Kind: captions
Language: en
the following is a conversation with
vitalik buterin
co-creator of and author of the white
paper the launched ethereum and ether
which is a cryptocurrency that is
currently the second largest digital
currency after bitcoin
ethereum has a lot of interesting
technical ideas that are defining the
future of blockchain technology and
vitalik is one of the most brilliant
people innovating in the space today
unlike satoshi nakamoto the unknown
person or group that created bitcoin
vitalik is
very well known
and
at a young age it's thrust into the
limelight as one of the main faces of
the technology that may redefine the
nature of money and all forms of digital
transactions in the 21st century
this is the artificial intelligence
podcast if you enjoy it subscribe on
youtube review it with five stars in
apple podcast support on patreon or
simply connect with me on twitter alex
friedman spelled f-r-i-d-m-a-n
as usual i'll do one or two minutes of
ads now and never any ads in the middle
that can break the flow of the
conversation i hope that works for you
and doesn't hurt the listening
experience
quick summary of the ads two sponsors
masterclass and
expressvpn
please consider supporting the podcast
by signing up to masterclass and
masterclass.com
lex
and getting expressvpn at expressvpn.com
lex
pod
this show is sponsored by masterclass
sign up at masterclass.com lex to get a
discount and to support this podcast
when i first heard about masterclass i
honestly thought it was too good to be
true
for 180 a year you get an all-access
pass to watch courses from experts at
the top of their field
to list some of my favorites
chris hadfield on space exploration neil
degrasse tyson on scientific thinking
and communication will write the creator
of simcity and sims on game design
i love that game
jane goodall on conservation carlos
santana one of my favorite guitarists on
guitar gary kasparov on chess obviously
i'm russian i love gary
daniel negrano on poker one of my
favorite poker players also phil ivey is
uh gives a course as well and many many
more
chris hadfield explaining how rockets
work and the experience of being
launched into space alone is worth the
money
by way of advice for me the key is not
to be overwhelmed by the abundance of
choice
pick three courses you want to complete
watch each all the way through from
start to finish it's not that long but
it's an experience that will stick with
you for a long time i promise
it's easily worth the money you can
watch it on basically any device
once again
sign up at masterclass.com
lex to get a discount and to support
this podcast
this show is sponsored by expressvpn
download it at expressvpn.com
lex pod to get a discount and to support
this podcast
i've been using expressvpn for many
years
i honestly love it
it's easy to use
press the big power on button and your
privacy is protected and if you like you
can make it look like your location is
anywhere else in the world i might be in
boston now but i can make it look like
i'm in new york london paris or anywhere
else
this has a large number of obvious
benefits
for example certainly it allows you to
access international versions of
streaming websites like the japanese
version of netflix or the uk version of
hulu
as you probably know i was born in the
soviet union so sadly given my roots and
appreciation of russian history and
culture my website and the website for
this podcast is blocked in russia
so this is another example of where you
can use expressvpn to access sites like
the podcast
that are not accessible in your country
expressvpn works on any device you can
imagine i use it on linux shout out to
ubuntu
windows android but it's available
everywhere else too
once again download it at expressvpn.com
lex pod to get a discount and to support
this podcast
and now here's my conversation with
vitalik buterin
so before we talk about the fundamental
ideas behind
ethereum and cryptocurrency
perhaps it'd be nice to uh to talk about
the the origin story of bitcoin
and the uh mystery of satoshi nakamoto
you give a talk that started with
sort of asking the question what did
uh satoshi nakamoto actually invent
maybe you could say who is satoshi
nakamoto and what did he invent sure so
satoshi nakamoto is
the name by which we know the person who
originally came up with bitcoin so the
reason why i say the name by which we
know is that
this is a anonymous uh fellow who has uh
shown himself to us only um over the
internet uh just by first publishing the
white paper uh for bitcoin and then
releasing the original source code for
bitcoin and then talking to
the very early bitcoin community on
bitcoin forums and
and of interacting with them and helping
the project along for a couple of years
um and then at some point in late 2010
to early 2011 he disappeared uh so
bitcoin is uh a fairly unique project
and how it has this kind of
mythical kind of quasi-god-like founder
who just kind of popped in and did the
thing and it
disappeared and we've somehow just never
heard from him again so in 2008 was so
the white paper was the first do you
know if the white paper was the first
time the
name
would actually appear satoshi nakamoto
believe so
so how is it possible
