Techno-Idealism Revisited:
Tyler Cowen and Vitalik Buterin reflect on the techno-idealism movement, spanning the past 25 years since the declaration of cyberspace independence. They examine the successes and failures of techno-idealism, particularly in the field of information technology.

Validation of Big Tech and Tech’s Role in COVID-19 Understanding:
Vitalik highlights the validation of well-capitalized big tech companies, especially Amazon, during the last eight or nine months. He emphasizes the positive impact of technology, including electronic media, in facilitating communication among scientists and accelerating the understanding of COVID-19.

The Challenge of Disorientation in a Transparent World:
Vitalik points out the underpredicted increase in disorientation resulting from the transparency brought by technology. He highlights the difficulty humans face in dealing with a world where everything is transparent and rumors abound. He observes the tendency to blame companies for this disorientation.

Peter Thiel’s Statement on AI and Crypto:
Vitalik addresses Peter Thiel’s statement that AI is communist and crypto is libertarian. He acknowledges that the role of crypto in the world’s future is yet to be determined. He expresses concern about AI’s totalitarian aspects, particularly surveillance, but also sees potential for increased liberties in autocratic societies with surveillance.

Governance Discussions in the Crypto Space and Online Moderation Challenges:
Tyler brings attention to the ongoing conversations about governance within the crypto space, citing examples from Zcash, Bitcoin Cash, and Ethereum. He mentions the drama surrounding Twitter and other social media platforms regarding moderation and the challenges they face in maintaining credibility and fairness. He poses the question of how to govern moderation effectively, considering the challenges faced by platforms like Twitter and Facebook.

Crypto Governance:
Crypto governance currently benefits from a large influx of resources due to the success of crypto assets, attracting smart people and experimentation. However, this flow of wealth also leads to a lack of discipline in governance experiments, making it difficult to determine which mechanisms are effective.

Wealth Subsidization:
The massive wealth flowing into crypto subsidizes governance experiments, allowing for more risk-taking and experimentation. The lack of competitive market discipline makes it difficult to distinguish between successful and unsuccessful governance mechanisms.

Facebook and Twitter:
Vitalik Buterin believes that media has historically been unfair and gotten away with it. He does not foresee a near-term future where a decentralized, crypto-run version of Twitter will replace existing platforms. Buterin predicts that Twitter will continue as is, making political adjustments as needed.

Regulatory Landscape:
If Joseph Biden is elected, Buterin expects the Democrats to establish a new regulatory agency for Facebook and Twitter. This regulation may cartelize the sector, cementing incumbents and increasing transaction costs. The result could be less innovation and higher labor intensity in the social media industry.

Crypto’s Role in the Future of Media:
Vitalik Buterin believes that crypto will not play a significant role in reshaping the media landscape in the near future. He argues that ordinary users are unlikely to switch to alternative platforms based on complex arguments about balance, freedom of speech, or decentralization. Buterin suggests that the current status quo, with a few dominant platforms, is likely to persist, albeit with some changes and evolutions.

The Internal Task of Crypto:
Buterin emphasizes the need for crypto to focus on internal governance experiments to determine its true potential. He questions whether crypto will remain primarily a portfolio instrument or if it can offer transformative transactional applications.

The Tug of War Between Portfolio and Transactional Demand:
Buterin highlights the tension between the demand for crypto as a portfolio asset and its potential for transactional use. For portfolio purposes, stability and predictability of value are desirable, while transactional applications may require some level of instability or unpredictability.

Enduring Portfolio Demand:
Buterin expresses confidence in the enduring demand for crypto as a portfolio instrument, but remains uncertain about the success of various governance and transactional experiments.

Pressure on Eva-Based Crypto Projects:
Tyler Cowen raises the question of whether the lack of widespread concern for neutrality and fairness among users could lead Eva-based crypto projects to abandon those values in the long run.

Vitalik’s Perspective on Crypto’s Long-Term Future:
Vitalik expresses uncertainty about the libertarian nature of crypto’s long-term future, emphasizing the possibility of co-optation and the influence of regulators. He believes that crypto’s true interaction with the banking system will determine how regulators respond, potentially leading to crypto playing by regulatory rules or becoming a conservative and tamed technology.

