offs.
link |
And I worry or I guess not so much worry
link |
because it's already happened.
link |
I unfortunately think that Bitcoin Cash ended up
link |
being a victim of this, right?
link |
Like first, no, there was a split with Bitcoin Cash.
link |
And then of course, Craig Wright came in
link |
and you know, Craig Wright was this basically scammer
link |
who just keeps on pretending that he is Satoshi Nakamoto,
link |
the inventor of Bitcoin.
link |
Hey, Craig Wright's legal team, do you hear me?
link |
Yes, I still think your client is a scammer.
link |
This is definitely gonna be death for a search
link |
because I gotta ask you about Craig.
link |
I guess these people have been contacting me
link |
and I'm trying to figure out like,
link |
what is up with this human being?
link |
So for people who don't know, there's somebody who is,
link |
let's start this Satoshi Nakamoto, who is the creator
link |
of Bitcoin, who's anonymous.
link |
And actually most really big people
link |
in the cryptocurrency space do not like yourself
link |
and others do not dare claim that they are even
link |
for fun Satoshi Nakamoto.
link |
In fact, if Satoshi Nakamoto is still alive
link |
and is like, if say you were Satoshi Nakamoto,
link |
it seems like the thing he would do is probably
link |
or she is trying to remain anonymous.
link |
On the flip side of that, there's a guy named Craig Wright
link |
who continually keeps claiming that he is in fact
link |
Satoshi Nakamoto and keeps suing a lot of people.
link |
So on him, if we could just linger on him,
link |
what do you make of this character?
link |
What are we supposed to make of this character?
link |
Should he be ignored?
link |
Is there any possible truth to his claims?
link |
What do you make of him?
link |
The analogy that's at the top of my head
link |
will get a bit political, but that's fine.
link |
You've had Michael Malice.
link |
So I guess I view Craig Wright
link |
as being kind of like a Donald Trump figure
link |
in that he's not very intellectual,
link |
but I think he gets a big audience
link |
because he says things that play to the resentments
link |
that people have and he says things
link |
that people wants to hear.
link |
Like in the wake of this block size war,
link |
the big blockers did feel very disenchanted.
link |
They felt that Bitcoin always had this vision
link |
that we were supposed to just keep increasing
link |
the block size and Bitcoin is peer to peer cash.
link |
It says so in the white paper.
link |
And then this elitist clique of core devs
link |
just came in and said, no, no, no,
link |
we're gonna impose this totally different vision.
link |
And if you ever want your scalability,
link |
you'll have to wait for us to create
link |
this totally unproven fancy technology
link |
called the lightning network
link |
that works under completely different principles.
link |
And they were very angry at this.
link |
And I mean, I think a lot of that anger is justified,
link |
but at the same time, when people are in that mental state,
link |
like it's very easy for you to just kind of like latch on.
link |
And if you find someone who expresses anger
link |
at the same things that you're angry at,
link |
and also like it seems like someone who's strong
link |
and seems like someone who might be good to rally around,
link |
it's very easy to just like get behind that.
link |
But that extra part about it where he's
link |
Satoshi Nakamura, I don't understand why that's necessary.
link |
I think that's, he could have done it without that,
link |
but that just, it's a marketing strategy.
link |
Like it sort of gives him more salience.
link |
Like there's other big block personalities, right?
link |
Well, what's the difference with Craig Wright?
link |
He's not just a big block personality,
link |
he's potentially Satoshi.
link |
And he did say all the big block things, right?
link |
Like he talked about how,
link |
oh, the concept of a fee market is fundamentally
link |
like economically wrong and it should be a free market
link |
and you should be able to have blocks as big as you want.
link |
So like he repeated all the talking points.
link |
And so a lot of people were kind of sucked into that, right?
link |
And so he unfortunately was able to basically dominate
link |
a big part of the Bitcoin cash community for a long time.
link |
And then eventually, of course,
link |
more and more people started to catch on.
link |
He would just say technical things
link |
that are completely wrong, right?
link |
Like one example of this that I remember
link |
is that he mixed up the concept of 256 bits
link |
and two to the power of 256 bits, right?
link |
So the difference is, it's like the difference
link |
between 80 and the concept of 80 digit numbers, right?
link |
And because of this, like he made this arguments
link |
that said that Bitcoin's elliptic curve
link |
is friendly to cryptographic pairings.
link |
Like you don't have to understand what that is,
link |
but if you want to know,
link |
I have articles on both at Vitalik.ca.
link |
But basically he made this like technical argument
link |
that really hedged on this point.
link |
And then when people pressed him on,
link |
it was like, yes, but no, no, like what?
link |
Look, exactly, the height is like what?
link |
Two to the 256 bits.
link |
That's a very tiny amount of information.
link |
No, no, no, no, two to the 256 bits
link |
is more than the amount of information in the universe.
link |
And like he equivocated and kind of like preyed
link |
on people's inability to understand
link |
that mathematical nuance.
link |
And I called him out.
link |
And eventually I even called him out in person
link |
at this conference in Seoul.
link |
Like I just stood up and asked,
link |
hey, conference organizer,
link |
why are you letting this fraud speak at this conference?
link |
And I remember even some big blockers at the time
link |
getting angry at me.
link |
But eventually they did get rid of him.
link |
And then Craig, well, basically Craig Wright
link |
was forced to split off
link |
because the rest of the community refused
link |
to accept some network change that he wanted.
link |
And so then there was the BCH and BSP.
link |
And then in the Bitcoin Cash community,
link |
there was this drama of,
link |
are they going to add a developer fund
link |
where they redirect 12 and a half percent of the revenue
link |
from the miners to the devs?
link |
And according to the libertarian not aggression principle,
link |
is this technically theft?
link |
Like his understanding of the technical depths
link |
of cryptocurrency was lacking in a way
link |
that Satoshi Nakamoto certainly would not.
link |
But the point is that even after Craig Wright got expunged,
link |
the Bitcoin Cash community kept having these disagreements.
link |
And now after this development funds dispute,
link |
there was a further split between Bitcoin Cash and ABC.
link |
So the branch continues to extend.
link |
So in that way, it's disappointing
link |
to see those kinds of splitting that was never resolved.
link |
I would have definitely like wanted to see more
link |
of a kind of like the principled coin
link |
with like tries to be Bitcoin,
link |
but follows consistent big block values.
link |
But I know maybe I should just like stop expecting projects
link |
that I have no involvement in to care at all
link |
about what my values are.
link |
And like maybe Ethereum just like is.
link |
I think you have a powerful voice
link |
and you can inspire other projects
link |
to live up to their best possible selves.
link |
Okay, so that's the layer one approach.
link |
The other layer one within Ethereum
link |
is the idea of sharding.
link |
What the heck is sharding?
link |
What does the future of sharding look like?
link |
Right, so to summarize that big long tangent
link |
that we just went into.
link |
It's a beautiful tangent by the way.
link |
It's the basic tangent.
link |
And I think like crypto is just one
link |
of the most underrated aspects of crypto
link |
is I think how you can like analyze the sociology
link |
and the politics and the anthropology.
link |
And I'm sure Dan Carlin would have fun exploring
link |
the space at some point.
link |
But like the core trade off, right?
link |
Is that if you scale blockchains the dumb way
link |
just by increasing the parameters,
link |
then eventually you just make it harder and harder
link |
to participate as a node and you end up with a system
link |
where there's like 20 computers running the whole thing.
link |
And it's just very centralized.
link |
So sharding basically says, well,
link |
instead of just increasing the parameters,
link |
what we're going to do is we're going to change
link |
the blockchain architecture in such a way
link |
that each individual node in the blockchain
link |
only needs to store a small portion of the data
link |
and only needs to process a small portion
link |
of the transactions.
link |
So you can think about it as being like inspired
link |
by BitTorrent, right?
link |
Like on BitTorrent, there's no such thing
link |
as a BitTorrent full node that has every movie, right?
link |
You know, the work is like split up among a huge number
link |
of computers and like that makes sense.
link |
That's, you know, the only sane way
link |
to scale a system like that.
link |
And if they actually tried making a version of BitTorrent
link |
that required full nodes that store every movie,
link |
then, you know, it would have like zero censorship
link |
resistance and it would just like, you know,
link |
be dead in an instant.
link |
So the challenge with taking that model
link |
and applying it to blockchains, right?
link |
Is that blockchains aren't just about like spreading data
link |
around, they're about agreeing on exactly what data
link |
was spread around and ensuring that everything
link |
that you agree on actually is correct.
link |
And so you have this paradox where let's say
link |
you want to have a system that supports 10,000 transactions
link |
a second, but each computer in the network
link |
can only personally verify a hundred transactions a second.
link |
So how can each computer get a guarantee
link |
about the other 9,900 without actually going
link |
and verifying them themselves?
link |
And it turns out that there are some,
link |
like a bundle of different tricks that can do that, right?
link |
So like one of them is just random sampling.
link |
So the idea behind random sampling is like,
link |
let's say for simplicity, this is a proof of stake chain
link |
and you have 10,000 validators, validators are like,
link |
you know, the stakers and like for simplicity,
link |
we'll assume they all have the same number of coins, right?
