Vitalik Buterin (Ethereum Co-founder) – TechCrunch Sessions (Jul 2018)


Chapters

00:00:04 Scaling, Privacy, and Security: Vitalik Buterin's Vision for Ethereum
00:03:05 Improving Smart Contract Security on the Ethereum Blockchain
00:08:10 Ethereum Foundation's Decentralized Organizational Structure
00:11:15 Privacy and Scalability on the Ethereum Blockchain
00:19:14 Blockchain-Based In-Game Assets: Challenges and Opportunities
00:22:31 Blockchain User Authentication Technologies and the Future of Mass Adoption
00:25:48 Tokenization of Real-World Assets and the Rise of Decentralized Exchanges
00:32:59 Fostering Inclusive Community Values in the Ethereum Space
00:35:05 Challenges and Limitations of Private and Consortium Blockchains
00:37:10 Blockchain Architecture Design Compromises

Abstract

Scaling, Privacy, and Security in the Blockchain World: Vitalik Buterin’s Vision for Ethereum’s Evolution

In the rapidly evolving world of blockchain technology, few figures stand out as prominently as Vitalik Buterin, the co-founder of Ethereum. Buterin’s insights and innovations continue to shape the blockchain landscape, addressing critical issues like scaling, privacy, and security. This article delves into Buterin’s perspectives on various aspects of blockchain technology, from the transition of Ethereum to proof-of-stake to the potential of new programming languages, and the challenges and opportunities they present.

Key Focus Areas for Ethereum’s Development

Buterin emphasizes three primary focus areas for Ethereum’s development: scaling, privacy, and security. He identifies these as pivotal for the blockchain’s future success and resilience. The transition from proof-of-work to proof-of-stake is a central component of this strategy, aimed at enhancing Ethereum’s efficiency and decentralization.

Proof-of-Stake vs. Proof-of-Work: A Comparative Analysis

Addressing criticisms of proof-of-stake’s tendency towards centralization, Buterin contrasts it with the existing proof-of-work system. He notes the dominance of a few mining pools in Bitcoin’s network, leading to a higher degree of centralization and associated security risks, such as the possibility of a 51% attack.

Buterin further highlights the geographic concentration in proof-of-work mining and the associated vulnerabilities. The recent flooding in Sichuan, China, serves as an example, leading to a significant portion of Bitcoin’s hash power going offline.

Additionally, plausible deniability strategies employed by mining pools and hardware manufacturers make it difficult to determine the true level of centralization in proof-of-work systems. This lack of transparency further exacerbates the centralization concerns.

The Advantages of Proof-of-Stake

Buterin argues that proof-of-stake, despite its criticisms, offers substantial improvements in terms of decentralization and security over proof-of-work. He believes it reduces the “rich getting richer” effect, prevalent in the current mining landscape.

Innovations in Programming Languages and Standardization

The introduction of Viper, a high-level programming language designed for smart contracts, marks a significant step in Ethereum’s journey. This language, along with ongoing developments in other high-level languages, aims to enhance security and minimize errors. Additionally, efforts to standardize code samples and templates for common components like multi-sig wallets are underway, further strengthening the ecosystem’s robustness.

The Parody Multi-Sig Wallet Incident and Ethereum Foundation’s Structure

The incident involving locked funds in the parody multi-sig wallet highlights the challenges facing blockchain technology. While a hard fork could resolve this issue, the Ethereum community is reluctant to support such a drastic measure. This scenario underscores Buterin’s commitment to neutrality and the decentralized nature of the Ethereum Foundation, which contrasts sharply with more centralized corporations.

Buterin has also expressed his desire to step back from his role as the public face of the Ethereum Foundation and focus on his role as chief scientist. Carl Beekhuizen, the foundation’s current communications director, will take on a more prominent role as the public face of the foundation. The Ethereum Foundation strives to be a decentralized organization, unlike centralized corporations like Microsoft.

Advancing Privacy on the Ethereum Network

Ethereum’s recent updates, including pre-compiled zero-knowledge primitives and elliptic curve mathematic operations, signal a strong commitment to enhancing privacy. These technologies enable more private transactions and open up new possibilities for privacy-preserving applications. Buterin acknowledges the regulatory concerns these advancements may attract but remains focused on their legitimate, wide-ranging applications.

