#504: Vitalik Buterin, Creator of Ethereum, on Understanding Ethereum, ETH vs. BTC, ETH2, Scaling Plans and Timelines, NFTs, Future Considerations, Life Extension, and More (Featuring Naval Ravikant)

We have an important preface, an important caveat, an important disclaimer before we get started, and here it is, provided from my lovely lawyers. Here we go. I am not an investment advisor. All opinions are mine alone. There are risks involved in placing any investment in securities or in bitcoin or in cryptocurrencies or in anything. None of the information presented today. or really any time, since you might be listening to this any time, is intended to form the basis for any offer or recommendation or have any regard to the investment objectives, financial situation, or needs of any specific person. That includes you, my dear listener. So Everything you're gonna hear is for informational entertainment purposes only. And with that said. Please enjoy.

Hello, boys and girls, ladies and germs, this is Tim Ferris and welcome to another episode of The Tim Ferris Show, where it is normally my job to interview world class performers, to tease out the habits, routines, et cetera, that you can apply to your own lives. This episode is a special episode. And It is a very detailed action packed episode, at least it was for me. And in a sense it pairs with an earlier episode. In two thousand seventeen, I did an episode with Naval Ravakant, who joins me again in this round two with Nick Zabo. And the title of that episode was The Quiet Master of Cryptocurrency, and it really covered

Everything related to Bitcoin. So BTC smart contracts. All of those fundamentals. This volume two. is going to cover everything.

Ethereum. And the two people joining me, I already named one, are Naval Ravakant? uh as I might have mentioned. And he is really the pilot for this conversation. So he takes the reins as the interviewer. You can find him on Twitter at Naval N A V A L. He is the co-founder and chairman of Angel List. He is an angel investor and has invested in more than one hundred companies, including many Huge successes including Twitter, Uber, Notion, Open Door Postmates, and Wish.

among many, many, many, many others. You can subscribe to Naval, his podcast on wealth and happiness on Apple Podcasts, Spotify, Overcast, or wherever you get your podcasts. You can also find his blog at Naval, that's N-A-V dot A L. The guest of honor. And the real expert in this particular episode is Vitalic Buterin.

on Twitter at Vitalic Butarin, V-I-T-A-L-I-K, B-U-T-E-R-I-N. Vitalik is the creator of Ethereum. He first discovered blockchain and cryptocurrency technologies through Bitcoin in 2011 and was immediately excited by the technology and its potential. He co-founded Bitcoin Magazine in September 2011, and after two and a half years looking at what the existing blockchain technology and applications had to offer, Wrote the Ethereum white paper in November 2013. It is hard to believe that it was so relatively recent. He now leads Ethereum's research team working on future versions of the Ethereum protocol. In twenty fourteen, Vitalik was a recipient of the two year TEAL Fellowship. tech billionaire Peter Tiel's project that awards one hundred thousand dollars to twenty promising innovators under twenty so they can pursue their inventions in lieu of a postsecondary institution. And boy oh boy

Did that award turn into a hell of a lot of value for the world and a lot of people? And Vitalik, I believe, is now a ripe old twenty-seven years old. You can find his writing and much more at Vitalic.ca. That's V-I-T-A-L-I-K. And for ease of reference and ease of finding, you can find the previous conversation with Nick Zabo on Bitcoin and smart contracts and other core concepts at Tim dot blog forward slash Bitcoin and you can also find this current conversation with Vitalik on all things Ethereum at Tim.blog forward slash Ethereum. That's E T H E R E U M.

Please enjoy. This wide ranging conversation. With. Vitalik Buterin and Naval Robacant.

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Now it is. My cybernetic organism, living tissue over metal metal skeleton. Tim, this is Naval Speaking Tim, thanks for having us. We're joined by Vitalik Bederin. Vitalik is the I believe now twenty seven year old creator of Ethereum, which is the most exciting cryptocurrency since Bitcoin and has incredibly broad ambitions and capabilities. And Vitalik is A really interesting guy because not only did he create Ethereum or co create it He also is a multidisciplinary polymath. His blog at Vitalik.ca is full of lots of great ideas and insights and thoughts. He runs the Ethereum Foundation and

He's sort of contributed to all kinds of things like automatic market makers, roll ups, social recovery wallets, decentralized finance, scalability of blockchains, governance, all kinds of great ideas in the cryptocurrency space. He also thinks a lot about public goods, radical markets, wealth distribution. He runs a very active Twitter account where he good naturedly engages with all kinds of people who are constantly trying to get into fights with him. Which is kind of what people do on Twitter. Um and uh yeah, and and we're very lucky to have him. I would say that for me, along with Nick Sabo and uh who we interviewed here in twenty seventeen, uh, who created BitGold and coined the term smart contracts. And along with Zuko, who uh is the irrepressible founder of Zcash, I've always found Vitalik, Nick, and and Zoco to be sort of the the three people on Twitter that I early on learned a lot about crypto from. So Welcome Vitalik and thanks for taking the time to talk to us about yourself and Ethereum.

No, thank you very much for the introduction, Naval. It's good to be here. Yeah, so I'm gonna start just right off the bat. We're probably gonna try and keep this fairly basic and high level. For those of you who are quite experienced with crypcurrencies, this may be a very general conversation. But at the same time, I'm gonna ask Vitalik some hard questions. We're not gonna let him get away with just the the PR angle. And so but we'll start with some basics. We let's assume we know what cryptocurrencies are, and for those of you who are not that familiar with it, I would suggest you go back to the podcast that Tim and I did with Nick Sabo back in twenty seventeen. I believe that's titled The Quiet Master of Cryptocurrency. Correct. And uh so once you're kind of up to speed on that, this one will make a lot more sense. But we're gonna get right into

Not what is crypto or what is bitcoin. We're gonna get into what is Ethereum. So how do you describe it today, Vitalik? Uh sure. Uh so the one sentence explanation of Ethereum that I sometimes give is it's a uh general purpose blockchain. So this of course makes more sense if you kind of already know what a blockchain is, right? It's this kind of decentralized network of many different computers that are together Yeah, like maintaining this kind of like a ledger or this kind of database together. Different participants have like very particular ways of plugging into that and they can send transactions that do very particular things. But no one can tamper with the system in a way that's outside of the rules.

And Ethereum expands on the Bitcoin approach by basically saying, Well, instead of having rules that are designed around supporting one application, We're going to make something more general purpose where people can uh just build their own applications and the rules for Whatever applications they build can be. Uh and it's executed uh the implemented um on the Ethereum platform. So one explanation that I um heard one person give is that like Bitcoin is like a spreadsheet where everyone only controls their own s five squares of the spreadsheet.

But Ethereum is a spreadsheet with uh macros, right? Uh so You know, everyone uh kind of controls, you know, their own accounts, which is kind of their own little piece of this universe. But then these pieces of the universe can have code and they can like interact with each other according to pre-programmed rules, and you can build a lot of things on top of that, right? Like uh Bitcoin builds a monetary system on top, uh kind of famously. Ethereum can build

You know, decentralized domain name systems, uh various decentralized financial contraption, some you know, prediction markets, you know, non fungible tokens and all all sorts of different uh schemes that people have been coming up with and the limit for what you build as uh basically your own creativity. But like the core difference between building an application on Ethereum versus building it on, you know, some traditional centralized platform. is this core idea that once you build your application

In the application does not need to depend on you or any other single person for its continued existence. And the application is guaranteed to continue running according to the rules that were specified. And like you do not have Any ability to kind of irregularly go in and tamper with it. That's a great overview and I like that Excel

analogy of it's a spreadsheet with macros instead of just a spreadsheet where you control your own cells. I'll also try and articulate in a few ways that I understand it kind of around the edges because I think Ethereum is one of those things that's now quite a bit bigger than you. And it probably has evolved in ways that even you didn't fully anticipate. So in some sense we're discovering Ethereum and no longer just building it. I also like to think of it as kind of an unstoppable application platform. So a platform for building unstoppable applications, kind of like a world computer. where let's say that we want to run very, very important computer programs where we don't trust the computer itself and we don't trust the other people to execute code in our behalf, then we create a single world computer where we check the code on the machines of many, many different people all around the world who are properly incentivized to maintain a single Computing state. So if Bitcoin is a shared ledger, then Ethereum is a shared computer for the entire world to run its most important applications.

So some of the applications that people are building on it are among the possibly the most important applications Of the future. So let's talk a little bit about those applications, about what this trustless world computer is doing. What are the applications today that are the most common and that you're most excited about? So first of all, I mean I think uh if the asset is a cryptocurrency and it itself is an application and kind of the first application of uh Ethereum.

Going beyond Financial things a bit. I mentioned ENS to the Ethereum name system. So ENS you can think of it as a decentralized name system. Right, so like for example, you know, when you go to Ethereum dot org There's DNS the Dobian Name System, which is the sp the kind of table that maintains this mapping of well, you know, if

A person enters Ethereum.com, the server they actually have to talk to to talk to the website is in like some particular IP address. And this DNS system that maintains this kind of public relationship is a uh fairly centralized system with a very small number of servers. running it. So ENS is a fully decentralized alternative that is running on the Ethereum blockchain. And you can use it not just for websites, right? Like you can use it just for accounts. So for example, like there's a messaging service called status. It's like in n in terms of like what it feels like to use it, you know, it's a messenger It's similar to Telegram or Signal or WhatsApp or any of those. Um, but the difference is that it is decentralized and so there's no dependents on any single server or like there's no dependents on status the company.

Which is nice because um It makes the whole thing much more censorship resistance. It makes the whole thing just a much more guaranteed to survive. You know, regardless of what forces wish for for its existence or wish against its um existence in the future. E and S is this really important part of it because well, if you have a chat application I need to have some name by which I can refer to you know like the users that I want to talk to. Right. Like I want to like type in and say

I've talked enough. Um Things like telegram and signal and whatsap. That mapping is generally Basic way. Kind of authenticated and controlled by a server. But whereas in the w in the status it's all just done by the Ethereum blockchain. Right. So

That uh as w one good example I think of a kind of not financial, but still very important, um if you're in application. Now going beyond those two cases there's no. A lot of uh kind of more complicated things. Um so The there's the DeFi uh decentralized finance uh space which uh

Is this big category that has all sorts of interesting contraptions in it? Um like so For example, there's uh prediction markets, so platforms where you can go and like bet on different outcomes like you know who's going to win some sports game or you know who's going to win some particular election. There have been very successful uh prediction markets running on the Ethereum blockchain.

There's uh just markets for trading um between different kinds of assets. There's what's called synthetic assets. Um so If you want to have access to like some mainstream real world asset. Like you know, a Zuller could be one example, but you know You don't have to like dollars, like there's uh

Lots of other examples as well. There's versions of this that are kind of purely virtual sort of simulated versions that exist um Purely, you know, like within the Ethereum environments. Yeah, there's this entire kind of very powerful financial toolkit that exists uh within the Ethereum ecosystem.

On the whole, like there's just A lot of these uh Interesting things that happen. I mean there's even games that are based on um Ethereum, there's uh a whole bunch of different things. Yeah, in fact uh DeFi uh decentralized finance is this gigantic new category in which entire companies and protocols are being built in a decentralized way that allow you to do a lot of things that would have required Wall Street along with bankers and judges and lawyers and accountants to handle, but now is done through smart contracts that are living on the blockchain, uh on the Ethereum blockchain. And these smart contracts are kind of at the core of the Ethereum blockchain.