Substack’s Popularity and Twitter’s Centralization:
Tyler Cowen and Vitalik discuss the rise of Substack as an alternative to Twitter. Vitalik attributes Substack’s popularity to people’s declining trust in mainstream media and the potential for financial gain. Vitalik predicts the proliferation of alternative platforms, such as WhatsApp and Clubhouse, which will reduce Twitter’s dominance and limit its ability to censor content.

Governance and Institutions in Ethereum:
Vitalik observes a shift towards more governance and institutional involvement in Ethereum, with less emphasis on dogmatic algorithms. He highlights the importance of individuals like Jimmy Wales in establishing trust and certifies in crypto ecosystems. Vitalik envisions the future of crypto as a combination of micro institutions focused on individuals and trust-based governance, particularly when interacting with the real world.

The Role of Non-Governmental Projects and Governments in Crypto:
Tyler Cowen and Vitalik discuss the evolving relationship between non-governmental crypto projects and governments. Vitalik emphasizes that the public and governmental spheres are not synonymous, and that public concern does not necessarily equate to government control. He suggests that the distinction between public and governmental authority is essential for the healthy development of crypto.

The Drawing Board of Ethereum 2.0:
Vitalik views Ethereum 2.0 as an institution in progress, with its complexity and multi-dimensional nature reflecting the evolving governance landscape of crypto. He acknowledges that Ethereum 2.0 is still in its development stages, but sees it as a promising example of institutional development in crypto.

The Global Community of Twitter:
Twitter is a truly global platform where people from all over the world interact and exchange ideas. The platform serves as a “world water cooler” where diverse perspectives and cultures converge. Twitter’s user base includes individuals from various countries, including the US, China, India, and Iran. This global nature of Twitter raises questions about the suitability of a single country, like the US, having ultimate control over the platform.

Jack Dorsey’s Role in Twitter:
Given the imperfect world we live in, Jack Dorsey’s leadership of Twitter is seen as less problematic compared to other potential actors. Dorsey’s role is viewed as preferable to alternative scenarios where individuals or entities with potentially more harmful intentions could be in charge.

Centralized Platforms vs. Global Audience:
Centralized platforms like Twitter serve a global audience but are based in a particular country, leading to potential conflicts. Crypto projects, on the other hand, often have a more global presence and may not be tied to a specific country. Bitcoin, for example, has a significant portion of its miners in China, while its developers are primarily located in the US and Europe.

Internet’s Impact on US Soft Power:
The internet has significantly increased the soft power of the United States. American ideas and movements, such as Me Too and Black Lives Matter, have gained global attention and influence through online platforms. The internet has cemented the English language as a global lingua franca, further solidifying the US’s intellectual and cultural dominance.

Global Reach and Cultural Influence:
The US’s global reach and cultural influence have grown significantly, with Americans having a far greater reach than individuals from other nations. This shift has been recognized by other countries, even if they are reluctant to admit it.

Physical vs. Digital America:
Digital America is a growing concept that includes individuals who may not reside in the US but are deeply engaged with American culture, technology, and issues. This raises questions about the definition of America and the role of tech platforms and cultural factors in shaping national identity.

Post-COVID Economic Shifts:
The shift towards remote work will lead to a decrease in real rents, benefiting many individuals. This will improve people’s standard of living and provide a boost to the US economy.

Globalization and US-China Relations:
Globalization does not necessarily diminish the US’s relative status. China’s focus on developing its own internet ecosystem may cement the US’s position in the global digital sphere.

Digital Anglosphere and Cultural Centers:
The digital Anglosphere is strongly influenced by American culture, with entertainment and influential writers heavily Americanized. There are incentives for intellectuals to cluster in major centers like the US, London, and Singapore.

Brexit and Cultural Divisions:
Brexit has further divided the UK and continental Europe, with the UK aligning more closely with the Anglosphere in terms of cultural and political values. This split is expected to continue, with language and gender becoming more significant factors in shaping divisions.

