Dialogue with Ethereum founder Vitalik Buterin: Facebook and the endorsement from the U.S. are Libra's biggest weaknesses

This article was first published on July 23, 2019, on the WeChat public account LatePost, authored by Wu Yangyinghui, Liu Hongjun, and Li Yang.

If your impression of blockchain is still stuck on cryptocurrency speculation, then Vitalik Buterin, born in 1994, is a breath of fresh air in the blockchain world. This Russian-Canadian has a large forehead and a thin, bony body. He speaks extremely quickly and has a keen insight into economics, politics, technology, and logic that is unlike most people.

Satoshi Nakamoto's Bitcoin paper opened the door to cryptocurrency, but in the early days, people were trying to find applications for blockchain without a breakthrough. It wasn't until 2017, when Ethereum's smart contract platform allowed for the issuance of tokens, that blockchain became popular, and people found a new way to engage with it. Ethereum, created by Vitalik, pushed the entire industry to its peak, and people began to refer to this 25-year-old as "God V" to express their admiration.

V's growth experience is also quite unique; he primarily acquired knowledge through the internet rather than formal education. His father, Dmitry Buterin, is a computer scientist. He received his first computer at the age of four, his parents divorced when he was five, and at six, he immigrated to Canada with his father from Russia. By the third grade, he could perform mental calculations at twice the speed of an average person, and in sixth grade, he discovered his talent for mathematics, writing a small game in C++ at the age of twelve.

In high school, he learned about Bitcoin under his father's influence and became obsessed with it. By the age of 17, he was writing for Bitcoin Weekly, earning five bitcoins per article. At 19, Vitalik dropped out of school.

Vitalik has always considered himself "outside the system," so his original intention in establishing Ethereum was to serve a group of marginalized people. Ironically, after the ICO boom in 2017, Ethereum became a paradise for speculators and traders, which was contrary to Vitalik's initial dream.

The first shock to Ethereum came from coins like Tron, which rose to prominence through marketing. This greatly stimulated the idealist in Vitalik, who said that if Tron surpassed Ethereum, "I would lose a significant amount of hope for humanity."

The second shock came from Facebook's launch of Libra, a more realistic and imaginative product. Vitalik stated that Libra would definitely compete with decentralized blockchain public chains.

Vitalik's growth story, unique ideas, and thoughts make him one of the most worthy figures to engage with in the blockchain world. Below is the interview with Vitalik conducted by LatePost.

1. On Libra

"Decentralization is not just an ideal; it is a highly practical strategy with a very high success rate."

Q: Facebook's launch of Libra will have what kind of impact on Ethereum and Bitcoin?

Vitalik: I don't think a cryptocurrency backed by a large corporation like Libra will completely replace decentralized finance; platforms that are not controlled by any individual or centralized organization still hold significant value.

Silicon Valley definitely wants to get more involved in finance. You have to understand that creating a cryptocurrency is much simpler than running a payment business, where you need to maintain good relationships with financial systems in various countries.

Q: Will Libra impact the fiat currencies of other countries, such as the Chinese yuan?

Vitalik: It's possible. Most of the main participants backing Libra are American companies, and other countries may be wary of a project that is fundamentally controlled by the U.S.

Q: Pure idealists rarely become the ultimate winners in history. Are projects like Facebook's Libra the key drivers for the large-scale application of blockchain?

Vitalik: Perhaps. What actually happens in blockchain may directly conflict with the expectations of idealists, including myself. Every technological revolution is like this.

The vast majority of Libra validators are in the U.S., and many people in various countries are very distrustful of U.S.-based systems because they do not trust the U.S. government. This could be a significant barrier to its global application. In contrast, decentralized systems like Ethereum do not face this barrier.

Therefore, decentralization is not just an ideal goal; it is also a strategy with a very high success rate in today's increasingly trust-deficient world, a very practical strategy. We should adhere to it to increase our chances of success.