link |
If someone has more coins, we'll just kind of split them up
link |
and pretend they're 10 stakers.
link |
Then you do like some random shuffling
link |
and you basically say, these random hundred validators
link |
are assigned to validate this block.
link |
These random hundred validators
link |
are assigned to validate this block.
link |
These random hundred validators
link |
are assigned to validate this block.
link |
And so each individual computer only gets assigned
link |
to validate like a small piece,
link |
but then the way that the information
link |
about like what's valid gets passed around, right?
link |
Is that when these hundred participants validate a block,
link |
they all sign a message basically saying like,
link |
yes, we agree that this block is valid.
link |
And then like they combine that signature into one
link |
and then they broadcast that signature.
link |
And then everyone else,
link |
instead of verifying the blocks directly,
link |
just verifies that signature, right?
link |
And so if I see the signature,
link |
I'm not directly convinced that that block is valid,
link |
but what I am convinced of is that out of this committee
link |
of this randomly selected group of a hundred validators,
link |
let's say at least 70 of them agree
link |
that this block is valid.
link |
And so if I trust that the majority
link |
of these participants are all honest,
link |
then because it's all randomly selected,
link |
the attacker can't just like force themselves
link |
into one committee.
link |
And so the attacker is gonna be evenly spread out too.
link |
And so if the entire set of validators is mostly honest,
link |
every committee is gonna be mostly honest.
link |
And so like bad blocks are not gonna go through, right?
link |
So that's like one simple form of sharding.
link |
There was also other more clever things that you can do.
link |
So for example, there's this concept of a ZK snarks, right?
link |
I'll call it as your knowledge proofs.
link |
So this is the idea that you can make a cryptographic proof
link |
that says, I verified or I ran some complex computation
link |
on this piece of data and I got this answer.
link |
And so if you make these kinds of proofs,
link |
then like if you see a ZK snark
link |
that says some block is valid,
link |
then you're convinced that that block is valid.
link |
And even if everyone in that committee is evil,
link |
like they have no way of making a valid proof
link |
for a bad block, right?
link |
Like, because the proof itself,
link |
like it is a proof that you did the computation
link |
where that proof is much easier to verify
link |
than just running the computation yourself.
link |
And there's once again, super awesome mathematical
link |
or cryptographic magic behind making ZK snarks work.
link |
But it gives you a little bit of a leg up
link |
over the 51% honest assumption.
link |
So it's a little hack that improves upon the random
link |
And like, there's other hacks, right?
link |
Like there is another hack called data availability
link |
sampling that allows you to make sure that the data
link |
in the blocks was actually published.
link |
But like, basically, like if you stack a couple
link |
of these tricks on top of each other,
link |
you can create a system where like I,
link |
as an individual participant can be convinced
link |
that everything that's going on in this distributed
link |
blockchain thing is correct without actually personally
link |
checking more than like a percent of it.
link |
So that's sharding.
link |
But the, as I understand, maybe correct me on this,
link |
is in the space of Ethereum, the sharding happens
link |
on some fixed number.
link |
Like the split is on some fixed number.
link |
I think it's 64 is the currently sort of proposed number.
link |
So how does that help scaling?
link |
Is it just the fixed constant scaling by 64?
link |
And is that a way to achieve those crazy,
link |
the crazy amount of scaling that seems to be required
link |
to use cryptocurrency for purchasing?
link |
So doing like competing with credit cards
link |
and Visa and so on.
link |
So first, I think like the 64 can be hard forked up
link |
So we've set it so that like there's theoretically space
link |
in the data structure for 1024 shards,
link |
it's just that 64 of them are turned on.
link |
There are challenges with having more shards
link |
because like you have to have logic that just like checks
link |
and manages all of those shards.
link |
And if there's too many of them,
link |
then that becomes too expensive.
link |
But even still, you can improve quite a bit.
link |
And then the other thing that we're doing is
link |
if what we're getting maximum scalability
link |
by combining rollups and sharding.
link |
So this might be a good time to talk about rollups.
link |
Now we're moving into layer two ideas.
link |
So the idea behind a rollup is basically that,
link |
so instead of just publishing transactions
link |
directly on chain and having everyone do all of the checking
link |
of those transactions,
link |
what you do is you create a system
link |
where users send their transactions to some central party
link |
called an aggregator.
link |
And like, well, theoretically, you can have a system
link |
where like the aggregator switches around
link |
or where anyone can be an aggregator.
link |
So it's still like permissionless to send things.
link |
Then what the aggregator does is they strip out
link |
all of the transaction data that like is not relevant
link |
to helping people update the state.
link |
So when I say the state,
link |
this is a very important kind of technical term
link |
I mean, like account balances, code,
link |
like things that are like memory,
link |
internal memory of smart contracts,
link |
like basically everything the blockchain
link |
actually has to keep track of and remember, right?
link |
So you just put in,
link |
you take all these transactions,
link |
strip out all the data that's not relevant
link |
to telling people how to update the state.
link |
And then you take the data that's needed
link |
to update the state,
link |
and then you like really compress it, right?
link |
So like, for example, if we say,
link |
I, Vitalik, have an account that's 0xAB58,
link |
blah, blah, blah, blah, blah, and it's 20 bytes.
link |
Well, instead we can say,
link |
well, I have an account that is number 1874224 in the tree.
link |
And that goes down from 20 bytes
link |
to just like an index and a position,
link |
which is three bytes, right?
link |
So you use all sorts of these fancy compression tricks,
link |
and you basically just,
link |
instead of publishing all these transactions,
link |
you publish this like tiny compressed blob, right?
link |
So the amount of data that goes on chain
link |
goes down by maybe about a factor of 10, right?
link |
And then the second thing is that
link |
you don't do the computation on chain,
link |
instead you do the computation off chain,
link |
and there's one of two ways to do this, right?
link |
One is called a ZK rollup,
link |
which is you just provide a ZK SNARK that basically says,
link |
hey, look, I did this computation,
link |
and I have this proof that here's, you know,
link |
some hash of the result and it's correct.
link |
And then you stick it on chain,
link |
and everyone verifies this one proof
link |
instead of verifying all these transactions.
link |
And then the other approach is called an optimistic rollup,
link |
which is basically made of the scheme where,
link |
like, first someone says like,
link |
hey, this is what I think the result of applying
link |
these transactions is.
link |
And then someone else can say,
link |
I disagree, the result is different.
link |
And only if two people disagree,
link |
do you actually just like publish all of the data
link |
and run that whole block on chain.
link |
So if there's disagreements,
link |
then you just like run everything on chain
link |
and whoever was wrong, like loses a lot of money, right?
link |
So like disagreements are very rare
link |
and they're very expensive.
link |
And then a ZK rollup,
link |
you don't even rely on this like challenging game at all,
link |
you just rely on a proof.
link |
So the core principle is basically that
link |
instead of lots of transactions
link |
and everyone verifies every transaction,
link |
it is you take the transactions,
link |
you strip them down and compress them as much as possible,
link |
then stick that on the blockchain.
link |
You do need to stick something on the blockchain
link |
just so that everyone else can like keep up to date
link |
with the state so they know what all the contracts are,
link |
what all the balances are and all of this,
link |
but it's a very small amount of data.
link |
And then you use one of these other off chain games,
link |
could be this optimistic game, could be a ZK snark
link |
to just prove that somebody out there did the computation
link |
and the result is correct, right?
link |
So you're pushing like 90% of the work off chain
link |
and then, well, 90% of the data
link |
and 99% of the computation off chain,
link |
and then you still have 10% of the data
link |
and 1% of the computation on chain.
link |
And so your scalability goes up by a factor of about 100.
link |
So these systems are already alive
link |
for some applications, right?
link |
So there's something called loopering,
link |
which is just a ZK roll up for payments, right?
link |
So you can have assets inside of the loopering system
link |
and you can go around and transfer them,
link |
and you get like much lower transaction fees, right?
link |
Like instead of $5, you'd have to pay like less than 5 cents.
link |
But the only problem is that this only supports
link |
a couple of applications right now,
link |
like making one that supports anything
link |
that you can do on Ethereum just takes a bit more work,
link |
but that's being done as well, right?
link |
So like within a few months, I'm expecting fully Ethereum
link |
capable roll ups to be available as well.
link |
So roll ups, just summarizing,
link |
do most of the work off chain,
link |
put only a little bit on chain, factor of 100 scaling,
link |
sharding, another factor of 100 scaling,
link |
100 times 100 factor of 10,000,
link |
hundreds of thousands of transactions a second,
link |
and like, you know, there's your scalability.
link |
Okay, so you achieve scalability,
link |
you can do a large number of transactions very quickly
link |
and the cost of doing those transactions are much lower.
link |
You wrote that in the long term ZK roll ups
link |
are going to win in terms of layer two technology.
link |
Specifically you wrote, in general,
link |
my own view is that in the short term,
link |
optimistic roll ups, as you were saying,
link |
are likely to win out of general purpose EVM computation
link |
and ZK roll ups are likely to win out for simple payments,
link |
exchange and other application specific use cases,
link |
just as you were saying.
link |
But in the medium to long term,
link |
ZK roll ups will win out in all use cases
link |
as ZK SNARK technology improves.
