Time Magazine Feature: Vitalik is worrying about the future of the crypto industry

In a few minutes, electronic music will start beating, plush toys will be thrown into the air, the ladies will turn colorful hula hoops, a mechanical bull will be activated, and one by one, excited riders will slam on the bull’s back. bumps. This is the closing party for ETHDenver, a week-long cryptocurrency conference on Ethereum. For days, people had formed long queues around the block. Right now, on this Sunday night in February, the energy of excitement is at a vertigo-inducing peak.

But as the crowd poured into the party, a lean, pixie-looking man was dashing out of the venue, brushing past the surprised selfie-takers and venture capitalists. Some people shouted and begged him to stay, and some even chased him down the street on foot and on motorcycles. However, the man ran faster than all of them and disappeared alone into the hidden space of the hotel lobby.

The most influential man in the crypto space, Vitalik Buterin, didn’t come to the party in Denver. He doesn’t drink and doesn’t like crowds much. Not because the 28-year-old Ethereum founder doesn’t have much to celebrate, of course. Nine years ago, Vitalik dreamed of using Ethereum as a way to use Bitcoin’s underlying blockchain technology to explore more functions beyond money. Since then, it has become the base layer for what advocates call a new, open source, decentralized internet.

Ethereum’s native currency, ETH, has become the second-largest cryptocurrency after Bitcoin, powering a trillion-dollar ecosystem and rivaling Visa in terms of money flow. Ethereum brings thousands of unbanked users around the world into the financial system, allows capital to flow unhindered across borders, and provides entrepreneurs with the infrastructure to develop everything from payment systems to prediction markets, digital exchanges New products from conferences to medical research centers.

Although the total market capitalization of cryptocurrencies is soaring, Vitalik clearly recognizes that the world he created is moving forward with a mixture of pride and fear. Ethereum has made a few white people incredibly wealthy, it has also allowed pollutants to be continuously pumped into the air, and it has also become a tool for tax evasion, money laundering, and incredible scams. Encryption itself has great dystopian potential if not implemented properly, the Russian-born Canadian explained in an 80 Minutes interview in his hotel room the morning after the party.

Vitalik worries that the dangers to overzealous investors, skyrocketing transaction fees and outrageous displays of wealth have dominated public perception of cryptocurrencies. The danger is that you own these $3 million monkeys, which becomes another gamble, he said, referring to The Boring Ape Yacht Club, a super-popular NFT collection of fancy primate cartoons, Digital-era status symbols that have become millionaires include Jimmy Fallon and Paris Hilton, who have traded for more than $1 million. There must be a lot of people just buying yachts and Lambos.

Vitalik prefers Ethereum to be a launching pad for various socio-political experiments. For example, a fairer voting system, urban planning, universal basic income, public works programs. Most importantly, he wants the platform to counteract authoritarian governments and subvert Silicon Valley’s grip on our digital lives. But he acknowledged that his vision for the transformative power of ethereum runs the risk of being overtaken by greed. As a result, Vitalik began reluctantly to take on a larger public role in shaping the future of crypto.

The only things that can be built up if we don’t make a sound are those that are immediately profitable, he said, his voice rising and falling as his hands nowhere to fit between a bumpy grey sofa cushion. And these are often far from what is truly good for the world.

Ironically, despite Vitalik’s reputation, he may not have the power to stop Ethereum from going off course. That’s because he designed Ethereum as a decentralized platform that not only carries his own vision, but also responds to the wishes of its builders, investors, and expanding community. Vitalik is not the official leader of Ethereum, and he believes that no one can have unilateral power over the future of Ethereum.

Time Magazine Feature: Vitalik is worrying about the future of the crypto industry

This makes Vitalik dependent on a limited set of soft-power tools: writing blog posts, giving interviews, conducting research, and speaking at conferences where many attendees just want to immerse themselves in their new-found cryptography of wealth. I’ve been yelling, sometimes it feels like howling in the wind, he said, his eyes scanning the room. Whether his approach works (and how much influence Vitalik has on his own ideas) could be the future of Ethereum being the foundation of a new age of digital life, versus a future where Ethereum is just another vehicle for financial speculation, credit default swaps, and utopian colors difference between.