Q: You strongly advocate for freedom and decentralization. What gave you your first enlightenment about liberalism and decentralization?

Vitalik: I have felt that freedom, openness, and equality are very important since I was young. When I was in high school, these feelings began to solidify into a more stable worldview. At that time, I discovered the free and open-source software community, Austrian economics, and Bitcoin, all of which appeared in my world around the same time. I spent a lot of time reading books and articles on the internet, exploring these ideas and communities.

To some extent, I have always lived "outside the system." My experience of self-learning many things through the internet made me realize the importance of establishing a world where people who deviate from the mainstream in any way can live.

When I was young, I didn't have a credit card, and Bitcoin enabled me to buy things online; more importantly, it allowed me to find work online and start earning money. For me, this was an important real-life demonstration of the value of decentralized technology—creating a more inclusive world.

Q: In the real world, people still seem inclined to trust centralized organizations like governments, banks, and large corporations.

Vitalik: I don't think decentralized systems should take over the world; it's enough to occupy a key area.

Q: Isn't the area occupied by blockchain too small, limited to exchanges and a portion of cryptocurrencies?

Vitalik: It's just that the technology hasn't developed to that point yet. When the technology reaches that level, we will see what happens.

Q: You once said that if Tron defeated Ethereum, you would lose some faith in humanity. Do you think Tron and Justin Sun will succeed?

Vitalik: If another blockchain bubble occurs, projects like Tron can inflate to a very large size. It could even evolve into something useful, like gambling.

But it is not truly decentralized, which is a result I am very concerned about. Such things could lead to government intervention and regulation, which would then strike the entire industry.

Q: What problems arise from the rapid growth in the blockchain field?

Vitalik: The Ethereum blockchain is currently 100% full (referring to Ethereum network congestion). If growth continues to accelerate, the additional energy will not be spent on useful things.

At the same time, network congestion and user account security are another major issue. Imagine if there were $50 billion worth of cryptocurrency in a mobile wallet, and the operating system had a backdoor… This is why I publicly advocate for better account security solutions on Twitter every week, such as multi-institution recovery and social recovery.

I know that the huge advantage of the Chinese tech community lies in creating a good user experience, so solving account security issues could be something that the Ethereum community in China can try and excel at.

2. On Disruption

"You either follow the rules of the network I built, or you build your own network."

Q: People often believe that blockchain will disrupt everything. Is blockchain really a "new thing"? What in history is similar to blockchain?

Vitalik: The interesting thing about blockchain is that it combines the dual characteristics of economic incentives and social organization; people actively contribute to it because they genuinely believe in its value and identify with the idea of decentralization.

Different blockchain projects focus on different aspects. For example, Zcash emphasizes privacy protection (note: Zcash is a cryptocurrency aimed at providing stronger privacy for its users through cryptographic techniques. V is an advisor for them); Bitcoin focuses more on value storage; Ethereum aims to build an infrastructure that allows people to easily create various decentralized applications.

However, at the same time, these projects have their symbolic tokens, and the prices of these tokens fluctuate. If you hold them, you certainly hope they go up. So, combining these motivations determines that it is different from historical things.

Q: Many people claim that there is no longer a need for companies in the blockchain world?

Vitalik: Running a company is indeed very different from working on Ethereum. Companies have a profit-seeking nature, while members of open-source projects contribute voluntarily.

Ethereum can be said to be an open-source project, but it is not just that. For example, with open-source projects, it is easy to copy code and create something different or even surpass the original. But with blockchain, you either follow the rules of the network I built, or you build your own network.

In business, you don't need more people to participate in building the ecosystem; you need to get the business up and running quickly and have employees perform their roles. Attracting users and acquiring users is the most important during this period; for open-source projects, users can seek out what interests them.

In business, you set a roadmap to guide your team in doing things. In open-source projects, your control is much weaker, and you will see community members spontaneously contributing to this ecosystem in various ways. Your community will thus become more inclusive and diverse.