We talked about these in the Nick Sabo podcast, but he famously described it as like a an automated vending machine as an example of a smart contract. where you you put in money in a certain slot and there's a certain set of rules and you press certain buttons and you get certain products in exchange. But these smart contracts obviously now are getting far, far more complicated and can actually be used not just to compose financial applications, but even applications that we don't normally think of as financial. One way to think about it for those of you who are into computer programming is imagine if every piece of a program, every function had an address from which anyone in the world could reach it, a unique identifier address. And it had a slot into which you could insert money. So you could call any function wherever it is in the world, you could insert money into it, and it would do something on your behalf. And so that gives Ethereum applications this very interesting property called composability, where you can use them almost like Lego blocks. Each one builds on the rest. And so the final product in DeFi ends up very, very advanced. In the traditional world when

uh let's say like Robinhood builds their application and then Schwab builds another application and Wisdom Tree builds a mutual fund or an ETF, those can't combine with each other, but in the Ethereum world of DeFi, all of these apps by default are open source, permissionless programmable and can connect right into each other. They can be identified, called, and paid for in a permissionless, trustless kind of way. So the the infrastructure that gets built in DeFi And Ethereum, although it's it's very difficult to build and it's complex, once a piece is built, it is available to everybody and sort of stacks onto each other almost to create one of those Japanese style Voltron robots that just gains in power. Yeah. Nivelle, let me jump in here, just as a proxy. I'm not even a proxy, I am a listener. Literally in this case, and I'm happy to be the listener. So I'm both a proxy and an actual listener, but How does one think about intellectual property if all of these

Otherwise separate or previously separate applications and so on are now Lego pieces that are kind of natively interconnected. Is that a silly question? I'm just wondering if No, no, it's a it's a really good question. I mean my high level view on it is that what blockchains do is through consensus they protect the data. So the users own their own private data and then sort of the public data that's needed to make the blockchain work, its integrity is protected by the blockchain. And that's what blockchains do. And they get a whole bunch of people to cooperate on what the canonical output should be, but the code itself is completely open. It it is kind of backwards to what we're used to. We're used to closed source companies capturing, but here all the value is created by open source

But yeah, uh Vitalik, I'm sure, has a different view on this, but you know, there's there's lots of copycats and clones and there's attacks and forks and so on. And it's kind of a wild west out there, but generally uh so far it does seem like the original products and the best products are succeeding the best and they're sort of always in the scoreboard of market cap and transactions and usage. But uh yeah, it's it's a wild west out there. Yeah, no, and I think um the blockchain environment is definitely uh one that operates under somewhat different rules than the traditional environments, right? Like uh just one example of this is like the idea of forking, right? Uh so one uh story uh that happened uh around the beginning of last year that I just love to tell because of how it kind of combines together the values of the space so nicely is uh There was this platform called Steam.

And in the Steam, uh there's Steam the platform and then there's Steam the company, right? And Like Steam it was its own blockchain and Steam the company. Like they did have some Steam tokens, um, but like they didn't have the right to like just do whatever they want with the Steam the platform because it was a decentralized thing. But you know, they had some tokens and then Steam the platform had a voting mechanism and holders of uh Steam tokens could vote on changes. But then the steam the company got bought out by Justin Sun, you know, the in infamous Tron person.

And uh just in some like basically if Nick started uh doing some things to kind of increase his control over the uh Steam platform. The community was uh gonna very unhappy with him and then he uh Even like kind of took advantage of um you know some of the uh voting mechanisms and some coins held in exchanges. to sort of seize control of uh at least the formal rules of the platform even further. But then what happens was that the users rebelled, right? What the users um said is Well we're creating a new platform called Hive And Hive is just a fork of scheme. It

is gonna have uh start with the same or most through the same rules as scheme and we're even gonna copy over most of the balances of the Steam tokens. Except if you participated in the attack then you know your balance um goes to zero when then you fork. And most of the users like basically kind of collectively moved over to this new fork. And you know, Justin's son had this full control of an empire, but then uh you know, nobody cared about that empire anymore because everyone now cared about Hive, right? So like forking is this primitive that exists and because of it, you know, you do have this Ability for just

community is to you know exert kind of collective agency and um They basically protect themselves from uh kind of being exploited. Um but at the same time, if you as a project team are good to your community, then Like those same effects work in your favor, right? Uh so

Those uh effects work in your favor because a community is willing to support your project. If someone makes a copycat, then you know, n generally very few people are willing to kind of support and provide any assistance to that copycat project. Unless of course you do something to betray the community's trust. Um in which case, you know, that like those kinds of situations are the situations that the copycat is for. I think uh legitimate developers have plenty of ability to build projects to gain from uh those uh projects becoming successful and There's a lot of uh ways in which the crypto space does end up uh kind of assuring that. But you know, at the same time it's also not in environments where

Anyone's level of control is infinite and in some ways that's uh the other beautiful thing about the space. Vitalik has this great line in his blog where he said we wanted digital nations, but we got digital nationalism. Um and and there's a lot of truth in that. Uh but basically these are these are like digital nations, and one of the analogies that I use for DeFi is that these are like crypto castles made of bath that are freely trading with each other. Just imagine like people are building applications on top of Ethereum. They're protecting by mathematics. Those are the walls and those castles, and there are moats, which are rivers of cryptography, but then they have free trade policy with each other, so that creates a lot of innovation. But if one of them starts misbehaving, then his people can leave and go to the next crypto castle, or This is where the analogy breaks down. They can actually replicate it, just create a copy and move to that one. Like in the Steven Hive example. Well, that also uh is uh I mean, it has comparables outside of the world of blockchain and cryptography, in so much as if we look at, say, WordPress as an open source project, you have companies like Automatic.

And Matt Mollinwick you might People may notice that M A T T in the middle of automatic two Ts, uh, which layers then these for profit services on top of an open source platform. And technically, someone could create a competitor. But like you said, there are these questions of Uh viability. Value add.

and moral leadership and so on, right? So so there are sort of sort of certain elements that contribute to the the Ethereum. ecosystem, so to speak, that you can Perhaps compare to other things to help educate people as well.

I was just sort of connecting some of the stuff. That's a good analogy with with uh WordPress. The the place where the analogies diverge is that WordPress It's kind of a single player game. Like each person owns their own blog. Right. Whereas in Ethereum world, you could use Ethereum to build a Twitter that everybody owns. And it requires social consensus to operate, but multiple people can put their data in. So it's this really weird thing where It's decentralized, it's open source, but it's still used to coordinate and bring people together. Blockchains combined this really weird combo of individualism and individual control and the ability to leave along with consensus and community and cooperation and build this giant public good. Um so it it it it is its own thing. It's hard to figure out, but it's worth figuring out because this is the next phase of the internet after mobile.

Yeah, let me if if I could jump in just to kinda be the kid in the corner of the class in the back of the class asking questions. I would love to hear from you, Vitalik, what was the initial vision for Ethereum and what has most surprised you, if anything. You know, I was I was doing a bit of reading just on the the Genesis story. And First of all, I I mean maybe separately, maybe for another conversation, it seems like a lot was done right in the beginning. And I was reading a quote from a Wired piece in 2016 and it's and this please feel free to fact check if it's not accurate, but it says, you know, when I came up with Ethereum, my first thought was Okay, this thing is too good to be true, and I'm going to have five professional cryptographers ranning down on me and telling me how stupid I am for not seeing a bunch of very obvious flaws.

But, you know, dot dot dot. Two weeks later I was extremely surprised that none of this happened. As it turned out, the core Ethereum idea was good, fundamentally, completely sound. I'd love to hear what the core idea was. Maybe we've already stated it and it's redundant, but the initial vision And if anything has been really surprising to you. That has transpired since those early days. So I think the core idea is um you know to make Asia general purpose blockchain, um and to kind of open the gates for people to build what they want to uh build on top of it. Right. Like uh

The background kind of story for when uh Ethereum was starting to be formed was that this was just the time when the idea of a blockchain kind of beyond uh Bitcoin was just starting to gain legitimacy and people were just starting to realize that, you know, there are these applications for blockchains other than just them running a currency and it would be a nice to ability platform that can actually support them. And so At the beginning, right, you had single purpose blockchains. You had Bitcoin uh for currency, you had Namecoin for domain names. You would have like single purpose protocols like covered coins for issuing assets. The second step is what I call the Swiss Army Knife Protocols.

So a Swiss Army Knife protocol basically says, well, here's a list of you know twenty five uh different applications. That we've identified as being important and let's build a blockchain to support all of them. Uh so like Mastercoin was uh one example of what I call the Swiss Army knife protocol. Yeah, the problem with Sorry Knife protocols is that two weeks later, you know, some fourteen year old teenager in Finland comes up with a twenty sixth application. So uh

The next the natural step is this kind of general purpose approach where instead of your blockchain Supporting twenty five applications, your blockchain supports a programming language. And whatever system with whatever rules he wants to build, you write that in a piece of code. And the nodes in the network can all execute the code and the network kind of helps to collaboratively enforce the rules of this code for the um objects that are in your particular application. So That was kind of the technical uh perspective. And then there's also the perspective of well, you know, what did I envision people building on top of it.

It's actually surprising how it hasn't changed that much. I'm like uh I remember some of the very earliest applications included kind of financial gadgets, uh so contracts for different were one example, and Uh which is uh You know, one very particular subset of the thing that today we call DeFi Decentralized file storage, uh kind of like you don't pay people to store a gigabyte of your data um was one thing I was excited about. Um decentralized game systems.

was um excited about those you know, decentralized training between different assets. Like A lot of the examples of just things that people wanted to do with uh blockchains at the time, like they're just are the same as what people are doing today. No, there are also new applications, right? So like non fungible tokens, um

That I briefly mentioned, um NFTs. The idea here is basically just create a yet token that you know represents something other than a financial asset. And uh One example of this could be that an NFT can represent video game assets, an NFT could represent like a digital work of art where he wants to sell kind of like basically breaking rights as being the original owner of it. And you know, there's a lot of these different use cases and these uh right now the NFT um ecosystem has been extremely successful. Um about a week ago there was a uh A Nancat NFT that got sold for the equivalent of about five hundred and eighty thousand dollars.

Um so That's an example of a new thing. Another example of an old thing is uh DAOs, decentralized autonomous organizations. And so the idea here is, well, you know, let's build an organization where the rules for the decision making in that organization No, the equivalent of like shareholder or board voting or whatever he wants to use.

Can just be written as rules in a smart contract. And then the program that executes those rules can be directly in control of Whatever assets the organization is supposed to control. And You know, we've seen a couple of

Examples of simple DAOs in action. An maker Dow which uh kind of maintains um you know a dye the stablecoin that uh kind of algorithmically targets a price of one dollar. Is uh one example. I mean Now there's also Rye, uh you know, there's A lot of examples of this. A lot of things that we expected from the beginning. Um prediction markets some also have been

Part of um you know what we were excited about using blockchains for since twenty fourteen. And they're still around today. So a lot of old things and also some new things as well. Thank you. Extremely. Yeah, some of the ones that Vitalik just laid out, like I I think your recent guest Katie Hahn mentioned NFTs as nifty's is what she called it. Uh oh no, I did'cause I wanted to try to force it sorry. I wanted to try to force that into the lexicon. Okay.

Nifty, yeah. So nifty nifty's are this crazy idea that like owning uh a digital copy of something and having your name stamped to it somehow gives it more value, but it seems to work. It works with collectible trading cards, it seems to work with digital art. And then because of the composability of the Ethereum infrastructure, you can reuse these nifty items across different games. games, different museums, different virtual worlds. And so you own it in one place and you own it everywhere, which is a very powerful concept. Um so digital scarcity was born with Bitcoin, but now extending into things that are not fungible, that are not exchangeable with each other. And that that's been, frankly for me, a surprising uh thing that has emerged in Ethereum. You know, Ethereum uh it's it's funny'cause you're asking Vitalik, like what did he expect and what did he not expect. I remember when Ethereum first launched that a lot of computer scientists I spoke with privately said it would never work. Because it's kind of this crazy idea uh that the way we're gonna get a trusted computer in the cloud is we will each run a copy of all the computations on all of our computers and then we'll sync it up and make sure it matches. So that's the recipe for building the slowest computer in the world. And uh but somehow we've we've gotten away with it. And so I think the big debate now about Ethereum has shifted from will it work to will it scale?