Three days after the music at the ETHDenver venue went off the air, Vitalik’s attention turned to the world, back to the region where he was born. Cryptocurrencies almost immediately became a tool of Ukrainian resistance in the war waged by Russian President Vladimir Putin. In the first three weeks of the invasion, the Ukrainian government and NGOs raised more than $100 million in cryptocurrencies. Cryptocurrencies have also provided a lifeline for some of the unbanked to flee Ukraine. But at the same time, regulators are also concerned that ethereum could be used by Russian oligarchs to evade sanctions.

Vitalik has also moved into action, directing hundreds of thousands of dollars in grants to disaster relief efforts, and has publicly attacked Putin’s decision to invade. The silver lining that has been revealed over the past three weeks is that it has reminded many in the crypto space that the ultimate goal of crypto is not to play games with million-dollar pictures of monkeys, but to do something that actually impacts the real world, Vitalik said in a blog post. In an email to Time Magazine on March 14, he wrote.

His outspoken advocacy marks a shift for a leader who has been slow to find his political voice. “One of the decisions I made in 2022 was to try to be more adventurous and less neutral,” Vitalik said. I’d rather Ethereum offend some people than make it into something meaningless.

The war is personal to Vitalik, who is of Russian and Ukrainian descent. In 1994, a few years after the collapse of the Soviet Union, he was born on the outskirts of Moscow to Dmitry Buterin and Natalia Ameline, both computer scientists. It was a time when the monetary and social system was collapsing, and his mother’s parents lost their life savings due to inflation. Growing up in the Soviet Union, I didn’t realize that most of the good stuff I was told in school was propaganda, Dad Dmitry explained. So I want Vitalik to question traditions and beliefs and he grows into a very independent thinker.

The family originally lived in a college dorm with shared bathrooms. No disposable diapers, his parents washed him by hand. Vitalik grew up in a turbulent but dynamic family environment. Father Dmitry said Vitalik learned to read at bedtime at an early age, but he was slow to speak a complete sentence compared to his peers. Because he was thinking so fast, Dmitry recalls, he actually had a hard time expressing himself for a long time.

Instead, Vitalik was drawn to the clarity of the numbers. At age 4, he inherited his parents’ old IBM computer and started playing with Excel spreadsheets. At the age of 7, he could memorize more than 100 digits of pi and shout out mathematical equations to pass the time. At 12, he was able to code in the Microsoft Office Suite. In 2000, Putin was elected president for the first time, and his family immigrated to Toronto, Canada. Vitalik’s precocious puberty was therefore more prominent and intensified among his peers.

His father described Vitalik’s upbringing in Canada as lucky and naive, and Vitalik himself describes himself as loneliness and separation.

Time Magazine Feature: Vitalik is worrying about the future of the crypto industry

In 2011, Dmitry introduced Vitalik to Bitcoin, which was created after the 2008 financial crisis. After seeing the financial systems in Russia and the United States collapse, Dmitry was intrigued by the idea of ​​another source of global money that was not controlled by the authorities. Vitalik soon started writing articles exploring new technologies for Bitcoin Weekly magazine, for which he made 5 bitcoins (about $4 at the time, now worth about $200,000).

Even as a teenager, Vitalik proved to be an incisive writer, capable of expressing complex ideas about cryptocurrencies and their underlying technologies in clear prose. At 18, he co-founded Bitcoin Magazine and became its lead writer, gaining a following in Toronto and abroad. Many see him as a quintessential tech engineer, said Nathan Schneider, a professor of media studies at the University of Colorado Boulder who first interviewed Vitalik in 2014. But at the heart of his practice is more observation and writing — which has helped him see a cohesive vision that no one else has yet.

As Vitalik learned more about the blockchain technology that built Bitcoin, he came to believe that using it purely for currency would be a waste. He believes that blockchain can be an effective way to protect all kinds of assets: web applications, organizations, financial derivatives, non-predatory lending schemes, and even wills. Each of these can be operated through “smart contracts,” codes that can be programmed to transact without the need for an intermediary. For example, a decentralized version of the ride-sharing industry could be built, sending money directly from riders to drivers, without Uber taking a cut of the proceeds.

In 2013, Vitalik dropped out of college and wrote a 36-page white paper laying out his vision for Ethereum: a new open-source blockchain on which programmers could build any type of application they wanted . Vitalik sent it to friends in the Bitcoin community and they spread it around. Soon, a handful of programmers and businessmen around the world approached Vitalik, hoping to help him make it a reality. Within a few months, eight people who would later become known as the Ethereum founders shared a three-story Airbnb in Switzerland, writing code and attracting investors.