that the creator of such a impactful
project
remains anonymous
that's a tough question and there's no
similarity to it in history of
technology as far as i'm aware yeah
so one possibility is that it's hal
finny um because uh hell finney was kind
of also
active in the bitcoin community and as
um how finney
um in those uh two
beginning years and uh how who is how
thin he may be he is one of the people
in the end of early cypherpunk community
he was
a computer scientist just yeah computer
scientists cryptographers people
interested in uh like
technology internet freedom like those
kinds of topics was it correct that i
read that he seemed to have been
involved in either the earliest or
the first transaction of bitcoin yes the
first transaction of bitcoin was between
sister oshie and alfini
do you think he knew who satoshi was if
he wasn't satoshi you probably know
how is it possible to work so closely
with people and nevertheless not know
anything about their fundamental
identity
is this like a natural sort of
characteristic of the internet
like if we were to think about it
because you and i just met now
there's a there's a depth of knowledge
that we we now have about each other
that's like physical like
my vision system is able to recognize
you i can also verify your identity of
uniqueness like yep
like it's very hard to fake you being
you yes so the internet
the internet has a fundamentally
different quality to it which is just
fascinating yeah i know this is
definitely interesting because
i
definitely just know a lot of people
just by their internet handles and like
to me when i think of them like i see
their internet handles and
one of them has enough profile pictures
this kind of
face that's kind of not quite human with
a bunch of kind of psychedelic colors in
it and when i visualize him i could just
visualize that that's not an actual face
yeah
you are the creator of the second well
he's currently the second most popular
cryptocurrency
uh ethereum so on this topic if we just
stick on satoshi nakamoto for for a
little bit longer
you may be the most qualified person to
speak to the psychology of this
anonymity that we're talking about
like
your identity is known like i've just
verified it but uh from your perspective
what are the benefits
in uh creating a cryptocurrency and then
remaining anonymous like if it can
psychoanalyze satoshi nakamoto is there
something interesting there
or is it just a peculiar quirk of him
it definitely helps create this uh kind
of image of this kind of neutral thing
that doesn't belong to anyone
and
then you've created a project
and because you're anonymous and because
uh you also have uh disappear or as
unfortunately happened to how finny if
that is him he ended up i think dying of
a lou gehrig's disease and he is in a
cryogenic freezer now but
like if you
pop in and you d and then you create it
and
and you're gone and uh
all that's remaining of uh that whole
process is the thing itself then like
no one can go and try to
um and if interpret any of your other
behavior and try to understand like oh
the
this person
wrote this thing um in some essay at age
16 where he expressed particular
opinions about democracy and so because
of that this project is like is a
statement that's trying to do this
specific thing
instead it creates uh this uh
environment where
the thing is what you make of it and
it doesn't have the yeah right the the
burden of your other ideas political
thought and so on so so now that we're
sitting with you
do you feel the burden of
being kind of the face
of ethereum i mean there's a very large
community of developers but nevertheless
yeah
is there like a burden associated with
that
there definitely is this is uh
definitely a big reason why i've been
trying to kind of push for the ethereum
ecosystem to become more decentralized
in many ways
just
encouraging a lot of kind of core
ethereum work to happen outside of the
ethereum foundation and of expanding
the number of people that are making
different kinds of decisions having
multiple software limitations instead of
one and all of these things like there's
a lot of things that i've tried to do to
and remove myself as a single point of
failure because
that is something that a lot of people
criticism
criticize me for um
so if you look at like the most
fundamentally successful open source
projects
it seems that it's like a sad reality
when i think about it is it seems to be
that one person is
a crucial contributor often you feel
like a lioness from
from uh for the for linux for the
colonel yeah that is possible and i'm
definitely not planning to disappear
that's an interesting
tension that projects like this kind of
desire a single entity
and yet
they're fundamentally distributed
i don't know if there's something
interesting to say about that kind of
structure and thinking about the future
of cryptocurrency does there need to be
a leader
there's different kinds of leaders you
know there's uh
there's dictators who control all the
money there's people who control
organizations there's uh kind of high
priests that just have themselves on
their twitter followers
what kind of leader are you would you
say
yeah in these days
actually
a bit more in the hype in the high