And when I talk to my friends in the crypto community and I say, hey, what do you want me to ask Vitalik? they send me a list, you know, of many, many questions, but the center piece is always the same. And like how the heck is this thing gonna scale? And I would like to get in that conversation. That is a more complicated conversation, it's technically sophisticated. But basically we're saying, hey, we're gonna have one giant mainframe computer in the cloud running everyone's applications so that we can all trust the computer instead of trusting each other. But how is that going to scale? Isn't that going to be the slowest computer of all time? And so now we're in a situation where Ethereum uh it's actually cleverly named. It runs on so called gas, quote unquote. And there's a limited amount of gas per block in the Ethereum blockchain. And frankly, uh the gas the price of gas has gone up. These decentralized finance applications, they can be very lucrative. They're trading large amounts of money uh and people are eager to use them. But the price of each of these transactions is going up. I was trying to do a small DeFi transaction the other day and it was a hundred dollar transaction and the price was twenty five dollars just to execute the transaction. And that's a very, very high transaction fee. And I know Vitalik and Crew have been working for years on the Ethereum two project to bring that cost down.

By the way, as an aside, that is one place where Ethereum really differs from Bitcoin. Bitcoin is saying, we're digital gold, this thing is immutable, don't change it. And the fights in the past have been about changing Bitcoin or not. And there's a big famous schism over that. But now with Ethereum, you know, the question is, the philosophy is we do change it, we do improve it, we do make it better, uh, but in the process, there is a greater chance that things can go wrong, that it can break. So now we're entering Ethereum two, which is the scalable version of Ethereum. So Vitalik, do you want to give us a quick overview of Ethereum two at a very high level and then we can kinda dig into the pieces. Um sure. Um so I think one other thing that's important to kind of add just to uh You know, give a complete picture of scaling is that there's these two families of scaling, layer one scaling and layer two scaling. Where layer one scaling basically says, Well, let's make the blockchain itself better.

And your two scaling says well let's come up with protocols that are gonna sit on top of the blockchain and that use the blockchain in more clever ways uh to provide the same kinds of security guarantees that a blockchain has. Um but that provide um much more scalability because you're not just kind of doubly staking like literally everything and doing everything on a blockchain directly.

And so Like Bitcoin for example. Uh you know, especially after the saline war is like focused very exclusively on layer two, right? Uh whereas you know, let's say Bitcoin Cash is very layer one focused. And this is a this is a classic thing in computing. Like so for example, when I go to a website, the domain name system is at a different layer, right the DNS servers, and then the HTTP servers, a server of the webpage, are another layer on top. And then there's a caching layer where some of the data might be kept closer to me. And then on my own computers where I run the JavaScript, because I don't wanna run that JavaScript way back on the HTP server or the DNS server. So there is a long, rich history in computing of stacking layers upon layers.

as you get closer to the point of uh the user, that's the point at which you use more compute and you execute more and more of the code. So basically the idea here is decentralize only what you need to decentralize. And so Ethereum is gonna split into or it's gonna have multiple layers. And I think what you're saying is layer one is really Ethereum, and that's the least scalable part, but that's where the security comes in, and layer two is where the code is run. And that's a that that has different properties, which you're gonna get into. But well the th the way that I would describe it is like in comparison to, you know, Bitcoin which is very layer two focused and Bitcoin Cash which is very layer one focused. Ethereum takes a moderate approach, so we do both kinds of scaling. Right. So there is the uh ETH two um effort which you mentioned, um which uh You know, it is layer one scaling, right? It is basically saying, Well, we're going to make this big upgrade of the Ethereum blockchain. We're going to

Move it from a proof of work, uh, to a proof of stake. Uh we're no proof of work is this current consensus mechanism that keeps the blockchain secure that runs on having a large number of uh computers just constantly cranking out these uh kind of mathematical hash solutions. twenty four seven. And proof of stake is a much more energy efficient alternative. Uh there's also sharding, which is a layer one scaling solution.

That says um that Instead of uh Every node in the network having to download and process everything. Every node in the network only has to download and process a small portion of all of the data. Yeah, the blockchain protocol is designed in a clever way that

still ensures uh safety despite having that constraint. So think of it as you know, like Combining at least some of the advantages of uh, you know, a Bitcoin style blockchain and BitSorrent, right? Like BitSorrent is very layer one scale. Like there's there's nobody who downloads um, you know, every movie or even uh an index of every movie. Yeah. So before we get to layer two, so so layer one is you're saying is proof of stake, which is moving from proof of work to proof of stake, and uh sharding, which is breaking it into pieces and having uh you know different pieces do different things and then try to reconcile them. On the proof of stake side, I mean that itself is a whole big debate that could take up the entire podcast.

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So the proof of work I'm familiar with Proof of stake, could we just define what that means? The core idea basically is um that in any decentralized consensus system.

Where you know you don't have a central registry that keeps track of you know like who the different humans are. You need some way for people to like basically vote on like which blocks got and which transactions got included in the network. And you need for that vote to be secure against What's called a civil attack. A civil attack is when one attacker just pretends to have one million different accounts. Normally like uh in you know like Reddit and uh Google accounts and Twitter and all of these centralized systems.

Like this is done using centralized mechanisms, right? Like uh they sometimes require phone number verification and then phone numbers absolve some often. end up having some kind of KYC on top of them. There is Various uh kind of AI techniques that try to detect bots. But in a decentralized system. But you know, we don't have this side of centralized registry of

who gets to be an actual user, right? And we don't want to have that. And so to prevent this uh civil attack, right? To prevent One person from just generating a billion accounts and out voting everyone else. The solution is economics, right? The solution is basically

that the extent to which you can vote on Just this very limited question of which transactions get included in what order. is proportional to how many economic resources you put in. So in the case of proof of work, those economic resources come in the form of computing hardware that you're running, right? Like when You're running um the sum mining software on your computer, you're cranking out these hash solutions, every hash solution

Gives you the right to generate a block. And the number of hash solutions that you can generate is proportional to how many computers you put in. In proof of stake. It works a little differently, but the core principle is that Your um

ability to kind of participate in creating the outcome is proportional to how many coins That are in the system that you're staking. And so the reason why proof of stake is efficient is because in proof of work Like the way that you're basically prove that you have a computer to the system is by just like running the software on on that computer twenty four seven and generating half solutions, right? Like that's the only way to safely do it because if you uh did not have to run the computer twenty four seven, like if you only had to run it twelve seven, well then

You know, you could have one computer that just pretends to be two different computers. But with proof of stake, if you have coins, those coins are saved in an account. That account has an associated public and private key and you can just make a digital signature with a private key. So you don't have to Like run any computer for longer than a few milliseconds. That's the kind of core principle.

That's supremely helpful. Thank you. Yeah, this is beyond the scope of this podcast, but it it is actually hotly debated how much more efficient proof of stake is because there's also these blockchains, they have to issue coins to uh in exchange for the security uh to the so called miners or validators in the case of proof of stake. And people will you know, spend a dollar to get a dollar, so to speak. If you're giving out free coins on the blockchain, and then people are gonna hustle in any which way possible and in proof of work, they'll do it by buying more computing equipment to run more hashes to get the new coins coming out and proof of stake. they'll have to lock up funds or they'll have to obtain funds to do it. And there's a cost to doing that to obtaining those funds. So there's no real free lunch, but there are arguments for efficiency with proof of stake, especially as you get to securing very large amounts. The way that I would just briefly summarize the proof of state case there is that

Like proof of stake can actually survive, um at least you know, in the opinion of proof of stake supporters, with much lower rewards than uh proof of work can. And the reason is and like because of how proof of stake works, the ratio between the cost of attacking a system and the cost of just running it like becomes uh like more favorable. But You know, this is a long debate. Um

I've written on it. I have a post on vitalics.ca uh like a If you just scroll down the most recent one called proof of stake, and then you know proof of work proponents have their own posts as well. So encourage you to read all of them. So going back, so this is all layer one scaling. Switch from proof of work to proof of stake, uh start sharding the blockchain. And this gets you some Tens of times improvement, like you know, twenty times, twenty five times improvement and through hundred times. Hundred times. Fantastic. Yeah. So then there's layer two, which stacks on top. Yes. So layer two, as I mentioned, is about creating protocols that live on top of the blockchain that only use the blockchain in very particular ways. So

There's lots of techniques for this, right? Like The simplest layer two to explain I think is a very special purpose kind of layer two called a payment channel. And so the idea behind a payment channel is like let's say I am you know, selling you Naval and an internet connection.

And you're paying me per megabyte. Well, let's say you're paying me, you know, like one cent per megabyte. Now If we want to do this over the blockchain. The naive way to do it is every time uh megabyte of uh data passes through the connection You will just make an on chain transaction and you send me one set.

The problem is this requires lots and lots of transactions And the transaction fees are actually much more expensive than one cent. So it's just completely economically non viable. So here's what we do instead. You Put

Ten dollars. into a smart contract, right? So you send ten dollars On the blockchain to an address. Where according to the rules of the Ethereum network Once those funds are at that address, those funds are controlled.

Not by a human, but by a computer program. Yeah. That computer program will then have some rules that I'll explain later. Right. So At the beginning You sent ten dollars to this contract.

And so far you actually haven't made any payments because As I'll explain. The contract has rules that'll allow you to get your money out. Now here's what you do after one megabyte. Um after ye uh no, we have one megabyte worth of um internet data passing between us.

You create an off chain message. And you digitally sign that off screen message. It just has um the number one set um just written on it. Right. So you will just write the you know the number one set. And you attach your signature.

And you send this to me. None of this goes on chain. Then one more megabyte happens. You write out a digital message that has the number two cents. And you dig no sign it, you send it to me.

Oh sometime later, every time uh a megabyte happens, you just send me one more of these messages, so you keep on incrementing the number. And let's say after a few hours of this In total, um we've had three hundred and forty seven megabytes uh worth of uh communication. And you've sent me a message that says three dollars and forty seven cents. And you are now done like no longer wants to use my internet, you know, you're signing off for the day. And so, you know, we're done.

So now here's what happens. I can then Take your message. And your message that says three dollars forty seven cents. I can attach my own signature to it.

And I can publish it as a transaction. going to the smart contract and you have your ten dollars in it. The smart contract has a rule that says If I send one of your off chain messages. I I I call them tickets. If I send one of your tickets

If I kind of wrap one of your tickets in an actual transaction. And I actually kind of published your ticket to the blockchain. Then Whatever amount of money is on your ticket. goes to me and the remainder gets refunded to you. Right. So I get my three dollars forty seven cents.

And you get your six dollars and fifty three cents uh back. Now It's actually incentive out a lines, right? Because um I um always have the ability to use the most expensive ticket that you s the most recent ticket that you sent me.

And I don't really have any reason to use one of your older tickets, right? So I'm always gonna pick your later ticket and so I'm always gonna claim all of the money that I'm owed. And you get your money back. Now if I disappear. Then

After some period of time. you have the ability to uh just go in and take the money back for yourself. Right. So the idea is that it's this contraption where You know. In reality you've made a payments to me three hundred and forty seven times, right?

Like you we've had three hundred and forty seven interactions during which The amount of money that's entitled to me goes up and the amount of money that's entitled to you goes down. But actually there's only two um actual blockchain uh transactions. Exactly. uh are visible to and needs to be processed by the rest of the network. Right. So we make three hundred and forty seven payments, but the blockchain only sees two of them and that's you know a factor of uh one hundred and um seventy eight

Uh to improvement there. Yeah. So so if I can summarize this for a second, um for kind of our our listeners. Um basically what you're saying is let's say that you and I have a long lived contract for some service rather than publishing every little aspect of that contract onto the Ethereum blockchain and flooding it. We go off to the side and We do a whole series of transactions, but every time we do a transaction, each of us like stamp it and say, Yeah, that little piece was done and we update the transaction between the two of us. And then when we're finished, either one of us can go back to the blockchain and submit the f the

the record of all the transactions and say, look, it's signed by both of us, so this is valid. But either one of us can submit it and the blockchain executes it. So the blockchain only needs to know when we left with how much money staked on this transaction and when we came back and what the total change was. It doesn't need to keep track of all the intermediate pieces. Exactly. Yes, that's a good summary. Now, channels are like I think of the the simplest uh kind of layer two, but they're also the least powerful layer two. They can only do payments um the uh

Have a hard time doing many kinds of smart contracts. Channels exist and they are being used for more and more things, um, and uh uh they're great. Uh but the thing that the Ethereum ecosystem is the most excited about is something called roll ups. Now I don't want to actually you know go in and fully explain roll ups because they're even more complicated than channels. But I for those who are interested, I do have an article.