link |
Why do you think ZK roll ups are going to win
link |
the big picture battle over layer two technologies?
link |
So I think ZK roll ups, like once you accept
link |
that the technology works are just like conceptually simpler
link |
and they have nicer properties.
link |
The reason is that they do not have this concept
link |
of a challenge game, right?
link |
Like, as I mentioned in an optimistic roll up,
link |
the way that you ensure that the results are correct
link |
is that you let one person submit
link |
and like they just submit with no proof.
link |
They just say, here's what I think the result is.
link |
And then if someone else disagrees,
link |
they make their own submission.
link |
And then if you have two disagreeing submissions,
link |
then you actually publish it on Chase.
link |
And then you see who's right.
link |
But for this to work, like you need to actually wait
link |
for someone to disagree, right?
link |
So like, for example, if I have an asset inside
link |
of an optimistic roll up and I wants to withdraw it,
link |
then I actually have to wait a week to withdraw it.
link |
Because like, if the block that contains my withdrawal
link |
turned out to be invalid,
link |
then there needs to be space for someone
link |
to disagree with it, right?
link |
Whereas with a ZK roll up,
link |
like you don't need time for disagreeing
link |
because you just have a proof, right?
link |
As soon as a block is submitted,
link |
there's a proof and you know it's correct.
link |
So if disagreements, especially in the longterm are sparse,
link |
then you don't want to do the optimistic,
link |
the game theoretic thing, you wanna do the ZK stock.
link |
Right, the ZK stuff is just,
link |
like you can win a ZK roll up,
link |
you can withdraw immediately.
link |
You don't have to like worry about the economics
link |
of proving as much, right?
link |
There's just like fewer issues.
link |
The reason why ZK roll ups are not winning everywhere today
link |
is because ZK stocks are still a crazy new technology,
link |
right, like this is something that 10 years ago,
link |
it existed only in theory and there was none in practice.
link |
Then, eight years ago,
link |
people were just getting excited about it
link |
in Bitcoin conferences for the first time.
link |
Like four years, starting four years ago
link |
or three and a half years ago even,
link |
that was the first time you were able to make
link |
any ZK stock based anything on Ethereum.
link |
And then people started making them
link |
and ZK technology has only really become efficient enough
link |
to do a lot of things within the past
link |
maybe one and a half years.
link |
So it's new technology, it's crazy technology,
link |
it's admittedly scary technology.
link |
If you wanna learn more,
link |
I also have an article about this on Vitality.ca.
link |
It's actually really, really good.
link |
You're, most of your writing, it goes,
link |
it's technical but it's accessible.
link |
I highly, highly recommend to check out Vitality's articles
link |
and blogs, whatever you call them on the website.
link |
It's brilliant summary of the work.
link |
Actually, Ethereum documentation period is really good.
link |
I think that's somewhat crowdsourced.
link |
That documentation is really, really accessible
link |
But let me ask about sort of other approaches
link |
to layer two, like side chains.
link |
So the one popular one is Polygon.
link |
What are your thoughts about Polygon,
link |
which is a layer two network?
link |
Is it negative for Ethereum?
link |
Does it have a future?
link |
Which is its own chain, but it's using Ethereum.
link |
It's like based on Ethereum essentially.
link |
Or maybe you can describe what it is.
link |
So I think there's a really big and important difference
link |
in security models between rollups and side chains,
link |
which is basically that rollups inherit
link |
from the security of Ethereum, right?
link |
So if I have coins inside of Loopring or Optimism
link |
or Arbitrum or ZK Sync,
link |
then even if everyone else in the world
link |
who is participating in these ecosystems
link |
hates me and wants to steal my money,
link |
I can still personally make sure
link |
that no matter what happens, I get my money out.
link |
It might be a bit expensive for me to get my money out
link |
and I have to do transactions on the main chain,
link |
but I'll be able to do it.
link |
Whereas in Polygon, which is a side chain,
link |
and so instead of being secured by Ethereum,
link |
it's also in part secured by its own
link |
proof of stake consensus with its own token.
link |
So if 70% of the whole,
link |
or even 51% of the holders of Polygon tokens
link |
wanted to take my money in Polygon, they can, right?
link |
So that's the, and like, to be fair,
link |
like there aren't even, like the supply,
link |
I don't think is even that widely distributed, right?
link |
So like potentially you could,
link |
this idea of 51% of the token holders
link |
coming together and stealing everything,
link |
like it's not impossible, right?
link |
Where does the scaling of Polygon come from?
link |
Like why is it able to process much more transactions
link |
than the Ethereum main chain?
link |
What's the idea there?
link |
I think in part, like I imagine,
link |
I'm not sure exactly what its capacity level is,
link |
but like I imagine it has a higher capacity
link |
because it's a bit more willing
link |
to take centralization trade offs.
link |
And then another thing is that like,
link |
if the Ethereum ecosystem,
link |
like even if it did not do that, right?
link |
If you think about an Ethereum ecosystem
link |
hypothetically scaling with side chains,
link |
then you would have a hundred copies of Polygon
link |
and they would each have their own tokens,
link |
they would each have their own chains.
link |
And so even if each one of those chains
link |
was only as scalable as Ethereum,
link |
you could still, like the total sum of them
link |
would still be a hundred times more than Ethereum.
link |
The thing that I want to say in Polygon's favor
link |
just to be very fair to them,
link |
like I really, you know,
link |
I definitely really, you know,
link |
respect the work that they're doing.
link |
So, you know, start with a bit with that word
link |
of not criticism caution, right?
link |
Like it's that they made this kind of deliberate trade off
link |
for very pragmatic reasons,
link |
which is that the Ethereum ecosystem needs to scale now.
link |
And there are applications that want to do something now.
link |
And, you know, if there aren't Ethereum friendly options
link |
for them, then like, they're not going to just wait
link |
peacefully and do nothing for 12 months.
link |
And they're going to go to, you know,
link |
either Binance Smart Chain or, you know,
link |
one of some other system or potentially something
link |
that just has totally no alignment
link |
with Ethereum values whatsoever.
link |
But whereas, you know, with Polygon,
link |
like the best thing that you can say in Polygon's favor
link |
and against optimism is that, you know,
link |
optimism is not live and Polygon is live, right?
link |
Like it just takes more work to create a system
link |
that has these extra rollups, security features.
link |
And so Polygon just said, we're going to be the system
link |
that makes the pragmatic trade off.
link |
We're going to go, you know, functionality first,
link |
and then, you know, we can talk about adding back
link |
the security later.
link |
So I've talked to them and like, in principle,
link |
I think they're very, you know, open to the idea
link |
of like adding more security and like becoming more,
link |
becoming a rollup or at least, you know,
link |
adding a Polygon chain that's a rollup
link |
at some point in the future,
link |
which is definitely something I think they, you know,
link |
absolutely should follow through on.
link |
But like the fact that like they exist now,
link |
and so, you know, applications can kind of bootstrap now
link |
on a chain that, you know,
link |
even though its security isn't perfect,
link |
at least it exists and people can go use it.
link |
And then over time, you know, the chain matures
link |
as the applications mature.
link |
Like, you know, it's, I think a very reasonable strategy
link |
and I'm definitely really happy
link |
that they're part of the ecosystem.
link |
Yeah, it's kind of interesting.
link |
The history of cryptocurrency has this tension
link |
of really good ideas that are hard to implement.
link |
So they take longer to implement
link |
and ideas that are not as good, but are faster to implement.
link |
This is like the story of like, you have like JavaScript
link |
that basically took over the world
link |
because it was quick to implement within 10 days.
link |
And then like later kept fixing itself.
link |
I don't know what to make of that.
link |
Sort of from an engineering perspective,
link |
I'm more and more becoming comfortable
link |
and accepting the fact that our whole world
link |
will run a technology that's not as good
link |
as it could have been.
link |
Just because the crappy solution is faster to implement
link |
What do you make of that tension?
link |
I think the compromise that we've been taking
link |
within Ethereum is like when we have to take
link |
the crappy solution, we look for crappy solutions
link |
that are forward compatible with becoming good over time.
link |
When you build the quick and dirty thing,
link |
you would still already have ideas in your head
link |
about what the more complete thing
link |
with all the security features added on would look like.
link |
Even if it requires a hard fork?
link |
For example, with sharding, I think it's likely
link |
that the first version of sharding that comes out
link |
is not going to have zkstarks and data availability sampling,
link |
But we know what these technologies are.
link |
We feel like we have wrapped our heads around them.
link |
And so we know how to build a system
link |
where we can put all the pieces in place
link |
so that it becomes very easy to bolt those components
link |
So if you do things that way, then at the beginning,
link |
you can have your system that has the functionality,
link |
but say has less security or less sustainability
link |
or less of something else.
link |
But then over time, it's designed in such a way
link |
that it has this easy on ramp to adding those things.
link |
And if you don't think explicitly
link |
about being future compatible,
link |
then you do often end up with a quick and dirty solution
link |
that backs you into a corner.
link |
And then there are definitely cases
link |
where I think the Ethereum ecosystem has suffered from that.
link |
And we have had to expand pretty significant effort
link |
on, for example, removing features that we didn't realize
link |
that we actually can't sustain.