priest direction than before yeah like
i definitely actually don't do all that
much of kind of going around and like
ordering ethereum foundation people to
do things because i think those things
are important i if there's something
that i do think is important that you i
do just usually kind of say it publicly
or just kind of say it to people and
quite often
projects just going to start doing it
so let's ask the
high philosophical question
about money yeah what at the highest
level is money what is money
it's a kind of game and it's a game
where you know we have points and if you
have points there's this one move where
you can reduce your points by a number
and increase someone else's voice by the
same number
and
these so it's a fair game hopefully well
it's one kind of fair game
like for example you know you can have
other kinds of fair games like you're
gonna have a game where if i give
someone a point and you give someone a
points and instead of that person
getting two points that person gets four
points and that's also fair
but
no money is um
easy to kind of set up and it serves a
lot of useful functions and so it kind
of just survives in the society as a
meme for thousands of years
it's useful for this storage of wealth
it's useful for the uh exchange of value
and it's also useful for denominating
future payments
a unit of account
a unit of account so what if you look at
the history of money in human
civilization
what just uh
if if you're a student of history like
how
has this role or just the mechanisms of
money changed over time in your view
even if we just look at the 20th century
before and then leading up to
cryptocurrencies that's something you
think about
yeah and i think like the big thing in
the 20th century is kind of we saw a lot
more intermediation i guess
like you know i mean the first part is
kind of the move from
being adding more of different kinds of
banking and then i used we
saw the move from and of dollars being
backed by gold to dollars
being backed by gold that's only
redeemable by certain people the dollars
not being backed by anything um to and
it's just this uh nerf system where you
have a bunch of free floating currencies
and then
people like um getting out of bank
accounts and then those things becoming
electronic people getting accounts with
payment processors that have account um
bank accounts
so
so what what do you make of that is
that's such a fascinating philosophical
idea that money might not be backed by
anything
what is that like fascinating to you
that money can exist without being
backed by something physical
it definitely is like what do you make
of that
like
how is that possible is that stable if
we look at the future of human
civilization is it possible to have
money at the large scale at such a
hugely productive and rich societies
be able to operate successfully without
money being backed by anything physical
i feel like the interesting thing about
the 21st century especially is that
a lot of the important valuable things
are not backed by anything like if you
look at like tech companies for example
like something like twitter
like you could theoretically imagine
that if all of the employees wanted to
they could kind of come together they
would quit
and you know start working on twitter
2.0 and
then
the value of um
and just kind of build the exact the the
exact same product of course possibly
build a better product and then just
kind of continue on from there and the
original
the original twitter would kind of just
not have people left anymore right like
the
there is theoretically kind of code and
like ip that's owned by the company but
in reality like good programmers could
probably read up rewrite all that stuff
in three months
so the
like the reason why the thing has value
is just kind of network effects and
coordination problems right like these
employees in reality aren't going to
switch all at once and also the users
aren't um all going to switch them at
once because it's just difficult for
them to switch at once and so
there's these kind of
meta-stable of equilibrium in the
interactions between thousands and
millions of people that are just
actually quite sticky even though if you
try to kind of assume that everyone's a
perfectly rational and kind of perfectly
slippery spherical cow they don't seem
to exist at all
this that stickiness do you have a sense
of grasp of the
sort of the fun fundamental dynamic like
the physics of that stickiness
it seems to work but uh and i think some
of the cryptocurrency
ideas kind of rely on it working yeah
it's uh you know it's the sort of thing
that's definitely been uh economically
modeled a lot like
one uh the kind of
analogy of something as similar that uh
you often see in textbooks as like
what is a government like if for exa
like 80 percent of uh people in a
country just like tomorrow suddenly had
had the idea that like
the laws that are currently the laws in
the government that currently is the
government are just people and some and
some other thing is the government and
they just kind of start acting like it
then that will kind of become the new
reality and then the question is well
what happens if and if
between zero and 80 people or
and 80 of people start believing that