Um once again, you know, go to vitalic.ca, scroll down like a I think it's called an incomplete guide to roll ups. And so I I describe channels and also the single class button and also roll ups. And roll ups are really powerful because They can support not just payments, they can support. the full generality of applications, like exactly the same applications that you can run directly on the Ethereum blockchain itself.

But if you do those things inside a roll up. They become one hundred times cheaper. Um so It's this very powerful scalability technology. It's the Ethereum community loves roll ups because They're very easy to upgrade to.

Because if you run an application on Ethereum, you can just run the exact same application inside of uh Ethereum virtual machine compatible roll up of which uh A couple of projects exist and actually I think A couple of days ago Optimism uh announced that they're going to launch Chef uh their mainnet fairly soon. Yeah, roll ups are fascinating. I've been looking into them a little bit and uh they're they're worth learning about. It's basically the idea is just that there's these very complex machines that are not on the blockchain, that are off the blockchain, that are running the transactions, but then they're submitting different kinds of proofs back to the blockchain to say, don't worry, these this was a valid transaction. And the two different approach optimism is optimistic, where basically optimistic roll ups say we assume people are doing the right thing, but we're watching. And if someone commits fraud or makes a mistake

Then they get punished for that fraud. Whereas there are these uh zero knowledge base roll ups, you know, pioneered by Starkware and others, which are basically saying, Hey, actually we're gonna submit proofs, which are much shorter than the actual computation, that the computation was done properly. But I think these give together what, another hundred X speed up? Mm-hmm. Yeah. So if you combine the ETH two layer one speed up and the layer two uh roll up speed up, then you get the ten thousand time speed up.

Exactly. You can get such Some some Where over one hundred thousand transactions a second. Yeah. One other really nice uh feature of uh sharding, by the way, is that like it's uh quadratic, right? So

If the efficiency of computers increases by a factor of two. then like you c the you can support twice as many shards and each shard can be twice as large, and so your the capacity of the whole system increases by a factor of four, right? And so we actually expect That capacity to increase uh going even far beyond one hundred thousand over, you know, the next couple of decades. Um is it a stretch to say then that it would it that sharding That sharding increases capacity is a square of Moore's Law. As opposed to Justin Moore's Law.

Mm-hmm. Now if we get to a hundred thousand plus transactions per second, that's a lot. I mean to give a uh give a uh comparable metric, there's a uh there's about a hundred thousand tweets per second at Twitter during peak times. And obviously these transactions are gonna be much more sophisticated than or could be much more sophisticated than a single tweet. They can actually be arbitrary computer programs running on the side. So That's quite a bit of scalability. So so then I think the question comes up, Well, well, where is it? You know, a lot of people I know who are building apps on top of ETH. have now had to come up with backup plans. They're competitive blockchains that are coming up, which trade off decentralization and security for speed. So what they'll do is they'll say, Well we'll only have twenty validators run by our friends, or maybe like a hundred people that we know and trust, but in exchange it's a lot faster. Like now we don't have to get consensus from r unknown people all over the internet. We don't need these complicated contraptions.

And then they can basically run much faster. So a number of projects are looking at these as as backup plans, but I know that they don't necessarily want to use these because these are less decentralized. They don't really fully live up to the original promise of blockchains to the same extent. So the real question I think in everybody's minds is like, is there a timetable for these? You know, can we can we reliably target a date? For certain kinds of improvements because people are betting their businesses on this. Great and uh very important question. Uh so I'll I mean I'll start off with uh the progress of east two. Uh so I think

It's important to reiterate because I think a lot of people haven't fully absorbed this. The ETH two chain is already running, right? So there's already a proof of stake chain. Um it does not yet have sharding. But the proof stake system is running. The thing that that has not yet happened is um the event that we call the Verge, which is where we basically actually take the ac existing activity on Ethereum and we fully move it over from the proof of work chain to the proof of stake chain, and then the proof of work chain just like basically becomes irrelevant from there.

The reason why we took this kind of multi-step approach where we first start the proof of stake system and then you know we have let both run in parallel for some time and then we merge at the end is just to give proof of stake some time to prove itself before the uh entire ecosystem is asked to um upgrade over. No, the proof stake uh thing exists, it's been stably running um ever since uh launch. Yeah. At some point uh fairly soon like you know, we are going to actually um go and merge um all the all of the proof of work activity onto it.

Um so shorting Is um also going to happen. Um as shorting right now is in the the There's a spec, there's prototypes of parts of it. I will admit that we were actually prioritizing the merge uh kind of even more than sharding recently. The reason why for this actually has to do with the other thing, which is roll ups, right? Like the thing to remember is that if you have roll ups but you do not have sharding

You still have a hundred X factor scaling, right? You still have the ability for the blockchain to go up to somewhere between one thousand and four thousand transactions a second. Depending on how complex these uh transactions are. Uh and so With roll ups, um as I mentioned, uh The optimism.

You know, fully EVM capable roll up is um likely to um launch uh an initial mainnet release uh some in uh around a month or so. Um there's also a project called Arbitrum. Um, which is also an EVM capable roll up. There's actually simpler roll ups.

that are only capable of uh processing simple transactions and exchanging between assets. Like Loop Ring and ZK Sync, and those roll ups have already been running stably for about a year. Right. So roll ups aren't even theory, they've been a practical part of scalability of Ethereum for a few users for almost a year and uh the thing that's left is basically taking that same model and uh just Fully extending it to uh kind of

not just support transactions but also arbitrary applications. Right. So Rolex are coming very soon. And We're fully confident um that by the time that we need any more sh uh scaling than that, and then you know, sharding will Have uh already been um

Ready for a long time by then. So you're basically saying fully very confident that something like uh you know an optimism or uh ZK based roll up will be solving a hundred X scalability problem within the next few months. I think so. I mean I think um Like there's definitely a lot of people who are not going to be comfortable moving over just because, you know, it's new technology and new technology always has risks. But

I expect there'll be plenty of um applications. I mean possibly even non financial applications like the Nifty is And um you know. Don't meet names and so forth to start off just because uh Like the risks are lower if things do break.

And then kind of creeping up to higher and higher value things as people become more comfortable over time. So do you think that Ethereum could have a scaling schism like Bitcoin did? Bitcoin split famously into Bitcoin and Bitcoin Cash over the block size debate a few years back, which is all around scaling, and people some people were saying Bitcoin should be digital cash and so therefore it needs these big blocks and it needs to handle more transactions and other people said, No, no, Bitcoin is a Swiss bank account, it's digital gold, and it needs to be secure. And lots of small nodes have to be able to run it. So we care more about security than we do about handling small transactions. And the the small block people won and so Bitcoin forked. And now of course what we call Bitcoin is a small block bitcoin that won that debate. Do you think that there's a possibility that miners, some miners and people will stay on ETH one instead of ETH two?

I think so, except I do think that the risks are much lower. Um a big part of the reason why is because we've been very open about proof of stake and sharding being the vision basically from the first day. Yeah, I mean Ethereum did already have the schizophren of Ethereum uh and uh Ethereum Classic. And uh a lot of the proof of work c proponents. did actually move over to P to Ethereum Classic already because they uh

Recognize that the theorem classic. Community and ideology was one that's more aligned with the continuing proof of work forever. And so you know why I'm staying on the chain where

Um core developers and lots of people are eagerly expecting a pro stake change if you can just move on to a platform already that uh And accept your values. Um so I think that was one of the factors that did um actually end up Making the uh E two transition uh kind of a bit more secure.

Um Another thing also is that I don't really think there's a deep schism of ideologies within Ethereum in the way that there was in Bitcoin. Like I think in Ethereum. everyone is roughly on board with the the idea that you know you have some layer one scaling and you have some layer two scaling.

There are some uh kind of longer term disagreements like uh You know, Justin Drake, one of our researchers, for example, is much more into uh making layer one more powerful, whereas I'm uh more in favor of a simpler layer one and um Having Layer two is do more things.

That's not a kind of extremely deep and fundamental disagreement where like, you know, either approach is uh gonna have Lots of scalability and it's gonna deliver a great uh Environment sets for Ethereum users. So that's interesting. You don't you don't even really run Ethereum.

You have disagreements with developers and they could even change it in a way that you don't like. Has that happened yet? Has has there been a case where something has been implemented into Ethereum that maybe the community or the other developers wanted, which you sort of disagreed with? There's definitely been changes that I have wanted to uh push forward that I mean I gave up on fairly quickly because uh now And of course developers or the community ended up uh disagreeing on them. There's been changes that were kind of pushed forward by

some people who are not myself, um, and then Where I just kept completely silent. So like block reward decreases, um, for example, I was completely silent. Or mostly silence. Proc Pal was mostly silenced until it was obvious that the Proc Powell side was uh losing. Things that I was uh trying to push forward. I mean those are harder to find just because like I tend to just naturally understand what the community will would accept and I don't really

try to push things that I don't think would be successful. Uh I mean Some minutia around um you know, scaling strategies and uh statelessness and state management strategies where like myself and some other core developers have some different opinions and so There's a lot of back and forth where we try to sort of satisfy each other's concerns.

Yeah, my sense from afar is you're more coordinating than dictating. And you're doing what? Are you running the Ethereum Foundation? Is there an organization you're part of, or are you just kind of a roving individual with a laptop and a few friends who just kind of writes blog posts and submits uh proposals? In some of us. I mean I do, you know, if uh I do the the proposal submitting, I have do, you know, some Sub writing proof of concepts. Um and you know, in Python I uh do some uh Yeah.

trying to coordinate people. The Ethereum Foundation as an organization exists. So the executive director of that is um Ayumiya Gurchi. Um she has been doing a lot of the logistical things for about the past uh three years and has done an uh amazing job and and I end up uh And of course quite a lot on uh Uh various things. But yeah, even the Ethereum Foundation, like

It has an important role because it has this And of a large pool of capital. And this s sort of high level of uh kind of public legitimacy, but it's uh not nearly the only organization within Ethereum, right? Like there's A lot of proposals that got initiated on the outside.

Um there's A lot of proposals um that got a really huge amount of community support coming from uh the outside Even organizations other than the Ethereum Foundation that have a lot of resources within the Ethereum ecosystem, so like for example For the first few years consensus um did quite a lot.

Inconsensus is still doing a lot, uh but now we all there's also a Uniswap. whose treasury has just grown a huge amount and they here are even wealthier than the Ethereum Foundation is. So uh It it I think in practice it does end up being this kind of loose collaborative effort between a lot of different groups. So Uniswap is interesting. Uniswap is uh for those of you don't know, it's an application built on top of Ethereum, but it has its own token and it's the f uh it's the f uh one of the first uh automated market makers, a decentralized platform for exchanging cryptocurrencies with each other.

without having to use a centralized authority like a Coinbase or a Gemini or a Coin List. Instead you just go on to you go into Uniswap and it's a smart contract. It's not owned or run by anybody except the community and a few developers and there's a token associated with it, but you can just automatically trade with this smart contract to turn, say, your Ethereum into a stablecoin to get the equivalent of dollars or back. This shows how the Ethereum ecosystem is very different than the Bitcoin ecosystem. In the Bitcoin ecosystem, there's only one coin, there's Bitcoin. And they don't really tolerate other tokens in their orbit. Whereas with Ethereum, you have a lot of other tokens in the orbit. And so you'll see blockchains that are competing with Ethereum that are trying to You know, they're making different trade-offs and you know, whether it's flow or Ava or NIR or whatever, there's a whole bunch of those. But then there's also people who are built on top of you, like Balancer and Curve and Uniswap and whatnot. And so what's your view on all these other tokens? How many tokens are there gonna be? How do you determine which one makes sense and which one doesn't? And do other blockchains make sense at layer one, or should other tokens only emerge at layer two now that Ethereum exists?

