Time Magazine Feature: Vitalik is Worried About the Future of the Crypto Industry

Author: Andrew R. Chow

Original Title: 《The Man Behind Ethereum Is Worried About Crypto's Future》

Translation: Nianqing, Linqi, Chain Catcher

After being nominated for Time magazine's 100 Most Influential People of the Year, Ethereum founder Vitalik today graces the cover of Time magazine, further highlighting the influence of Ethereum and the crypto industry as a whole.

At the same time, Time magazine released an interview with Vitalik, covering his early growth, personal thoughts, and the inside story of Ethereum's early development. Below is the full translation of the report by Chain Catcher:

A few minutes later, electronic music will start pulsating, plush toys will be thrown into the air, ladies will twirl colorful hula hoops, and a mechanical bull will be activated, with excited riders bouncing violently on its back one after another. This is the closing party of ETHDenver, a week-long cryptocurrency conference focused on Ethereum. For days, people have been lining up around the block. Right now, on this Sunday night in February, the excitement is at its peak, dizzying.

But as the crowd surges into the party, a lean man resembling a "little elf" rushes out of the venue, brushing past surprised selfie-takers and venture capitalists. Someone shouts loudly, pleading for him to stay, while others even walk or ride motorcycles after him into the street. However, this person runs faster than all of them, disappearing alone into the hidden spaces of the hotel lobby.

The most influential figure in the crypto space, Vitalik Buterin, did not come to Denver for the party. He doesn’t drink and doesn’t particularly enjoy crowds. Of course, it’s not because the 28-year-old Ethereum founder has little to celebrate. Nine years ago, Vitalik dreamed of using Ethereum as a way to explore more functionalities beyond currency, leveraging the underlying blockchain technology of Bitcoin. Since then, it has become the foundational layer of what advocates call a new, open-source, decentralized internet.

Ethereum's native currency, ETH, has become the second-largest cryptocurrency after Bitcoin, powering a trillion-dollar ecosystem that rivals Visa in terms of capital flow. Ethereum has brought thousands of unbanked users around the world into the financial system, allowing capital to flow across borders without hindrance and providing entrepreneurs with the infrastructure to develop a variety of new products, from payment systems to prediction markets, digital exchange conferences to medical research centers.

Despite the soaring total market value of cryptocurrencies, Vitalik is acutely aware that the world he helped create is moving forward amidst a mix of pride and fear. Ethereum has made a few white individuals incredibly wealthy while simultaneously polluting the air, and it has also become a tool for tax evasion, money laundering, and unbelievable scams. "If implemented improperly, crypto technology itself has great dystopian potential," the Canadian born in Russia explained during an 80-minute interview in his hotel room after the party.

Vitalik is concerned about the dangers faced by overly eager investors, skyrocketing transaction fees, and the shameless flaunting of wealth that has dominated public perception of cryptocurrencies. "The danger is that you have these $3 million monkeys, which turns into another form of gambling," he said, referring to the Bored Ape Yacht Club, a wildly popular NFT collection of fancy primate cartoons that has become a status symbol of the digital age for millionaires including Jimmy Fallon and Paris Hilton, with trading prices exceeding $1 million. "There are definitely a lot of people just buying yachts and Lamborghinis."

Vitalik hopes Ethereum can become a launchpad for various socio-political experiments. For example, fairer voting systems, urban planning, universal basic income, public works projects. Most importantly, he hopes this platform can counterbalance authoritarian governments and disrupt Silicon Valley's grip on our digital lives. But he admits that there is a risk of his vision for Ethereum's transformative power being replaced by greed. As a result, Vitalik has begun to reluctantly take on a larger public role in shaping the future of crypto.

"If we don’t speak up, the only things that will be built are those that can make immediate profits," he said, his voice rising and falling as his hands found no place to rest between the uneven gray sofa cushions. "And those often stray far from what truly benefits the world."

Ironically, despite Vitalik's fame, he may not have the ability to prevent Ethereum from going off track. That’s because he designed Ethereum as a decentralized platform that not only carries his personal vision but also needs to respond to the will of its builders, investors, and the ever-expanding community. Vitalik is not the formal leader of Ethereum; he believes that no one should have unilateral power over its future.