and like what is
uh the thing you also you see is that
if there is one of these kind of
switches happening this kind of
revolution then if you're the first
person to join then like you
probably probably don't have the
incentive to do that but then if you're
the 55th
percentile person to join then suddenly
becomes quite safe too and so
this definitely is the sort of thing
that you can kind of try to analyze and
understand mathematically but
one of the
kind of results is that the sort of
like
when the switch happens definitely can
be chaotic sometimes
yeah but still like to me the idea that
uh the network affects the the fact that
human beings at a scale like millions
billions can share
even the idea of currency like
all agree that's just uh
i know economics can model it i'm a
skeptic on economic and uh
it's like uh so my my favorite sort of
field maybe recreationally psychology is
trying to understand human behavior
and i i think sometimes people just kind
of pretend that they can have a grasp on
human behavior even though we it's such
a messy space that all the models that
psychology or economics those different
perspectives on human behavior can have
or
are difficult
it's difficult to know how much that's
wishful thinking and how much it is
actually getting to the core of
understanding human behavior but
on that idea
what
do you think is the role of money in
human motivation
so
do you think
money
from an economics perspective from a
psychology perspective is core
to like human desires
money is definitely very far from the
only motivator um it is a big motivator
and it's uh one of the closest things
you have to a universal motivator
i think
because ultimately in like almost any
person in the world if you
ask them to do something like they'll be
more inclined to do it if you also offer
some uh
offer the money right and that's uh
there's definitely many cases where
people will do things other than things
that maximize how much money they have
and that happens all the time but
like though a lot of those other things
are kind of but much more
specific to and of who that person is
and of what their situation is the
relationship between the motive and the
action and these other things what do
you think is in the interplay of the
other motivator from like nietzsche
perspective is power
do you think money equals power do you
think those are conflicting ideas do you
think i mean that's the one of the ideas
that decentralized currency
decentralized applications are looking
at is
who holds the power yeah
money is definitely a kind of power and
there's definitely people who
want money because it gives them power
and then
even
if my money doesn't seem to and
explicitly be about money a lot of uh
things that people spend money on are
ultimately about a social status of some
kind
um
so i mean i definitely view those two
things as kind of interplaying and then
there's also money as just a way of uh
like
measuring how successful you are i guess
a scoreboard right so this kind of gets
back to the game
like if
you have four billion dollars then
the main benefit you get from going up
well one of the big benefits you get
from going up to six million dollars is
that now instead of uh being below the
guy who has five you're above the guy
who has five
so you think money could be kind of uh
in a game of life it's also a measure of
self-worth it's like how we
it's definitely how uh
how a lot of people perceive it define
ourselves in the hierarchy of yeah and
i'm not
yeah not saying it's kind of a healthy
thing that people
define their self-worth as money because
it's definitely kind of far from a yeah
perfect indicator of like how much you
like
value you provide to society or anything
like this but i i definitely think that
like
as a matter of kind of current practice
a bunch of people do feel that way
so what does utopia from an economic
perspective look like to you
what does the perfect world look like
i guess like the economists say utopia
would be
one where
kind of
everything is an of incentive aligns in
this um in the sense that there aren't
enough conflicts between what satisfies
your goals and kind of what is uh good
for and everyone in the world um in the
world as a whole
what do you think that would um
look like does does that mean they're
still
poor people and rich people there's
still income inequality
do you think sort of uh marxist ideas
are strong do you think sort of
ideas of objectivism
uh like where the market rules is strong
like what is there is the different
economic philosophies that just
seem to be reflective of what utopia
would be
so i definitely think that
existing economic philosophies do end up
kind of
systematically kind of deviating from
the utopia in a lot of ways yeah like
one of the big things i talk about for
example is public goods right and public
goods are especially important on the
internet right yeah because
like the idea is with kind of money as
this game where you know i was a few
coins a few coins and you gain the same
number of coins is that this usually
happens in a trade where i lose some
money you gain some money you lose a
sandwich and i gain a sandwich
and
this kind of model works really well
