#80 – Vitalik Buterin: Ethereum, Cryptocurrency, and the Future of Money

Vitalik Buterin is co-creator of Ethereum and ether, which is a cryptocurrency that is currently the second-largest digital currency after bitcoin. Ethereum has a lot of interesting technical ideas that are defining the future of blockchain technology, and Vitalik is one of the most brilliant people innovating this space today. Support this podcast by supporting the sponsors with a special code: – Get ExpressVPN at https://www.expressvpn.com/lexpod – Sign up to MasterClass at https://masterclass.com/lex EPISODE LINKS: Vitalik blog: https://vitalik.ca Ethereum whitepaper: http://bit.ly/3cVDTpj Casper FFG (paper): http://bit.ly/2U6j7dJ Quadratic funding (paper): http://bit.ly/3aUZ8Wd Bitcoin whitepaper: https://bitcoin.org/bitcoin.pdf Mastering Ethereum (book): https://amzn.to/2xEjWmE This conversation is part of the Artificial Intelligence podcast. If you would like to get more information about this podcast go to https://lexfridman.com/ai or connect with @lexfridman on Twitter https://twitter.com/lexfridman, LinkedIn https://www.linkedin.com/in/lexfridman/, Facebook https://www.facebook.com/lexfridman, Medium https://medium.com/@lexfridman, or YouTube https://www.youtube.com/lexfridman where you can watch the video versions of these conversations. If you enjoy the podcast, please rate it 5 stars on Apple Podcasts https://podcasts.apple.com/us/podcast/artificial-intelligence/id1434243584, follow on Spotify https://open.spotify.com/show/2MAi0BvDc6GTFvKFPXnkCL, or support it on Patreon https://www.patreon.com/lexfridman. Here’s the outline of the episode. On some podcast players you should be able to click the timestamp to jump to that time. OUTLINE: 00:00 – Introduction 04:43 – Satoshi Nakamoto 08:40 – Anonymity 11:31 – Open source project leadership 13:04 – What is money? 30:02 – Blockchain and cryptocurrency basics 46:51 – Ethereum 59:23 – Proof of work 1:02:12 – Ethereum 2.0 1:13:09 – Beautiful ideas in Ethereum 1:16:59 – Future of cryptocurrency 1:22:06 – Cryptocurrency resources and people to follow 1:24:28 – Role of governments 1:27:27 – Meeting Putin 1:29:41 – Large number of cryptocurrencies 1:32:49 – Mortality

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Lex Fridman?

  The following is a conversation with Vitalik Buterin, co-creator of and author of the white paper that launched Ethereum and Ether, which is a cryptocurrency that is currently the second-largest digital currency after Bitcoin. Ethereum has a lot of interesting technical ideas that are defining the future of blockchain technology, and Vitalik is one of the most brilliant people innovating in the space today. Unlike Satoshi Nakamoto, the unknown person or group that created Bitcoin, Vitalik is very well-known and, at a young age, is thrust into the limelight as one

• 0:40Lex Fridman?

  of the main faces of the technology that may redefine the nature of money and all forms of digital transactions in the 21st century. This is the Artificial Intelligence Podcast. If you enjoy it, subscribe on YouTube, review it with five stars on Apple Podcasts, support it on Patreon, or simply connect with me on Twitter at LexFriedman, spelled F-R-I-D-M-A-N. As usual, I'll do one or two minutes of ads now and never any ads in the middle that can break the flow of the conversation. I hope that works for you and doesn't hurt the listening experience. Quick summary of the ads: two sponsors, MasterClass and

• 1:21Lex Fridman?

  ExpressVPN. Please consider supporting the podcast by signing up to MasterClass at masterclass.com/lex and getting ExpressVPN at expressvpn.com/lexpod. This show is sponsored by MasterClass. Sign up at masterclass.com/lex to get a discount and to support this podcast. When I first heard about MasterClass, I honestly thought it was too good to be true. For $180 a year, you get an all-access pass to watch courses from experts at the top of their field. To list some of my favorites, Chris Hadfield on space exploration, Neil

• 2:05Lex Fridman?

  deGrasse Tyson on scientific thinking and communication, Will Wright, the creator of SimCity, and Sims on game design.

• 2:14Lex Fridman?

  I love that game. Jane Goodall on conservation. Carlos Santana, one of my favorite guitarists on guitar. Garry Kasparov on chess. Obviously, I'm Russian. I love Garry. Daniel Negrono on poker, one of my favorite poker players. Also, Phil Ivey is, uh, gives a course as well. And many, many more. Chris Hadfield explaining how rockets work and the experience of being launched into space alone is worth the money. By way of advice, for me, the key is not to be overwhelmed by the abundance of choice. Pick three courses you want to complete. Watch each all the way through from start to finish. It's not that long, but it's an experience that will stick with you for a long time. I promise. It's easily worth the money.

• 2:59Lex Fridman?

  You can watch it on basically any device. Once again, sign up at masterclass.com/lex to get a discount and to support this podcast. This show is sponsored by ExpressVPN. Download it at expressvpn.com/lexpod to get a discount and to support this podcast. I've been using ExpressVPN for many years. I honestly love it. It's easy to use. Press the big power on button and your privacy is protected. And if you like, you can make it look like your location is anywhere else in the world. I might be in Boston now, but I can make it look like I'm in New York, London, Paris, or anywhere else.

• 3:42Lex Fridman?

  This has a large number of obvious benefits. For example, certainly it allows you to access international versions of streaming websites like the Japanese version of Netflix or the UK version of Hulu. As you probably know, I was born in the Soviet Union. So sadly, given my roots and appreciation of Russian history and culture, my website and the website for this podcast is blocked in Russia. So this is another example of where you can use ExpressVPN to access sites like the podcast that are not accessible in your country. ExpressVPN works on any device you can imagine.

• 4:21Lex Fridman?

  I use it on Linux, shout out to Ubuntu, Windows, Android, but it's available everywhere else, too. Once again, download it at expressvpn.com/lexpod to get a discount and to support this podcast. And now here's my conversation with Vitalik Buterin.

• 5:01Lex Fridman?

  So before we talk about the fundamental ideas behind Ethereum, a cryptocurrency, perhaps it'd be nice to talk about the origin story of Bitcoin and the mystery of Satoshi Nakamoto. You give a talk that started with sort of asking the question, what did Satoshi Nakamoto actually invent? Maybe you could say, who is Satoshi Nakamoto and what did he invent?

• 5:27Vitalik Buterin?

  Sure. So Satoshi Nakamoto is the name by which we know the person who originally came up with Bitcoin. So the reason why I say the name by which we know is that this is an anonymous fellow who has shown himself to us only over the internet, just by first publishing the white paper for Bitcoin, then releasing the original source code for Bitcoin, and then talking to the very early Bitcoin community on Bitcoin forums and interacting with them and helping the project along for a couple of years. And then at some point in late 2010, early 2011, he disappeared.

• 6:12Vitalik Buterin?

  So Bitcoin is a fairly unique project in how it has this kind of...

• 6:20Vitalik Buterin?

  Mythical, like kind of quasi-godlike founder who just kind of popped in, did the thing and then disappeared and we've somehow just never heard from him again.

• 6:30Lex Fridman?

  So in 2008, was, so the White Paper was the first, do you know if the White Paper was the first time the name was actually appears, Satoshi Nakamura?

• 6:39Vitalik Buterin?

  I believe so.

• 6:40Lex Fridman?

  So how is it possible that the creator of such an impactful project remains anonymous?

• 6:48Vitalik Buterin?

  That's a tough question and

• 6:51Lex Fridman?

  There's no similarity to it in the history of technology as far as I'm aware.

• 6:55Vitalik Buterin?

  Yeah. So one possibility is that it's Hal Finney, because Hal Finney was also active in the Bitcoin community and as Hal Finney in those two beginning years and how

• 7:11Lex Fridman?

  Who is Hal Finney maybe?

• 7:12Vitalik Buterin?

  He is one of the people in the early Cypherpunk community. He was

• 7:19Lex Fridman?

  He was a computer scientist.

• 7:20Vitalik Buterin?

  Yeah, computer scientists, cryptographers, people interested in like technology, internet freedom, like those kinds of topics.

• 7:31Lex Fridman?

  Was it correct that I read that he seemed to have been involved in either the earliest or the first transaction of Bitcoin?

• 7:38Vitalik Buterin?

  Yes. The first transaction of Bitcoin was between Satoshi and Hal Finney.

• 7:43Lex Fridman?

  Do you think he knew who Satoshi was?

• 7:45Vitalik Buterin?

  If he wasn't Satoshi, probably no.

• 7:48Lex Fridman?

  How is it possible to work so closely with people and nevertheless not know anything about their fundamental identity? Is this like a natural sort of characteristic of the internet?

• 8:02Lex Fridman?

  Like if we were to think about it, because you and I just met now, there's a depth of knowledge that we now have about each other that's like physical, like my vision system is able to recognize you. I can also verify your identity of uniqueness, like

• 8:19Vitalik Buterin?

  Yep.

• 8:20Lex Fridman?

  Like it's very hard to fake you being you.

• 8:22Vitalik Buterin?

  Yes.

• 8:23Lex Fridman?

  So the internet The internet has a fundamentally different quality to it, which is just fascinating. Can you maybe talk to that?

• 8:29Vitalik Buterin?

  Yeah, no, this is definitely interesting as I definitely just know a lot of people just by their internet handles. And to me, when I think of them, like I see their internet handles and one of them has a kind of profile picture as this kind of face that's kind of not quite human with a bunch of psychedelic colors in it. And when I visualize him, like I just visualize that.

• 8:54Lex Fridman?

  That's not an actual face.

• 8:56Vitalik Buterin?

  Yeah.

• 8:57Lex Fridman?

  You are the creator of the second, well, at least currently the second most popular cryptocurrency, Ethereum. So on this topic, if we just stick on Satoshi Nakamoto for a little bit longer, you may be the most qualified person to speak to the psychology of this anonymity that we're talking about. Like, your identity is known, like I've just verified it. But from your perspective, what are the benefits in creating a cryptocurrency and then remaining anonymous? Like if we can psychoanalyze Satoshi Nakamoto, is there something interesting there? Or is it just a peculiar quirk of him?

• 9:36Vitalik Buterin?