Non-Financial Applications of Blockchain Technology:
Crypto technologies have potential applications beyond financial transactions. Micro-prediction markets and virtual reality applications are areas where blockchain could play a significant role.

The Promise of Crypto:
Vitalik Buterin sees significant potential for crypto’s evolution to enable new classes of transactions, such as those in virtual reality worlds. The success of prediction markets on Ethereum highlights the need for certain nudges and regulations to unlock the full potential of crypto.

The Missing Markets Puzzle:
Tyler Cowen and Vitalik Buterin discuss the puzzling absence of certain markets, like prediction markets, despite the high levels of trading in regular financial markets. The micro foundations for the absence of these markets remain unclear, impacting crypto’s future. The success or failure of crypto in opening up new transactions depends on the fundamental reasons behind missing markets.

Scalability Challenges:
Transaction costs and usability have historically hindered the growth of crypto. However, ongoing work on scalability solutions like sharding and rollups promises significant cost reductions. The success or failure of these scalability measures will determine whether user experience was the primary barrier to crypto adoption.

The Role of Crypto as a Unit of Account:
Vitalik Buterin believes that crypto doesn’t need to become a widely used unit of account to open up new transactions. However, it may require a significant deterioration of fiat currencies for crypto to gain traction as a unit of account. The substitutability of crypto for fiat currencies remains a key variable in forecasting crypto’s future.

The Rise of Stablecoins:
The proliferation of stablecoins, such as DAI, USDC, and USDT, has raised questions about their trust properties and long-term viability. Tyler Cowen expresses bearishness on crypto due to the rise of stablecoins, citing their dubious trust properties and the historical failure of exchange rate pegs. Vitalik Buterin highlights the historical instability of exchange rate pegs, emphasizing the challenges stablecoins face in maintaining their stability over the long term.

Vitalik’s Views on Stable Coins:
Stable coins will likely become floating exchange rates, which he supports. Stable coins are inherently unstable due to fat tail risks.

Macro Foundations of Crypto:
Distrust in governments is a significant factor driving interest in cryptocurrencies. Bitcoin is seen as a more sound foundation compared to fiat currencies. Decentralized technology could thrive due to the erosion of trust in governments.

Tyler’s Inquiry on the Future of Trust in Governments:
Governments and the Fed are distinct entities, and trust in them may differ. The Fed has enjoyed a period of positive performance and public trust. Crypto’s growth may be hindered while the Fed remains credible and effective.

Vitalik’s Perspectives on the Fed’s Role:
The Fed’s strong performance has concealed issues within the American banking system. The Fed’s credibility may eventually diminish as it exhausts its ability to address problems. This could lead to a surge in interest in cryptocurrencies as people seek alternatives.

Two Possible Scenarios for Crypto’s Future:
If the Fed’s credibility remains strong, crypto’s growth may be limited. If the Fed’s credibility falters, it could lead to a surge in demand for cryptocurrencies.

Quadratic Funding Experiments:
Quadratic funding experiments have been conducted in the Ethereum ecosystem through Gitcoin grants, distributing around $2 million. Positive feedback suggests people are generally satisfied with the results. Experiments with downtown stimulus have been conducted in Colorado to fund businesses using quadratic funding.

Collective Choice:
Collective choice mechanisms like quadratic funding can work and have shown positive results. However, the key input to collective choice is the quality of voter preferences. If bad outcomes are being generated, it’s not necessarily about changing electoral systems or mechanisms but rather addressing the root issue: the quality of the inputs.

Cultural Influence on Preferences:
The cultural context and values shape what people want and consider important. Electoral mechanisms may not make a significant difference in addressing larger problems if the underlying cultural preferences are not addressed.

Well-Educated Communities:
In communities with a high level of education, such as those associated with Ethereum, there’s potential for more effective use of collective choice mechanisms. The efficiency properties of these methods can be utilized within the model.

Input Quality:
The quality of inputs is a fundamental factor that cannot be bypassed in collective choice mechanisms.