when the thing that we're using money to
incentivize the set of private goods
right things that you provide to one
person where the benefit comes to one
person but
the
like on the internet especially but also
many many contacts kind of off the
internet there's actions that kind of
individuals or groups can take where
instead of the benefit going to one
person the benefit just goes to many
people at the same time and you can't
control who the benefit goes to right so
for example this podcast you know we
publish it
and
when it's published you don't have any
fine grains control over like oh these
38 000 people can watch it and then like
these other 29 000 people can't it's
like once the number goes high enough
then you know people will just like copy
it and then when i write articles on a
blog then
they're just like
free for everyone and that stuff's even
harder to prevent anyone from copying
so and aside from that things like you
know scientific research for example
and
even taking more pedestrian examples
like climate change mitigation would be
a big one um
so
there's a lot of things in the world
where
you have these kind of individual
actions with have concentrated costs and
distributed benefits and money as a
point system
does not do a good job of encouraging
these things
and
one of the kind of other things even
kind of
tangentially connected to crypto but
kind of theoretically outside of it that
i work on is this sort of mechanism
called quadratic funding um and the way
to think about it is and i've imagine a
point system where
if uh
like if one person gives a coin
gives coins to one other person then it
works the same way as money but if
multiple people uh give coins to one
person and they do so anonymously so
it's kind of not in consideration for a
specific service to that person
themselves and then
the number of coins received by that
person is kind of greater than just the
sum of the number of coins that have
given by those different people
um so the actual formula is you take the
square root of the amount that each
person gave then you add all the square
roots and then you had to square the
sums
yeah and then you give that and
the idea here would basically be that if
let's say for example
you just started going off and kind of
planting a lot of trees
and there's a bunch of people that are
really happy that you're planting trees
and so they go and all kind of throw a
coin um your way then
the like there is like basically the
fact that kind of you get more than the
sum you get this kind of square of some
of these of uh of square roots of these
tiny amounts is them
that this actually kind of compensates
for the tragedy of the comments right in
this there's even this kind of
mathematical proof that it sort of
optimally compensates for it what is the
tragedy of the common um this is just
this idea that
like if there is this uh situation where
there's some public good that lots of
people benefit from then no individual
person wants to contribute to it because
if they contribute they only get a small
part of the benefit from
their contribution but they pay the full
cost of their contribution
in which context does this um sorry what
is the term quadratic quadratic funding
like what's in which context is this
mechanism
useful so
obviously you said to to combat the
tragedy of the commons but yeah in which
context do you see it as useful actually
practically yeah theoretically public
goods in general right so like like
services like what what are we what are
we talking about what's the public yeah
so
within the um ethereum ecosystem for
example like we've actually tried using
this mechanism i yeah wrote a couple of
articles about the cinevon vitalic.ca
where i go through some of the most
recent rounds and it's been really
interesting um some of the top ones that
people supported there were
things like kind of just
online user interfaces that make it
easier for people to interact with
ethereum
there was
documentation there were podcasts
there were
enough software kind of clients like
kind of implementations of the ethereum
protocol of privacy tools just like
lots of things that are
useful to lots of people
when a lot of people are contributing
like funding a particular
particular entity yeah uh that's really
that's really interesting is there
something special about the quadratic
the
the the summing of the square roots yeah
so another way to think about it is like
imagine if n people each give a dollar
then the person gets n squared right um
and
and so each individual person's uh
contribution gets multiplied by n right
because you have n people yeah um and so
that kind of perfectly compensates for
the kind of kind of anti-1 uh tragedy of
the commons i just wonder if the the
squared part is yeah how fundamental no
it is um
and i'd uh recommend you go to uh on
vitalik.ca i have this article called a
quadratic payments a primer and highly
recommended it's kind of at least my
attempt so far and explaining the
intuition behind this intuition so if we
could can we go to the
the very basic
what is
the blockchain or perhaps
we might even start at the uh
the byzantine generals problem in
byzantine fault tolerance in general
that
i i
bitcoin was taking steps to uh providing
a solution for
