On June 4, Lex Fridman’s big interview with Vitalik Buterin, the co-founder of Ethereum and one of the most significant people in the cryptocurrency world, was released on YouTube. If you don’t have time to watch the video, you can read our review.
About “Dog” Crypto Coins
When Jackson Palmer launched a Dogecoin mining pool as a joke featuring a popular Internet meme with a Shiba Inu dog in late 2013, no one expected the coin to soar so much. Even Vitalik could not understand why he invested $25,000 in the project in 2016. In the end, it turned out to be the best investment decision of his life: at the end of 2020, the capitalization increased to 50 billion USD, and during the exchange rate fluctuations, the increase was around 1000%.
Shiba Token is a follower of the Doge, the second most important “dog” coin. When its capitalization reached USD 13 billion in May 2021, the developers transferred half of all existing tokens worth approximately USD 7 billion to Vitalik’s cold wallet. This generous gesture (probably for marketing purposes) cost Buterin two days of work: first, it was not easy to get access to the wallet, and second, he had to transfer all funds, including 325 thousand Ether tokens, to a multisignature wallet, risking losing everything. The situation required quick decisions, as a result, a few days before the cryptocurrency market noticeably went down — he donated 20% of the Shiba tokens to charity, including to India’s Covid-19 relief fund, and burned the remaining 80%.
About Ethereum 2.0
The original intention was to create a new blockchain. But to make it easier for people to switch to version 2.0, the plan was changed, and now the work will take place in several stages: first Proof-of-Stake, then sharding, and so on. As a result, the transition will be seamless and without problems for the average user.
Proof-of-Stake will be one of the key mechanics in Ethereum 2.0. Unlike Proof-of-Work, which is currently used in Ethereum, this method does not require a lot of resources and energy, which in general is both greener and cheaper. Blockchain currently gives almost 5 million Ether to miners each year (with a total of 115 million). With Proof-of-Stake, this will be about 0.5-1 million Ether per year, which is generally significantly more profitable because the common proposal will not increase as rapidly.
Another advantage of Proof-of-Stake is security. For example, to gain control over a network with 5 million ether, you need to enter the same amount. And in terms of USD, it will cost many times more than a hypothetical attack on the network. But even if such attacks do happen, with Proof-of-Stake, due to automatic slashing, they are easier to parry and easier to recover from.
About Hardfork And Softfork
Speaking of changes. Most people think that softfork is less forceful than hardfork, but Vitalik fundamentally disagrees and calls himself a supporter of hardfork. In his opinion, in the case of softfork, changes are imposed, and those who do not agree with them remain on the network by default. In the case of hardfork, it is up to the participant to decide whether to accept the changes or not and whether to stay in the system or not. However, it is risky — there can be a split.
About cryptocurrency and decentralization
Blockchain is an opportunity to create new digital structures in the name of the public interest… My concern is that without tools such as cryptocurrency, human existence outside the centralized systems controlled by someone (at the state or a large company level) may become impossible.
Vitalik hopes that in the future society will be able to abandon the concept of one big structure supposedly representing the interests of society. According to Buterin, it is necessary to use the synthesis of the decentralization principles and open sources of information, take all the best, and eliminate the shortcomings. But for this to happen, you need a long-term development strategy. It is important that contributors and developers are supported and that this does not turn into another centralized project.
I believe Ethereum can be used in a number of progressive social ideas and social movements. At least, due to the fact that it is a worldwide open financial system, absolutely any person can be its participant. Everything created on Ether, in fact, is a public value for everyone.
About block size
The interview also covered the controversial topic of block size. Vitalik admits that he would consider himself a supporter of larger blocks. But in general, he believes that in this case, the solution should be a compromise, so that it is easy to send transactions and verify them. This is important for decentralization. If it becomes expensive to read the blockchain, most of the participants will have to turn to a narrow circle of people for it, who may start setting their own rules, which is unacceptable for decentralized systems. And if the new transactions are expensive to implement, most will move to a centralized second-tier system.
About State Cryptocurrency Regulation
In the best-case scenario, blockchain will assimilate and integrate into public life, as it happened with the Internet. The state will hardly be able to “stop” this system. But it is able, for example, to forbid major employers to pay or accept payments in cryptocurrency — and then it will have no impact on the social order. Moreover, the government has something to worry about: for example, it could lose the income tax for legal entities as a source of funding if companies would be replaced by autonomous decentralized organizations.
Five people are literally able to do cool projects nowadays, and each of the participants can be in a different country. Such accessibility is the key value of cryptocurrency in general. This is what social progress is all about.