Central Bank Issued Digital Currencies:
Vitalik Buterin expressed concern about central bank issued digital currencies (CBDCs) potentially sucking the life out of private banks. He believes that while China may be able to implement CBDCs due to its intertwined private and state banks, other countries may face challenges. Buterin sees CBDCs as overrated and fears they could lead to central banks becoming intermediaries and private banks being starved for deposits.

Remote Work and Geographic Mobility:
Buterin believes remote work will make moving within a country more viable but not necessarily between countries. He argues that personal networks and the high costs associated with moving across borders limit the impact of remote work on geographic mobility. Buterin sees the viability of remote work changing movement within nations more than between nations.

Charter Cities:
Buterin distinguishes between two types of charter cities: The traditional concept of charter cities governed by a small group of individuals, which he believes is unlikely to happen. A more realistic scenario where governance becomes more complex and diverse, with entities like shopping malls and enterprise zones gaining more sovereignty. Buterin believes this latter type of charter city is underrated and could become more significant in the future.

Online to Offline Communities:
Tyler Cowen inquired about Balaji’s idea of online communities forming offline and intentionally coming together in a physical location. Buterin believes people tend to move less frequently and are less likely to make multiple moves throughout their lives. He expects people to choose different one-time moves to distinct locations rather than frequent hopscotch movements.

Virtual Reality:
Buterin expressed skepticism about virtual reality due to his personal experience with dizziness. He acknowledges that his argument against VR is simple and unsophisticated, but he believes it may be either totally correct or totally wrong.

Small Countries:
Buterin believes small countries will continue to exist and do well but will likely attach themselves to larger units. He highlights the challenges faced by countries like Singapore, which must navigate complex relationships between China and the United States. Buterin emphasizes that well-run small countries can thrive and sees positive developments in places like New Zealand and Taiwan.

The United Nations:
Buterin views the United Nations as overrated due to its overblown public perception. He acknowledges that econometric studies suggest the UN modestly reduces conflict worldwide but criticizes the organization for frequently issuing messages that offend him. Buterin believes the UN’s positive impact is declining, and it is no longer a significant player in many issues.

Mars:
Buterin expressed skepticism about space travel and Mars colonization. He emphasized the perilous journey, the challenges of reentry, and the daunting costs and problems associated with Mars. Buterin sees Mars as overrated by enthusiasts but believes the average American’s low expectations of Mars are accurate.

Frontier and Biomedicine:
Buterin acknowledged the potential frustration of not having a frontier like Mars but sees advancements in biomedicine as a potential source of strangeness and difference in the world. He believes biomedicine could have a more significant impact on people’s lives and discussions than Mars colonization.

Cowen’s Argument about People’s Indifference to Censorship:
Tyler Cowen suggests that people generally don’t care about censorship resistance or control over their information until it personally affects them. He compares this to the increasing use of VPNs due to censorship and the potential for crypto-based solutions to gain traction when a specific issue arises that mainstream platforms fail to address.

Vitalik’s Response:
Vitalik agrees that people tend to become aware of these issues only when they are personally affected. However, he argues that centralized platforms may eventually miscalculate and cause harm, prompting users to seek alternatives. He also acknowledges the possibility that existing platforms might evolve somewhat in a decentralized direction to address concerns without fully embracing crypto solutions.

Control as a Liability:
Vitalik emphasizes the concept of “control as a liability,” suggesting that having excessive control over a system can backfire. He suggests that reducing control doesn’t necessarily mean adopting fully decentralized crypto solutions but could involve establishing independent governing councils or allowing users to choose moderation algorithms.

Fully Decentralized Solutions as a Niche:
Vitalik believes that fully decentralized solutions will remain a niche in the short term. Their long-term prospects depend on finding a compelling use case and technological advancements that address their limitations.

The Credible Threat of Decentralization:
Vitalik argues that even if decentralized technologies don’t become widely adopted, their credible threat can influence centralized actors to be more reasonable. He cites the example of piracy, where the threat of illegal torrenting pushed recording labels to create more consumer-friendly services like Spotify and Netflix.