so the byzantine generals problem it's
this uh
paper that uh leslie lamport uh
published in 1982 where he has this
thought experiments where if you have
two generals that are have camped out on
opposite sides of a city
and they're planning when to attack the
city
then
the question is and if how could those
generals coordinate with each other and
they could send message messengers
between each other but those messengers
kind of could get sniped by the enemy on
the
road some of those messages could end up
being traders and if things could end up
happening and
with just two
mess
generals it turns out that there's kind
of no solution in a finite number of
rounds that guarantees that they will be
able to coordinate on the same answer um
but then in the case where you have more
than two generals and then leslie
analyzes cases like
um are the mess and
messages kind of just oral messages are
the messages kind of signed messages so
i can give you a signed message and then
you can pass along that signed message
and the third party can still verify
that i originally made that message
and depending on those different cases
there's kind of different bounds on like
given how many generals and how many
traders um among those generals kind of
whether like under one conditions you
actually can't agree when to launch an
attack uh so
it's actually a big misconception that
the the byzantine general's problem was
unsolved so listen lanport solved it the
thing that was unsolved though is that
all of these solutions assume that
you've already agreed on a fixed list of
who the generals are and
these generals have to be kind of
semi-trusted to some extent they can't
just be anonymous people because if
they're anonymous then like the enemy
could just be 99 of the generals
so
right then
in the 1980s and the 1990s kind of the
general use case for distributed system
stuff was more kind of enterprisey stuff
where you could kind of assume
that uh you know you know who the nodes
are that are running these nf computer
networks so if you wants to have some in
a decentralized computer network that
pretends to be a single computer and
that you can kind of do
do a lot of operations on then
it's made out of these kind of 15
specific computers and we know kind of
who and where they are and so we have a
good reason to believe that say at least
11 of them would be fine
and then it could also be within a
single system exactly almost a network
of devices sensors so on like in
airplanes and i think uh like flight
systems in general still use these kinds
of ideas yep yep um so that's the 80s
that's the it is the 90s now the
cypherpunks had a different use case in
mind which is that they wanted to create
a fully a decentralized global
permissionless currency
and
the problem here is that they didn't
want any authorities and they didn't
even want any kind of privileged list of
people and so now the question is well
how
do you use these techniques to create
consensus when you have no way of kind
of measuring identities right you have
no way of
kind of determining whether or not some
99 of participants aren't actually all
the same guy
and so the clever solution that satoshi
had this is uh kind of going back to the
that presentation i made at defcon a few
months ago where i said that the thing
satoshi invented with crypto economics
is this uh really neat idea that you can
use economic resources to kind of limit
identity how many identities you can get
and
the uh
if there isn't any existing
decentralized digital currency then the
only way to do this is with proof of
work right so with proof of work the
solution is just
you
publish a solution to a hard
mathematical puzzle that takes some uh
kind of clearly calculable amount of
computational power to solve you get an
identity and then you solve five of
those puzzles you get five identities
and then these are the identities that
we run the consensus algorithm between
so the proof-of-work mechanism you just
described is like the fundamental idea
proposed in the
in the white paper that defines
bitcoin uh what's the
idea of consensus that we wish to reach
what
why is consensus
important here what is consensus
so
the goal here
in just simple technical terms is to
basically kind of wire together a set of
a large number of computers in such a
way that they yeah kind of pretends to
the outside world to be a single
computer where that single computer
keeps working even if a large portion of
the kind of constituents the computers
that make it up break and kind of break
in arbitrary ways like they could shut
off they could uh try to actively break
a system they could do lots of mean
things
so
the
reason why the cypherpunks wanted to do
this is because they wanted to run one
particular program on this virtual
computer and the one particular program
that they wanted to run is just a
currency system right it's a system that
just processes a series of transactions
and for every transaction it verifies uh
that the sender has enough coins to pay
for the transaction and verifies that
the digital signature is correct and if
the check's passed then it subtracts the
coins from one account and adds the
coins to the other account roughly
so first of all the the the