Q: If cryptocurrencies become widespread in 10-20 years, what will the world look like then? What will be the biggest change?

Vitalik: I think the financial sector will benefit greatly, and by then, the application of smart contracts will be as simple as using the internet today.

Two months ago, I went to Africa and asked local Ethereum community members what they were doing with blockchain. Their answer was simple—many Africans are now working remotely for companies in developed countries, and through this, they can earn a lot of money. But without cryptocurrency, it would be very difficult for them to transfer their earnings back to Africa, as intermediaries like banks would take at least a 10% cut. I think this application, while simple, is meaningful.

Decentralized applications also have potential; platforms like media and sharing economies should not be completely controlled by centralized organizations (like large companies). Just like how 20 years ago, without the internet, people could only independently create software, what you created was on your computer, and what I created was on my computer. There was no connection between us.

Q: Do you think Google will still exist then?

Vitalik: Google will definitely still exist; it will just adjust its business model and way of doing things accordingly. Technology will not change the disruption of government organizations and large companies, but it will prompt them to change.

Q: In your opinion, which aspects of the blockchain field are overestimated, and which are underestimated?

Vitalik: In the short term, DeFi (decentralized finance) is somewhat overestimated; there are indeed some encouraging achievements in this field, but I think the technology has not kept pace. People underestimate the risks involved, especially the severe consequences of smart contract vulnerabilities. For example, last week, a DeFi platform was successfully hacked due to a bug in one of its oracles, resulting in a loss of $37 million.

What is underestimated, I believe, are non-financial Dapps, which could be interesting. For example, there is a project in Singapore that provides degree verification for universities, ensuring that degrees cannot be faked.

3. On Evolution

"The next step for Ethereum: Enhancing privacy, diminishing individual influence."

Q: What was the biggest compromise you made during the upgrade process to Ethereum 2.0?

Vitalik: The biggest compromise may be that we had to give up some things. For example, we didn't have time to create a more perfect and beautiful algorithm.

Casper FFG is one example. Even today, we know that Casper CBC is theoretically better, but we decided to push it to future versions. The Casper FFG protocol has been shortened by about 30% compared to six months ago because we all worked hard to simplify it. (Note: Casper FFG is the core consensus mechanism of Ethereum 2.0, while Casper CBC is another, more complex consensus mechanism.)

Another key decision was to separate Ethereum 2.0 as an independent public chain from Ethereum 1.0. This made the protocol design clearer, but it also meant that the transition from Ethereum 1.0 to Ethereum 2.0 would be difficult to manage. We had to choose between the most perfect and the most concise protocol, and we chose the latter.

Q: Who is Ethereum's biggest competitor now, and who will be its biggest competitor in the future?

Vitalik: Ethereum is a diverse ecosystem that contains many things. If you see it as a cryptocurrency, then it faces competition from other cryptocurrencies. If you see it as decentralized applications, then it faces increasing competition from such applications.

As an infrastructure that supports Dapps (decentralized applications), it is actually difficult to compare with other centralized infrastructures. For example, the blockchain has only about 10 million users, while platforms like Facebook and WeChat have 100 times the number of users of the blockchain. If the blockchain cannot provide the services that centralized platform users need, then it cannot be compared.

Q: Many people question Ethereum, saying that besides ICOs, there are no other mainstream applications. After Ethereum 2.0 goes live, do you think there will be killer applications?

Vitalik: I hope so.

Q: So far, what do you think are the three most important projects in Ethereum?

Vitalik: It depends on how you define "important" and "project." For example, Solidity and Vyper (both are Ethereum programming languages) are very important; without them, Ethereum would not be usable. But we don't think too much about them.

I think improving privacy is very important for the next step of Ethereum, while also considering security. However, you cannot easily make a billion dollars in cryptocurrency from these projects unless you are Zooko (co-founder of Zcash).