No, this is definitely uh very Important topic. Uh in tokens are one of those uh Things that's really like playing with fire. Right. Like on the other hand, um Fire is uh crucial to human civilization, but on the um other hands fire is uh If you're evil you can burn up your family if you're not careful.

So The the thing with tokens, right, is that The cryptos space is not the only space that tried to build decentralized things. Right. Like there are a lot of decentralized projects that are outside the crypto space. Like um Diaspora, the uh decentralized alternative to f to Facebook that people tried to build around two thousand and ten.

But the challenge with um this uh kind of pre blockchain or non blockchain decentralization or crypto is that it's harder to uh kind of align the incentives and motivate people to actually wants to participate in, you know, building and growing the community at a large scale. Like you can get idealists, but the problem with idealism is that

Idealism is not very socially scalable. Cryptocurrency on the other hand, um, you know, can uh appeal to the kind of universal values, right? Like where you know the real universal value is getting rich for a lot of people. Yeah. And and it seems with ETH you've done a bit of both. You've got a bit of both. You've got people who have ETH to getting rich and then there's also a movement. Yeah. Right, exactly. And I like I think that balance is important, right? Like I think

The failure of a lot of non blockchain crypto shows the inability to do things at scale without that financial incentive, but at the same time No, the project a lot of the more at least in my opinion, amoral projects within crypto that just care about Uh you know, the pump and uh the volume and um you know getting a uh powerful and expensive token that they can get rich off of like

Those projects end up uh not really doing well in the long term either, right? And there's been Plenty of projects where just like V C funds gave um, you know, hundreds of millions of dollars of capital to them, but you know, the reality is that like hundreds of millions of dollars of capital just can't buy you a soul. Right. And and so a lot of uh people end up uh kind of Stumbling and falling on that to some extent.

Yeah. I think some of that is just driven by the pre mine phenomenon, where Bitcoin had a so called fair launch, although you can debate how fair it was, but but you know, uh how fair the distribution is today. But uh everyone s sort of started mining at the same time, or everyone who was aware of it. Where s a lot of coins that have come subsequently, the team has a pre mine where they get a bunch of the uh the coin in advance. And as the amount of the pre-mine goes up and the competition moves from hey, let's mine as much Bitcoin as possible to hey, let's just create the winning blockchain and then get the big pre-mine. So it's just move the competition from mining to creating or forking. Uh, so it it's almost sort of inevitable once pre-minds became a little bit accepted that there would be so many different blockchains. Yeah, and I think that's uh

Definitely fair too. Like in w Ethereum once again is a kind of fairly uh kind of moderate there. Like there was a pre mine, but no, the pre mine was only about twelve uh percent of Actually like about ten percent of the total supply. And you know, people did have the opportunity to mine or to combine the sale and so a lot of people had the opportunity to kind of become part of the ecosystem. But I mean I do think that the the less monetary and of the movement aspects of this is important, right? Like if you just um, you know, go to CoinMarket Cap and you look at

Some of the like top ten coins. Other than like say Bitcoin and Ethereum. Like you can't always give a good answer for, you know, what values does that token represent. Um whereas, you know, for Bitcoin you can, for Ethereum you can, for Zcash, for example I think you can.

So I think there definitely is this kind of A complicated balance between different factors. Basically the coin can help, but too much emphasis on the um on just the coin can hurt. And It's challenging.

I think Uniswap actually did really well with their coin. Uh because uh Like on the one hand, like you you know, you could kind of criticize it and say, you know, oh, this was only just a measure That it was kind of reactionary, that was reacting to, you know, kind of sushi swap uh trying to kind of Swoop.

basically try to push everyone to quickly migrate over and they had a coin and so people, you know, got into SushiSwap because uh they just w wanted to get rich off of it, and so Uniswap reacted by making their own coin. Um but at the same time, like they did this one really cool thing, which has a big part of the initial distribution was this very a kind of egalitarian airdrop, right? Like basically If you Had used Uniswap. Even once before the airdrop began, you would get four hundred uni tokens.

So at the time those uh uni tokens were worth about three and a half dollars, so the joke was like You know, Uniswap actually delivered on giving everyone a stimulus check. And uh you know, people really loved that. And uh the the s supply distribution uh distribution of uni was gonna very widely dispersed and the whole thing was this kind of Dow where um a lot of people could uh participate in decision making. So I think There's waste to do tokens well and there's waste to do tokens poorly.

Yeah, the backdrop on Uniswap, uh SushiSwap is Uniswap was this automated market maker, this decentralized exchange that launched, and then they sort of got attacked. They got cloned by this other one called SushiSwap, you know, joke on Uni Sushi. And then they tried to like steal the Uniswap community by saying, Hey, come here and we'll pay you more By giving you tokens and then Uniswat was forced to actually create a token, which we then gave away to their community, which are called airdrops. It's like helicopter drops of money, except now it's in made up tokens. So there's all this interesting stuff that goes on in crypto where trying to build and maintain communities, you have to figure out how to distribute the spoils. But contrast how this is compared to, say, Facebook or Twitter. You don't see Mark Zuckerberg airdropping Facebook stock on the users, and you don't see Jack Dorsey airdropping Twitter revenues on the users, but that's exactly what happens in blockchain land. And you know, I Ethereum might have had a small pre mine, but I do remember early on looking at Ethereum and I think I I I talked to Balaji Srinavas and one of your other guests about it, Tim, where we were looking at ETH back in the day when it was first launching and we were just really confused because it seemed like there was this one brilliant

technical guy surrounded by like fifteen other people who all had the title co founder. And it was very confusing to evaluate as an investor, so we ended up not investing to our detriment. Uh but that's that's my way of saying that this was not a Vitalik get rich quick scheme. I don't think Vitalik even had you know, was even the single largest token holder. I think there were many other people who frankly, you know, had a lot less to do with Ethereum success who ended up holding a huge number of tokens. So to the extent that Vitalik is the one who's working on it and pushing it forward, it's a labor of love. And I've always been super impressed by how his team is very altruistic and really kinda wants to make the world a better place. Maybe they're young and naive, but it's you know, it's refreshing to see that. So I think, you know, in terms of branding, a lot of people look at Ethereum as like lift. to Bitcoin's Uber, right? There's sort of a crypto right wing libertarianism versus a crypto left wing uh sort of libertarianism. Naval, let me jump in for one second here, if I may ask a

Naive question. Nice question, maybe. And if if I'm completely looking at this the wrong way, I'd love to be corrected. Uh thinking of Ethereum. And comparing it to say. bitcoin and considering the possible regulatory threats. to Bitcoin and I think probably a

a stronger focus on cryptocurrency than blockchain by regulators. And just by extension, if we're thinking of Ethereum on some level. as both cryptocurrency but also as a world computer maybe as if Amazon had its own cryptocurrency, right? Bizonians or whatever they whatever they might call it, and then AWS, that even if there were a crackdown on currencies that

Ethereum would have some resilience and anti fragility in that respect, does it mean that Ethereum in its entirety is less subject to regulatory threat. Yeah, or that it can thrive in the face of regulatory

threat along the lines of that which uh Bitcoin could face. I mean comparing the regulatory situation of uh Ethereum and Bitcoin, I mean I think Like both benefit from being highly international. But like Bitcoin has a strong community in the US, it has a strong community in China, it has a strong community in the You know, the EU and lots of other places.

Um Ethereum is uh very similar in uh that regard. Um you know there's These very strong communities in lots of uh different uh countries. You know, including countries that are I You know, not uh kind of geopolitically on the same page with each other.

So there there's a lot of uh resilience, yeah. Yeah. In that sense. Yeah, of course. The other uh kind of aspect of uh politics is that like it's not

just about what they can do. It's also about like what they want to do. The reality is that regulators have cracks down on uh cryptocurrency is significantly less than uh they uh theoretically could, right? Like they theoretically could like make something like Coinbase go overnight. Right. And like I think the reality is that You know, they uh Don't uh in part because they they do see a lot of the positive value that's uh coming out of uh these uh platforms, right? Uh there's

Even regulators that want to use um you know public blockchains and uh you know even things like Ethereum to build applications on top of them. You know, they uh C value in uh Some of the kind of advantages that the Things like stablecoins, for example, could provide right and you know, non financial applications of various kinds. Yeah, if if you wanted to build a fraud proof voting application, you'd probably do it in Ethereum.

Mm-hmm. Yeah. Mm, that'll be interesting. Yeah. Cryptocurrencies are inherently designed to be sovereign resistant, right? They're they're designed to be stateless. And so the geographic redundancy is one aspect of it. And some countries try to ban it. Like I think uh for the for a while people think China tried to ban it and that sort of failed, and right now India's talking about banning it and that will end in tears, right? That's not gonna go well when you leave your country out of the innovation in the next ten years, so hopefully they don't do that. But there's also redundancy in terms of design. For example, going to proof of stake is a different kind of redundancy than being just all proof of work. Um so you're not subject to the same kinds of attacks, I think being used for all kinds of applications. Nival could you speak to that?

Yeah, so pro proof of work is you shut down miners and miners have hardware and equipment and you know where they live, right? They need a physical presence. Whereas proof of stake is validators who just need an internet connection. And so they're they're kind of harder to stop and harder to find in theory. Mm-hmm. And then you also have just what applications are running on top of these platforms. So if you're just running digital gold, that's one application, but if you're also running as Vitalik said, uh, you know, functioning prediction markets, public goods, uh financial systems, voting systems, gaming systems, nifty tokens, art galleries, right, and all those kinds of things, then it gets very hard to shut it down. And I actually think eventually all internet traffic will be encrypted and all of it will require cryptocurrencies to kind of just allocate scarce resources. Like even today, there are things that we do in the internet that are centralized, like caching and routing and spam filtering that should be decentralized and involve crypto payments for efficiency.

And once we sort of start getting to those applications, it'll be very hard to turn off crypto without turning off the internet. It's the native money of the internet. And so if you take away value transfer from the internet, the internet as we know it will be stunted at best and more likely just cease to function at some levels. Thank you. Back to Univol. Yeah. Oh yeah, yeah, yeah. No, not at all. No. Yeah, it's I mean there's a there's there's there's an infinite number of of rabbit holes we can go down. Coming back to Ethereum for a second, so there's Bitcoin, which is clearly digital gold, there's Ethereum, which is the world computer. And you know, with digital gold, high price is good. You want your gold to go up in value, except to the extent these days digital gold bitcoin has been going up. But it actually gives me some trepidation. I tell people it's like my insurance policy is becoming more valuable, uh my life insurance policy, right? I don't know how I feel about that.

But with ETH, it's not clear that the price going up is always that good for adoption. It's it's good for the people who are pumping and holding, but is it so good for the people who are trying to use it? I mean well do you have any thoughts on the price of ETH and how much for example, we don't even know exactly how much ETH there is gonna be in the future, right? The supply curve is a little bit undefined. And some people say, Oh, it could be too big, this thing will get inflated, whereas there are other arguments saying no, there's certain applications we're gonna have for which you have to lock up ETH or even destroy ETH. to use these applications so ETH may end up being more valuable. Do you have a what is your current point of view on where the ETH supply heads and what the ETH price means for the ecosystem? Yeah, I so one thing that I think you o alluded to a little bit is that there's this proposal called EIP one five five nine, which uh kind of redesigns how the transaction fee market works. And you know, there's a lot of uh kind of very wonky uh kind of economic math for um kind of why the specific changes that make so make sense. But one of the consequences of that change is um that

the majority of fees instead of going to the minor whoever creates the block would get burned. Like it was just whatever get deleted out of existence. And so if demands to use Ethereum is high enough uh then there would actually be more ETH than uh there uh being destroyed than is being created. And so you know the the joke that we sometimes make is, you know, if uh Bitcoin knows uh fixed supply is sound money, then you know if you have a decreasing supply, does that make us some ultra sound money? Uh and it actually is not even that far fetched a possibility. Like uh if you look at the transaction fees for the last month, like they actually have been on a lot of days greater than the block rewards for that day um for that day. Um so It's interesting because like it basically

creates this more direct connection between people using the Ethereum blockchain. And um You know, ease um having some value. Right, like um at the beginning the way that ETH was even described when we were doing the sale is that this is like gas, you know, you're buying This token that you need to use.