  It definitely helps create this kind of image of this kind of neutral thing that doesn't belong to anyone. That you created a project and because you're anonymous and because you also have disappeared or as unfortunately happened to Hal Finney, if that is him, he ended up, I think, dying of Lou Gehrig's disease and he's in a cryogenic freezer now. But like if you pop in and you created and you're gone and all that's remaining of that whole process is the thing itself, then like no one can go and try to interpret any of

• 10:20Vitalik Buterin?

  your other behavior and try to understand like, oh, this person wrote this thing in some essay at age 16 where he expressed particular opinions about democracy and so because... Of that, this project is like, is a statement that's trying to do this specific thing. Instead, it creates this environment where the thing is what you make of it.

• 10:46Lex Fridman?

  And it doesn't have the, yeah, right. The burden of your other ideas, political thought and so on. So now that we're sitting with you, do you feel the burden of being kind of the face of Ethereum? I mean, there's a very large community of developers, but nevertheless.

• 11:05Vitalik Buterin?

  Yeah.

• 11:06Lex Fridman?

  Is there like a burden associated with that?

• 11:09Vitalik Buterin?

  There definitely is. This is definitely a big reason why I've been trying to kind of push for the Ethereum ecosystem to become more decentralized in many ways. Just encouraging a lot of kind of core Ethereum work to happen outside of the Ethereum Foundation and of expanding the number of people that are making different kinds of decisions, having multiple software limitations instead of one and all of these things. Like, there's a lot of things that I've tried to do to remove myself as a single point of failure because that is something that a lot of people criticize me for.

• 11:48Lex Fridman?

  So if you look at like the most fundamentally successful open source projects, it seems that it's like a sad reality when I think about it, is it seems to be that one person is a crucial contributor. Often you feel like Linus from Linux, for the kernel.

• 12:08Vitalik Buterin?

  Yeah, that is possible, and I'm definitely not planning to disappear.

• 12:13Lex Fridman?

  That's an interesting tension that projects like this kind of desire a single entity, and yet they're fundamentally distributed. I don't know if there's something interesting to say about that kind of structure and thinking about the future of cryptocurrency. Does there need to be a leader?

• 12:34Vitalik Buterin?

  There's different kinds of leaders, you know, there's dictators who control all the money. There's people who control organizations. There's kind of high priests that just have themselves and their Twitter followers.

• 12:47Lex Fridman?

  What kind of leader are you, would you say?

• 12:49Vitalik Buterin?

  Yeah, in these days, actually, a bit more in the high priest direction than before.

• 12:57Lex Fridman?

  Yeah.

• 12:57Vitalik Buterin?

  Like. I definitely actually don't do all that much of kind of going around and like ordering Ethereum Foundation people to do things because I think those things are important. If there's something that I do think is important, I do just usually kind of say it publicly or just kind of say it to people. And quite often, projects just kind of start doing it.

• 13:22Lex Fridman?

  So let's ask the high philosophical question about money.

• 13:26Vitalik Buterin?

  Yeah.

• 13:27Lex Fridman?

  What at the highest level is money? What is money?

• 13:32Vitalik Buterin?

  It's a kind of game and it's a game where we have points and if you have points, there's this one move where you can reduce your points by a number and increase someone else's points by the same number. And these-

• 13:45Lex Fridman?

  So it's a fair game, hopefully?

• 13:47Vitalik Buterin?

  Well, it's one kind of fair game. Like, for example, you can have other kinds of fair games. Like, you're gonna have a game where if I give someone a points and you give someone a points, then instead of that person getting two points, that person gets four points. And that's also fair. But, you know, money is easy to kind of set up and it serves a lot of useful functions. And so it kind of just survives in society as a meme for thousands of years.

• 14:14Lex Fridman?

  It's useful for the storage of wealth. It's useful for the exchange of value.

• 14:20Vitalik Buterin?

  And it's also useful for denominating future payments, a unit of account.

• 14:26Lex Fridman?

  A unit of account. So what, if you look at the history of money in human civilization, just if you're a student of history, like, how has its role or just the mechanisms of money changed over time in your view? Even if we just look at the 20th century or before and then leading up to cryptocurrencies, is that something you think about?

• 14:50Vitalik Buterin?

  Yeah, and I think like the big thing in the 20th century is kind of we saw a lot more intermediation, I guess. Like, you know, I mean, the first part is kind of the move from being adding more of different kinds of banking and then we saw the move from kind of dollars being backed by gold to dollars being backed by gold that's only redeemable by certain people to dollars not being backed by anything. Um, to an of this, you know, system where you have a bunch of free floating currencies and then

• 15:26Vitalik Buterin?

  people like getting kind of bank accounts and then those things becoming electronic, people getting accounts with payment processors that have account, um, bank accounts. So.

• 15:37Lex Fridman?

  So what, what do you make of that? That's such a fascinating philosophical idea that money might not be backed by anything. What, is that like fascinating to you that money can exist without being backed by something physical?

• 15:52Vitalik Buterin?

  It definitely is.

• 15:54Lex Fridman?

  Like, what do you make of that? Like, how, how is that possible? Is that stable? If we look at the future of human civilization, is it possible to have money at the large scale at such a hugely productive and rich societies? Be able to operate successfully without money being backed by anything physical?

• 16:12Vitalik Buterin?

  I feel like the interesting thing about the 21st century especially is that a lot of the important valuable things are not backed by anything. Like, if you look at like tech companies, for example, like something like Twitter.

• 16:25Lex Fridman?

  Yes.

• 16:26Vitalik Buterin?

  Like, you could theoretically imagine that if all of the employees wanted to, they could have kind of come together, they would quit and, you know, start working on Twitter 2.0 and then.

• 16:40Vitalik Buterin?

  The value of and just kind of build the exact the the exact same products or possibly build a better product and then just kind of continue on from there and the original the original Twitter would kind of just not have people left anymore, right? Like the there is theoretically kind of code and like IP that's owned by the company, but in reality, like good programmers could probably read up rewrite all that stuff in three months. So the like, the reason why the thing has value is just kind of network effects and coordination problems, right? Like these employees in reality aren't going to switch all at once and also the users aren't all going to switch at once because it's just difficult for them to switch at once.

• 17:24Vitalik Buterin?

  And so there is these kind of meta-stable equilibrium in interactions between thousands of millions of people that are just actually quite sticky, even though if you try to kind of assume that everyone's a perfectly rational and kind of perfectly slippery spherical cow, they don't seem to exist at all.

• 17:43Lex Fridman?

  This that stickiness, do you have a sense, a grasp of the sort of the fundamental dynamic, like the physics of that stickiness? It seems to work, but and I think some of the cryptocurrency ideas kind of rely on it working.

• 18:00Vitalik Buterin?

  Yeah, it's a, you know, it's the sort of thing that's definitely been economically modeled a lot. Like one of the kind of analogy of something as similar that you often see in textbooks as like, what is a government? Like if for example, like 80% of people in a country just like tomorrow suddenly had had the idea that like the laws that are currently the laws in the government that currently is the government are just people and some and some other thing is the government and they just kind of start acting like it, then that would kind of become the new reality. And then the question is, well, what happens if and if between zero and 80 people or and

• 18:42Vitalik Buterin?

  80% of people start believing that and like what is? The thing you see is that if there is one of these kind of switches happening, this kind of revolution, then if you're the first person to join, then like you probably don't have the incentive to do that. But then if you're the 55th percentile person to join, then suddenly becomes quite safe too. And so it definitely is the sort of thing that you can kind of try to analyze and understand mathematically. But one of the kind of results is that the sort of like when the switch happens definitely can be chaotic sometimes.

• 19:25Lex Fridman?

  Yeah, but still, like to me, the idea that the network affects the the fact that human beings at a scale of like millions, billions can share, even the idea of currency, like all agree, that's just, I know economists can model it. I'm a skeptic on economic, it's like, so my favorite sort of field, maybe recreationally, psychology is trying to understand human behavior. And I think sometimes people just kind of pretend that they can have a grasp on human behavior, even though we it's such a messy space that all the models that psychology or economics, those different perspectives on human behavior can have are

• 20:06Lex Fridman?

  difficult. It's difficult to know how much that's wishful thinking and how much it is actually getting to the core of understanding human behavior. But on that idea, what do you think is the role of money in human motivation? So do you think money from an economics perspective, from a psychology perspective is core to like human desires?

• 20:34Vitalik Buterin?

  Money is definitely very far from the only motivator. It is a big motivator, and it's one of the closest things you have to a universal motivator. Because ultimately, in like almost any person in the world, if you ask them to do something, like they'll be more inclined to do it if you also offer some offer them money, right? And that's Like, there's definitely many cases where people will do things other than things that maximize how much money they have, and that happens all the time. But like, though, a lot of those other things are kind of but much more specific to and of who that person is and of where their situation is, the relationship between the motive and the action and these other things.

• 21:19Lex Fridman?

  What do you think is an interplay of the other motivator from like Nietzsche perspective is power? Do you think money equals power? Do you think those are conflicting ideas? Do you think? I mean, that's the one of the ideas that decentralized currency, decentralized applications are looking at is who holds the power?

• 21:37Vitalik Buterin?

  Yeah. Money is definitely a kind of power. And there's definitely people who want money because it gives them power. And then even if money doesn't seem to and explicitly be about money, a lot of things that people spend money on are ultimately about a social status of some kind. So I definitely view those two things as an interplaying. And then there's also money as just a way of like measuring how successful you are, like as a scoreboard, right? So this kind of gets back to the game. Like if you have $4 billion, then the main benefit you get from

• 22:21Vitalik Buterin?

  going up, well, one of the big benefits you get from going up to $6 billion is that now, instead of being below the guy who has five, you're above the guy who has five.

• 22:30Lex Fridman?

  So you think money could be kind of, in a game of life, it's also a measure of self-worth? It's like how we?

• 22:38Vitalik Buterin?

  It's definitely how, how a lot of people perceive it.

• 22:42Lex Fridman?

  Define ourselves in a hierarchy of society.

• 22:45Vitalik Buterin?

  Yeah, not saying it's sort of a healthy thing that people define their self-worth as money, because it's definitely far from a perfect indicator of how much you value you provide to society or anything like this. But I definitely think that as a matter of kind of current practice, a bunch of people do feel that way.