proof-of-work idea is kind of i mean at
least to me seems
pretty
fascinating it is i mean that's a
it's kind of a revolutionary idea i mean
is is it is it obvious to come up with
that you can
use uh you can exchange basically
computational resources for
for identity
it's uh it actually has a pretty long
history it was uh first proposed in a
paper by uh
cynthia dwork and
[Music]
neor in 1994 i believe and the original
use case was uh combating email spam so
the idea is that if you send an email
you have to send it with a proof of work
attached and
like this makes it reasonably cheap to
send emails to your friends but it makes
it really expensive to send spam to a
million people
yeah that's a
simple brilliant idea so maybe also
taking a step back so what is the role
of blockchain in this
what is the blockchain sure so the
blockchain
i mean my way of thinking about it is
that it is this
kind of
system where you have this kind of one
virtual computer created by this a bunch
of these uh uh nodes in the network um
and the reason why
the term blockchain is used is because
the data structure that these systems
use at least so far
is one uh where
they um even if different nodes in the
network periodically publish blocks and
a block is a kind of list of
transactions uh together with a pointer
like a hash of a yeah
a previous block that it builds on top
of
um and so you have a series of blocks
that that
nodes in the network create where each
block points to the previous block and
so you have this chain of them
is a fault tolerance
mechanism built into the idea of
blockchain or is there a lot of
possibilities of different ways to make
sure there's no
funny stuff going on there are indeed a
lot of possibilities um so in a kind of
just simple architecture as i just
described the way the fault tolerance
happens is like this right so
you have a bunch of nodes and they're
just happily and occasionally creating
blocks building on top of each other's
uh blocks
and let's say you have kind of one block
we'll call it kind of block one
and then
someone else builds another block on a
steel called block two
then we have an attacker and what the
attacker tries to do is the attacker
tries to revert block two and the way
they revert block two is instead of
doing the thing they're supposed to do
which is build a block on top of block
two they're gonna build another block on
top of block one um so you have block
one which has two children block two and
then block two prime now
this might sometimes even happen by
random chance if you know two nodes in
the network just happen to create blocks
at the same time and they don't hear
about each other's things before they
create their own but this also could
happen because of an attack
now
if this happens you have an attack then
the no in the bitcoin system uh the
nodes follow the longest chain um so if
um this um attack had happened uh and if
when the uh
original chain had more than two blocks
on it so if it was trying to kind of
revert more than more than two blocks
then everyone would just
would just ignore it yeah um and
everyone would just keep following the
regular chain but here you know we have
block two and we have block two prime
and so the two are kind of even and then
whatever block um the next block is
created on top of so say block three is
now created on top of block two prime
then everyone says
agrees that block 3 is the new head
and
block 2 prime is just kind of forgotten
and then everyone just kind of
peacefully builds on top of block 3 and
the thing continues so how difficult is
it to mess with the system
so how like if we look at the general
problem like how many
what fraction of people who participate
in the system have to be bad
players
in order to mess with it truly like
what's your is there is there a good
number serious um
well depending on kind of what your
model of the participants is and like
what kind of attack we're talking about
it's
anywhere between 23.2 and 50 percent
of what of all of the computing power in
the network
sorry so 22 and 23. between 23.2 and 50
and 50
are can be
uh compromised so like once you're once
your pers your portion of the total um
computing power the network goes above
the 23.2 level then there's kind of
things that you can mean things that you
can potentially do and as your
percentage of the network kind of keeps
going up then the your abilities as you
mean things kind of goes higher and then
if you have above 50 then you can just
break everything so how hard is it to
achieve that level like it seems that
so far historically speaking has been
exceptionally difficult
so this is a challenging question um so
the economic cost of uh acquiring that
level of stuff from scratch is uh fairly
high i think it's uh
somewhere in the low billions of dollars
and when you say that stuff you mean
computational resources yeah so
specifically specialized hardware and of
asics that people use to uh solve these
uh puzzles is to do the mining these
days small tangent uh
so obviously i work a lot in deep
learning with gpus and asics for that
application and i tangentially kind of
hear that so many of these you know
sometimes nvidia gpus are sold out
because of this other application like
what do if you can comment