Different Stances and Perspectives:
Tyler Cowen acknowledges that he and Vitalik have different stances on these issues due to their respective roles. Cowen is a detached observer, while Vitalik is a doer, which shapes their perspectives and conclusions. The time interval of the debate also influences their views on the importance of decentralization.

Pitching Ethereum to Bright Economics Students:
Vitalik suggests that the best way to convince economics students about the significance of Ethereum is to show that papers on Ethereum can be published in top academic journals. He believes that this would demonstrate the credibility and legitimacy of Ethereum as a subject of study.

Academic and Economic Research on Cryptocurrency:
There has been significant academic and economic research on cryptocurrency theory and cryptography, including work by Eric British and Tim Roughgarden’s analysis of the AP 1559 fee market reform proposal.

Decentralized Finance (DeFi):
Vitalik Buterin acknowledges the rise of DeFi as an exciting development but admits that he finds it challenging to understand and evaluate due to the lack of market tests and clear mental models.

Getting Involved in Ethereum Development:
For new developers, Tyler Cowen recommends starting by developing a simple application on top of Ethereum, such as a wallet DAP or a DAP that interacts with a smart contract. This hands-on approach provides a deeper understanding of the development process and different components of the Ethereum ecosystem. Depending on the developer’s focus, they can explore existing applications, ETH1, ETH2, or Layer 2 protocols.

Non-American Anglo Soft Power in Entertainment:
Tyler Cowen highlights the rise of non-American Anglo soft power in entertainment, particularly from India, Nigeria, and South Korea. He emphasizes the influence of these countries’ entertainment industries on global culture and their potential to challenge the dominance of American media.

Hollywood’s Declining Soft Power:
* Vitalik Buterin argues that Hollywood’s soft power is diminishing due to its attempt to appeal to a global audience, resulting in a decline in quality.
* Korean and Iranian cinema are cited as examples of smaller-scale productions that prioritize quality and cater to specific audiences.

Social Media’s Growing Influence:
* Buterin emphasizes the growing influence of social media in shaping global culture, surpassing Hollywood’s reach.
* YouTube and Instagram stars are often more popular than movie stars, demonstrating the shift in celebrity production.

AI’s Impact on Movie Production:
* Buterin believes that AI and recent developments in language models like GPTs will reduce the cost of movie production, enabling individuals to create high-quality content.
* However, he suggests that centralization will persist at the top, with a few dominant players attracting the most attention.

Crypto’s Regulatory Challenges:
* Buterin expresses concern about the potential for increased regulation of cryptocurrencies, particularly in the United States under a Biden presidency.
* He highlights the need to consider the implications of banks moving into technology and fintech encroaching on banking services.

The Future of Ethereum:
* Buterin predicts that Ethereum will become a more mainstream institution, known to a broader audience and engaging in a wider range of applications.
* Tyler Cowen anticipates continued growth in Ethereum’s technology, enabling more applications and attracting a larger user base.
* Cowen believes that viral crypto applications will emerge, similar to CryptoKitties, once transaction fees are no longer a limiting factor.

ETHonline Summit Highlights:
* The ETHonline summit brought together 710 developers who worked on various projects, resulting in 175 contributions in areas such as DeFi, scalability, and governance.
* Over the course of the year, eGlobal and ETHonline hosted 1713 developers through online and in-person events.

Conference Wrap-Up:
The conference hosted by Tyler Cowen involved more than 470 projects in the Ethereum ecosystem. Some of the projects have grown to become well-funded companies, while others have been experimental in nature. A commonality among these projects is that the creators were passionate about building them and wanted to share them with the community.

Gratitude and Appreciation:
Tyler Cowen expressed gratitude to all the participants, attendees, and speakers for their involvement in the four-week conference.

Future Event Announcement:
The next hackathon, Ithogata, will be held in person from August 6 to 8 in Bogota, Colombia, alongside DEF CON. More details about the event will be announced soon.

Conclusion:
Tyler Cowen thanked the audience for their presence and wished them a pleasant afternoon, evening, and night.