link |
Like one big example is just increasing the gas costs.
link |
So like making some operations more expensive
link |
because they should be expensive
link |
because they actually take a lot of time in the process.
link |
So that's making something more expensive,
link |
kind of like taking some functionality away.
link |
So if you can like be cognizant
link |
of where you're likely going into the future,
link |
and if you don't know, like even be cognizant
link |
of both the most likely paths that you'll take in the future
link |
and coming, like thinking about your roadmap
link |
and coming up with a roadmap where you know
link |
that like if you wants to do either of those things,
link |
then you have a clean path toward it.
link |
That's probably the best kind of practical way
link |
to get the best of both worlds that we have.
link |
Okay, let's talk about this wonderful process of merging.
link |
Okay, so there's the main net,
link |
which is the Ethereum 1.0 chain,
link |
or the, what should we say,
link |
the chain that uses proof of work
link |
as a consensus mechanism.
link |
And then there's, what is it called?
link |
The beacon chain that uses the proof of stake mechanism.
link |
And I believe the beacon has been deployed successfully,
link |
is working, so that was in December of 2020.
link |
There's a bunch of questions around that
link |
that's fascinating as well,
link |
but I think the most fascinating question
link |
is about merging those two.
link |
When do the two chains, one that's proof of work,
link |
one that's proof of stake, merge?
link |
And what are the most difficult parts of this process?
link |
Right, so as you've said, right,
link |
the way that we have set up this proof of stake transition
link |
is that at first, the proof of stake chain
link |
just launches on its own, right?
link |
And this is the thing that happened in December.
link |
And the proof of stake chain has been running
link |
for close to six months now.
link |
I mean, by the time people watch this,
link |
it might actually be six months.
link |
But it isn't actually coming to consensus
link |
on anything except for itself, right?
link |
So the idea behind that is to just
link |
give the proof of stake chain time to mature,
link |
time for people to build the ecosystem around it,
link |
time to make sure that there aren't any bugs,
link |
and just like prove to the community
link |
that no proof of stake actually is real,
link |
and a full transition is realistic,
link |
because the thing that you're transitioning to
link |
already exists and already works.
link |
And then at some point in the future,
link |
you have this event called the merge,
link |
where you basically take the activity
link |
that's being done inside of the proof of work chain,
link |
and you actually move it over into the proof of stake chain,
link |
so you get rid of the proof of work side completely.
link |
So the way that the merge will work is,
link |
it's definitely gone through a few different iterations.
link |
Like the earlier versions of this
link |
actually required more work for users
link |
and more work for clients.
link |
It was much more like,
link |
oh, there's this new chain, there's this old chain,
link |
and then everyone has to migrate
link |
from the old chain to the new chain,
link |
and then at some point we'll forget about the old chain.
link |
The new version is designed
link |
to be much more seamless for users, right?
link |
So basically what actually happens is that
link |
the old chain basically becomes embedded
link |
inside the new chain, right?
link |
So starting from the merge transition block,
link |
every proof of stake chain block
link |
is going to contain a block of the,
link |
what we consider now to be,
link |
what we consider to be the Ethereum chain today,
link |
but we'll call it the execution chain.
link |
And then at the same time, to create one of these blocks,
link |
you're not going to need proof of work anymore, right?
link |
So basically at the same time,
link |
you would both get rid of the proof of work requirements
link |
for one of these blocks to be valid,
link |
but instead you require these blocks
link |
to be embedded inside of the proof of stake blocks, right?
link |
So you basically have like a chain inside a chain.
link |
And this is, from an architecture perspective,
link |
you might think it's a little bit suboptimal,
link |
but it actually has some nice properties
link |
and makes it easier to kind of think about the consensus
link |
and think about what we call the execution layer,
link |
like transactions and contracts kind of separately
link |
and upgrade them separately.
link |
And it also just means that the upgrade process
link |
is extremely seamless, right?
link |
Because from the point of view of a client
link |
that's following the chain,
link |
you basically have to update nothing, right?
link |
You're still following the same chain
link |
and follows the same rules,
link |
except instead of checking proof of work,
link |
you'll switch to checking that these blocks
link |
are embedded inside of blocks of the proof of stake chain.
link |
So there'll be this merge block
link |
that will mark this transition.
link |
And over time, I guess the new chain
link |
will contain the full record
link |
of all the transactions that's ever happened
link |
on the previous chain, on the old chain.
link |
So maybe I'm asking a dumb question here,
link |
but in this process, is the new chain going to have
link |
all the information of the past transactions?
link |
The new chain is not going to hold information
link |
from what happened in the Ethereum chain before the merge,
link |
right, so Ethereum clients that people are going to use
link |
around the time of the merge and soon after the merge,
link |
they're probably just going to sync
link |
and check the proof of work chain up to the merge,
link |
and then they're gonna check the proof of stake chain.
link |
But at some point in the future,
link |
I think people will just stop bothering
link |
checking the proof of work before the merge.
link |
Got it, so that old history information is not important
link |
for the future, like if you're operating actively
link |
on the new chain, that history is not important to you.
link |
It's not important, so it's not strictly important
link |
for just like any smart contract
link |
or just like applications that run on the blockchain.
link |
It can be important to users,
link |
and it can be important for some applications,
link |
but we're basically saying that like maintaining
link |
and serving that is not going to be a simultaneous
link |
with the responsibility of every Ethereum node.
link |
If you want that information, there can be separate
link |
protocols for backing it up.
link |
And like these other protocols actually exist, right?
link |
Like there's something called the graph,
link |
which is doing some history retrieval.
link |
Potentially, you can just take that entire chain
link |
and stake it on BitTorrent.
link |
Like there's lots of ways to like archive it
link |
and create kind of customized search protocols for it.
link |
So what's your sense why, so there's a Python 2
link |
and Python 3, and it took forever for people to switch.
link |
What's your sense why this merge has been taking longer
link |
than perhaps was expected?
link |
I think the biggest reason is just we've been
link |
underestimating the technical complexity.
link |
There's a lot of technical complexity
link |
in making a successful proof of stake chain.
link |
There's a lot of technical complexity
link |
in actually figuring out the transition process.
link |
So that's bigger than social complexity.
link |
So the technical complexity you would say
link |
is the bigger reason for any delays
link |
than the social complexity?
link |
I actually think so.
link |
I think we've been very fortunate
link |
to not have too much social complexity around the merge.
link |
So not much drama.
link |
I think the biggest part of the reason
link |
is just because we have been talking
link |
about proof of stake and sharding
link |
as being part of the roadmap
link |
since almost the very beginning of the project, right?
link |
Like the very first proof of stake blog post
link |
is from January 2014, which was two months
link |
after the project started
link |
and maybe even a day after the announcement.
link |
So proof of stake was not something
link |
that we kind of put on anybody by surprise.
link |
And then when the Dow fork happened
link |
and the people on the ETC side split off,
link |
I think it also just happens that a lot of the people
link |
that were not willing to stomach the Dow fork
link |
and then join the ETC side,
link |
they were the more Bitcoiny types.
link |
And the more Bitcoiny types do also tend to like proof
link |
And so like that also sort of ended up,
link |
sort of like purifying the communities on both sides,
link |
So Ethereum Classic is not switching to proof of stake
link |
and they're happy with their setup.
link |
And by the time that it came
link |
to the beacon chain launching into now,
link |
I think the community is very strongly in favor
link |
of the proof of stake switch.
link |
But let me ask the question that no engineer wants to hear,
link |
which is the question of timeline.
link |
When do you think the merge will happen?
link |
Do you have a sense it might happen this year?
link |
Do you have a sense it might be pushed
link |
towards next year, 2022 or even beyond?
link |
I think early 2022 is the most realistic.
link |
There's definitely still like an optimistic case
link |
of it happening this year,
link |
but the realistic thing to count on is definitely
link |
the very early part of next year.
link |
Is there specific things that stand out to you
link |
that will make you feel good about progress
link |
if you see it happening?
link |
So the thing that we had last month
link |
is we had this online hackathon called Rayanism,
link |
where basically a bunch of the different client developers
link |
that are going to be part of the transition,
link |
like hacks together some test nets
link |
of the post merge Ethereum chain.
link |
So these were only test nets
link |
of what would happen after the merge.
link |
They were not test nets of the transition itself.
link |
So the thing that people are working on now actually
link |
is the transition.
link |
So having a full specification
link |
of both the transition and post transition,
link |
and we have specifications now,
link |
but in a realistic way,
link |
they'll probably needs to have a couple of changes
link |
and have things that continue to be ironed out,
link |
and then have a test net
link |
that does both the transition and the post transition.
link |
And then once you have a test network,
link |
then you just have to do a lot of testing and audit it,
link |
and then do some runs on not just a specialized test network
link |
but on say an existing test network
link |
like a Robson or Rinkeby
link |
that Ethereum people already significantly use.
link |
then you can deploy the transition on mainnet.
link |
Just as a quick comment,
link |
because this is fascinating.
link |
In August of last year,
link |
there was this Medalla.
link |
I believe it's pronounced Medasha.
link |
It's a South American subway station.
link |
But spelled with two Ls.