• 23:09Lex Fridman?

  So what does utopia from an economic perspective look like to you? What does a perfect world look like?

• 23:17Vitalik Buterin?

  I guess the economist's utopia would be one where kind of everything is incentive aligned in the sense that there aren't kind of conflicts between what satisfies your goals and what is good for everyone in the world as a whole.

• 23:40Lex Fridman?

  What do you think that would look like? Does that mean there's still poor people and rich people? There's still income inequality? Do you think sort of Marxist ideas are strong? Do you think sort of ideas of objectivism?

• 23:58Lex Fridman?

  Like where the market rules is strong? Like what? Is there different economic philosophies that just seem to be reflective of what a utopia would be?

• 24:09Vitalik Buterin?

  So I definitely think that existing economic philosophies do end up kind of

• 24:16Vitalik Buterin?

  systematically deviating from the utopia in a lot of ways. Like, one of the big things I talk about, for example, is public goods, right? And public goods are especially important on the internet, right? Like, the idea is with kind of money as this game where, you know, I lose a few coins and you gain the same number of coins. This usually happens in a trade where I lose some money, you gain some money, you lose a sandwich and I gain a sandwich. And this kind of model works really well when the thing that we're using money to incentivize this kind of private goods, right? Things that you provide to one person where the benefit comes to one person.

• 24:57Vitalik Buterin?

  But the, like, on the internet especially, but also many, many contexts off the internet, there's actions that individuals or groups can take where, instead of the benefit going to one person, the benefit just goes to many people at the same time and you can't control who the benefit goes to, right? So for example, this podcast, you know, we publish it. And when it's published, you don't have any fine grains control over like, oh, these thirty eight thousand people can watch it and then like these other twenty nine thousand people can't. It's like, once the number goes high enough, then, you know, people will just like copy it. And then when I write articles on a blog, then they're just like

• 25:41Vitalik Buterin?

  free for everyone and that stuff's even harder to prevent anyone from copying. So and aside from that, things like, you know, scientific research, for example, and even taking more pedestrian examples like climate change mitigation would be a big one. Um, so there's a lot of things in the world where you have these kind of individual actions with have concentrated costs and distributed benefits and money as a point system does not do a good job of encouraging these things. And one of the kind of other things even kind of tangentially connected to crypto, but kind of theoretically outside of it that I work on is this sort of mechanism called quadratic funding.

• 26:26Vitalik Buterin?

  Um, and the way to think about it is, and if imagine a point system where if like if one person gives a coin, gives coins to one other person, then it works the same way as money. But if multiple people give coins to one person and they do so anonymously, so it's kind of not in consideration for a specific service to that person themselves. Uh, then the number of coins received by that person is kind of greater than just the sum of the number of coins that have given by those different people. Um, so the actual formula is you take the square root of the amount that each person gave, then you add all the square roots and then you kind of square the sum. Square. Yeah, and then you give that and

• 27:12Vitalik Buterin?

  the idea here would basically be that if, let's say, for example, you just start going off and kind of planting a lot of trees. And there's a bunch of people that are really happy that you're planting trees and so they go and all kind of throw a coin your way. Then the like, there is like, basically the fact that kind of you get more than the sum, you get this kind of square of some of these of a of square roots of these tiny modes is that this actually kind of compensates for the tragedy of the commons, right? And there's there's even this kind of mathematical proof that it sort of optimally compensates for it.

• 27:49Lex Fridman?

  What is the tragedy of the commons?

• 27:50Vitalik Buterin?

  Um, this is just this idea that like, if there is this situation where there's some public good that lots of people benefit from, then no individual person wants to contribute to it because if they contribute, they only get a small part of the benefit from their contribution, but they pay the full cost of their contribution.

• 28:11Lex Fridman?

  In which context is this? Um, sorry, what is the term quadratic?

• 28:15Vitalik Buterin?

  Quadratic funding.

• 28:16Lex Fridman?

  Quadratic funding.

• 28:17Vitalik Buterin?

  Yeah.

• 28:18Lex Fridman?

  Like, what's in which context is this mechanism useful? So obviously you said to to combat the tragedy of the commons, but

• 28:27Vitalik Buterin?

  Yeah.

• 28:27Lex Fridman?

  in which context do you see it as useful, actually practically speaking?

• 28:30Vitalik Buterin?

  Yeah, theoretically, public goods in general, right? So like.

• 28:34Lex Fridman?

  Like services, like what are we? What are we talking about? What's a public?

• 28:36Vitalik Buterin?

  Yeah, so within the Ethereum ecosystem, for example, like we've actually tried using this mechanism, like I wrote a couple of articles about this and on vitalic.ca where I go through some of the most recent rounds and it's been really interesting. Some of the top ones that people supported, there were

• 28:57Vitalik Buterin?

  things like just online user interfaces that make it easier for people to interact with Ethereum. Um, there was documentation, there were podcasts.

• 29:11Vitalik Buterin?

  There were kind of software, kind of clients, like kind of implementations of the Ethereum protocol of privacy tools, just like lots of things that are kind of useful to lots of people.

• 29:26Lex Fridman?

  When a lot of people are contributing like funding a particular particular entity.

• 29:31Vitalik Buterin?

  Yeah.

• 29:31Lex Fridman?

  Uh, that's really, that's really interesting. Is there something special about the quadratic? The. The the summing of the square roots and

• 29:38Vitalik Buterin?

  Yeah, so another way to think about it is like imagine if N people each give a dollar, then the person gets N squared, right? And and so each individual person's contribution gets multiplied by N, right? Because you have N people. And so that kind of perfectly compensates for the kind of N to one tragedy of the commons.

• 29:59Lex Fridman?

  I just wonder if the the squared part is somehow fundamental.

• 30:02Vitalik Buterin?

  No, it is. And I'd recommend you go to on vitalik.ca. I have this article called quadratic payments, a primer. And highly recommended. It's kind of at least my attempt so far and of explaining the intuition behind this.

• 30:18Lex Fridman?

  Intuition. So if we could, can we go to the the very basics? What is the blockchain? Or perhaps we might even start at the the Byzantine generals problem and Byzantine fall tolerance in general that I Bitcoin was taking steps to providing a solution for.

• 30:43Vitalik Buterin?

  So the Byzantine generals problem, it's this paper that Leslie Lamport published in 1982, where he has this thought experiment where if you have two generals that are camped out on opposite sides of a city and they're planning when to attack the city, then the question is, and if how could those generals coordinate with each other? And they could send messengers between each other, but those messengers kind of could get sniped by the enemy on the road. Some of those messages could end up being traitors and if things could end up happening.

• 31:21Vitalik Buterin?

  And with just two mess generals, it turns out that there's kind of no solution in a finite number of rounds that guarantees that they will be able to kind of coordinate on the same answer. But then in the case where you have more than two generals, then Leslie analyzes cases like, are the mess messages kind of just oral messages? Some are the messages, kind of signed messages, so I can give you a signed message and you can pass along that signed message. And the third party can still verify that I originally made that message. And depending on those different cases, there's kind of different bounds on like, given how many generals and how many traitors

• 32:07Vitalik Buterin?

  among those generals and what, like, under what conditions you actually can agree when to launch an attack. So it's actually a big misconception that the Byzantine generals problem was unsolved. So Leslie Lampard solved it. The thing that was unsolved, though, is that all of these solutions assume that you've already agreed on kind of a fixed list of who the generals are. And these generals have to be kind of semi-trusted to some extent. They can't just be anonymous people because if they're anonymous, then like the enemy could just be 99% of the generals. So

• 32:42Lex Fridman?

  Right, right.

• 32:42Vitalik Buterin?

  The, um, in the 1980s and the 1990s, kind of the general use case for distributed system stuff was more kind of enterprisy stuff where you could kind of assume that, uh, you know, you know who the nodes are that are running these kind of computer networks. So if he wants to have some kind of decentralized computer network that pretends to be a single computer and that you can kind of do, do kind of operations on, then it's made out of these kind of 15 specific computers. And we know kind of who and where they are. And so we have a good reason to believe that, say, at least 11 of them would be fine.

• 33:22Lex Fridman?

  And it could also be within a, a single system.

• 33:25Vitalik Buterin?

  Exactly.

• 33:26Lex Fridman?

  Almost a network of devices, sensors, so on, like in airplanes. And I think, uh, like flight systems in general still use these kinds of ideas.

• 33:34Vitalik Buterin?

  Yep, yep. Um, so

• 33:36Lex Fridman?

  So that's the 80s.

• 33:37Vitalik Buterin?

  That's the 80s and 90s. Now, the cypherpunks had a different use case in mind, which is that they wanted to create a fully decentralized global permissionless currency. And the problem here is that they didn't want any authorities and they didn't even want any kind of privileged list of people. And so now the Question is, well, how do you use these techniques to create consensus when you have no way of kind of measuring identities, right? You have no way of kind of determining whether or not some 99% of participants aren't actually all the same guy. And so the clever solution that Satoshi had, this is kind of going back to that presentation I made at DEF CON a few months ago,

• 34:21Vitalik Buterin?

  where I said that the thing Satoshi invented was crypto economics. Is this a really neat idea that you can use economic resources to kind of limit how many identities you can get? And if there isn't any existing decentralized digital currency, then the only way to do this is with proof of work, right? So with proof of work, the solution is just you publish a solution to a hard mathematical puzzle that takes some clearly calculable amount of computational power to solve. You get an identity and then you solve five of those puzzles, you get five identities.

• 35:04Vitalik Buterin?

  And then these are the identities that we run the consensus algorithm between.

• 35:09Lex Fridman?

  So the proof of work mechanism you just described is like the fundamental idea proposed in the white paper that defines Bitcoin. What's the idea of consensus that we wish to reach? Why is consensus important here? What is consensus?

• 35:29Vitalik Buterin?

  So the goal here in just simple technical terms is to basically kind of wire together a set of a large number of computers in such a way that they kind of pretend to the outside world to be a single computer, where that single computer keeps working even if a large portion of the constituents, the computers that make it up break. And kind of break in arbitrary ways, like they could shut off, they could try to actively break a system, they could do lots of mean things. So the reason why the Cypherpunks wanted to do this is because they wanted to run one particular program on this virtual computer. And the one particular program that they wanted to run is just a currency system, right?