And if you want to expense transactions. And If the token is actually a consumable, right, then it actually behaves even more like um No. I guess you know, gasoline as uh the original metaphor, right? Like uh if people wanted to use it, they would actually have to consume it. And so the value of it is actually s something that sort of depends on

Lee Yeah. Ethereum network being useful. Let's see, yeah, like it's a bit of a different, um kind of guiding principle than something like Bitcoin, right? Where Bitcoin

just thrives value from you know Bitcoin the currency thrives value from Bitcoin the currency and Bitcoin the blockchain is this kind of Thing off and decide that, well, okay, fine, it has to exist. Um whereas in Ethereum, like it's much more of a system where the blockchain is the point. Um and Yeah, the Eath the asset gains value from the blockchain uh doing its uh i its job successfully. That's interesting. So big Bitcoin the value is in the currency or in the Bitcoin itself, where it's in ETH the value is in the blockchain being used and the ETH is the byproduct of it.

Yeah, to use my strained castles made of math analogy. And you and that thing has high walls and is guarded really well and they don't change much and you know it's the same as it was in two thousand nine or two thousand eleven so that no one can break in. But ETH is sort of this dynamic network of little city states that are trading with each other. So the more trade there is, the more free flow of information and goods, the more valuable the whole system becomes. But no single point of it is necessarily as impregnable. Like, for example, I do expect that we'll see more hacks and break ins and failures in the ETH ecosystem as a whole, not in ETH itself, but in the ecosystem around ETH, than we will in the ecosystem around Bitcoin, necessarily. But at the same time, ETH is dynamic and growing and and adaptive. Which just makes it more of a uh You know an evolving creature. Yeah.

I mean I I'd agree with that with one reservation, which is that I mean I think big the big Bitcoin ecosystem does have its own uh kind of taking time bomb demons too. Um like uh tether is one example. Mm-hmm. Yeah, there are pieces around the Bitcoin ecosystem that are semi-centralized or un of unknown trustworthiness and do rely on uh untrusted on un trusted third parties, I should say. Uh but you know, as the Bitcoin people say, like not your keys, not your coin, right? And trust and trusted third parties are security holes. Um so they're aware of that. I think the the Bitcoin maximalist, which I believe is a term that you co-coined, um the Bitcoin maximalists uh would say, Well, that's not Bitcoin, right? That's something else. Um so I I mean one of the things to think about here, and I think you care about this more than most people in crypto, which is nice, is that you do seem to care about wealth inequality, the genie coefficient, and the distribution of coins. And one of the criticisms about crypto that I see a lot is like, Well, okay, so you're getting rid of the old oligarchs with this new financial system, but you're just replacing them with new oligarchs.

who are the original Bitcoin and ETH holders, and how do you think about the distribution of wealth in a crypto run economy as opposed to a fiat currency, uh AK the US dollar and uh you know the Euro run economy. This is definitely one I think one of the challenging uh kind of questions for the the community to grapple. Um Yeah, this is actually one of the reasons um why I kind of really like Ethereum's uh kind of More you know, multi currency welcoming ecosystem, right? Like uh you know, sure, okay, you have ETH and uh

Yeah, there are limited set of opportunities to kind of get new Eve directly from the tap, and at some point, uh you know, the supply is going to stabilize and if you're buying e you're just you're buying youth from a previous people. But at the same time, there are these new applications that are launching You know, you have your um um uni as I mentioned. We are

The yeah distribution was uh I mean I thought it quite egalitarian, right? Like the as I mentioned, you know, the the four hundred um uni stimulus checks that just go to everyone who um ever used the application at least once and the kid tried really hard to not favor Wealthy users too much. And then There's uh I think Tornado Cash um um had an airdrop uh a couple of weeks back. Uh no there's

More of these assets coming in. And I think like That kind of churn is um healthy, like it Yeah. It breeds new life into the ecosystem. you know, it breathe segment of new life into the wealth distribution and and it does Um create opportunities for

new people to uh be able to come in and uh kind of participate on a somewhat level footing as well. But then if we want to compare all of this to the Fiat ecosystem I It's a difficult comparison to make just because um you know the kind of Institutions are so different and it's kind of difficult to uh

You know, match one up against the other, right? Like uh Fiat currency is um you know, they basically get created by kind of a combination of uh You know, the the central bank and the uh commercial banking uh ecosystem. And In terms of where the the

a kind of new f newly generated value comes in, like, you know, both sides of that gets uh Sub share essentially. And like There's bad things that come out of it. There's also good things that come out of it. Um so like I mean I know like this is a controversial position among uh libertarians, but like I actually like the idea that um

You know, if you have a fiat currency then the government can print it and just use that as a source of government revenue. Um the reason why I like it is because I think if the government can earn can get um money through unobtrusive means That reduces uh the extent to which it has to rely on um getting money through more intrusive means and um

You know, rely on it like taxation and uh kind of more directly. The problem is when it's unobtrusive, it's very easy to do it very sneakily. Um and these tax taxes have to be collected now, whereas uh printing can kick the can down the road for the next person to solve. Right, right. arguments in the other direction. Yeah, there's a there's a mor there's a moral hazard there. And I think we're watching it play out where we printed eight trillion dollars last year and who's gonna pay for it. Right. Well the nice thing about cryptocurrency, of course, is that like the ecosystem is much more transparent. Um and so you know it's easier to uh analyze and understand what the rules are and like within the context of a crypto ecosystem, you know, as I mentioned, you can still do very egal egalitarian things. Um you can still

you know, reward people who were very important early contributors to things that ended up being very important. Um so you know, you can still do um kind of all of uh those things and you know we do have a responsibility to get the balance right but The environment is just inherently a more kind of

open and honest one just because You know, these are decentralized systems and everyone does just they see exactly what's going on. Yeah, it's certainly more transparent. Like you can tell what the money supply of ETH is at any given point. Good luck doing that with the US dollar money supply, or you can tell what the inflation on ETH is at any given point. And and as you say, there's opportunities to build more applications on top of ETH, and maybe ETH is the app store for decentralized applications. But some of those applications can go on to capture just as much value and create just as much value as ETH itself. Um so I think that'll be uh it's the the really interesting development in the last uh year is just to see applications on top of ETH really creating and capturing and building lots of wealth and and value. And so in that sense, this twenty twenty one and twenty twenty run up seem a little different to me than the twenty seventeen run up, which was based on just, you know, a lot of hype, frankly. Um

So As we see sort of crypto playing out, you've also had some very interesting thoughts on everything from radical markets to political philosophy to kind of what happened in twenty twenty and so on, and we could spend a whole podcast on that, but just at a very high level, you had a really good post on your blog saying end notes. On twenty twenty. And it was about a lot more than just crypto. So what else are you really interested in these days? I mean, uh is it AGI, is it life extension, is it public goods, is it different kinds of voting schemes? What's really on top of mind free that's not directly crypto related?

Some of all of those. Uh so like I think The changing uh kind of way in which economics works is definitely one of those really important topics. There's a couple of different uh kind of changes that's happening. Like one of them that I talked about is just public goods becoming more important, right? Like uh a lot of the ways that Like people would thought of economics like fifty or hundred years ago. They just uh kind of focused on private goods. Like uh Cars, houses, food, uh you know, things like that. But

There's also public goods, right? Which are Projects that benefit um a large and unselective group of people. And so no individual person who benefits um has the incentive to personally fund the whole thing. But it's hard to

push people to pay for it because like you can't you know, deny the benefits of uh the thing to people who don't pay it for it, for example, right? And so scientific research is one example of a a public good. My blog is one example of a public good. Open source software is um an example of uh a public good. And like on the internet, public goods are even more common than private goods are. Uh and so like our economics um just the

has to uh uh No, just take that fact seriously. And Uh a lot of uh what's uh but happening in the blockchain space in some ways just is, you know, the crypto world trying to grapple against of those things. So basically these public goods are where the the costs are concentrated. Like if I want to s fund scientific research, I do it out of my own pocket, but it benefits all of humanity. So the benefits are distributed. And so these tend to be under supplied. There tend to be too few of them. And so there are there are schemes out there to tackle some of them. I think you've talked about quadratic funding as an example.

Mm-hmm. Yes. What is quadratic funding? Uh um so quadratic funding is this um Interesting mechanism.

that basically says anyone can donate money to public goods through the mechanism. But to compensate for this kind of under provision that you talk about, the mechanism provides a subsidy to Every public good. And that subsidy depends not just on the amount that was contributed, but also on the total number of people who contributed, right? So like for example, if there's two projects, they both got a hundred dollars, but one of them got Let's say eighty dollars from one person and twenty dollars from another person.

And the second project just got one dollar from each of a hundred people. The second public good is much more public than the first public good. Yeah, the tragedy of the commons on the second one is much greater. Right, and so the facts that the s that the second one managed to get to a hundred dollars despite the one hundred way tragedy of the comments. implies that it's a really important project and so the uh quadratic funding mechanism actually gives a much greater subsidy to the, you know, one dollar from a hundred each of a hundred people project um than it does from the project that got just the

um a hundred dollars from um Yeah, a split between two people. And so we've been experimenting with the quadratic funding. There's this uh thing called Gitcoin grants that happens a few times a year. Uh and that's had about a Seven um

Um or eight rounds by now, I forget the exact number. um just for public goods within the Ethereum ecosystem and that's worked really well. Um so That's been one of the kind of interesting experiments that I've been following. Question on quadratic funding, just to hop in here since I'm

I'm involved with a few different types of scientific research. Are those funders in those experiments that you've run Anonymized or de Anonymized because I'm thinking through the example you gave and how there are other plausible explanations for why there might be I'm just thinking about, for instance, reputational risk associated with certain types of scientific research.

Uh the there are other plausible explanations, but those largely hinge on named names versus them being anonymous. So how do you think about other contributing factors depending on how you're conducting the experiments? Sure. So First of all, like in quadratic funding, unfortunately, you do need to have some kind of model of for identity because

You know, he needs to prevent the two people from just pretending that they are one hundred people. Right. Um but with cryptography. You actually can do fancy things that give you most of the benefit from having anonymity despite um needing to have an identity system. Basically You can have a system where people can

make all these contributions and They're you know done in such a way that the system identifies like how many unique contributors there are for each project. But where the system Does not get an idea like nobody actually gets any um idea of

Exactly which particular person Um donated how much money to which particular project. This is done using this uh really important and fascinating topic of a zero knowledge proof cryptography. Yeah, zero knowledge proof cryptography like basically The idea is that it allows you to

make cryptographic proofs that some statement is true. Um so like I can make a cryptographic proof that says that, you know I have one hundred coins or that. You signed a message um that contains like some um some fact about me and it was signed with your key. And you can make these proofs.

But we are The proof. does not reveal the contents of uh the thing that it's proving. Right. So like for example, I can prove that I have an account that has at least one hundred coins. But I don't have to prove which account it is, I don't have to prove exactly how many coins I have. And there's a lot of this very fancy mathematical magic that basically uh

creates this protocol where If you give me a proof, then I know that the statement is true because if the statement is false, you would have had no way to generate the proof. But if I have just a proof I can learn nothing else beyond the fact that that particular statement is correct. So this is incredibly powerful cryptography. It's uh It's behind Z cache, for example. Um there's also with Earing applications like Tornado Cache, um, that are using it. There's

Zero knowledge proofs also have these really nice scalability proofs, um so The uh proof are very f quick to verify, even if the statement that they're proving is incredibly complex. Mm-hmm. And uh Z K roll ups like some of these uh scaling solutions end up uh really benefiting from using them. So Very powerful technology and I think it's also

very significant from a social perspective because You know, we have this broader kind of anonymity versus accountability debate, right? Of like you know, the benefits of privacy versus the benefits of like basically persistent reputations. And zero knowledge cryptography is really powerful because it may it's in a lot of cases allow us to get both good things at the same time. Like you could get us the benefits of uh things like persistent reputations while at the same time getting uh a lot of the benefits of uh anonymity.