link |
because that's how Spanish works, right?
link |
Like the two Ls have a...
link |
Anyway, but I read about it in middle of August, August 14th,
link |
there was an incident on that test net.
link |
How does this process work?
link |
What do you learn from those kinds of incidents
link |
when stuff goes wrong in the test process?
link |
I think that incident was that
link |
there was a consensus failure of some kind as I remember.
link |
Basically just different clients
link |
interpreting things in different ways,
link |
and then one of them getting kicked off the network.
link |
And then it ended up taking a while
link |
to actually get everyone to get back online.
link |
A big part of the reason why it took weeks to resolve
link |
is because it's on a test network,
link |
like the coins are valueless.
link |
And so there's not really this big push of any kind
link |
for people to actually go and download the new clients
link |
so they can start participating again.
link |
And so it definitely took a while
link |
until the chain started finalizing again.
link |
And then also there was, I think,
link |
another round of just not finalizing in October,
link |
There were definitely things that we learned.
link |
Like there were a lot of things,
link |
especially that client developers
link |
just learned about like optimization
link |
and how to build their clients
link |
in a way that they can process things efficiently.
link |
There's a lot that we learned
link |
from just like seeing the full life cycle
link |
of what happens when more than a third of the validators
link |
go offline and then finalization stops.
link |
And then that kind of weird unusual state
link |
of the chain continues for a while.
link |
And then eventually everyone who is not participating
link |
just gets enough of their stake.
link |
Like we don't use the word slashed,
link |
we use the word leaked for this,
link |
but like basically also burned
link |
until the people who are participating
link |
go back up to two thirds
link |
and then the chain goes back to finalizing.
link |
So just seeing all of those edge cases play out live,
link |
I think actually helped a lot
link |
and probably helped to really contribute
link |
to making us feel better about Mainnet.
link |
I mean, there's also an incident just recently
link |
in April 24th of 2021
link |
where this was on Beacon, I guess.
link |
There was a bug discovered in the software client Prism
link |
that prevented roughly 70% of validators
link |
on the network from producing blocks.
link |
I mean, maybe you can comment on what happened,
link |
but broadly like the big picture,
link |
what kind of stuff are you worried about
link |
in terms of problems that might arise?
link |
Are we talking about small bugs?
link |
Are we talking about like emergent social,
link |
unexpected social bugs?
link |
What are the things that worry you
link |
about the future of Ethereum
link |
that you want to make sure you construct mechanisms
link |
that prevent those things from happening?
link |
So one of the lucky things there was
link |
that this particular bug only prevented
link |
proposed self blocks.
link |
It did not prevent attestations.
link |
So attestations is just a mechanism for voting on blocks.
link |
And it's the attestations that are actually responsible
link |
for the chain finalizing.
link |
So like coming to this more permanence agreements on blocks.
link |
So the chain was actually quite stable all the way through.
link |
I think the thing that we generally learned
link |
from these experiences is just how valuable it is
link |
to have this multi client network.
link |
So this is one of these areas where I think Ethereum
link |
distinguishes itself from like Bitcoin, for example.
link |
That in Ethereum, we don't have one single client
link |
that everyone just runs, right?
link |
There's multiple implementations of the protocol.
link |
And these multiple implementations,
link |
they all process and verify the blocks
link |
that each other can verify, right?
link |
So they all speak the same language.
link |
Now, sometimes when there's a bug, they disagree.
link |
And when two clients disagree because of a bug,
link |
we call this a consensus failure.
link |
And consensus failures are pretty serious, right?
link |
And when you have a client's monoculture like Bitcoin does,
link |
then it's more rare to have consensus failures.
link |
Though you still have them actually.
link |
Bitcoin had a consensus failure
link |
between two different versions of the same client
link |
back in 2013, but they're less likely to happen.
link |
But the interesting thing is that the multi client
link |
architecture has actually, I think, saved Ethereum
link |
much more than it's heard it.
link |
So even in this most recent incident, right?
link |
Like Prism was not producing blocks,
link |
but all the other clients were still producing blocks.
link |
There's four others, right?
link |
Yes, it's a Prism, Nimbus, Teku, and the Lighthouse.
link |
And then also Ethereum back in 2016 had this fun events
link |
that we call the Shanghai DOS attacks.
link |
They're called that because the attacks started
link |
right on the first day of our annual conference at DEF CON
link |
that happens to be in Shanghai that year.
link |
So what happened basically was that someone came up
link |
with a way to create blocks that were very slow
link |
for one client to process, but not the other client.
link |
So at that time, there were basically two Ethereum clients.
link |
They were called Geth and Parity.
link |
Right now, I think the top three ones are Geth,
link |
Nethermind, and Basu.
link |
But what happened as a result of us having two clients
link |
is that the attacker was just not able to come up
link |
with blocks that both clients were completely failing
link |
And so a lot of the miners and a lot of network participants,
link |
they just kept on switching between the two implementations
link |
depending on which one worked.
link |
And that actually really helped the chain survive
link |
through that month of attacks as the attacker just kept
link |
on hammering at our system and identifying all
link |
of the weaknesses and just forcing our clients
link |
to do this rapid sprint of just optimizing the hell
link |
out of everything and make sure there aren't any
link |
of those DOS blocks or DOS bugs remaining.
link |
So that was another example.
link |
And then as a counter example,
link |
so something that also shows the point from the other side,
link |
Bitcoin had this bug in 2010, the balance overflow bug.
link |
Basically someone created a transaction that had two outputs
link |
and those outputs were both of a few billion Bitcoin.
link |
So like about two to the power of 63 Satoshis.
link |
And then if you add those numbers together,
link |
you'll go above two to the power of 64.
link |
And of course, computers like once you go above
link |
to the power of 64, you wrap around.
link |
And so the Bitcoin nodes thought that there was enough money
link |
to pay for the transaction because it was asking for,
link |
let's say like a billion Satoshis or something,
link |
but actually it was asking for two to the power
link |
of 64 plus a billion.
link |
And so the attacker just managed to create like billions
link |
of Bitcoin out of thin air.
link |
And this was not only discovered and fixed
link |
after something like 12 hours,
link |
but if there had been,
link |
if Bitcoin had been a multiple implementation system,
link |
then what would have almost certainly happened
link |
is like one of the clients would have bugged out,
link |
but the other clients would have probably
link |
actually had a check for that, right?
link |
And so there would have been a consensus failure,
link |
but at least that would have like alerted everyone
link |
that there is a problem very quickly.
link |
And it also would have given everyone
link |
just like obvious social permission to go and, you know,
link |
pick whichever one of the chains is correct
link |
and solve the problem.
link |
So like, that's, I think a big learning that we've had
link |
from multiple of our experiences in the Ethereum ecosystem,
link |
just like validating this multi client model.
link |
And like, to be fair,
link |
it's a model that we get criticized for a lot, right?
link |
Like Bitcoin people talk about, you know,
link |
the risk of consensus failures that this creates.
link |
VC types are like, well, you know,
link |
isn't it expensive and wasteful to fund three software teams
link |
where you could just be making, you know,
link |
one quote focused effort, you know,
link |
they love the word focused.
link |
And like, you know, Ethereum is not that,
link |
but it's amazing despite not being that.
link |
Basically, yeah, so that was interesting.
link |
And then there have definitely been other learnings as well,
link |
just from like seeing the chain live
link |
and seeing what actually is the staking experience like,
link |
what are the actual incentives
link |
for all the different participants.
link |
So I definitely feel like we're gaining a lot
link |
from this sort of one year of trial running the chain
link |
before we actually make all of Ethereum depend on it.
link |
Let me ask perhaps a strange question,
link |
but you know, proponents of Bitcoin will say things like,
link |
Bitcoin fixes everything.
link |
So why do we need Ethereum?
link |
Versus like Bitcoin plus lightning network for scalability
link |
and then using Bitcoin for,
link |
with this proof of work for security.
link |
So in this kind of, it is perhaps sort of a strange question,
link |
but it's a high level question.
link |
Why do we need another technology?
link |
Yes, it has a bunch of nice features,
link |
but like doesn't Bitcoin fix everything already?
link |
So the thing that always attracted me about Bitcoin
link |
is these values of decentralization,
link |
creating these open provisional systems
link |
that anyone can participate in
link |
and that aren't just going to flop over and die
link |
if whoever created them gets bored
link |
and that are resistant to like whoever runs them
link |
breaking the rules and all of these things.
link |
And I think that pretty strongly that these principles
link |
are like really valid in importance
link |
to much more things than just money, right?
link |
Like Bitcoin is the blockchain for money
link |
and Ethereum was built from the start
link |
as a general purpose blockchain, right?
link |
There is ether the asset on Ethereum,
link |
but then you can also make decentralized financial things,
link |
what we call DeFi today.
link |
You can make like ENS, the decentralized domain name system.
link |
You can put, make prediction markets on it.
link |
You can make totally nonfinancial systems
link |
that just like keep track of whether or not
link |
some certificate was signed
link |
or whether or not some like cryptographic key got revoked.
link |
There's this big long list of like just interesting things
link |
that you could use about blockchains to do, right?