• 36:13Vitalik Buterin?

  It's a system that just processes a series of transactions. And for every transaction, it verifies that the sender has enough coins to pay for the transaction, it verifies that the digital signature is correct. And if the check's passed, then it subtracts the coins from one account and adds the coins to the other account roughly.

• 36:33Lex Fridman?

  So first of all, the proof of work idea is kinda, I mean, at least to me, seems pretty fascinating.

• 36:41Vitalik Buterin?

  It is.

• 36:42Lex Fridman?

  I mean, that's a, it's kind of a revolutionary idea. I mean, is it, is it obvious to come up with that you can use, you can exchange basically computational resources for, for identity?

• 36:56Vitalik Buterin?

  It's, it actually has a pretty long history. It was first proposed in a paper by Cynthia Dwork and Neyor in 1994, I believe. And the original use case was combating email spam. So the idea is that if you send an email, you have to send it with a proof of work attached. And like, this makes it reasonably cheap to send emails to your friends, but it makes it really expensive to send spam to a million people.

• 37:22Lex Fridman?

  Yeah, that's a simple, brilliant idea. So maybe also taking a step back, so what is the role of blockchain in this? What is blockchain?

• 37:33Vitalik Buterin?

  Sure. So the blockchain, my way of thinking about it is that it is this kind of system where you have this kind of one virtual computer created by a bunch of these nodes in the network. And the reason why the term blockchain is used is because the data structure that these systems use, at least so far, is one where they, different nodes in the network periodically publish blocks. And a block is a kind of list of transactions, together with a pointer, like a hash of a previous block that it builds on top of.

• 38:13Vitalik Buterin?

  And so you have a series of blocks that nodes in the network create, where each block points to the previous block, and so you have this chain of them.

• 38:22Lex Fridman?

  Is a fault tolerance mechanism built into the idea of blockchain? Or is there a lot of possibilities of different ways to make sure there's no funny stuff going on?

• 38:33Vitalik Buterin?

  There are indeed a lot of possibilities. So in a kind of just simple architecture, as I just described, the way the fault tolerance happens is like this, right? So you have a bunch of nodes and they're just happily kind of occasionally creating blocks, building on top of each other's blocks. And let's say you have kind of one block, we'll call it kind of block one. And then someone else builds another block, honestly, we'll call it block two. Then we have an attacker. And what the attacker tries to do is the attacker tries to revert block two. And the way they revert block two is instead of doing the thing they're supposed to do, which is build a block on top of block two. They're going to build another block on top of block one. So you have block one, which has two children, block two, and then block two prime.

• 39:18Vitalik Buterin?

  Now, this might sometimes even happen by random chance if, you know, two nodes in the network just happen to create blocks at the same time. And they don't hear about each other's things before they create their own. But this also could happen because of an attack. Now, if this happens, you have an attack. Then the, in the Bitcoin system, the nodes follow the longest chain. So if this attack had happened and when the original chain had more than two blocks on it. So if it was trying to kind of revert more than more than two blocks, then everyone would just would just ignore it. And everyone would just keep following the regular chain. But here, you know, we have block two and we have block two prime.

• 40:02Vitalik Buterin?

  And so the two are kind of even. And then whatever block, the next block is created on top of. So say block three is now created on top of block two prime. Then everyone agrees that block three is the new head. And block two prime is just kind of forgotten. And then everyone just kind of peacefully builds on top of block three and the thing continues.

• 40:25Lex Fridman?

  So how difficult is it to mess with the system?

• 40:29Lex Fridman?

  So how, like, if we look at the general problem, like, how many? What fraction of people who participate in the system have to be bad players?

• 40:40Lex Fridman?

  In order to mess with it truly, like what's your, is there, is there a good number?

• 40:44Vitalik Buterin?

  There is. Well, depending on kind of what your model of the participants is and like what kind of attack we're talking about, it's anywhere between 23.2 and 50%.

• 40:57Lex Fridman?

  Of what?

• 40:58Vitalik Buterin?

  Of all of the computing power in the network.

• 41:02Lex Fridman?

  Sorry, so 22 and 50?

• 41:04Vitalik Buterin?

  Between 23.2 and 50%.

• 41:06Lex Fridman?

  And 50% are, can be compromised.

• 41:10Vitalik Buterin?

  So like, once your, once your portion, your portion of the total computing power of the network goes above the 23.2 level, then there's kind of things that you can, mean things that you can potentially do. And as your percentage of the network kind of keeps going up, then the, your ability to do mean things kind of goes higher. And then if you have above 50%, then you can just break everything.

• 41:33Lex Fridman?

  So how, how hard is it to achieve that level? Like, it seems that so far, historically speaking, it's been exceptionally difficult. So...

• 41:43Vitalik Buterin?

  This is a challenging question. So the economic cost of acquiring that level of stuff from scratch is fairly high. I think it's somewhere in the low billions of dollars.

• 41:55Lex Fridman?

  And when you say that stuff, you mean computational resources?

• 41:59Vitalik Buterin?

  Yeah, so specifically specialized hardware and of ASICs that people use to solve these puzzles, to do the mining these days.

• 42:07Lex Fridman?

  Small tangent. So obviously, I work a lot in deep learning with GPUs and ASICs for that application. And I tangentially kind of hear that so many of these, you know, sometimes Nvidia GPUs are sold out because of this other application. Like, what do, if you can comment, I don't know if you're familiar or interested in this space, what kind of ASICs, what kind of hardware is generally used these days for, to do the actual computation for the proof of work?

• 42:37Vitalik Buterin?

  Sure. So in the case of Bitcoin and Ethereum are a bit different. So in the case of Bitcoin, there is an algorithm called SHA256. It's just a hash function. And so the puzzle is just coming up with a number where the hash of the number is below some threshold. And so, because the hashes are designed to be random, you just have to keep on trying different numbers until one works. And the ASICs are just like specialized circuits that contain and if...

• 43:05Vitalik Buterin?

  Circuits for evaluating this hash over and over again. And you have kind of like millions or billions of these hash evaluators and just stacked on top of each other inside of a box. And you just keep on running the box 24/7.

• 43:17Lex Fridman?

  And the answer is there's literally specialized hardware designed for this.

• 43:20Vitalik Buterin?

  Yes.

• 43:21Lex Fridman?

  Oh, this is living in an amazing world. Another tangent, and I'll come back to the basics, but does quantum computing throw a wrench into any of this?

• 43:31Vitalik Buterin?

  Very good question. So quantum computers have two main families of algorithms that are relevant to cryptography. One is Shor's algorithm. And Shor's algorithm is one that kind of completely breaks the hardness of some specific kinds of mathematical problems. So the one that you've probably heard of is it makes it very easy to factor numbers. So like figure out kind of what prime factors are that kind of that you need to multiply together to get some number, even if that number is extremely big. Shor's algorithm can also be used to break elliptic curve cryptography. It can break like any kind of hidden order groups. So it breaks a lot of cryptographic nice things that we're used to.

• 44:16Vitalik Buterin?

  But the good news is that for every major use of things that Shor's algorithm breaks, we already know of quantum proof alternatives. Now, we don't use these quantum proof alternatives yet because in many cases they're five to 10 times less efficient. But the crypto industry in general kind of knows that this is coming eventually and it's kind of ready to take the hit and switch to that stuff when we have to. The second algorithm that is relevant to cryptography is Grover's algorithm. And Grover's algorithm might even be more familiar to AI people. It's basically usually described as solving search problems.

• 45:01Vitalik Buterin?

  But the idea here is that if you have a problem of the form, find a number that satisfies some property, then if with a classical computer, you need to try and have N times before you find a number, then with a quantum computer, you only need to do a square root of N computations. And Grover's

• 45:24Vitalik Buterin?

  Could potentially be used for mining, but there's two possibilities here. One is that Grovers could be used for mining and whoever creates the first working quantum computer that could do Grovers will just mine way faster than everyone else and we'll see another round of what we saw when Asics came out, which is that kind of the new hardware just kind of dominated the old stuff and then eventually it switched to a new equilibrium.

• 45:49Lex Fridman?

  But by the way, way faster, not exponentially faster.

• 45:53Vitalik Buterin?

  Quadratically faster.

• 45:54Lex Fridman?

  Quadratically faster, which is not sort of, it's not game changing, I would say. It's like Asics, like you said, it would be.

• 46:02Vitalik Buterin?

  Exactly. Yeah. So it would not necessarily break proof of work as a thing.

• 46:07Lex Fridman?

  That's right. Yeah.

• 46:07Vitalik Buterin?

  Now, the other kind of possible world, right, is that quantum computers have a lot of overhead. There's a lot of complexity involved in maintaining quantum states and there's also, as we've been realizing recently, making quantum computers actually work requires kind of quantum error correction, which requires kind of a thousand real qubits per logical qubit. And so there's the very real possibility that the overhead of running a quantum computer will be higher than the speedup you get with Grovers, which would be kind of sad, but which would also mean that the given proof of work will just keep working fine.

• 46:43Lex Fridman?

  So beautifully put. So proof of work is the core idea of Bitcoin. Is there other core ideas before we kind of take a step towards the origin story and ideas of Ethereum? Is there other stuff that were key to the white paper of Bitcoin?

• 46:59Vitalik Buterin?

  There is proof of work and then there's just the cryptography, just kind of public keys and signatures that are used to verify transactions. Those two are the big things.

• 47:08Lex Fridman?

  So then what is the origin story? Maybe the human side, but also the technical side of Ethereum?

• 47:15Vitalik Buterin?

  Sure. So I joined the Bitcoin community in 2011 and I started by just writing. I first wrote for this kind of online thing called Bitcoin Weekly. Then I started writing for Bitcoin Magazine.

• 47:31Vitalik Buterin?

  And

• 47:32Lex Fridman?

  Sorry to interrupt. You have this funny kind of story, true or not, is that you were disillusioned by the downsides of centralized control from your experience with WoW, World of Warcraft. Is this true, or you're just being witty?

• 47:48Vitalik Buterin?

  I mean, the event is true, the fact that that's the reason I do decentralization is witty.

• 47:53Lex Fridman?

  Maybe just a small tangent. Have you always had a skepticism of centralized control? Is that

• 48:02Vitalik Buterin?

  To some degree, yeah.