This leaves Vitalik relying on limited soft power tools: writing blog posts, giving interviews, conducting research, and speaking at conferences where many attendees just want to immerse themselves in their newfound wealth secrets. "I’ve been shouting loudly, and sometimes that shout feels like howling into the wind," he said, his eyes scanning the room. Whether his approach is effective (and how much influence Vitalik has over his own ideas) may be the difference between Ethereum becoming the foundation of a new era of digital life and Ethereum merely being another financial speculation tool, a credit default swap, and a utopian fantasy.

Three days after the music stopped at the ETHDenver venue, Vitalik's attention turned to the world, back to the region where he was born. In the war initiated by Russian President Vladimir Putin, cryptocurrency almost immediately became a tool for Ukraine's resistance. In the first three weeks of the invasion, the Ukrainian government and NGOs raised over $100 million in cryptocurrency. Crypto also provided a lifeline for some who could not use banks to escape Ukraine. But at the same time, regulators were worried that Ethereum would be used by Russian oligarchs to evade sanctions.

Vitalik also began to take action, using hundreds of thousands of dollars in grants for disaster relief and publicly condemning Putin's decision to invade. "The glimmer of hope revealed in the past three weeks is that it reminded many in the crypto space that the ultimate goal of crypto is not to play games with million-dollar monkey pictures, but to do things that can truly impact the real world," Vitalik wrote in an email to Time on March 14.

His candid advocacy marks a shift for a leader who has long struggled to find his political voice. Vitalik said, "One of the decisions I made in 2022 was to try to be more adventurous and less neutral." "I’d rather Ethereum offend some people than become something meaningless."

This war is personal for Vitalik, who has Russian and Ukrainian heritage. Born in 1994 just outside Moscow, a few years after the Soviet Union collapsed, his parents, Dmitry Buterin and Natalia Ameline, are both computer scientists. During that era, the currency and social system were on the brink of collapse, and due to inflation, his mother's parents lost their life savings. "Growing up in the Soviet Union, I didn’t realize that most of the good things I was told in school were propaganda," his father Dmitry explained. "So I hope Vitalik questions traditions and beliefs; he has grown into a very independent thinker."

The family initially lived in a university dormitory with a shared bathroom. Without disposable diapers, his parents washed him by hand. Vitalik grew up in a tumultuous but vibrant family environment, and his father Dmitry said that Vitalik learned to read before bed at a young age, but he was slow to articulate complete sentences compared to his peers. "Because his thinking was too fast," Dmitry recalled, "he actually had a hard time expressing himself in words for a long time."

Instead, Vitalik was deeply fascinated by the clarity of numbers. At the age of 4, he inherited his parents' old IBM computer and began playing with Excel spreadsheets. By 7, he could recite pi to over a hundred digits and would shout out mathematical equations to pass the time. By 12, he was coding in Microsoft Office Suite. In 2000, when Putin was first elected president, the family immigrated to Toronto, Canada, and Vitalik's precociousness became even more pronounced among his peers.

His father described Vitalik's upbringing in Canada as "fortunate and naive," while Vitalik himself described it as "lonely and isolating."

In 2011, Dmitry introduced Vitalik to Bitcoin, which was created after the 2008 financial crisis. After witnessing the collapse of the financial systems in Russia and the United States, Dmitry was intrigued by the idea of an alternative global source of funds that was not controlled by authorities. Vitalik soon began writing articles exploring new technologies for Bitcoin Magazine, earning 5 bitcoins (then worth about $4, now worth around $200,000) for each piece.

Even as a teenager, Vitalik proved to be a sharp writer capable of articulating complex ideas about cryptocurrency and its underlying technology in clear prose. At 18, he co-founded Bitcoin Magazine and became its lead writer, gaining followers both in Toronto and abroad. "Many people think of him as a typical tech engineer," said Nathan Schneider, a media studies professor at the University of Colorado Boulder, who first interviewed Vitalik in 2014. "But the core of his practice is observation and writing—this helps him see the cohesive vision that others have not yet seen."

As Vitalik learned more about the blockchain technology that underpins Bitcoin, he began to believe that using it solely for currency was a waste. He thought blockchain could serve as an effective way to protect various assets: web applications, organizations, financial derivatives, non-predatory loan programs, and even wills. Each of these could be operated through "smart contracts," which are codes programmed to execute transactions without the need for intermediaries. For example, a decentralized version of ride-sharing could be established, allowing payments to be sent directly from passengers to drivers without Uber taking a cut.