Ethereum is exploring ways to enhance privacy on its blockchain, including through optimizations to the virtual machine and support for zero-knowledge-proof technologies. The privacy roadmap involves optimizing the virtual machine, participating in zero-knowledge-proof development, and researching new computing models for enhanced privacy.

Ethereum supports zero-knowledge-proof technologies such as Snark and Stark, enabling more efficient cryptographic operations and privacy-preserving applications.

Vitalik Buterin acknowledges concerns about privacy technologies potentially attracting regulatory attention but emphasizes their broader applications, including scalability and legitimate uses in various industries. Vitalik Buterin believes that the decentralized nature of blockchain development makes it difficult for regulators to force developers to implement specific changes, such as hard forks to delete accounts.

Addressing Nefarious Use and Regulatory Pressure

Buterin recognizes the potential for illicit use of Ethereum but believes its positive uses far outweigh these concerns. He anticipates regulatory responses to target exchanges rather than the blockchain itself, underscoring the importance of decentralization in maintaining the integrity of the blockchain.

The Fascination with Crypto Collectibles and In-Game Item Tokens

The popularity of tokens for gaming and virtual collectibles, such as CryptoKitties, has captured public imagination. While Buterin does not personally engage with these collectibles, he acknowledges their potential and the need for careful consideration of their long-term value. He is excited about the prospects of blockchain-based in-game item tokens but remains cautious about their integration with game mechanics and market dynamics.

Vitalik Buterin mentions having received Cryptokitties but hasn’t delved into it. There’s interest in using tokens for in-game items, which excites Buterin. Buterin admits limited understanding of collectible game psychology. Demand exists for trading in-game assets.

Blizzard actively opposed real-money trading in World of Warcraft. They aimed to maintain a neutral playground where money didn’t grant advantages. However, this stance has been gradually softening.

Buterin expresses concern about the intersection of efficient markets and the psychology of fun and challenge. Paying to bypass challenges may diminish the inherent enjoyment of gaming.

Buterin sees blockchain as a great platform for asset tradability in games. It establishes a neutral playing field, reducing the influence of centralized providers. It promotes interoperability and simplifies the integration of new games. The existing crypto infrastructure facilitates trading.

Buterin anticipates the possibility of game server hacks due to Plasma implementation. Plasma clients would automatically detect misbehavior and initiate exit transactions onto the blockchain. This would result in significant transaction fees.

John raises the question of user experience in large-scale in-game asset trading. With millions of people involved, will users interact directly with their wallets and sign transactions? Or will the blockchain remain transparent to them?

Technological Considerations: Plasma, User Experience, and Security Tokens

Buterin discusses the role of Plasma in game server security and the implications of scalable blockchain technology on user experience in trading in-game assets. He also touches on the burgeoning field of security tokens, representing a broad array of real-world assets, and their potential to transform asset trading and ownership.

Value of Blockchainifying Real-World Assets:

Tokenizing real-world assets brings access to an open ecosystem of tools for trading, collateralization, and financial contracts. This open ecosystem allows for innovation and integration between different ERC-20 tokens and applications.

Challenges in Tokenizing Art:

Despite excitement surrounding tokenizing art, the transition from traditional art purchases to digital ownership can be challenging. Psychological barriers exist in valuing digital representations of art compared to physical pieces.

Decentralized Exchanges vs. Centralized Exchanges:

Vitalik Buterin expresses hope for the dominance of decentralized exchanges over centralized ones. Centralized exchanges provide valuable services, especially for fiat-to-crypto conversions, due to the centralized nature of the fiat world. Decentralized exchanges offer advantages in usability and transparency, with potential for increased efficiency over time.

Ethereum’s Harmony Compared to Bitcoin:

Ethereum’s community operates under a social contract that embraces ongoing evolution, including proof of stake and sharding. Disagreements exist but are rooted in a shared understanding of the goal of moving forward. The community’s values and early members’ beliefs influence its growth and direction.

Ethereum’s Community Values and Goals

The Ethereum community, guided by principles of inclusivity, intellectual diversity, and technological progress, is exploring various social and political applications of blockchain technology. Projects like basic income, radical markets, and blockchain-based voting reflect the community’s commitment to leveraging technology for social good.