While some of the other founders have fun while working—watching Game of Thrones, convincing friends to bring beers in exchange for ETH IOUs—Vitalik spends most of his time alone, coding on his laptop. Over time, it became clear that the group had very different plans for emerging technologies. Vitalik wants a decentralized open platform on which anyone can build anything. Others want to use the technology to start businesses.

One idea is to build a cryptocurrency equivalent to Google, where Ethereum would use customer data to sell targeted ads. These people also quarrel over power and titles. One co-founder, Charles Hoskinson, named himself CEO — Vitalik wasn’t interested, joking that his title was C-3PO, taken from the “Star Wars” droid.

The ensuing conflict left Vitalik with a culture shock. In a matter of months, he has gone from a recluse writing code and technical articles to a decision maker battling a bloated ego and power struggles. His vision for Ethereum is up in the air. The biggest divide is definitely that many of these people care about making money. For me, that’s not my goal at all, Vitalik said.

His net worth is at least $800 million, according to public records on the blockchain, whose accuracy has been confirmed by a spokesperson. Even in the beginning, I lowered the percentage of the ETH distribution that I and other high-level founders would receive to be more egalitarian. It really upsets them.

Vitalik said other founders tried to use his naivety to push their own ideas about how ethereum should work. People used my fear of regulators against me, he recalls, saying we should have a for-profit entity because it was legally so much simpler than being a nonprofit. As tensions rose, the group implored Vitalik to make a decision. In June 2014, he asked Hoskinson and Amir Chetrit, the two co-founders who propelled Ethereum into an enterprise, to leave the group. He then launched the creation of the Ethereum Foundation (EF), a non-profit organization to secure Ethereum’s infrastructure and fund research and development projects.

Over the next few years, all the other founders left one by one to pursue their own projects, either working with Ethereum or as direct competitors. Some of them remain critical of Vitalik’s approach. In the dichotomy between centralization and anarchy, Ethereum appears to be heading for anarchy, said Hoskinson, who now leads his own blockchain, Cardano. We think there is a middle ground in creating some sort of blockchain-based governance system.

With the founder split, Vitalik became Ethereum’s philosophical leader. He holds a seat on the Ethereum Foundation Board of Directors and has the clout to influence industry trends and drive the market through public statements. He is even called “V God” in China. But he did not fully enter the power vacuum.

He is not good at directing people around him, said Aya Miyaguchi, executive director of the Ethereum Foundation. Danny Rya, principal researcher at the Ethereum Foundation, said: “From a social navigation perspective, he’s immature. He may still hate conflict. Vitalik called his efforts as the leader of the organization the curse of my early years on Ethereum.

It’s not hard to see why. When you meet Vitalik, he still doesn’t exhibit stereotypical leadership qualities. He sobbed, stammered, and walked stiffly, trying to maintain eye contact. He pays little attention to clothes, mostly wearing Uniqlo T-shirts or clothes given to him by friends. His disheveled appearance makes him an easy target on social media: He recently shared insults from online questioners who said he looked like a Bond villain or an alien lunatic.

However, almost everyone who has had an adequate conversation with Vitalik has star eyes. Vitalik is very entertaining and almost completely free from pretentiousness or conceit. He’s an unabashed geek, and his eyes light up when he sees one of his favorite concepts, be it secondary voting or governance system futarchy.

Just as Ethereum was designed to be an all-purpose machine, Vitalik is an all-purpose thinker, proficient in everything from sociological theory to advanced calculus to the history of land taxes. (He’s currently using Duolingo to learn his fifth and sixth languages.) He doesn’t talk to people like a superior man, and he avoids security details. The emotional part of me says that once you start down this road, specialization is another word for losing your soul, he said.

Alexis Ohanian, co-founder and head of cryptocurrency investing at Reddit, said being around Vitalik gave him an atmosphere similar to when he first met the inventor of the World Wide Web, Tim Berners-Lee. He’s very thoughtful and humble, Ohanian said, and he’s giving the world some of the most powerful Lego bricks it’s ever seen.

For years, Vitalik has grappled with the question of how much power can be exercised in Ethereum’s decentralized ecosystem. The first big test came in 2016, when a newly created Ethereum-based fundraiser called The DAO was hacked, taking $60 million, or more than 4% of all ETH in circulation at the time.