Seems very powerful just to follow up on that. You're thinking of scientific Research. I'm going to ask you what areas you might have particular personal interest in. I know you have some interest in life extension. uh as evidenced by the the dragon slaying parable on your website uh or that you link to from your Twitter bio. But It strikes me that the quadratic funding experiments would also be

heavily dependent on Equally simplistic or simplified communication of competing, not necessarily competing, but contrasted scientific studies, right? Because there are some instances, just in my experience, where scientific studies that require a lot of scientific knowledge or due diligence. would have fewer funders compared to others, but that doesn't necessarily reflect less importance or impact potential.

Yes. No, this is also a very important point. Um and I think the solution to this is that Like quadratic funding by itself doesn't solve all the problems. And you have to combine quadratic funding with other mechanisms. Um so I can give two examples. One example of how you could do this is you could just set up an organization where the organization has some smart people And you know, those smart people do a good job of picking who the scientists are that are really worth funding.

And then that organization gets a five or ten year history. And people see that oh w you know, yes, this organization thus have a surprisingly good track record of uh funding, you know, the studies that actually do end up uh turning out to be meaningful five years down the line. And then people will just uh contribute through the quadratic funding scheme to this organization, and the organization will be able to kind of leverage its own reputation. Now if that organization ends up you know, doing bad things and abusing um it's this kind of public trust that it's earned.

Then you know people could very easily just stop contributing to it and start uh contributing to it to another group. So that's one approach. Another approach is that there could be clever ways to Combine. Quadratic funding with venture capital? Uh so the idea here is that imagine if uh when people make a public good

They create a coin associated with that public good. And they just want people buy the coin. And when people buy the coin, the revenue is just go to the people who issue it. And then What you can do with quadratic funding is you can basically um kind of collectively buy out these coins, right? So you can just say, Okay. You know, this coin

Is a coin that represents a project sub that Give the world. uh say a million dollars worth of value and so we're gonna quadratically find the million dollars into the coin. And so anyone who bought that coin would be able to benefit. Right. And the and so the idea is that like if there are intelligent investors that are able to recognize that something will be valuable, you know, ten years in the future, then like basically they will be able to make a profit off of this and

If anyone has something that like is maybe difficult for the a kind of wider public to Determine is valuable at the beginning. But then is likely to lead to a sub important outcome that just everyone recognizes is really valuable sometime in the future. then you know kind of in these investors can fill the gap, right? So like you have these two approaches. Like you can either rely on reputation and kind of

Uh do it retrospectively or you can rely on um this uh kind of combination of quadratic funding with um you know tokens and investment to do it prospectively. Um so I think uh Both of those are really interesting. I love this uh possibility to combine also, right? I mean you you could potentially have all of the elements that you described.

Combined. And uh Noel, you you sound like you wanna jump in. I was just thinking that the campaign financing kind of works a little bit like this. Um maybe accidentally, maybe the system has just navigated to it through kind of a complex systems level intelligence, but if you look at campaign financing for when people run for office, there's a maximum limit they can get per Donor, right? And so an individual can only gift a certain amount to a congressman or to a senator or presidential candidate. And then the feds also have matching funds on top of that. So it's a combination of these schemes because by limiting the amount that any one person can give, you're sort of creating a quadratic although it's not truly quadratic, like I you know, someone very wealthy. I guess they could give a lot more through a a side vehicle, but then that's less efficient because they're not allowed to coordinate with the main campaign. So there's kind of a really badly implemented version of quadratic funding with matching dollars already in existence in federal campaign financing.

Mm. That's a good point. Yeah. are on your short list of most personally interesting. At the moment.

Yeah, no, so you brought up life extension and life extension is definitely really importance to me. Um like I think in The coronavirus has um actually uh even had the positive side effect of uh kind of speeding this along in some ways, but there's a lot of extremely promising things happening in uh biotech. I think there's a very significant chance that like Where we're standing today is basically

is for biotech the equivalent of where computers were in nineteen fifty. Right. And so if you imagine, you know, the difference between the Enyak and um you know a a modern uh kind of laptop or a smartphone, that's the difference that we're gonna see between the biotech of a twenty twenty and uh the biotech of twenty ninety. And so if right now we can already come up with uh Vaccines for a virus. A a year for deployment to start, but really the whole the whole thing actually happens much faster and and uh you know, most of the delay can be blamed on like bioconservatism, but that's in a whole other discussion.

If you go from even there and then uh you know, add seventy years of progress to that. Like it's it's very easy to see. Thanks even. the process of aging turning into something that just becomes reversible and it being A regular thing for people to live, um, you know.

one and a half uh two centuries and then um uh go even further from there. There's a just a huge uh kind of nice uh humanitarian outcome that can come from that. You know, basically Like the concept of uh Your grandmother dying is just going to kind of slowly leave the public consciousness the same way that the concept of uh getting lost in a city of slowly left the public consciousness over the last twenty five years as we got better cell phones. And I mean I think that's uh

A really lovely and just kind of much better world to spend a lot of resources to shoot for. Do you think that's realistic, though, given all the three letter agencies that slow down experimentation and development? Because I worry it's more like nuclear power, right? Where they can't tolerate a single death, so the in innovation isn't really allowed. Right, so this is where I say a controversial thing, which is I think I'm very happy that the coronavirus has helped to delegitimize uh bioconservatism to the extent that it has. Yeah, I agree with that. The Moderna vaccine was ready on Jan thirteenth. Right. Yes. And like even things like human challenge studies, right? Like uh the default, I think, bioethics opinion around a year ago is like, you know, Oh my god, this is unethical and you know, now like in the UK they're actually happening. No, this is great. Yeah, no, it it it it is good if it breaks down bioconservatism to some extent because the pace of innovation is too low. It's like what we've done to nuclear power, if we do that to biotech, and we kind of have already to some extent, but if we do it even more then

There's no chance of, you know, grandma living forever. There's not even a chance of me living, you know, fifty hours longer, let alone grandma living forever. Um, you know, you're twenty seven, I I I'd love to see where you're at forty seven. You're gonna be a you know, a really interesting guy. You already are, but you're gonna be an even more interesting guy. Even more interesting at four hundred and forty seven. Yeah, that'll be fun to simple. Uh but no, I hope you guys can both come to my a thousandth birthday party. Well are you are are you on some kind of caloric restriction or intermittent fasting? Um so so far I yeah well I do like the poor man's intermittent fasting, which is that I just usually don't eat breakfast. I do again. The usual exercise, uh nothing too fancy.

Uh I eat uh kind of At least A couple of the basic supplements that the that the life extension cool people are um recommending. Nothing too much fancier than that so far. Uh though You know, very closely watching the space and then I'm sure

Oh I end up doing much more things, so you know ten or even five years from now. Do you take Rapamycin? I do not take Rabamison. Um midforming is the one that I take, um Ashramanda is another that I take. Mm-hmm. And uh just for those people listening who who who should know this, number one, this none of this is medical advice. Number two, the uh metformin just as an example, none of these things should be taken without advice of a medical professional. Metformin is used in the treatment of type two diabetes, glucophage.

But I'm also familiar with it. How do you decide what to implement versus not implement for yourself personally? Um, I just um And ask around a lot of people in the life extension uh community. Uh yeah, you know. read the studies, uh y you know, look at uh And just what are some of the high level results. Um and then

Just kind of narrow down to a couple of things. Mm-hmm. It it is remarkable how many people in various subcommunities have been using a lot of these interventions longitudinally. I remember when I was working on my second book looking into trans respiritrol and finding even at that time, this was two thousand eight, two thousand nine, people who had for years been using wanna say five hundred milligrams per day. So you were able to identify certain long term effects and side effects. Uh, granted anecdotally, but still having an N of I don't know, maybe a thousand people on this forum. So there there's a lot to be gleaned.

uh from these from these groups. Yeah, there's even a new one making the rounds of Glugon like peptides, GLP one. I'm sure you've seen some study floating around on that. But yeah, these things are very unknown. I wish these were more out in the open and that There was a very, very strong anti-aging research community that was functioning out in the open that was trading notes on what works and what doesn't and able to run some kind of human trials, you know, more efficiently because uh fighting aging is a is a very time sensitive task. It is. Yeah.

It's uh half the deaths of World War it's no literally half the deaths of World War Two for every um A year that uh you know it gets delayed or how or that number of lives saved for every year that uh it gets brought earlier. Yeah, one analogy I I heard that I liked was, you know, we're all born time billionaires. with billions of seconds of life and then we spend those and now you get to someone like Warren Buffett and I'm sure he would trade a hundred billion dollars for more billions of seconds. Uh but he can't, right? In fact, healthcare is the ultimate inelastic good. On your deathbed, you'll spend any amount of money to live even a an hour longer. Um so certainly the economic incentives are there, the personal incentives are there, but because of this concept that you know people who don't know what they're doing are gonna hear something and run out and like ingest some substance and then die, you know, drink bleach or take too much repomycin.

Because of that kind of fear, we're not allowed to do any real innovation or discovery, and it's literally killing us outright. And if we just reframed it as well, no, it's not that we're dying of aging. We're dying because you won't let us do the innovation, do the research, it might take on a different take. But I was actually a little disappointed with the coronavirus response because I thought We would have had faster trials of the vaccines. But the fact that they were still kind of slow and even now the deployment is being held up because we have to create these perfect vaccine delivery packages instead of just a kind of quick and dirty vaccination. And we have to go through these very regimented protocols rather than just saying everybody just line up and let's just go as quickly as possible. Because we insist on doing things in kind of this bureaucratic, overly control way, we're still slowing things down. And if coronavirus would get us to accelerate our normal processes into a wartime footing, then what will?

Yeah, I I also just want to add that I think given my experience with a highly stigmatized field of scientific research, which is Psychedelics and psychedelic compounds. For intractable or difficult to treat psychiatric conditions.

I think that life extension or the community itself and proponents thereof could spend a lot of their oxygen and calories trying to convince regulators and three letter acronyms to classify aging as a disease and therefore allocate funding. And I think that that is going to be very difficult and possibly wasteful compared to decentralized or distributed funding from

philanthropists or donors of various types. I think a lot of it's gonna come down to to independent financing. Uh since that has been the case even All the way up to phase three trials for compounds that show tremendous effect sizes in the k in the treatment of depression and PTSD and so on. Yeah. I think an another important thing also is just kind of international outreach and more connections because like ultimately You know, the US is not the center of the universe. Um, and there's plenty of very smart people in you know the EU, like Singapore, China, India, uh Canada, whatever other places. You know, there's a lot of uh great talent there that I think could um

help um all of uh humanity solve uh these problems faster. Uh so If we can just uh Work together on the problem more. hopefully prevents stupid nationalism from adding too much friction between things. Yeah, I think a lot of the newer generation, rather than just being patrons of the arts, they're

Trying to figure out how to become patrons of science. And instead of just doing venture capital. We'd all like to figure out a model for venture research. Because we need more science, right? Science is upstream of technology and the faster we can move science, the more it'll benefit us across the board. So I don't know where else you want to take this, Tim, but I have some kind of more of the closing questions type for Vitalik, if you're ready for those. I want to take this where you want to take this of all. Okay. Um

One question I kinda have is given all the tumultuous change in twenty twenty, because coronavirus was a trigger, but it was a trigger for accelerating a lot of things that were already happening. Like where do you think the world heads in the next few years where maybe your peers might disagree with you? What are your contrarian views or your kind of uniquely held individualistic views on how things are gonna play out that are not yet consensus? And this is unfair,'cause aging was a good one. You you made a solid you went out on a limb on aging. Well, aging is aging is an example that's like Contrary in the world, but definitely not contrarian among uh kind of my circles, I guess. Yeah, when I went through your writings, I mean the the idea that there will be many blockchains and many tokens, right, is quite different. The idea that the internet has increased the number of public goods

rather than the number of private goods is actually quite contrarian because we think of it as going more and more private property, but on the internet it's one to many, so there's all these public goods. And I think you were the first one to really hammer that point home in a big way. And then I think this aging thing is another one. So I'm just digging, seeing if there's any more Yeah no, um another thing might like Uh that might have been um ve i iconoclastic two years ago, but is um very much not today would be kind of just geographic decentralization. Even with the Ethereum, like we made we took a very active effort of um You know, not making it too centralised in any one country or any or or any one city in any one place. And I feel like we benefited a lot from that. But now of course um you know everyone is uh

Uh geographically decentralizing and Coinbase has announced that like None of it's uh management of live in San Francisco and so forth. It's very hard to associate Ethereum with a single country. I think it was created by mostly Canadians and your blog has a.ca top level domain. Well, I'm a Canadian, but then uh right, but my blog has a dot CA. The foundation is uh Swiss and now there's um A Singaporean entity as well. A lot of the initial developers were German Um you know a lot of of uh d developers are from the US as well.