• 48:04Lex Fridman?

  Has that feeling evolved over time, or has that just always been a core feeling that decentralized control is the future of a human society?

• 48:12Vitalik Buterin?

  It's definitely been something that felt very attractive to me ever since I could have heard that such a thing is possible.

• 48:18Lex Fridman?

  Possible, even technically. So, great. So you're, you joined the Bitcoin community in 2011, you said you began writing. So what's next?

• 48:27Vitalik Buterin?

  Started writing, moved from high school to university halfway in between that, and spent a year in university. Then, at the end of that year, I dropped out to do Bitcoin things full-time. And this was a combination of continuing to write Bitcoin Magazine, but also increasingly work on software projects. And I traveled around the world for about six months and just going to different Bitcoin communities. Like, I went to first to New Hampshire, then Spain, other European places, Israel, and then San Francisco. And along the way, I've met a lot of other people that are working on different Bitcoin projects.

• 49:07Vitalik Buterin?

  And when I was in Israel, there were some very smart teams there that were working on ideas that people were starting to kind of call Bitcoin 2.0. So one of these was colored coins, which is basically saying that, hey, let's not just use the blockchain for Bitcoin, but let's also kind of issue other kinds of assets on it. And then there was a protocol called Mastercoin that supported issuing assets, but also supported many other things, like financial contracts, like domain name registration, and a lot of different things together. And And I spent some time working with these teams.

• 49:45Vitalik Buterin?

  And I quickly kind of realized that this Mastercoin protocol could be improved by kind of generalizing it more. Right? So the analogy I use is that the Mastercoin protocol was like the Swiss Army knife. You have 25 different transaction types for 25 different applications. But what I realized is that you could replace a bunch of them with things that are more general purpose. So one of them was that you could replace like three transaction types for three types of financial contracts with a generic transaction type for a financial contract that just wants you specify a mathematical formula for kind of how much money each side gets.

• 50:26Lex Fridman?

  By the way, a small pause. What's, you say financial contract, just the terminology. What is a contract? What's a financial contract?

• 50:35Vitalik Buterin?

  So this is just generally an agreement where kind of either one or two parties kind of put collateral kind of in. And then they, depending on kind of certain conditions, like this could involve prices of assets. This could involve the actions of the two parties, it could involve other things. But they kind of get kind of different amounts of assets out that just depend on things that happened.

• 51:02Lex Fridman?

  So a contract is really, a financial contract is at the core, is the core interactive element of a financial system.

• 51:11Vitalik Buterin?

  Yeah, there's, yeah, there's many different kinds of financial contracts. Like there's things like options where you kind of give someone the right to buy a thing that you have for some specific price for some period of time. There's contracts for difference where you basically are kind of making a bet that says like, for every dollar this thing goes up, I'll give you $7. Or for every dollar the thing goes down, you give me $7 or something like that.

• 51:36Lex Fridman?

  But the main idea that these contracts have to be enforced and trusted.

• 51:41Vitalik Buterin?

  Yes, exactly.

• 51:42Lex Fridman?

  You have to trust that they will work out in a system where nobody can be trusted.

• 51:46Vitalik Buterin?

  Yes.

• 51:48Lex Fridman?

  This is such a beautiful complicated system. Okay, so you were seeking to kind of generalize this basic framework of contracts.

• 51:59Lex Fridman?

  So what does that entail? So what technically are the steps to creating Ethereum?

• 52:06Vitalik Buterin?

  Sure. So I guess just to kind of continue a bit with this Mastercoin story. So started by kind of giving ideas for how to generalize the thing. And eventually this turned into a much more kind of fully fleshed proposal that just says, hey, how about you scrap all your futures and instead you just put in this programming language. And I gave this idea to them and their response was something like, hey, this is great, but this seems complicated and this seems like something that we're not going to be able to put onto our roadmap for a while. And my response to this was like, wait, do you not realize how revolutionary this is? Well, I'll just go do it myself. And then I...

• 52:45Lex Fridman?

  What was the name of the programming language?

• 52:47Vitalik Buterin?

  I just called it ultimate scripting.

• 52:49Lex Fridman?

  Great.

• 52:50Vitalik Buterin?

  So then I kind of went through a couple more rounds of iteration and then the idea for Ethereum itself started to form. And the idea here is that you just have a blockchain where the core unit of the thing is what we call contracts. It's these kind of accounts that can hold assets and that have their own internal memory, but that are controlled by a piece of code. And so if I send some ether to a contract, the only thing that can determine where that ether, the currency inside Ethereum goes after that is the code

• 53:32Vitalik Buterin?

  of that contract itself. And so basically you're kind of sending assets to computer programs becomes this kind of paradigm for creating these kind of self-executing agreements.

• 53:46Lex Fridman?

  Self-executing. It's so cool that code is sort of part of this contract. So that's what's meant by smart contracts.

• 53:53Vitalik Buterin?

  Yeah.

• 53:54Lex Fridman?

  So how hard was it to build this kind of thing?

• 53:57Vitalik Buterin?

  Harder than expected. And originally, I actually thought that this would be a thing that I would kind of casually work on for a couple of months, publish and then go back to university.

• 54:08Vitalik Buterin?

  Then I released it and a bunch of people, or I released the white paper.

• 54:14Lex Fridman?

  The white paper, the idea is there.

• 54:15Vitalik Buterin?

  The idea, the white paper. A whole bunch of people came in offering to help, a huge number of people and have expressed interest. And this was something I was totally not expecting. And then I kind of realized that this would be something that's kind of much bigger than I had ever thought that it would be. And then we started on this kind of much longer development slog of making something that lives up to this sort of much higher level of expectations.

• 54:45Lex Fridman?

  What are some of the, is it fundamentally like software engineering challenges?

• 54:50Vitalik Buterin?

  It was.

• 54:51Lex Fridman?

  Is there social, okay, so there's.

• 54:52Vitalik Buterin?

  And social.

• 54:54Lex Fridman?

  So, so what are the biggest interesting challenges that you've learned about human civilization and software engineering through this process?

• 55:04Vitalik Buterin?

  So I guess one of the challenges for me is that like I'm one of the kind of apparently unusual geek schools that have never treated with anything but kindness in school.

• 55:15Lex Fridman?

  Yes.

• 55:15Vitalik Buterin?

  And so when I got into crypto, I had expected everyone would just kind of be the same kind of altruistic and nice in that same way. But the, the algorithm that I used for finding co-founders for this thing was not very good. It was sort of literally what computer scientists call the greedy algorithm. It's sort of the first 15 people who applied back offering to help kind of are the co-founders.

• 55:42Lex Fridman?

  Oh, you mean like literally the, the people that will form to be the founders, co-founders of the community? The algorithm, I like how you call it the algorithm.

• 55:52Vitalik Buterin?

  Yeah, and so what happened was that these, like especially as the project got really big, like there started to be a lot of this kind of infighting and there are a lot of, like I wanted the thing to be a nonprofit and some of them wanted to be a for-profit. And then there started to be people who were just kind of totally unable to work with each other. There were people that were kind of trying to get an advantage for themselves in a lot of different ways. And this, just about six months later led to this big governance crisis. And then we kind of reshuffled leadership a bit and then. The project kept on going, then nine months later, there was another governance

• 56:37Vitalik Buterin?

  crisis, and then there was a third governance crisis. And so

• 56:41Lex Fridman?

  Is there a way to, if you're looking at the human side of things, is there a way to optimize this aspect of the cryptocurrency world? It seems that there is, from my perspective, there's a lot of different characters and personalities and egos. And like you said, I don't know, you know, I also like to think that most of the world, most of the people in the world are well intentioned, but the way those intentions are realized may perhaps come off as

• 57:11Vitalik Buterin?

  Yeah.

• 57:12Lex Fridman?

  as negative. Like, what, is there, is there a hopeful message here about creating a governance structure for cryptocurrency that where everyone gets along?

• 57:24Vitalik Buterin?

  And after about four rounds of reshuffle, like, I think we've actually come up with something that seems to be pretty stable and happy. I think, I mean, I definitely do think that most people are well intentioned. I just think that like, one of the reasons why I like decentralization is just because there's like, this thing about power where power attracts people with egos. And so that just allows a very small percentage of people to just ruin so many things.

• 57:54Lex Fridman?

  You think ego has a, you think ego has a use? Like, is ego always bad?

• 58:01Vitalik Buterin?

  It sometimes does. Well, then the Ethereum research team, I feel like we've found also a lot, a lot of very good people that are just primarily just interested in things for the technology. And things seem to just generally be going quite well.

• 58:23Lex Fridman?

  Yeah, when you're, when the focus and the passion is in the tech. So on the, so that's the human side of things. But the technology side, like, what have you learned? What have been the biggest challenges of bringing Ethereum to life? On the technology side.

• 58:38Vitalik Buterin?

  So I think first of all, just, you know, there's like the first law of software development, which is that when someone gives you a timetable, I'll switch the unit of time to the next largest unit of time and add one. And we basically fell victim to that. And so instead of taking like three months, it ended up taking like 20 months to watch the thing. And that was just, I think, underestimating the sheer technical complexity of the thing. There are research challenges. Like so, for example, one of the things that we've been saying from the start that we would do, one is a switch from a proof of work to a proof

• 59:20Vitalik Buterin?

  of stake, where proof of stake is this alternative consensus mechanism where instead of having to waste a lot of computing power on solving these mathematical puzzles that don't mean anything, you kind of prove that you have access to coins inside of the system. And this kind of gives you some level of participation in the consensus.

• 59:40Lex Fridman?

  Can you maybe elaborate on that a little bit? I understand the idea of proof of work. I know that a lot of people say that the idea of proof of stake is really appealing. Can you maybe linger on it a little longer, explain what it is?

• 59:52Vitalik Buterin?

  Sure. So basically, the idea is like, if I kind of lock up 100 coins, then I turn that into a kind of quote virtual miner. And the system itself kind of automatically and randomly assigns that in a virtual miner the right to create blocks at particular intervals. And then if someone else has 200 coins and they unlock and lock those 200 coins, then they get a kind of twice as big virtual miner, they'll be able to create their blocks twice as often. So it tries to do similar things to proof of work, except instead of the thing kind of rate limiting your participation being your ability to

• 1:00:36Vitalik Buterin?

  crank out solutions to kind of hash challenges, the thing that re-limits your participation is kind of how much coins you're kind of locking into this mechanism.