What I mentioned above is closer to infrastructure. In terms of application projects, the exchange Uniswap is one of my favorites this year; it makes the exchange between cryptocurrencies much easier, and it is a purely decentralized application that is easier to use than centralized applications.

Q: You have been trying to diminish your influence on Ethereum. Are you worried that your departure would weaken Ethereum's competitiveness?

Vitalik: It is very likely that in the early stages of a project, a small number of people dedicated to pushing the project is necessary. But as the project matures, I think a more distributed and decentralized community structure will become important.

Making Ethereum increasingly decentralized does not require me to leave or retire; it requires more excellent people to join and take on important roles like mine.

Q: Besides you, who else can decide the fate of Ethereum 2.0?

Vitalik: The decision-making process for Ethereum 2.0 is relatively centralized. Most decisions are made by 3-5 core members: myself, Danny, Justin, Hsiao-wei, and Dankrad (all core developers of Ethereum).

The decision-making process for Ethereum 1.0 is more open because it is a public chain that is already operational. Ethereum 2.0 is also moving towards this stage.

4. On the World

"If you have a lot of money, you can have absolute initiative—this is the biggest problem with the mainstream anonymous quantitative voting of blockchain."

Q: There is a viewpoint that in China, people care more about money than ideas and technology in blockchain. Do you agree? What do you think about the differences in blockchain development in different countries?

Vitalik: In fact, blockchain development in the U.S. and Asia, including mainland China and East Asia, is quite similar. There is a large amount of VC and investment funds, and large projects can consume this funding to create products. This situation is less common in Europe, which has more of a non-profit hacker culture spirit.

Of course, the U.S. and Europe have more similarities; they emphasize ideas and technology more—ideas include decentralization, open source, freedom, and social welfare, while technology includes consensus algorithms, zero-knowledge proofs, signature schemes, etc. Asia, on the other hand, focuses more on cryptocurrencies, trading, and mining.

But this situation is changing recently. Project centers are concentrating in the U.S. and Chinese academia, and independent research projects focusing on privacy, sharding, and other technologies are emerging in China and Asia. At the same time, the process of enterprises adopting blockchain is steadily advancing globally.

Q: So will the competition for public chains mainly occur between China and the U.S.?

Vitalik: I think it should be among three regions: the U.S., China, and Europe. Europe also has projects that are doing very well, such as Tezos (a smart contract platform similar to Ethereum).

Members of the Ethereum Foundation are distributed across these three major regions, and if you include Australia, that makes four regions. We are trying to achieve geographical decentralization.

Q: Currently, many countries around the world are experiencing social tensions and political crises. Is it possible for blockchain to change the existing political ecology? For example, many people believe its mechanisms can be used for voting to achieve organizational autonomy?

Vitalik: If you study economics, you will find that the mainstream anonymous quantitative voting in blockchain actually has many problems. The biggest problem is that if you have a lot of money, you can have absolute initiative, while those without financial strength will have little say in decision-making. There are many historical examples of a company acquiring and controlling another company by purchasing a majority of its shares.

I am also working with Dr. Glen Weyl to design a quadratic voting mechanism to try to solve many of the problems associated with anonymous quantitative voting.

Q: Is DAO (Decentralized Autonomous Organization) an attempt at this organizational autonomy? How effective is it currently?

Vitalik: DAO is a very interesting topic. On one hand, I am glad to see many attempts at DAO organizations; they can indeed do many things that ordinary organizations cannot do. However, the implementation phase of DAO organizations is not as magical as some people imagine; DAOs are still in a very early stage.

For example, look at MolochDao (a DAO project recently established to help raise funds for public welfare projects on Ethereum). Its existence is a good thing, but it has not solved the fundamental economic incentive problem. The most direct question is: why is it so difficult for public welfare projects to raise funds?