link |
Like basically they are sort of the missing piece
link |
that where without them,
link |
the kinds of things that a decentralized computer network
link |
can do is very limited.
link |
And once you have them,
link |
a lot of those limitations end up going away.
link |
And so Ethereum was like always from the beginning
link |
about that, right?
link |
It's about like, hey, this isn't just money.
link |
There's so much more that you could do
link |
if you could just go ahead and make any infrastructure
link |
or digital institution or DAO
link |
or whatever you wanna call it,
link |
where the kind of the base layer of the logic
link |
is just executed in this open and transparent way
link |
where everyone can see what's going on
link |
or if you like your zero knowledge proofs,
link |
at least everyone can see proofs that prove to you
link |
that what's going on follows the rules
link |
and you don't need to just constantly keep trusting
link |
centralized actors.
link |
Hence the smart contracts
link |
as being a sort of a core technology as part of Ethereum.
link |
Smart contracts, the computer programs
link |
that are running on Ethereum,
link |
they are like the core
link |
of what makes Ethereum general purpose.
link |
Yeah, so I do think that there's a lot more wrong
link |
with the world than just money, right?
link |
Like I'm not one of these people who thinks that
link |
if you get rid of fiat currency
link |
and you replace it with cryptocurrency,
link |
then suddenly wars are gonna go away, right?
link |
Because like, first of all,
link |
like say your average revenue
link |
is only a small portion of government revenue, right?
link |
It's like what, 5%, 10%, something like that.
link |
Second of all, like if you are the sort of,
link |
this is one of the things
link |
I don't even get about their philosophy.
link |
Like, let's say you're the sort of person
link |
who is an extreme and very distrusting libertarian
link |
and you think that these governments are terrible, right?
link |
Like we know today that governments
link |
find a combination of things like welfare
link |
and things like the military
link |
that goes and like bombs people in Afghanistan, right?
link |
And so the question you have to ask is like, okay,
link |
you with your new, you know, magic newfangled cyber currency
link |
that takes over the world,
link |
take away the government's ability
link |
to have seniorized revenue
link |
and so you reduce the government's revenue by 10%.
link |
If the government is that evil,
link |
which portion of its expenses
link |
is it gonna take that 10% from?
link |
Is it gonna stop the bombing people in Afghanistan
link |
or is it gonna cut welfare?
link |
If you think it's the first,
link |
you have a very optimistic view of the government, right?
link |
So that's, I guess, my perspective
link |
on like why the whole, you know,
link |
we're going to save the world and create peace
link |
by like denying governments the right
link |
to stealth taxation kind of perspective
link |
doesn't really make much sense for me.
link |
And I do think that there is real value
link |
that comes from a decentralized and open currency.
link |
Like just the fact that there is a financial infrastructure
link |
that anyone in the world can go ahead and use, right?
link |
It's, that's something that can easily be
link |
a big boon for people, right?
link |
There's a lot of places where the currency
link |
and is much less stable than the dollar.
link |
And, you know, these people like they don't like,
link |
well, if they use Bitcoin,
link |
their only option is to get Bitcoins, right?
link |
Which, you know, are also pretty volatile.
link |
If they use Ethereum, then, you know, they can get ether,
link |
but then they can also get stable coins, right?
link |
And you might think that, you know,
link |
oh, you're not being ideologically pure.
link |
Now you're giving them stable coins,
link |
which are mirroring dollars.
link |
And obviously dollars are going to collapse too.
link |
But the reality is that dollars are vastly more stable
link |
than the Venezuelan Bolivar.
link |
So like, there are really meaningful and beneficial things
link |
that you can give to people by having a global
link |
and open financial system.
link |
But I think if you want to actually do that,
link |
like you have to have much more than just a currency, right?
link |
And then if you want to go beyond financial things,
link |
then, you know, you have to obviously have much more
link |
than a currency and then, you know,
link |
you also have to actually take scalability seriously
link |
because the nonfinancial applications,
link |
like nobody's going to pay $5 a transaction for them.
link |
Can we return to dogs?
link |
No, no, no, no, no.
link |
The other one's categorically forbidden.
link |
Yeah, categorically forbidden.
link |
Is there any cryptocurrency based on cats actually?
link |
I think there are.
link |
Like, there was cat coin, there was nan coin.
link |
For some reason, they just didn't catch on as much
link |
as the dog coins did.
link |
Okay, so let's talk about Dogecoin and Elon Musk.
link |
Elon said that, quote, ideally,
link |
Doge speeds up block time 10x,
link |
increases block size 10x, and drops fee 100x.
link |
Then it wins hands down, end quote.
link |
You said in a blog post, partially responding to that,
link |
that there are subtle technical reasons
link |
why this is not possible.
link |
To this, Elon said that you, quote, fear the Doge.
link |
So let's talk about this.
link |
What are the technical hurdles for Dogecoin
link |
that prevent it from becoming
link |
one of the primary cryptocurrencies of the world?
link |
And do you, in fact, fear the Doge?
link |
I definitely feel obligated to correct the record.
link |
I definitely do not fear the Doge.
link |
No, I love the Doge.
link |
I actually visited the Doge in Japan a few years back.
link |
She's an amazing dog, she's still alive.
link |
Wait, the original Doge?
link |
So, you know, we accept Doge every year
link |
for our annual DEF CON conferences.
link |
So, I definitely don't think Ethereum
link |
is opposed to Doge coins.
link |
I kind of want to feel like Ethereum
link |
is at least a little bit in spirit itself a Dogecoin.
link |
And then, as I mentioned, I love Doge,
link |
I bought a bunch of Doge, I still hold a bunch of Doge.
link |
On the scalability question,
link |
the challenge basically is the limits to scalability
link |
and the trade offs with centralization, right?
link |
If you just increase the parameters
link |
without doing anything else,
link |
then it just becomes more and more difficult
link |
for people to validate the chain
link |
and it just becomes more likely that the chain
link |
becomes centralized and becomes vulnerable
link |
to all kinds of capture.
link |
So, does it need like some of the layer two technologies
link |
that we've been talking about?
link |
I personally think that if Doge wants to somehow bridge
link |
through Ethereum and then people can trade Doge
link |
thousands of times a second inside of a loop ring,
link |
then that would be amazing.
link |
If they want to just like take ZK roll up style technology
link |
and just have thousands of transactions a second
link |
on their own chain, then that would be a great outcome
link |
So, is there ways for Ethereum and Dogecoin
link |
Okay, so there's a power behind a person like Elon Musk
link |
pushing the development of a cryptocurrency.
link |
Is there ways to leverage that power and that momentum
link |
to improve Ethereum, to improve some of the sort of
link |
cryptocurrencies that are already technologically advanced
link |
and pushing forward that kind of technology?
link |
I definitely think there's room for...
link |
You know that meme of Doge like taking over,
link |
Is there a way to ride that storm, that wave of the Doge
link |
that's taking over?
link |
I think if we can have a secure Doge to Ethereum bridge,
link |
then that would be amazing.
link |
And then when Ethereum gets its scalability,
link |
any scalability thing that works for Ethereum assets,
link |
you would be able to also trade wrapped Doge
link |
with extremely low transaction fees
link |
and very high speed as well.
link |
Is there precedence for building secure bridges
link |
between cryptocurrencies?
link |
Is that, I mean, how difficult is this kind of task?
link |
It's definitely something that's in its infancy.
link |
There definitely have been some cross chain interaction
link |
things that have been done before.
link |
So, the earliest is probably the concept of merge mining,
link |
right, when a chain just makes its entire
link |
proof of work algorithm dependent on
link |
the proof of work algorithm of another chain.
link |
So, I think famous Dogecoin actually merge mines
link |
to Litecoin, which is, I think in retrospect,
link |
not looking like a very good choice
link |
because now Dogecoin is bigger than Litecoin.
link |
But, you know, if there's potentially some way
link |
for Dogecoin to merge mine with an Ethereum proof
link |
of stake of some kinds,
link |
then that could be an interesting alternative.
link |
So, that's one type of chain interaction.
link |
As far as bridges, like one chain reading another chain,
link |
early in Ethereum's history,
link |
there was this project called BTC Relay.
link |
It's a smart contract on Ethereum
link |
that just verifies Bitcoin blocks.
link |
I think people stopped really caring about it
link |
and maintaining it because there just weren't enough
link |
applications that were actually interested
link |
in using it at the time.
link |
And then the transaction fees got too high
link |
to actually maintain it.
link |
So, I think if we want to make a BTC Relay 2.0,
link |
that becomes cheaper because, you know,
link |
it uses snarks or something like that,
link |
then you probably could.
link |
But maybe now's the time when you actually
link |
can do that sort of one way verification.
link |
But the one challenge though,
link |
is that if he wants to have a bridge
link |
that allows you to move assets between chains,
link |
then you don't just need one way verification,
link |
you need two way verification, right?
link |
And Ethereum can verify anything
link |
because Ethereum smart contracts
link |
can just run arbitrary code.
link |
But if you want Bitcoin to be able to do things
link |
based on what happens in Ethereum lands,
link |
then Bitcoin would have to basically,
link |
well, they can do everything with soft forks
link |
because that's their religion,
link |
but they'll do it that way.