Um one the most efficient East Q clients is uh based in uh Australia. Uh so I feel like we kind of actually like took the the the those values seriously and and did it well. And and and Ethereum has spent you've s the foundation has spent a lot of time in East Asia. I think I've seen you kind of going from conference to conference in East Asia and Korea and Japan and places like that spreading the word. So um it is quite decentralized geographically What advice do you have for someone who wants to get into Ethereum and doesn't just want to go and buy the token, right? Who actually wants to dive into the ecosystem, w what what is a person to do

to get involved in the Ethereum community and the ecosystem, where where are the points of leverage? I think What Mm. Learning to build an application and actually trying to build an application is I think one uh great place to start if uh

That's the sort of thing that interests you. Like even if you don't turn it uh out as a uh full time developer, it's like forcing yourself through the process still helps you just understand like, you know, what are the different pieces and Actually, what function do they serve? Another example uh another approach there's Well, now obviously to kind of temporarily suspend it, but generally uh there's a lot of local communities that you know like

kind of in person meetups and all that that people can be part of, and that's um often a great opportunity to uh get to meet other Ethereum people. Um there's a lot of materials online. Although generally I am a kind of much more big fan of uh hands on learning, so kind of learning by doing instead of learning by taking in information. I'm so you know, highly recommend like just trying to build one application. For a a lot of people.

Um Otherwise, yeah, there's just a lot of different uh communities and like you do have to just like Go in and start taking part in them. Yeah, for for those of you who are curious, I think Vitalik's blog has uh spawned quite a few of the things in the Ethereum ecosystem. Like I think it was one of your musings that led to the creation of Uniswap and you've recently been talking about roll ups and social wallets and

uh and all kinds of other things that can be built on top. Although I maybe this is the first year where I feel like the community is outpacing your ideas with nifty's and with uh some of the games that are coming up on top of ETH and so on. It does seem like that there's a lot of innovation going on. It's hard to keep up. It's very, very hard to keep up. But that's a good thing. For those of you also looking for what's next down the rabbit hole, uh Vitalik briefly mentioned zero knowledge proofs. I would say that you know, the the beginning of the rabbit hole, the entrance is Bitcoin. Then you go a little further down, you find ETH, but then when you find zero knowledge proofs, that's the big mind blowing moment where you realize just what crypto is capable of and there are analogs for what crypto can do that almost cannot be done in the real world. It's sort of like when you go into physics and when you encounter quantum mechanics, it sort of makes you rethink that no not everything necessarily maps onto exactly how I observe it.

Um the same way when you get to zero knowledge proofs you realize that the levels of creativity in crypto that enables are greater than what we might have had pre-crypto. Um so that's also an interesting space to kind of learn about. And I think zero knowledge proofs have probably been incorporated into an emerged in the Ethereum system ecosystem even more than we expected, right? Because a lot of people called it moon math early on. It was considered too hard to be practical, but people have been chipping away at it. Yeah, no, it's moon well the moon map is definitely significantly less moony than it was even one or two years ago. Like uh even Snarks uh w another term for these uh zero knowledge proofs um have just become considerably simpler. Uh sometime around one and a half years ago. I might even try to make another post um of one of my my most recent ones on Nevitalic.ca where I tried to talk about like how roughly how ZK snarks work. I actually feel like I need an explanation that at least the high school version of myself would have understood, which is like it's still not perfect, but it's like significantly more

understandable than any of the previous ones have been. So I feel like the ideas are definitely trickling down. Oh so I y I do have another answer to the question of like what things are you thinking about that other people are not thinking about yet. Um I think this is uh kind of taking a kind of cultural and social context uh seriously? Which sounds obvious, but in some ways it really isn't, right? Like uh even within the crypto space, I feel like a lot of people in their models of uh, you know, is Bitcoin going to beat governments some or

Are these things going to be censorship resistance? They tend to look at it purely from a get technical point of view. And they basically are kind of implicitly assuming that, you know, the g governments are gonna try as hard as they can um and uh the crypto space is gonna try as hard as it can and it'll be a battle and uh one side and you know that person's preferred side is going to win. But the reality is that governments are not trying as hard as they can. And a big part of the reason why is that government is uh not even so much in

Entity as it is a battlefield, right? And like what are the soldiers fighting on the battlefield, a lot of it is just the cultural movements. And a lot of the success of cryptocurrency and blockchains I think they could really have to do with the way that they have a kind of interplayed with a lot of the important cultural trends of the last ten years like this including things um like people's distrust of financial institutions after t two thousand and eight. I think people's distrust of centralized tech companies um after

uh two thousand and twenty is uh also going to play a big part. Also just um another fascinating thing I think is like even like one thing that surprised me is how cryptocurrency managed to appeal to a lot of people who would not normally think of themselves as libertarians. Yeah, that's something that I think like did end up uh

Even blindsiding a lot of people. And the reason why that happened has to do with kind of very deep and specific aspects of like how people think. I mean it's kind of how people think ideologically, right? Like uh a lot of people Think of like saying. Authoritarians, for example, as just people who hate freedom and want to restrict things.

But like the reality is there's lots of people who are like in favor of very specific restrictions or even in favor of restrictions that benefit their own team. But they're just as eas very easily flipped to being very pro freedom when you know it's their own team that's being threatened. Or even when you just kind of take things out of the cultural context of uh you know, what should the governments do and into the cultural context of well, you know, like how should technology work. So There's a lot of these kind of very subtle effects um that determine You know, whether blockchains and some of the ideals behind blockchains uh kind of succeed and fail.

And these uh kind of very subtle properties of like how humans think and even How humans interact with each other. Or extremely important in a lot of ways and the reason why they're important is they just determine the effectiveness with which people can coordinate. Right. Like you know, humans are

naturally uh kind of very attuned to a kind of social trends and humans have a lot of motivations that have to do directly with um, you know, what position they have within a kind of social trends and context that are um made up by other people. Uh and This is just a space that uh the uh

you know, blockchain in cryptocurrency space is going to navigate well. Um and if it navigates it poorly Then I think blockchains will be stopped by governments. Or like they won't be stopped entirely, but no the amount of usage can easily be more than ninety percent lower than um it otherwise would be. But on the other hand, if a blockchains can, you know, successfully show to a kind of large enough coalitions that this is a valuable and this is a good thing for the world Um then they can be very successful. Uh and like this is just something that's uh You know, the space needs to have a better understanding of it take seriously.

Yeah, I think i there's a lot of good points you just made. Uh one I like is that government is not an entity or an enemy of the battlefield. It it may just be the battlefield. That all of these factors can kinda win simultaneously. I think you made this point in your blog at w at in one place where you said that in twenty twenty, you know, big government won, big social media won, big centralized applications won, but decentralized also won. So there you can have multiple winners. These are necessary either or. You've also made a an argument in one of your uh blog posts, which is also beyond the scope of this podcast, but I think is worth digging into for people interested in game theory where you basically point out that a lot of the toy models that we consider when we're evaluating how these things will end up have it a a so called Nash equilibrium. They have a solution in game theory because a lot of individuals making decisions independently, but because majority coalitions rule and people conclude Or they can form coalitions that you end up in these unstable cycles where you have a majority win one round and then the definition of the majority reshuffles and then they win the next round. And so we see this in politics where it seems like, okay, now the Democrats are in charge forever and oops, no, now the Republicans are in charge forever and oops, no, now the Democrats are in charge forever again. And subtly underneath what's going on is a definition of democrat and republican is unstable. They're just coalitions that are being formed and reformed as needed. So yeah, these these are lots of great thought provoking points. I I'd really love to

Touch base with a Vitalik who's thirty seven, you know the ripe old age of thirty seven out of his thousand year Methuselah like lifespan and see where you've gotten to. So Naval, I don't know if you have uh questions remaining. So I I really just have one question, and that is a pet curiosity of mine, it's related to language learning. So you have studied quite a few languages. I looked at a clip of you answering questions in a QA at some point, I don't know the year, in Mandarin. And I was very impressed. I went to two universities in China and Ni Jang Jong Jiang the Hang Ha. So I wanted to ask if you could give advice now, having Tested many things.

used many approaches for someone who wants to learn Mandarin, what would your current recommendations be to them? Sure. Uh so for any language, my usual approach is uh I think at the beginning like you do need some kind of uh explicit program. So like one thing that I've used is the Pavzor podcasts, uh so that's P I M S L E U R Um so it's just a series of these ninety minute uh or sorry, ninety, thirty minute podcasts, or twenty seven hundred minutes or about two days in total. that you know, you'll listen to one of them every day and they just like

teach you the language from nothing up to you know some very basic level um over the course of these uh ninety episodes so you start from that, but then even after that you don't have nearly enough to understand anything. Um so from there Sometimes you can find other um podcasts like And eventually you'll graduate to just like regular podcasts in that language. So things that are not even optimized for language learning. But like at the beginning you do want to find like Resources that are optimized for learning.

Flash card apps um helped for Chinese specifically for um Memorizing the characters. Or at least, you know, the first step out of you know. Five hundred or a thousand or so, and there's plenty of flashcard apps are all about equally good. And then once you uh kind of get past some level, then you get to a level where the best way to get even better is to just talk to people. Another um kind of path that works somewhat at the beginning actually is like if you just

go into uh, you know, a city Are you just like start like reading various signs on the street and you try your best to just understand what you know, what they mean. I mean if you uh see a word that you don't understand you'll look it up. Like that's um often useful. I also use duolingo as well. Uh it's uh Then

Helpful in some cases. So it's just like a combination of these uh techniques and like you have to When you start it's difficult and then when you get past some points like yeah. You get to a point where you can just uh kind of level up just from uh talking to people from there.

Yeah, great advice. And I'll I'll just add to that, uh, that Google Translate with image translation can be a Incredible. savior in lands where you don't understand the orthographies of in Japan. My brother doesn't speak Japanese, but we traveled there and he was able to more or less accurately translate Hanji, the Han the Chinese characters using Google Translate. It was remarkably accurate. It's improved a lot. And uh as I understand it, You know, another thing that that you've done is is watching now, I'd like to clarify here, is it watching films in other languages or is it watching English language films with subtitles in your target language, which is also something I've done.

It is watching films in other languages, sometimes we'll subtitles in English. Got it. Thank you. Naval, would you like to to to wrap up? No, thank you. Thank you, Vitalik. It's really been an honor. I think along with uh you know Nick Sabo and Hal Finney and Wei Dai and a few other, you know, very influential people and Zoco and so on, you've just been incredibly influential in the development of blockchains. And uh I believe that blockchains are the third wave of the internet. after the web and mobile. And they're quite fundamental to how the internet does operate in the future. You're

Probably the youngest one of that group, so uh you're going to be involved in there for hopefully a very long time. uh and it's gonna change uh the computing as we know it. Uh I'm betting on it. I know many people are. And so thanks for your work and thanks for taking the time to help bring this to a broader audience. I mean I'm I I think I'm not even the youngest already. I mean like hide in from Uniswap hide in from Uniswap is even younger than I am and like you know the Uniswap Treasury has uh more funds in it than the Ether and Valuation Treasury. So this revolution proceeds fast, man. Yeah, when I was first starting out, my first company, I remember I was twenty five and CEO and company was valued highly and the CTO of the company, he was in his mid thirties, he said, Huh. He said, So you're used to being the smartest young guy in the room, right? Just wait till you get old. And here we are. Thank you, gentlemen. Thank you.

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