The hack tested the values ​​of the crypto community: if they truly believed that no central authority should be above the rules governing smart contracts, thousands of investors would have to take losses, which in turn would encourage more Lots of hackers. On the other hand, if Vitalik chooses to use a tactic called a hard fork to reverse the hack, he will exercise the same right to centralize the financial system he is trying to replace.

Vitalik took a middle ground. He consulted with other ethereum leaders, wrote blog posts advocating for a hard fork, and saw the community vote overwhelmingly for the option through forums and petitions. When Ethereum developers create a fork, users and miners can choose to stick with the attacked version of the blockchain. But they overwhelmingly chose the forked version, and Ethereum quickly regained its value.

For Vitalik, the DAO attack exemplifies the promise of a decentralized approach to governance. Leadership must rely more on soft power than hard power, so leaders must really consider the feelings of the community and respect them, he said. Leaders are not fixed, so if leaders stop working, the world will forget about them. In turn, the new leader will be easily welcomed.

Over the past few years, countless leaders have emerged in Ethereum, building various products, tokens, and subcultures. 2017 saw an ICO boom, with venture capitalists raising billions for blockchain projects. 2020 will be the summer of DeFi, with new trading mechanisms and derivatives structures circulating funds at ultra-high speed around the world. Last year also saw an explosion of NFTs: tradable digital goods, such as avatars, art collectibles and sports cards, soared in value.

Skeptics scoff at the utility of NFTs, where billion-dollar economies are built on perceived digital ownership of simple images that can be easily copied and pasted. But they have quickly become one of the most used components in the Ethereum ecosystem. In January, NFT trading platform OpenSea hit a record $5 billion in monthly sales.

Time Magazine Feature: Vitalik is worrying about the future of the crypto industry

Conference attendees line up to ask questions after Vitalik’s keynote

Rather than predicting the rise of NFTs, Vitalik observed the phenomenon with interest and anxiety. On the one hand, they have helped boost the price of ETH, which has grown in value more than tenfold over the past two years. (Disclosure: I bought less than $1,300 worth of ETH in 2021.) But its transaction volume has overwhelmed the Ethereum network, causing congestion and gas fees to skyrocket. For example, bidders spend hundreds of dollars in additional fees to secure their confirmation speed for rare NFTs.

The fees undercut some of Vitalik’s favorite projects on the blockchain. Take Proof of Humanity, which pays out a universal base income (currently around $40 a month) to any registered user. Reality varies from week to week, and the network’s congestion charges can be prohibitive by taking money out of your wallet to pay for basic living needs. Now the fees are like this, Vitalik said, it’s really getting to the point where the derivatives and gambling stuff is starting to price some cool stuff.

Inequalities have spilled over into the crypto space in other ways, including severe gender imbalances and a lack of racial diversity. It’s not something I put a lot of intellectual energy into, Vitalik acknowledges gender equality. The ecosystem there really needs to be improved. He scoffed at the dominance of token voting, with Vitalik arguing that the DAO’s voting process is just a new version of plutocratic rule, where wealthy venture capitalists can make self-interested decisions with little resistance. It’s become the de facto standard, and it’s the dystopia I’ve seen over the past few years, he said.

These issues have sparked backlash within and outside the blockchain community. As cryptocurrencies move toward the mainstream, their esoteric jargon, idiosyncratic culture, and financial excesses are widely disdained. Meanwhile, frustrated users are turning to newer blockchains like Solana and BNB Chain, driven by the prospect of lower transaction fees, alternative building tools, or different philosophical values.

Vitalik understands why people should stay away from Ethereum. Unlike almost any other leader in the trillion-dollar industry, he doesn’t see a problem, especially given the fact that Ethereum’s current problems stem from the fact that it has too many users. (The loss of a huge fortune doesn’t worry him too much: last year, he also gave up $6 billion worth of Shiba Inu tokens that were given to him, explaining that he wanted to donate some to charity to help maintain the meme the value of the token, while relinquishing his role as a “center of power”.)

Meanwhile, a representative confirmed that he and the Ethereum Foundation, which holds nearly $1 billion worth of ETH reserves, are taking a variety of approaches to improve the ecosystem. Last year, they handed out $27 million to ethereum-based projects, up from $7.7 million in 2019, with grantees including smart contract developers and Lagos educational sessions.