link |
And if Doge wants to make a fork
link |
where that allows for two way transferability
link |
with Ethereum, then they could.
link |
I mean, I think that would be a lovely collaboration
link |
to make if there's interest.
link |
I think there might actually even be some multi SIG funds
link |
that has some funding.
link |
It's just a bounty for someone
link |
to make a bridge between the two.
link |
Oh, could you maybe try to psychoanalyze Elon Musk
link |
for a brief second?
link |
So what are your thoughts about Tesla and Elon Musk's
link |
journey through the cryptocurrency world?
link |
So first with Bitcoin and then with Dogecoin.
link |
So acquiring, holding a large amount of Bitcoin.
link |
And I believe, at least considering the acquiring
link |
and holding a large amount of Dogecoin.
link |
Positives, negatives, what do you think the future
link |
for Tesla and SpaceX in the cryptocurrency space looks like?
link |
Do you think they'll consider Ethereum?
link |
I'm sure that if they stay in the cryptocurrency system
link |
at all, then they have to at some point.
link |
Bitcoin number one, Dogecoin number,
link |
I mean, come on, it deserves to be number three.
link |
And then, or number two.
link |
And then Ethereum can be whatever that other number is.
link |
If Ethereum only becomes a Dogecoin somehow,
link |
maybe change the logo to incorporate a dog of some sort.
link |
Almost like Doge sneaking behind.
link |
Oh, that would be fascinating.
link |
For when the merge happens.
link |
And I think, Elon, you definitely,
link |
I think you would make a mistake
link |
if you were to kind of ascribe too much sophisticated,
link |
malevolent, or any deep intentionality to the whole process.
link |
I think he's just a human being and he likes dogs,
link |
just like I like dogs.
link |
Yeah, I think that is literally the reasoning
link |
behind the whole Dogecoin thing.
link |
There is some aspect to which,
link |
I mean, the guy helped launch a car into space, right?
link |
Like you could ask, like, what is the purpose of that?
link |
I think the purpose of that is fun.
link |
I think he truly is more and more, especially lately,
link |
embodying the whole idea that the most entertaining outcome
link |
is the most likely and he's fully embracing
link |
the most entertaining outcome.
link |
And in many ways, Dogecoin is the most
link |
entertaining cryptocurrency.
link |
As cryptocurrency becomes more and more impactful
link |
in the world, people are getting
link |
more and more serious about it.
link |
And so he's selecting the cryptocurrency
link |
that is the least serious and the most fun.
link |
And there's something to that,
link |
like coupling fun with technological sophistication
link |
and somehow figuring out a way to do that well.
link |
I want the world to be fun.
link |
I think the world being fun is great.
link |
Okay, let me ask about a couple
link |
of other technologies if it's okay.
link |
What are your thoughts about Chainlink
link |
and hybrid smart contracts that utilize
link |
off chain external data sources?
link |
And I think it's definitely necessary for a smart contract
link |
so that do a lot of things to use off chain data
link |
of some kind, right?
link |
Like if you want to have a stable coin,
link |
you need a price oracle so you know
link |
what price you're targeting.
link |
If you want to have some fancy no crop insurance gadget,
link |
like I think EtherRisk has been doing
link |
a lot of good work with that.
link |
And I think it was either Kenya or Sri Lanka or both,
link |
like they're making a lot of good progress
link |
in some of those places.
link |
Like you need some kind of oracle to tell you,
link |
did it actually rain in this particular area?
link |
If he wants to have like assets that mirror
link |
other financial assets, you need an oracle.
link |
If you want to have a prediction market,
link |
you need an oracle.
link |
And so projects that provide oracles
link |
are definitely really important.
link |
There are definitely different kinds of use cases.
link |
Like Augur is more about events
link |
and the Augur oracle is designed,
link |
I think differently from Chainlink, right?
link |
Like Chainlink emphasizes the whole,
link |
we have a fast automated thing
link |
that just gives you data quickly.
link |
Whereas Augur is more, we don't give a crap about speed.
link |
And look, we don't need to give a crap about speed
link |
because if you want to get your money out
link |
on a prediction market that where in reality it's resolved,
link |
you can probably just sell your coins for 99 cents anyway.
link |
So I mean, I think Chainlink is definitely
link |
taking a good and important part of the oracle design space.
link |
And I'm definitely happy that there's
link |
that project taking the task on.
link |
I mean, at the same time, I do think that
link |
their frog army on Twitter can get a bit intense at times,
link |
I mean, is there a way to incorporate
link |
sort of oracle network type of ideas into Ethereum?
link |
I personally would prefer the Ethereum base layer,
link |
like stay away from trying to provide too much functionality
link |
because like once you have the Ethereum base layer
link |
making a claim about like say the US dollar
link |
to Ethereum price, like at some sense,
link |
you're basically saying that like Ethereum
link |
as a base platform starts making
link |
what could be geopolitical statements, right?
link |
Like for example, imagine if there was some civil war
link |
and the US split up and you had two currencies
link |
that both claims to be the US dollar,
link |
well, Ethereum would have to pick one
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for the sake of everyone who was already using that oracle.
link |
So does that mean that the blockchain would be
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taking a position in this big mega political debate?
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So I think like for just those kinds of reasons,
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I would personally like prefer Ethereum itself
link |
to be more of this sort of pure platform
link |
that just analyzes transactions
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just mathematically using deterministic consensus rules.
link |
And then if you need the oracles, that can be layer twos.
link |
Like I think Ethereum like benefits
link |
from not trying to do everything at layer one
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and having this like very robust layer two ecosystem
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where you have all these projects doing interesting things.
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Yeah, focus on the basic technology avoid the politics.
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Let me ask a bit of a human question.
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Charles Hoskinson, someone you've worked with
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in the early days of Ethereum,
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there appears to my outsider view
link |
to have been a bit of a falling out.
link |
Is there positive inspiring human story
link |
to be told about why you two parted ways?
link |
I kind of want to let the various books
link |
about Ethereum speak for themselves,
link |
but I feel like since that time,
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I think Charles has clearly progressed
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and matured in a lot of ways.
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And people who follow Charles closely
link |
have definitely told me that like 2021 Charles
link |
is very different from a 2014 Charles.
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And I'm sure it's 2021 Vitalik is much different
link |
from 2014 Vitalik as well.
link |
I'm kind of interested how the 2030 and 2040 Vitalik
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and Charles look like as well.
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Like the progression of the humans.
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Is this going to be one of those things
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where like everyone comes full circle
link |
and then 2030 Vitalik and Charles are best friends?
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Yeah, not necessarily best friends,
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but some kind of are able to reminisce
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in ways that puts some of the tension of the past behind.
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I think such things are possible.
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I think people definitely absolutely have a right to,
link |
and I think should strive to just constantly change
link |
and reinvent themselves.
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Is there something you could say about your thoughts
link |
about the Cardano project that Charles Hoskinson leads?
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They've worked on some interesting ideas
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that mirror some of the ideas in Ethereum,
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proof of stake, working on smart contracts
link |
and all those kinds of things.
link |
Is there something, again, positive,
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inspiring that you could say?
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Are they a competitor?
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Is it complimentary technology?
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There's definitely interesting ideas in there.
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I do think Cardano takes a bit of a different approach
link |
than Ethereum in that they really emphasize
link |
having these big academic proofs for everything,
link |
whereas Ethereum tends to be more okay with heuristic arguments
link |
in part because it's just trying to do more faster.
link |
But there's definitely very interesting things
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that come out of IOHK research.
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Can you comment on that kind of idea?
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I, as sort of having a foot in research,
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enjoy Charles's kind of emphasis on papers
link |
and deep academic rigor.
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What's the role of deep research rigor
link |
in the world of cryptocurrency?
link |
I'm actually the sort of person
link |
who thinks deep rigor is overrated.
link |
The reason why I think deep rigor is overrated
link |
is because I think in terms of why protocols fail,
link |
I think the number of failures that are outside the model
link |
is even more important, is bigger and more important
link |
than the failures that are inside the model.
link |
So if you take selfish mining, for example,
link |
that original discovery from 2013
link |
that showed how Bitcoin does,
link |
even if it has a 50% fault tolerance,
link |
assuming everyone's honest,
link |
it only has a zero to 33% fault tolerance,
link |
depending on your network model,
link |
if you assume rational actors.
link |
And to me, that was a great example
link |
of an outside the model failure, right?
link |
Because traditional consensus research,
link |
just up until or before the blockchain days,
link |
did not think about like incentivization much, right?
link |
There was a little bit of thought about incentivization.
link |
There's like a couple of papers
link |
on the Byzantine altruist rational model,
link |
but it wasn't that deep.
link |
It was mostly operating under the assumption
link |
that we're gonna make consensus
link |
between 15 participants and these are institutions.
link |
And if something goes wrong,
link |
then we can figure out whether or not
link |
it was deliberate offline.
link |
And if they did something evil, we can sue them.
link |
Whereas in the crypto world, you can't sue that, right?
link |
And so that whole discovery basically arose
link |
just because the model of traditional consensus research
link |
just didn't cover those possibilities.
link |
And then once you go out of the model,
link |
those other issues do exist, right?