• 1:00:46Lex Fridman?

  Okay, so interesting. So that that limited participation doesn't require you to run a lot of compute.

• 1:00:54Lex Fridman?

  Does that mean that the richer you are, so rich people?

• 1:01:01Lex Fridman?

  Are more like their identities more

• 1:01:05Vitalik Buterin?

  Right, and this

• 1:01:06Lex Fridman?

  Stable.

• 1:01:08Vitalik Buterin?

  Yeah.

• 1:01:09Lex Fridman?

  Verifiable, or whatever, whatever the right terminology is.

• 1:01:12Vitalik Buterin?

  Right, and this is definitely a common critique. I think my usual answer to this is that like proof of work is even more of that kind of system.

• 1:01:20Lex Fridman?

  Exactly.

• 1:01:20Vitalik Buterin?

  Yeah.

• 1:01:21Lex Fridman?

  I didn't mean that statement as a criticism. I think you're exactly right. That's equivalent. The proof of work is the same kind of thing, but in the proof of work, you have to also use physical resources.

• 1:01:32Vitalik Buterin?

  Yes, and burn computers and burn trees and all of that stuff.

• 1:01:36Lex Fridman?

  Is there a way to mess with the system of the proof of proof of stake?

• 1:01:42Vitalik Buterin?

  There is, but you will once again need to have a very large portion of all the coins that are locked in the system to do anything bad.

• 1:01:48Lex Fridman?

  Got it. Yeah, and just to that, maybe take a small tangent. One of the criticisms of cryptocurrencies, the fact that I guess for the proof of work mechanism, you have to use so much energy in the world.

• 1:02:01Vitalik Buterin?

  Yes.

• 1:02:02Lex Fridman?

  Is one of the motivations of proof of stake is to move away from this?

• 1:02:06Vitalik Buterin?

  Definitely.

• 1:02:07Lex Fridman?

  Like, what's your sense of the, maybe I'm just under informed. Is there like legitimately environmental impact from this?

• 1:02:15Vitalik Buterin?

  Yeah, so the latest thing was that Bitcoin consumed as much energy as the country of Austria or something like that. Yeah, and then Ethereum is like right now, maybe only like half an order of magnitude smaller than Bitcoin.

• 1:02:29Lex Fridman?

  I've heard you talk about Ethereum 2.0. So what's the, what's the dream of Ethereum 2.0? What's the, the status of proof of stake as the mechanism that Ethereum moves towards? And also, how do you move to a different mechanism of consensus

• 1:02:46Vitalik Buterin?

  Sure.

• 1:02:46Lex Fridman?

  within a cryptocurrency?

• 1:02:48Vitalik Buterin?

  So Ethereum 2.0 is a collection of major upgrades that we've wanted to do to Ethereum for quite some time. The two big ones, one is proof of stake and the other is what we call sharding. Sharding solves another problem with blockchains, which is scalability.

• 1:03:05Vitalik Buterin?

  And what sharding does is it basically says, instead of every participant in the network having to personally download and verify every transaction, every participant in the network only downloads and verifies a small portion of transactions. And then you kind of randomly distribute who gets how much work. And because of how the distribution is random, it still has the property that you need a large portion of the entire network to corrupt what's going on inside of any shard. But the system is still very redundant and very secure.

• 1:03:39Lex Fridman?

  That's brilliant. How hard is that to implement? And how hard is proof of stake to implement? Like on a technical level?

• 1:03:47Vitalik Buterin?

  Yeah.

• 1:03:48Lex Fridman?

  Software level?

• 1:03:49Vitalik Buterin?

  Proof of stake and sharding are both challenging. I'd say sharding is a bit more challenging. The reason is that proof of stake is kind of just a change to how the consensus layer works. Sharding does both that, but it's also a change to the networking layer. The reason is that sharding is kind of pointless if at the networking layer, you still do what you do today, which is you kind of gossip everything, which means that if someone publishes something, every other node in the client hears it from on the networking layer. And so instead, we have to have kind of sub networks and the ability to quickly switch between sub networks and other sub networks talk to each other. And this is all doable, but it's a more complex architecture. And it's definitely the sort of thing that has not yet been done in cryptocurrency.

• 1:04:32Lex Fridman?

  So most of the networking layer in cryptocurrency is you're shouting, you're like broadcasting messages. And this is more like ad hoc networks, like

• 1:04:42Vitalik Buterin?

  Yeah, you're shouting within smaller groups.

• 1:04:45Lex Fridman?

  Smaller group, but you have like a bunch of sub like

• 1:04:47Vitalik Buterin?

  Exactly.

• 1:04:48Lex Fridman?

  You have to switch between. Oh, man, I'd love to see the, it's a beautiful idea. So from a graph theoretic perspective, but just the software that like who's responsible? Is the Ethereum project like the people involved? Would they be implementing? Like, what's the actual, you know, this is like legit software engineering. Who, like, how does that work? How do people collaborate, build that kind of project? Is this like almost, like, is there a software engineering lead? Is there?

• 1:05:21Lex Fridman?

  It's like, is it legit, almost like large scale open source project?

• 1:05:25Vitalik Buterin?

  There is, yeah. So we have someone named Danny Ryan on our team who's just been brilliant and great all around. And he is a kind of de facto kind of development coordinator, I guess. It's like, you have to invent job titles for this stuff, right? The reason is that, like, we also have this unique kind of organizational structure where the Ethereum Foundation itself kind of does research in-house, but then the actual implementation is done by independent teams that are separate companies and they're located all around the world and like fun places like Australia.

• 1:06:01Vitalik Buterin?

  And so, you know, you kind of just need a bunch of kind of almost non-stop cat herding to just keep getting these people to kind of talk to each other and kind of implement the spec, make sure that everyone agrees on kind of what's going on and kind of how to interpret different things.

• 1:06:20Lex Fridman?

  So how far into the future are we from these two mechanisms in Ethereum 2.0? Like, what's your sense of the timeline, keeping in mind the previous comment you made about the sort of general curse of software projects?

• 1:06:36Vitalik Buterin?

  So Ethereum 2.0 is split into three phases. So phase zero just creates a proof of stake network and it's actually separate from kind of proof of, the proof of work network at the beginning, just to kind of give it time to grow and improve itself.

• 1:06:52Lex Fridman?

  Do people get to choose, sorry to interrupt, do people get to choose, I guess?

• 1:06:55Vitalik Buterin?

  Yes, they get to choose to move over if they want to. Then phase one adds sharding, but it only adds sharding of data storage and not sharding of computation. And then after that, there is kind of the merger phase, which is where the, the accounts, kind of smart contracts, like all of the activity on the existing ETH1 system just kind of gets cut and pasted into ETH2. And then the proof of work chain gets forgotten and then, and things, all the things that were living there before are just kind of continue living inside of the proof of stake system. So for timelines, phase zero has been a kind of...

• 1:07:38Vitalik Buterin?

  Almost fully implemented and now it's just a matter of a whole bunch of security auditing and testing. My own experience is that right now it feels like we're at about a phase comparable to when we were doing the original Ethereum launch when we were maybe about four months away from launch.

• 1:07:59Lex Fridman?

  So that's just a hunch.

• 1:08:00Vitalik Buterin?

  That's just a that's just a hunch, yeah.

• 1:08:03Lex Fridman?

  So how, you know, it took it took like over a decade for people to move from Python two to Python three. How do you see the move from like this phase of zero of for for different consensus mechanism? Do you see there being a drastic phase shift in people just kind of jumping to this better mechanism?

• 1:08:25Vitalik Buterin?

  So in phase zero, I don't expect too many people to do much because in phase zero and phase one, the new chain they get it deliberately and it doesn't have too much functionality turned on. It's there just like if you want to be a proof of stake validator, you can get things started. If you want to store data for other blockchain applications, you can get started. But existing applications will largely keep living on each one. And then when the merger happens, then the merger is a operation that happens all at once. So that's kind of one of the benefits of consensus system that like on the one hand, you have to coordinate the upgrade. But on the other hand, the upgrade can be coordinated.

• 1:09:06Lex Fridman?

  So what's Casper FFG by the way?

• 1:09:09Vitalik Buterin?

  Casper FFG is the consensus algorithm that we are using for the proof of stake.

• 1:09:14Lex Fridman?

  Is there something interesting specific about Casper FFG? Like some beautiful aspect of it that's.

• 1:09:20Vitalik Buterin?

  There is. So Casper FFG combines together kind of two different schools of a consensus algorithm design. So the general two different schools of the of the design are right. One is a 50% fault tolerant, but dependent on network synchrony. So 50% fault tolerant, but it's it's it's all right up to 50% of faults, but not more, but it depends on. An assumption that all of the nodes can talk, uh, talk to each other within some, uh, of a limited period of time. Like if I send a message, you'll receive it within a few seconds. Um, and the second school is thirty-three percent fault tolerant, but safe under a synchrony.

• 1:10:03Vitalik Buterin?

  Which means that like if we agree on something, then that thing is finalized. And even if the network goes horribly wonky the second after that thing is finalized, there's no way to revert that thing. Um, and

• 1:10:16Lex Fridman?

  That's fascinating how you would make that happen.

• 1:10:20Vitalik Buterin?

  It's, uh, definitely quite clever. Um, I'd recommend the Casper FFG paper. Uh, if you just search like archive as in like ARX, I V, Casper FFG, it's

• 1:10:30Lex Fridman?

  That's an archive. The paper's an archive.

• 1:10:32Vitalik Buterin?

  Yeah, yeah.

• 1:10:33Lex Fridman?

  Who are the authors?

• 1:10:34Vitalik Buterin?

  Um, myself and, uh, Virgil Griffiths.

• 1:10:37Lex Fridman?

  That's awesome. I, uh, take a small tangent. Uh, this idea of just putting out white papers and papers and putting them on archive and just putting them publicly. Is that, is that at the core? Is that a necessary component of cryptocurrency? Is that the tradition started with, uh, uh, Satoshi Nakamoto? What, what do you make of it? Like, what do you make of the future of that kind of sharing of ideas?

• 1:10:59Vitalik Buterin?