Valuing Inclusivity and Exclusivity:

Vitalik Buterin believes in promoting the right values and attracting the right people to the Ethereum community. He emphasizes the importance of creating a culture that is inclusive and welcoming to all, while also excluding those who take themselves too seriously.

Ethereum’s Social and Political Goals:

Ethereum aims to pursue various social and political goals through its projects and initiatives. These goals include promoting basic income, radical markets, voting on the blockchain, prediction markets, and intellectual diversity.

Valuing Intellectual Diversity:

Buterin emphasizes the importance of intellectual diversity within the Ethereum community. He believes that exposure to diverse values and perspectives has contributed to the community’s success.

Appreciating Technological Progress:

Ethereum values technological progress and advancements in cryptography and blockchain technology. Buterin highlights the significance of taking Byzantine fault tolerance theory, zero-knowledge proofs, NARC, and STARX seriously. Ethereum collaborates with communities working on these technologies and fosters non-maximalist partnerships with other blockchain communities.

Revisiting Private and Consortium Blockchains

Buterin’s diminishing optimism about private and consortium blockchains arises from their unfulfilled promises and slow progress. He suggests that public blockchain networks may offer more credible alternatives to these centralized solutions, providing a more resilient infrastructure for decentralized applications.

Skepticism Towards Private and Consortium Blockchains:

Vitalik Buterin expresses his decreasing optimism towards private and consortium Ethereum blockchains compared to his stance two or three years ago.

Empty Promises:

Buterin criticizes the lack of tangible benefits from private and consortium blockchain implementations. He mentions the example of a purported $200 million savings by IBM without clear evidence of its actual implementation.

Failed Pilot Projects:

Buterin highlights the slow progress and eventual failures of many initial pilot projects in the private and consortium blockchain space.

Lack of Decentralization:

He points out instances where supposedly decentralized consortium chains end up having a centralized structure with nodes controlled by a single company, contradicting the decentralized nature of blockchain technology.

Historical Challenges:

Buterin draws parallels between the current struggles of private and consortium blockchains with their challenges in the 1990s and 2000s. He attributes these difficulties to the lack of decentralized consensus algorithms before the emergence of Bitcoin and crypto economics.

Centralization vs. Decentralization and the Future of Blockchain Technology

In closing, Buterin highlights the ongoing tension between centralization and decentralization in the blockchain world. While recognizing the need for compromises in various industries, he remains a strong advocate for decentralized solutions and the transformative potential they hold.

Vitalik Buterin’s perspectives, covering a wide range of topics from the technical intricacies of Ethereum’s development to the broader philosophical and ethical implications of blockchain technology, offer a comprehensive look into the future of blockchain. His vision underscores the importance of constant innovation, community-driven development, and the balance between efficiency, security, and decentralization. As blockchain technology continues to evolve, Buterin’s insights provide valuable guidance for navigating its complex and dynamic landscape.

Consortia vs. Public Chains

– Vitalik discusses the challenges of creating decentralized consortia, emphasizing the difficulty in attracting additional members beyond the first major company.

– He highlights the credibility and resilience advantages of public chains, such as Ethereum’s network of 16,000 computers, over consortia chains.

Compromises between Decentralization and Centralization

– Vitalik acknowledges the need for compromises between decentralized ideals and the practicalities of centralization in various industries.

– He suggests that consortium chains are not the only means of achieving such compromises.

Alternative Approaches to Decentralization

– Vitalik proposes plasma chains, even those acting as centralized servers, as another way to balance decentralization and centralization.

– He emphasizes the potential of incorporating Merkle trees and blockchain commitments into centralized systems to create resilient and decentralized solutions.

Favorite Blockchains

– Vitalik reveals his diverse collection of blockchain private keys, including Bitcoin, Bitcoin Cash, Bitcoin Gold, Bitcoin Uranium, Bitcoin Diabids, Bitcoin Carbon Dioxide, Doge, Zcash, and Ethereum-based tokens.

– He expresses particular interest in the Zcash team’s technical competence and commitment to privacy.

Cultural Success of Zcash

– Vitalik acknowledges Zcash as one of the few projects that has successfully cultivated a strong cultural identity.


Notes by: Ain