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

While some of the other founders worked and entertained themselves—watching "Game of Thrones" and convincing friends to bring beer in exchange for ETH IOUs—Vitalik spent most of his time alone, coding on his laptop. Over time, it became clear that the group's plans for the emerging technology were very different. Vitalik wanted a decentralized open platform where anyone could build anything. Others wanted to use the technology to start businesses.

One idea was to create a cryptocurrency equivalent to Google, where Ethereum would use customer data to sell targeted ads. These individuals also argued over power and titles. One co-founder, Charles Hoskinson, appointed himself CEO—Vitalik was uninterested and joked that his title was C-3PO, after the robot from "Star Wars."

The ensuing conflicts left Vitalik with a cultural shock. In a matter of months, he had transitioned from a reclusive life of writing code and technical articles to a decision-maker grappling with a bloated ego and power struggles. His vision for Ethereum hung in the balance. "The biggest divide was definitely that many of these people cared about making money. For me, that was completely not my goal," Vitalik said.

According to public records on the blockchain, his net worth is at least $800 million, a figure confirmed by a spokesperson. "Even from the very beginning, to be more equitable, I lowered the percentage of ETH allocations that I and other senior founders would receive. That really upset them."

Vitalik said other founders tried to exploit his naivety to push their own ideas about how Ethereum should operate. "People used my fear of regulators against me," he recalled, "saying we should have a for-profit entity because it's legally much simpler than being a non-profit." As tensions escalated, the organization urged Vitalik to make a decision. In June 2014, he asked Hoskinson and Amir Chetrit, two co-founders pushing for Ethereum to become a business, to leave the organization. He then initiated the creation of the Ethereum Foundation (EF), a non-profit organization aimed at protecting Ethereum's infrastructure and funding research and development projects.

In the following years, all other founders left one by one to pursue their own projects, either collaborating with Ethereum or becoming direct competitors. Some of them still criticize Vitalik's approach. "In the dichotomy between centralization and anarchy, Ethereum seems to be heading towards anarchy," Hoskinson said, who now leads his own blockchain, Cardano. "We think creating some sort of blockchain-based governance system is a middle ground."

As the founders split, Vitalik became the philosophical leader of Ethereum. He holds a seat on the Ethereum Foundation board and has the influence to shape industry trends and drive the market through public statements. He is even referred to as "God V" in China. But he has not completely stepped into a power vacuum.

"He is not good at directing those around him," said Aya Miyaguchi, executive director of the Ethereum Foundation. Ethereum Foundation chief researcher Danny Ryan said, "From a social navigation perspective, he is still immature. He probably still hates conflict." Vitalik described his efforts in leading the organization as "the curse of my early years at Ethereum."

It's not hard to see why. When you meet Vitalik, he still does not exhibit the stereotypical qualities of a leader. He stutters, speaks haltingly, walks stiffly, and struggles to maintain eye contact. He hardly puts thought into his clothing, mostly wearing Uniqlo t-shirts or clothes gifted by friends. His disheveled appearance makes him an easy target on social media: he recently shared insults from online questioners who said he looked like "a Bond villain" or "an alien madman."

However, almost everyone who has had extensive conversations with Vitalik is starry-eyed. Vitalik is very engaging, almost entirely devoid of self-importance or arrogance. He is an unabashed geek, and when he sees one of his favorite concepts, his eyes light up, whether it's quadratic voting or governance systems like futarchy.

Just as Ethereum is designed to be a universal machine, Vitalik is a universal thinker, proficient in disciplines ranging from sociological theory to advanced calculus to the history of land taxes. (He is currently using Duolingo to learn his fifth and sixth languages.) He does not speak to people from a position of superiority, and he avoids security details. "My emotional side says that once you start down this path, specialization is another word for losing your soul," he said.

Reddit co-founder and head of cryptocurrency investments Alexis Ohanian said that being around Vitalik gave him "a vibe similar to meeting Tim Berners-Lee, the inventor of the World Wide Web, for the first time. He is very thoughtful and humble," Ohanian said, "and he is providing the world with some of the most powerful building blocks ever."