link |
So, but then at the same time,
link |
there definitely are protocols that turn out to be,
link |
that do have failures inside the model.
link |
Like this reminds me of the time
link |
when I think I found a bug
link |
in a proposed consensus implementation
link |
from either BitShares or EOS.
link |
This happened around the end of 2017.
link |
So that was definitely inside the model
link |
because like they had a very clear idea
link |
of what they were trying to achieve.
link |
They had a very clear description
link |
and like there's a very clear mathematical argument
link |
for why the description doesn't lead
link |
to what they're trying to achieve.
link |
But ultimately what you're trying to achieve
link |
can never be fully described in formal language, right?
link |
Like I think this is the big discovery of,
link |
the AI safety people, for example, right?
link |
Like just having a specification of what you want
link |
is an insanely hard problem.
link |
And like the more powerful the optimizer
link |
that you're giving the instructions to,
link |
the more you have to be careful.
link |
And so, I think there are the kind of these two sides.
link |
And then the other thing is that
link |
a lot of the academic approach ends up
link |
basically optimizing for other people
link |
inside of the academic system.
link |
And it doesn't really optimize for like curious outsiders.
link |
Whereas like I personally totally optimize
link |
for curious outsiders, or at least I feel like I strive to.
link |
So I guess like that's my case for why I like
link |
tends to behave in ways that, you know,
link |
occasionally traditional academic types
link |
criticize as being reckless.
link |
But I mean, on the other hand, you know,
link |
there's definitely real benefits that come from
link |
like just taking a rigorous approach,
link |
especially when, you know, you know what the thing,
link |
like, you know what the specification is
link |
of what you're trying to get.
link |
And like, you're trying to kind of improve your ways
link |
or provide protocols that actually provide that.
link |
And like, you know exactly what you're looking for.
link |
I feel like realistically, you probably wants to do
link |
both kinds of analysis.
link |
And like, sometimes you even want to do
link |
both kinds of analysis in stages, right?
link |
Like you have, you want to do more quick and dirty things
link |
and even wants public feedback on the quick and dirty stuff.
link |
And then later on you formalize it more
link |
and then you get more feedback.
link |
Like in general, I guess I feel like the norms of research
link |
in the future, like the internet has just changed so much.
link |
There's no way that it's not going.
link |
And you know, it's even changed like collaboration structures
link |
and like the patterns in which we work with each other.
link |
There's no way that the correct structure
link |
for collaborative research is the same
link |
as what it was 15 years ago.
link |
But like, what combination of these existing components
link |
and of new ideas it is, like that's something
link |
that's, you know, totally legitimate
link |
to kind of fight it out.
link |
And I think it's great that there's different ecosystems
link |
that have different attitudes to things.
link |
Like, you know, I think, you know,
link |
there's a big possibility that, you know,
link |
things that the Ethereum,
link |
ways that the Ethereum ecosystem approaches some problems
link |
And if there's other ecosystems with different principles
link |
and they do well, that's something that we can learn from.
link |
In the spirit of the depth for a search,
link |
can you comment on AI safety?
link |
And some people are really worried
link |
about the existential risks of artificial intelligence.
link |
Is there something you could say that's hopeful
link |
about how we avoid in the same kind of line of reasoning
link |
about creating formal models versus kind of looking
link |
outside the model into what the real world actually is like?
link |
Is there some lessons from that we can take
link |
and map onto the AI safety world
link |
where the potentials of the technology,
link |
whether it's in autonomous weapon systems
link |
or just the paperclip problem
link |
that we can avoid AI destroying the world?
link |
So my impression is actually that, like,
link |
this is more of a kind of far away impression
link |
and it could be wrong, that it might even be
link |
that one of the challenges is that AI is not formal enough.
link |
Like, because AI is very practitioner oriented, right?
link |
Like, it's all about like, hey, I found a couple of hacks
link |
and look, I ran them and look,
link |
they seem to improve classification accuracy
link |
from 0.684 to 0.773.
link |
So a lot of the time there just isn't actual science behind
link |
why this hack works and why this other hack doesn't work.
link |
You just sort of like trial and error your way into it.
link |
And I could see how that approach works,
link |
but at the same time, like,
link |
that approach is not good for eligibility, for example.
link |
Like, it's not good for like understanding
link |
what the heck is actually going on,
link |
like how these kinds of systems conceivably might fail.
link |
Like, there's even, you know, a debate on like,
link |
can you take GPT3 like things and just scale them up
link |
and their intelligence will continue to improve
link |
or is there just like some types of reasoning
link |
that they're fundamentally bad at
link |
and like they're not gonna get good at it
link |
no matter how much you like scale this exact same approach
link |
and add more hardware to it.
link |
So having like thinking about what's going on
link |
more explicitly, I mean, my understanding
link |
is that a big part of AI safety research
link |
is trying to do that sort of stuff, right?
link |
Yeah, formalize, try to improve just AI eligibility,
link |
like trying to understand, you know,
link |
if the AI makes some classification
link |
so we can actually see like what happens
link |
and like what's going on in the middle, right?
link |
Whereas with crypto or with traditional cryptography,
link |
you know, it's like very much not,
link |
well, okay, I mean, I shouldn't quite say that.
link |
It's, traditional cryptography is this interesting mix
link |
of being very formal and being very informal
link |
because it's very formal with,
link |
given these security assumptions,
link |
prove that the protocol works
link |
under these security assumptions.
link |
The places where it's very informal is like,
link |
well, how do we even know that there isn't
link |
an efficient algorithm for factoring numbers?
link |
Yeah, we kind of tried it for 40 years.
link |
And then, you know, so far,
link |
no one's found anything better
link |
than the general number field sieve.
link |
And like, okay, fine, we'll just assume it's fine.
link |
You know, how do we know you can't find the discrete log
link |
between two elliptic curve points?
link |
Like, nope, did it a couple of decades,
link |
no one's found anything faster
link |
than like baby step, giant step stuff.
link |
and like, there's definitely ways
link |
in which that approach really makes sense, right?
link |
Because at least you can concentrate your analysis
link |
on a small number of building blocks.
link |
And like, you know, you do have some intuitive reasoning
link |
about those building blocks,
link |
but like at least there is a small number
link |
of building blocks and lots of people are looking at them.
link |
And then everything else just sort of gets formally built
link |
on top and you actually can like mathematically reduce
link |
the security of big things to building blocks, right?
link |
Like you can have mathematical proofs
link |
that say, you know, if you make a ZK Synarch
link |
of a yes statement when in reality that statement is false,
link |
then you can use that to like extract information
link |
out of elliptic curves that, you know,
link |
it completely breaks the problem or something like that.
link |
So ZK Synarch is an example where formalism is beneficial.
link |
And so maybe you can have the same kind of stuff
link |
in the AI safety within AI systems
link |
that you can get a hold of some kind of aspect
link |
of the systems that you can control provably.
link |
And then in blockchains and cryptocurrency,
link |
I think the one area where consensus mechanisms
link |
is still more an art than a science
link |
is that these aren't just like technological systems,
link |
they're crypto economic systems, right?
link |
And they make assumptions about people.
link |
And which assumptions you can make about people
link |
is not something that you can prove with math.
link |
Right, even just the basic 51%.
link |
Can you trust the 51%?
link |
If you can't trust the 51%,
link |
can you trust the other 49% to be able to coordinate
link |
on like making their own fork?
link |
What will happen to coin prices?
link |
Like how do people as human beings react to these events?
link |
Like there's all of these assumptions.
link |
But no, at the same time,
link |
look, if you can write down the assumptions,
link |
then you can like do formal things with them.
link |
I almost forgot to ask you
link |
about one of the most exciting aspects of Ethereum.
link |
I mean, it's non technical.
link |
I think it's a societal, it's social, which is NFTs.
link |
So what do you think about the explosion of NFTs
link |
in the recent months, especially in the art world
link |
and beyond, and what does the future look like?
link |
So this is maybe the social impact on the world,
link |
on the individual creators of all kinds.
link |
Like is that something you've actually expected to see,
link |
NFTs having this kind of impact?
link |
And beyond, what do you think will happen
link |
in the digital space with NFTs,
link |
in virtual reality, in gaming, all those kinds of things?
link |
I was definitely surprised by like NFTs in particular.
link |
Like I even actually think might be on record somewhere
link |
on some tech conference panel.
link |
Like they were asking, you know,
link |
it was one of those overrated or underrated sections
link |
and ask about NFTs and I thought,
link |
and I said like, hey, I think NFTs are overrated.
link |
And, you know, in retrospect,
link |
that turned out to be quite wrong.
link |
I think, like, I guess I just personally
link |
can't really relate to this concept
link |
of like spending a lot of money on a thing.
link |
Like there's nothing, you know,
link |
there's no clear kind of understanding
link |
of why that thing would maintain its value.
link |
Uniqueness of a thing having value.
link |
That's like, I definitely like cannot really understand,
link |
you know, the psychology behind like buying,
link |
you know, paying $200,000 for original art painting.
link |
I'd be like, you know, if I had a mansion,
link |
just like give me photocopies of everything.
link |
You can hang three photocopies of the Mona Lisa section.
link |
Why would I even have the Mona Lisa?