The Ethereum Foundation research team is also working on two important technical updates. The first, called Merge , converts Ethereum from proof-of-work (a form of blockchain verification) to proof-of-stake, which the Ethereum Foundation says will reduce Ethereum’s energy usage by more than 99 percent, and make the network more secure. Vitalik has struggled with proof-of-stake since the inception of Ethereum, but repeated delays have turned implementation into waiting for Godot. At ETHDenver, Ethereum Foundation researcher Danny Ryan announced that the merger will happen within the next six months, barring something insanely catastrophic. On the same day, Vitalik encouraged companies concerned about the environmental impact to hold off on using ethereum until the merger was completed, even if it was delayed until 2025.

In January, Moxie Marlinspike, co-founder of messaging app Signal, wrote a widely read review noting that despite collectivist slogans, the so-called web3 had gathered around centralized platforms. As he often does when faced with legitimate criticism, Vitalik made a thoughtful, detailed post on Reddit. The world of properly verified decentralized blockchains is on the horizon, and closer than many imagine, he wrote. I don’t see a technical reason why the future needs to look like today’s status quo.

Vitalik realized that the utopian promises of cryptocurrencies sounded outdated to many, and called the race to implement sharding in the face of competition a ticking time bomb. “If we don’t have fast enough sharding, then people may start migrating to more centralized solutions,” he said. If it’s still centralized after all this stuff, then yes, there’s a stronger argument Think there is a big problem.

With the technical issues resolved, Vitalik turned his attention to the socio-political issues he thinks blockchain could potentially solve. On his blog and Twitter, you’ll find papers on housing; on voting systems; on the best way to distribute public goods; and research on urban construction and longevity. While Vitalik has lived in Singapore most of the time during the pandemic, he is increasingly a digital nomad, writing articles on the road.

Those familiar with Vitalik have noticed a philosophical shift over the years. He has traveled from a more sympathetic anarcho-capitalist thinking to a Georgian thinking, says economist Glen Weyl, one of his close collaborators, referring to a theory that the value of the commons should be equal to all members of society . A recent post by Vitalik called for the creation of a new type of NFT that is not based on monetary value, but on participation and identity. For example, the distribution of votes in an organization may depend on individuals’ commitment to the group, rather than the number of tokens they own. “NFTs can represent more of who you are than just what you can afford ,” he wrote.

While Vitalik’s blog is one of his primary tools for public persuasion, his posts are not intended to be decrees, but rather intellectual explorations that spark debate. Vitalik often dissects the flaws of obscure ideas he once enthusiastically wrote about, such as the Harberger tax. His blog is a model of how leaders can approach complex ideas with transparency and rigor, exposing the chaotic process of intellectual growth to all, and perhaps learning from it.

Some of Vitalik’s more radical ideas may be alarming. In January, he caused a slight outcry on Twitter for advocating artificial wombs, which he believes could reduce the pay gap between men and women. He predicts that a person born today is likely to live to be 3,000 years old and take an anti-diabetic drug that he hopes will slow his body’s aging, although research on the drug’s efficacy is mixed.

Vitalik is increasingly sought after by politicians as government agencies prepare to venture into crypto, and in March President Biden signed an executive order seeking a federal program to regulate digital assets. At ETHDenver, he spoke privately with Colorado Gov. Jared Polis, a pro-crypto Democrat. Vitalik is anxious about the political leanings of crypto in the U.S., and Republicans are generally more eager to embrace it. There are certainly signs that crypto appears to be about to become a right-leaning thing, Vitalik said. If it does happen, we will sacrifice a lot of the potential it offers.

For Vitalik, the worst-case scenario for the future of crypto is the eventual concentration of blockchain technology in the hands of authoritarian governments. He was unhappy with El Salvador’s introduction of bitcoin as legal tender, fraught with the dangers and volatility of identity theft. Governments could use the technology to crack down on dissidents, which is one reason Vitalik insists cryptocurrencies remain decentralized. He sees the technology as the most powerful equalizer of surveillance technology deployed by governments and powerful corporations.

Vitalik argues that if Mark Zuckerberg shouldn’t have the power to make era-changing decisions or control user data for his own gain, then he shouldn’t either send some people to other blockchains, or allow others to use people’s Nasty way to use his platform. I want to have an ecosystem with a lot of good lunatics and bad lunatics,” Vitalik said. “Bad madness is when a lot of money is being used up and all it’s doing is funding the hacking industry. Good madness is when tech jobs, R&D, and public goods come on the other end. And so there’s this battle. .We have to be conscious and make sure more of the right things happen.

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