For years, Vitalik has been grappling with how much power can be exercised within Ethereum's decentralized ecosystem. The first major test occurred in 2016 when a newly created Ethereum-based fundraising organization, The DAO, was hacked, losing $60 million, which accounted for over 4% of all circulating ETH at the time.

The hack tested the values of the crypto community: if they truly believed that no central authority should override the rules managed by smart contracts, then thousands of investors would have to bear the losses, which in turn would encourage more hackers. On the other hand, if Vitalik chose to use a strategy called a hard fork to reverse the hack, he would exercise the same centralized power that he was trying to replace in the financial system.

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

For Vitalik, the DAO attack exemplified the promise of decentralized governance approaches. "Leadership must rely more on soft power than hard power, so leaders must genuinely consider the feelings of the community and respect them," he said. "Leaders are not fixed, so if a leader stops working, the world will forget them. Conversely, new leaders will be easily welcomed."

In recent years, countless leaders have emerged within Ethereum, building various products, tokens, and subcultures. The ICO boom emerged in 2017, with venture capitalists raising billions for blockchain projects. In 2020, there was the DeFi summer, with new trading mechanisms and derivative structures rapidly circulating funds globally. Last year saw the explosive growth of NFTs: tradable digital goods like avatars, art collectibles, and sports cards, with values skyrocketing.

Skeptics mock the utility of NFTs, an economy worth billions built on perceived digital ownership of simple images that can be easily copied and pasted. But they have quickly become one of the most used components within the Ethereum ecosystem. In January, the NFT trading platform OpenSea reached a record monthly sales figure of $5 billion.

Vitalik did not predict the rise of NFTs but observed the phenomenon with interest and anxiety. On one hand, they helped boost the price of ETH, which has increased more than tenfold over the past two years. (Disclosure: I purchased ETH worth less than $1,300 in 2021.) But their trading volume has overwhelmed the Ethereum network, leading to congestion and skyrocketing gas fees. For instance, bidders for rare NFTs are willing to spend hundreds of dollars in extra fees to ensure their confirmation speed.

These fees undermine some of Vitalik's favorite projects on the blockchain. Take Proof of Humanity, for example, which issues universal basic income (currently about $40 per month) to any registered user. The reality varies weekly, as the network's congestion fees can force you to withdraw money from your wallet to cover basic living needs, which is daunting. "The fees are such that," Vitalik said, "we've really reached a point where financial derivatives and gambling are starting to price some really cool things."

Inequality has also spread in other ways within the crypto space, including severe gender imbalance and lack of racial diversity. "This is not something I have invested a lot of intellectual energy into," Vitalik admitted regarding gender equality. "The ecosystem there really needs improvement." He scoffed at the dominance of token voting, believing that the voting process in DAOs is merely a new version of oligarchy, where wealthy venture capitalists can make self-serving decisions with almost no resistance. "It has become the de facto standard, which is the dystopia I have seen over the past few years," he said.

These issues have sparked strong opposition both within and outside the blockchain community. As cryptocurrency moves towards the mainstream, its esoteric jargon, unique culture, and financial excess have been widely scorned. Meanwhile, frustrated users are turning to newer blockchains like Solana and BNB Chain, driven by the prospect of lower transaction fees, alternative building tools, or different philosophical values.

Vitalik understands why people are moving away from Ethereum. Unlike almost any other leader in the trillion-dollar industry, he feels there is no problem, especially considering that the current issues with Ethereum stem from the fact that it has too many users. (Losing vast wealth has not overly concerned him: last year, he gave up Shiba Inu tokens worth $6 billion that were gifted to him, explaining that he wanted to donate some to charity to help maintain the value of the meme token while relinquishing his role as a "power center.")

Meanwhile, a representative confirmed that he and the Ethereum Foundation, which holds nearly $1 billion in ETH reserves, are taking various approaches to improve the ecosystem. Last year, they distributed $27 million to Ethereum-based projects, up from $7.7 million in 2019, with recipients including smart contract developers and educational conferences in Lagos.