  I guess so, yeah. And it's definitely something that's like kind of mandatory for crypto because like crypto is all about making systems where, you know, you don't have to trust the operators to trust that the thing works. And so if like anything behind our system works is closed source, then that kind of, uh, kills the point. And so there is the kind of a sense in which the fundamental properties of the category of the thing we're trying to build just kind of forces openness. But also openness just has proven to be a really great way to collaborate. And then there's actually a lot of, of innovation and academic collaboration that's just kind of happened ad hoc in the crypto space the last few years.

• 1:11:44Vitalik Buterin?

  So like, for example, we have this forum called ETH Research. That's like E T H R E S E A R, then dot C H. Um, and there we publish kind of just ideas in a form that's kind of half formal. Like it's halfway in between, like it's, it's a kind of a text write-up and then you can have math in it. But it's often in a much shorter than a paper and It turns out that the great majority of new ideas, like they're just kind of fairly small nuggets that you can explain in like five to 10 lines and they don't really.

• 1:12:19Lex Fridman?

  They don't need the whole formality of a paper.

• 1:12:22Vitalik Buterin?

  Exactly. They don't require the kind of like 10 pages of, and a filler. And so.

• 1:12:26Lex Fridman?

  Introduction, conclusion is not needed.

• 1:12:28Vitalik Buterin?

  Yeah. And so instead you just kind of publish the idea and then people can go comment on it. And yeah, this has been great for us.

• 1:12:37Lex Fridman?

  I think I interrupted you. Was there something else on Casper FFG?

• 1:12:41Vitalik Buterin?

  No, so just Casper FFG is just kind of combines together these two schools. And so basically it creates this system where if you have more than 50% that are honest, then, and you have a network synchrony, then the thing kind of goes as a chain. But then if network synchrony fails, then kind of the last few blocks in the chain might kind of get replaced. But anything that was finalized by this kind of more asynchronous process gets, like can't be reverted. And so you essentially get a kind of best of both worlds between those two models.

• 1:13:21Lex Fridman?

  Okay. So I know what I'm doing to them. You're reading the Casper FFG paper. Apologize for the romanticized question, but what to you are some or the most beautiful idea in the world of Ethereum? Just something surprising, something beautiful, something powerful?

• 1:13:40Vitalik Buterin?

  Yeah. I mean, I think the fact that money can just emerge out of a database if enough people believe in it, I think is definitely one of those things that's up there. I think one of the things that I really love about Ethereum is also this concept of composability. So this is the idea that like if I build an application on top of Ethereum, then you can build an application that talks to my application and you don't even need my permission. You don't even need to talk to me. So one really fun example of this is there was this kind of game on Ethereum called CryptoKitties that just involved kind of breeding digital cats.

• 1:14:17Lex Fridman?

  Yes.

• 1:14:18Vitalik Buterin?

  And someone else created a game called Crypto Dragons, where the way you play Crypto Dragons is you have a dragon and you have to feed it CryptoKitties.

• 1:14:29Vitalik Buterin?

  They just created the whole thing just like as an Ethereum contract that you would send these these tokens that are defined by this other Ethereum contract. And for the interoperability to happen, like the projects don't really need to, like the teams don't really need to talk to each other. You just kind of interface with the existing program.

• 1:14:52Lex Fridman?

  So it's arbitrarily composable in this kind of way. So you have different different groups that could be working. And so you could see it scaling to just outside of dragons and kitties, it could be, you could build like entire ecosystems of software.

• 1:15:06Vitalik Buterin?

  Yeah, and in the, I mean, especially in the decentralized finance space that's been popping up the last two years, there's been a huge amount of really interesting things happen as a result of this.

• 1:15:18Lex Fridman?

  Is it particular kind of like financial applications kind of thing?

• 1:15:22Vitalik Buterin?

  Yeah, I mean, there's like stable coins. So this is a kind of tokens retain value equal to $1, but they're kind of backed by a cryptocurrency. Then there's decentralized exchanges. So when as far as decentralized exchanges goes, there's this really interesting construction that has existed for about one and a half years now called Uniswap. So what Uniswap is, it's a smart contract that holds the balances of two tokens. We'll call them token A and token B. And it maintains that in variance that the balance of token A multiplied by the balance of token B has to equal the same value.

• 1:16:04Vitalik Buterin?

  And so the way that you trade against the thing is basically like you have this kind of curve, you know, like X times Y equals K. And before you trade, it's at some points on the curve. After you trade, you just like pick some any other points on the curve. And then whatever the delta X is, that's the amount of A tokens you provide. Whatever the delta Y is, that's the amount of B tokens you get or vice versa. And that's just, and then kind of the slope at the current points on the curve is the price. And so that just is the whole thing. And that just allows you to. Have this exchange for tokens and even if there's very few participants and the

• 1:16:47Vitalik Buterin?

  whole thing is just like so simple and it's just very easy to set up, very easy to participate in and it just provides so much value to people.

• 1:16:57Lex Fridman?

  And the fundamental, the distributed application infrastructure allows that somehow.

• 1:17:06Vitalik Buterin?

  Yes, so this is a smart contract meeting. This is all a computer program that's just running on Ethereum.

• 1:17:12Lex Fridman?

  Smart contracts too are just fascinating.

• 1:17:15Vitalik Buterin?

  They are.

• 1:17:16Lex Fridman?

  Okay, do you think cryptocurrency may become the main currency in the world one day? So where do you think we're headed in terms of the role of currency, the structure, type of currency in the world?

• 1:17:29Vitalik Buterin?

  I definitely expect fiat currencies to continue to exist and continue to be strong and I definitely expect kind of fiat currencies to also digitize in their own way over the next couple of decades.

• 1:17:42Lex Fridman?

  What's fiat currency, by the way?

• 1:17:43Vitalik Buterin?

  Oh, just like things like US dollars and like dollars and euros and yen and these other things.

• 1:17:49Lex Fridman?

  And they're sort of backed by governments.

• 1:17:51Vitalik Buterin?

  Yes, but I also expect cryptocurrencies to play this kind of important role in just making sure that people always have an alternative if fiat currencies start breaking. So like if, or if you're in, you know, some very high inflation place like Venezuela, for example, or if your country just kind of gets cut off from, like, cut off from other financial systems because of like something the banks do, if any kind of, if there's even like some major trade disruption or something worse happens, then like cryptocurrencies are the sort of thing that just because of their kind of global neutrality, they're just kind

• 1:18:36Vitalik Buterin?

  of always there and you can keep using them.

• 1:18:39Lex Fridman?

  It's interesting that you're quite humble about the possibilities of the future of cryptocurrency. You don't think there's a possible future where?

• 1:18:48Lex Fridman?

  It becomes the main set of currency because it feels like fiat, it feels like the centralized control by governments of currency is limiting somehow. Maybe my naive utopian view of the world.

• 1:19:03Vitalik Buterin?

  It's uh, it's definitely very possible. Uh, I mean, I think like for cryptocurrencies being the main form of of value to kind of work well, like you do need to have some much more price stability than they have today. And I mean, there are now stable coins and there are kind of crypto cryptocurrencies that try to be more stable than the existing things like Bitcoin and Ether, but that just is, to me, the kind of the main challenge.

• 1:19:35Lex Fridman?

  Do you think, oh, that's, do you think that's a characteristic of this just being the early days is such young concept, 10 years is nothing in the history of money?

• 1:19:44Vitalik Buterin?

  Yeah, and I think it's a combination of two things, right? One is it's uh, it's still early days, but the other is a kind of more durable, any kind of economic problem, which is that like demand for currency is volatile, right? Because of like recessions, booms, changes to technology, lots of things, and if people's demand for how much currency they want to hold changes. And if you have a currency that has a fixed supply, then the change in demand has to be entirely expressed as a change in value of the currency. And so what that means is that kind of the volatility of demand becomes entirely translated into volatility and head of prices of things that dominated in that currency.

• 1:20:27Vitalik Buterin?

  But if you have a currency where instead the supply can change, and so the supply can kind of go up when there's more demand, then you have the supply kind of absorbing more of that volatility, and so the price of the currency would absorb less of the volatility.

• 1:20:41Lex Fridman?

  On that topic, so Bitcoin does have a limited supply, a specific fixed supply.

• 1:20:46Vitalik Buterin?

  Yes.

• 1:20:47Lex Fridman?

  Uh, what's, what's the idea and Ethereum doesn't, but can you clarify?

• 1:20:54Lex Fridman?

  Just on the comment you just made, is Ethereum qualify to the kind of currency that you're talking about and being flexible in the supply?

• 1:21:01Vitalik Buterin?

  It's a bit more flexible, but kind of the thing that you would really want is something that's kind of specifically flexible in response to how valuable the currency is. And and I'd recommend you to look at stable coins as well. So like things like DAI, for example. It's like

• 1:21:21Lex Fridman?

  How you spell that?

• 1:21:22Vitalik Buterin?

  D A I.

• 1:21:24Lex Fridman?

  And what's stable coins? Is it a type of cryptocurrency?

• 1:21:28Vitalik Buterin?

  It is a type of cryptocurrency. It's a type of cryptocurrency that's issued by a smart contract, one of these Ethereum computer programs that where the smart contract holds a bunch of Ether and then it basically like that people deposit. And then it issues DAI and the reason why people deposit is because they want to kind of go high leverage on their Ether. And so it kind of pairs these two sets of users, one that wants stability and one that kind of wants extra risk together with each other. And it basically creates or gives one set of participants

• 1:22:05Vitalik Buterin?

  a guarantee that they'll be that they have this asset that can that can be later converted back into Ether, but like specifically at kind of the one dollar rate.

• 1:22:14Lex Fridman?

  It has some kind of stabilizing network effects.

• 1:22:18Vitalik Buterin?

  Yeah, it has this. Yeah, it has many kinds of stabilizing mechanisms in it.

• 1:22:23Lex Fridman?

  That's fascinating. Okay, this this world is awesome technically, just from a scientific perspective, it's an awesome world. That I often don't see from an outsider's perspective, what I often see is kind of maybe hype and a little bit, if I may say so, like charlatanism. And you don't often see, at least from an outsider's perspective, the beautiful science of it and engineering of it. Maybe, is there a comment you can make?

• 1:22:51Lex Fridman?

  Of who to follow, how to learn about this world without being interrupted by the charlatans and the hype people in the space.