Unless there is a centralized institution, otherwise, everyone in a DAO organization makes decisions independently, and each person can only receive a small portion of the rewards, which discourages participation. MolochDao currently has $2-3 million in funds, and this $3 million worth of Ether comes from donors who originally wanted to contribute to public welfare. There are many projects that are very valuable to Ethereum, worth far more than $3 million. If a DAO has money, everything is easy to discuss, but if it doesn't, fundraising becomes a big problem.

5. On Himself

"A good life is not only about what you have but also about what you lose."

Q: After becoming wealthy, what is the most expensive thing you have bought?

Vitalik: I won't tell you (laughs).

Q: If you weren't working on Ethereum, what would you be doing?

Vitalik: I might delve deeper into decentralized economic systems, such as the quadratic voting mechanism I mentioned earlier, which is something I am very interested in besides Ethereum.

From a societal perspective, society really needs innovation in governance, such as large-scale group decision-making that can be aided by some tools. Additionally, there are some studies on cryptography, which are not limited to applications in blockchain.

Besides cryptography and economics, there are also some fields I am very interested in, such as research on extending lifespan and projects aimed at alleviating global poverty. Since I am not an expert in these fields, I can only support them through donations.

Q: Who do you admire most in the blockchain world?

Vitalik: Outside of the Ethereum field, I have great respect for Zooko. He is not a "coin pumper" or a narrow-minded extremist; he has profound insights into technology and society. Such people are rare in the blockchain world, and he is one of them.

If you look at people's Twitter in the blockchain world, more than 70% of cryptocurrency founders are promoting their coins. But Zooko and I are quite similar; he is always discussing various broad interests, he even introduced me to a Twitter account that posts summaries of World War II every day.

I also like Tim Swanson. Although he is a critic, he is willing to engage with the blockchain world and become friends with people in it.

Q: What book has had the most significant impact on you?

Vitalik: A blog I recently read—Slate Star Codex—was very informative; it felt like reading five books.

Another book is "The Elephant in the Brain" by Robin Hanson. The interesting thing about this book is that it discusses the complexity of human motivations; we cannot honestly face our motivations for doing something.

For example, you might think that your motivation for doing something is to benefit the world or to be meaningful to society. But ultimately, you will find that the things you do that benefit the world are the same things that make you rich and famous. Even though we may have multiple motivations for doing something, such as seeking the welfare of all humanity, selfishness, subconscious motivations, etc., we also lie to ourselves, believing that one of those (the good motivation) is the true motivation for doing that thing.

Q: What is the underlying theory you use to understand the world and make decisions?

Vitalik: I think having only one underlying theory is not enough; it can confine you.

The philosopher Isaiah Berlin wrote a book called "The Hedgehog and the Fox," which is a reference to a fragment by the ancient Greek poet Archilochus: "The fox knows many things, but the hedgehog knows one big thing."

Hedgehogs have a grand theory (like being a liberal or an atheist), they enjoy extending these theories to many areas, relishing their simplicity and expressing their views with great confidence. On the other hand, foxes are skeptical of grand theories, insensitive to predictions, and ready to adjust their thoughts based on actual events. Organizational behavior professor Philip Tetlock believes that foxes are better predictors than hedgehogs.

Q: Besides creating Ethereum, what is the most important thing in your life?

Vitalik: It might be all the writing I have done.

Q: Plato advocated giving political power entirely to a few philosophers. What do you think?

Vitalik: Kings represent hard power; I prefer to focus on soft power.

Q: If you could choose one person from history to exchange lives with, who would it be?

Vitalik: I prefer to stay close to the future, where I have a higher chance of survival—until we invent technology to extend life and live longer.

If it were someone from the past, I would need to think carefully. I'm not sure that becoming a historical figure is a good idea; being famous does not necessarily mean having the best life.

Q: What does a better life mean to you?

Vitalik: My perspective has changed significantly over the past few years. Ten years ago, I would have thought that what I wanted was to be famous, respected, and have more money.

Recently, my thoughts have changed: a good life is not only about what you have but also about what you lose.