The Ethereum Foundation's research team is also working on two significant technical updates. The first, known as "The Merge," will transition Ethereum from a proof-of-work mechanism (a form of blockchain validation) to a proof-of-stake mechanism, which the Ethereum Foundation claims will reduce Ethereum's energy consumption by over 99% and make the network more secure. Since Ethereum's inception, Vitalik has been advocating for a proof-of-stake mechanism, but repeated delays have turned implementation into a waiting game. At ETHDenver, Ethereum Foundation researcher Danny Ryan announced that the merge would occur within the next six months unless a "crazy catastrophic event" happens. On the same day, Vitalik encouraged companies concerned about environmental impacts to delay using Ethereum until the merge is complete, even if it "gets pushed to 2025."

In January, Moxie Marlinspike, co-founder of the messaging app Signal, wrote a widely read commentary pointing out that despite collectivist slogans, the so-called web3 has gathered around centralized platforms. As he often does when faced with legitimate criticism, Vitalik published a thoughtful, detailed post on Reddit. "A properly verified decentralized blockchain world is coming and is closer than many people think," he wrote. "I see no technical reason why the future needs to look like the present."

Vitalik realizes that the utopian promise of cryptocurrency sounds outdated to many and that the race to implement sharding in the face of competition is referred to as a "time bomb." "If we don’t shard fast enough, then people might start migrating to more centralized solutions," he said. "If it’s still centralized after all this happens, then yes, there’s a stronger argument that there’s a big problem."

As technical issues are resolved, Vitalik is turning his attention to the larger socio-political problems he believes blockchain could address. On his blog and Twitter, you will find papers on housing; on voting systems; on the best ways to allocate public goods; urban planning and longevity studies. While Vitalik spent most of the pandemic living in Singapore, he increasingly resembles a digital nomad, writing articles on the road.

Those familiar with Vitalik have noticed a philosophical shift over the years. "He has gone on a journey from a more sympathetic anarcho-capitalist mindset to a Georgeist mindset," said economist Glenn Weil, one of his close collaborators, referring to a theory that values common goods equally for all members of society. A recent post by Vitalik called for the creation of a new type of NFT that is not based on monetary value but on participation and identity. For example, voting allocation within an organization could depend on an individual's commitment to the group rather than the number of tokens they hold. "NFTs can represent more who you are rather than just what you can afford," he wrote.

While Vitalik's blog is one of his main tools for public persuasion, his posts are not intended to be decrees but rather intellectual explorations that spark debate. Vitalik often dissects the flaws in obscure ideas he once passionately wrote about, such as the Harberger tax. His blog serves as a model for how leaders can handle complex ideas transparently and rigorously, exposing the chaotic process of intellectual growth for all to see, perhaps to learn from.

Some of Vitalik's more radical ideas may raise eyebrows. In January, he sparked mild outrage on Twitter for advocating artificial wombs, which he believes could narrow the pay gap between genders. He predicts that people born today are likely to live until 3000 and takes anti-diabetic medication in hopes of slowing his physical aging, despite mixed research on the drug's effectiveness.

As government agencies prepare to enter the crypto space, in March, President Biden signed an executive order seeking a federal framework to regulate digital assets, and Vitalik is increasingly courted by politicians. At ETHDenver, he had private conversations with Democratic Colorado Governor Jared Polis, who supports cryptocurrency. Vitalik feels anxious about the political leanings of crypto technology in the U.S., as Republicans are generally more eager to embrace it. "There are definitely signs that crypto seems to be becoming a right-leaning thing," Vitalik said. "If that really happens, we will sacrifice a lot of the potential it offers."

For Vitalik, the worst-case scenario for the future of crypto is that blockchain technology ultimately becomes centralized in authoritarian governments. He is dissatisfied with El Salvador's adoption of Bitcoin as legal tender, as Bitcoin is fraught with dangers of identity theft and volatility. Governments could use the technology to suppress dissent, which is one reason Vitalik insists on keeping cryptocurrency decentralized. He believes the technology is the most powerful counterbalance to the surveillance technologies deployed by governments and powerful companies.

Vitalik believes that if Mark Zuckerberg should not have the power to make epoch-defining decisions or control user data for profit, then he should not be able to send some people to other blockchains or allow others to use his platform in objectionable ways. "I want an ecosystem with a lot of good crazies and bad crazies," Vitalik said. "Bad craziness is when a lot of money is drained, and all it does is fund the hacking industry. Good craziness is when technical work, research, and public goods emerge on the other end. And so there’s this battle. We have to be conscious to ensure that more of the right things happen."