• 1:23:04Vitalik Buterin?

  I think you do need to just know the specific kind of just people to follow. Like there's, you know, there's all the kind of the cryptographers and the researchers. And there's just like, even just the Ethereum research crew, like myself, like Dan Crad, Danny Justin, and of the other people. And then of the academic cryptographers and like before this today, I was at Stanford and Stanford has the Center for Blockchain Research and of Dan Bonet, that's a really famous and great cryptographer, was running it. And there's a lot of other people there and there's people working on like zero knowledge proofs, for example.

• 1:23:49Vitalik Buterin?

  Zuko from Z Cash is one other person that I respect. So I think if you follow the technical.

• 1:23:57Lex Fridman?

  And just crawl along that.

• 1:23:59Vitalik Buterin?

  Yeah, yeah.

• 1:23:59Lex Fridman?

  Start with the Ethereum group and then look at the academics, Dave Bonet and so on. And then just cautiously expand the network of people you follow.

• 1:24:07Vitalik Buterin?

  Yeah, exactly. And like if someone seems too, too self promotional, then just like remove them.

• 1:24:13Lex Fridman?

  Is there books that are, so there's these white papers and we just discussed about, about ideas being condensed into really small parts. Is there books that are emerging that are kind of good introductory material?

• 1:24:28Vitalik Buterin?

  So for historical ones, and there's like Nathaniel Popper's Digital Gold, which is just about the history of Bitcoin. There's like one and then Matthew Leising announced that there's one about the history of Ethereum. For technical ones, and there's Andreas Antonopoulos's Mastering Ethereum.

• 1:24:46Lex Fridman?

  Great. So let me ask you sort of, sorry, to pull back to the. The idea of governments and decentralized currency.

• 1:24:57Lex Fridman?

  You know, there's a tension between decentralization of currency and the power of nations, the power of governments. You, um, what's your sense about that tension? Can, is there some rule for regulation of currency? You, yeah, is there, like, is government the enemy of digital currency? Of distributed currency? Or can they be, like, cautious friends?

• 1:25:27Vitalik Buterin?

  I mean, I think, like,

• 1:25:30Vitalik Buterin?

  the one thing that people forget is that it's clearly not entirely an enemy. Because I think if, uh, there hadn't been so much government regulation on, and if centralized, uh, digital, issuing centralized digital currencies, then I'd like, we'd be seeing things, people like Google and Facebook and Twitter just kind of issuing them left and right. And then, like, if that was the case, then decentralized currencies would still appeal to some people, but they definitely would appeal to less people than today. So even in that sense, I think it's, uh, like, clearly been kind of more of a help. I just kind of set the stage for the, you know, the existence as of, of the sector in some ways.

• 1:26:12Vitalik Buterin?

  Uh, but also, and I think some of both, you know, like, there's definitely things that governments kind of can do, in some cases have done to, uh, hurt the spread of, uh, and of growth of, uh, of blockchains. There's things that they've done to help and they've, uh, in some cases, definitely done a good job of, and of going after fraudulent projects, uh, and of going after some of the projects that have some of the kind of craziest and most misleading marketing.

• 1:26:45Vitalik Buterin?

  There's, uh, also the possibility that governments will end up using blockchains for a lot of different things. Like, you know, governments, yeah, and they do a lot more than just regulating, right? Like, there's also, like, they have the, kind of.

• 1:27:02Vitalik Buterin?

  Identity records, they have kind of like property registries, even their own currency is like secure, lots of different kind of things that they're operating and there's even blockchain applications in a lot of those.

• 1:27:17Lex Fridman?

  Yeah, and they can, you know, they can leverage technology to do a lot of good for our societies. It is a little unfortunate that governments often lag behind in terms of their acceptance and leverage of technology. If you look at the autonomous vehicle space, AI in general, they're a few years behind. It'd be nice to help them catch up. That's a, that's, that's always ongoing problem. You met Vladimir Putin to discuss decentralized currency. You're, you're born in the, where were you born?

• 1:27:52Vitalik Buterin?

  Kolumna. It's a city about 115 kilometers south of Moscow.

• 1:27:56Lex Fridman?

  In Russia?

• 1:27:57Vitalik Buterin?

  Yes.

• 1:27:59Lex Fridman?

  Yeah, I grew up in Moscow. I mean, that's Vladimir Putin is a, is a central figure in this part of the world. So what was that like, meeting, well, meeting him? What was that experience like?

• 1:28:12Vitalik Buterin?

  He's taller in photos than in person.

• 1:28:15Lex Fridman?

  Yeah, he's, yeah, that's right. He's five seven, I think, five eight, maybe.

• 1:28:21Vitalik Buterin?

  Yeah, and it's, unfortunately, we didn't actually kind of have too much of a chance to talk to him. Like, I managed to see him for about one minute at the end of this meeting. And I did get a chance to see a lot, like, some of the other kind of government ministers, and he recommended some. And some of them are actually interested in trying to use some like blockchains to look for various government use cases, to kind of limit corruption and other things. And I have, like, it's hard to tell from one conversation, kind of what things are genuine and what things are just like, oh, blockchain is cool, let's do blockchain.

• 1:28:59Lex Fridman?

  Right. But, you know, when I, when I listen to like Barack Obama talk about artificial intelligence, there's certain things I hear where, okay, so he might not be an expert in AI, but he know, he like actually studied it carefully enough to think about it, like. Internal like, even if it's just reading a Wikipedia page, like, he really thought about what this technology means. Did you get a sense that Putin or some of the ministers like thought about blockchain, like thought about the fundamentals of techno, or like, understand it intuitively? Or are they too old school to try to grasp it?

• 1:29:40Vitalik Buterin?

  Some are old school, some are more new school. It depends. It's definitely like depends on who you talk to.

• 1:29:47Lex Fridman?

  I mean, that's an open question for me with Putin, because Putin has said.

• 1:29:51Vitalik Buterin?

  I don't know. And as I said, I've only talked to him for about one minute, so.

• 1:29:55Lex Fridman?

  But sometimes you can pick up sort of insights. There's a quick comment there. There are about, maybe you can correct me on this, but there are about 3,000 cryptocurrencies being actively traded.

• 1:30:06Vitalik Buterin?

  Yes.

• 1:30:08Lex Fridman?

  And Ethereum is one of, you know, a lot of people believe that there will be the the main cryptocurrency. I think Bitcoin is currently still the main cryptocurrency, but Ethereum very likely might become that the the main one. Is this kind of diversity good in the crypto world? Do you see it sticking around? Should there should there be a winner? Like, should there be some consensus globally around Bitcoin or around Ethereum? Like, what's your what's your sense?

• 1:30:34Vitalik Buterin?

  I definitely think the diversity is good. And I definitely think also that there's probably too many people trying to make separate blockchains right now. The number should definitely be greater than one and probably greater than two or even five.

• 1:30:48Lex Fridman?

  Not 3,000.

• 1:30:50Vitalik Buterin?

  Not 3,000, yeah. And also not even like 40 high-quality platforms that try to do the same thing. There's definitely this range from just like one person who just like wrongly thinks that you can create a cryptocurrency in like 12 hours and doesn't even think about kind of the community aspects of maintaining it, going to people actually trying but only creating a really tiny one, to like scammers, to people like making something that's actually successful. And then there's a lot of different categories of blockchain and of project in terms of what it's trying to do and what applications it's for. And I think the experimentation is definitely healthy.

• 1:31:37Lex Fridman?

  If you you look at the two worlds, it might be a little bit disjointed, but the distributed applications, cryptocurrency, and then the world of artificial intelligence. Do you see there's some overlap between these worlds that both worry about centralized control? Is there some overlap that's interesting that you think about? Do you think about AI much?

• 1:31:57Vitalik Buterin?

  Yeah, and I think definitely I'd have thought about things like the AI and if control problems and alignment problems and all of those things.

• 1:32:07Lex Fridman?

  Do you worry about the existential threat of AI?

• 1:32:09Vitalik Buterin?

  It's definitely one of the things I worry about. I think there's a lot of kind of common challenges because in both cases, what you're ultimately trying to do is you're trying to kind of get a simple system to direct a more complex system. Like, in the case of these strong AIs, the idea would be that the simple system is people and the complex system is whatever thing the people end up unleashing on the universe that'll hopefully be a great thing. And in the case of blockchains and of the complex, well, the simple thing is the algorithm,

• 1:32:51Vitalik Buterin?

  which is a piece of static and fully open source code, and the more complex thing is just the all of the different possible human actors and the strategies that they might end up use to participate in the network.

• 1:33:04Lex Fridman?

  Do you think about your own mortality? Like, what you hope to accomplish in your life?

• 1:33:11Vitalik Buterin?

  Oh, I definitely I definitely think about ending my own mortality.

• 1:33:14Lex Fridman?

  So that's if I gave you the option to live forever, would you?

• 1:33:19Vitalik Buterin?

  Depends a lot on what the fine print is. You know, if it's one of those things where I'm gonna be kind of like floating through empty space for 10 to the 75 years, then no. If it's forever worth of having, you know, fulfilling life with meaningful with friends to spend the time with, with kind of meaningful challenges to explore and interesting things to be working on, then I think absolutely.

• 1:33:53Lex Fridman?

  That's beautifully put. Live forever, but you'd have to check the fine print. I think there's no better way to end it. Vitalik, thank you so much for talking to us. So exciting to follow your work from a distance. Thank you. And thank you for creating a revolutionary idea and sticking with it and building it out and doing some incredible engineering work. And thanks for talking today. Yeah, thank you. Thanks for listening to this conversation with Vitalik Buterin. And thank you to our sponsors, ExpressVPN and MasterClass. Please consider supporting the podcast by signing up to MasterClass at masterclass.com/lex and getting ExpressVPN at expressvpn.com/lexpod.

• 1:34:38Lex Fridman?

  If you enjoy this podcast, subscribe on YouTube, review it with five stars on Apple Podcasts, support it on Patreon, or simply connect with me on Twitter at @lexfriedman. And now, let me leave you with some words from Vitalik Buterin. The thing that I often ask startups on top of Ethereum is, can you please tell me why using Ethereum blockchain is better than using Excel? And if they can come up with a good answer, that's when you know you've got something really interesting. Thank you for listening and hope to see you next time.