i don't know if you're familiar or
interested in the space what kind of
asics what kind of hardware
is generally used these days for
to do the actual computation for the the
proof of work sure so in the case uh and
bitcoin and ethereum are a bit different
uh so in the case of bitcoin there is an
algorithm called uh
sha256 it's just a hash function and so
the puzzle is just coming up with a
number where the hash of the number is
below some threshold and so because the
hashes are
designed to be random you just have to
keep on trying different numbers until
one works
and the
are just like specialized circuits that
contain kind of
circuits for evaluating this hash over
and over again and you have like
millions or billions of these hash
evaluators since just stacked on top of
each other inside of a box and you just
keep on running the box 24 7. in the asx
there's literally specialized hardware
designed for this yes oh this is we live
in an amazing world
another tangent and i'll come back to
the basics but uh does quantum computing
throw a wrench into any of this
very good question so uh quan some
computers have two main kind of families
of algorithms that are relevant to
cryptography one is a shores algorithm
ensures algorithm is one that kind of
completely breaks the hardness of uh
some specific kinds of mathematical
problems so the one that you've probably
heard of is it makes it very easy to
factor numbers uh so like figure out
kind of what prime factors are that kind
of that you need to multiply together to
get some number even if that number is
extremely big um sure's algorithm can
also be used to break elliptic curve
cryptography
um it can break like any kind of hidden
order group so
it breaks a lot of kind of cryptographic
nice things that we're used to
but the good news is that for every kind
of major use of uh things that shore's
algorithm breaks we already know of uh
quantum proof alternatives right now we
don't use these quantum proof
alternatives yet because in many cases
they're five to ten times what's
efficient but and uh the
crypto
industry in general kind of knows that
this is coming eventually and it's kind
of ready to uh take the head and switch
to that stuff when we when we have to
the second algorithm that is relevant to
cryptography is grover's algorithm and
and grover's algorithm might even be
kind of more familiar to ai people
that's basically usually described as
solving search problems um but the idea
here is so that if you have a problem
over the form finds a number that
satisfies some property um then if with
a classical computer you need to try
kind of end times before before you find
the number then with a quantum computer
you only need to do square root of n
computations
and grovers
could potentially be used for mining but
there's two possibilities here one is
that grovers could be used for mining
and whoever creates the first working
quantum computer that could do grovers
we'll just mine way faster than everyone
else and we'll see another round of uh
what we saw when asics came out which is
that's kind of the new hardware just
kind of dominated the old stuff and then
eventually it switched to a new
equilibrium but by the way way faster
not exponentially faster quadratically
faster quadratically faster which is not
sort of uh
it's not game-changing i would say it's
like asics like you said it would be
exactly
yeah so it would not necessarily break
proof of work as of that's right yeah
now the other
kind of possible world right is that
quantum computers have a lot of overhead
there's a lot of complexity involved in
maintaining quantum states and there's
also
as we've been realizing recently
making quantum computers requ actually
work requires kind of quantum era
correction which requires kind of a
thousand real qubits per logical qubit
and so there's the very real possibility
that the overhead of running a quantum
computer will be higher than the speed
up you get with grovers which would be
kind of sad but which would also mean
that given proof of work would just keep
working fine
so
they're beautifully put so so proof of
work
is uh the core idea of bitcoin is there
other core ideas before we kind of take
a step towards the origin story and the
ideas of ethereum is there other stuff
that uh were key to the white paper of
bitcoin there's proof of work and then
there's just the cryptography just kind
of public keys and signatures that are
used to uh verify transactions those two
really big things
so then what is um
the origin story maybe the human side
but also the technical side of ethereum
sure so i joined the bitcoin community
in uh 2011
and i started by just writing i first
wrote for this sort of online thing
called bitcoin weekly
then i started writing for uh bitcoin
magazine
um
and uh
sorry to interrupt you have this funny
kind of
uh story true or not is uh
that you were disillusioned by
the downsides of centralized control
from your experience with wow world of
warcraft is this true or you're just
being witty uh i mean the event is true
of the fact that that's the reason i do
decentralization is woody
maybe just a small tangent
d have you always had a skepticism of
centralized control
is that
some degree yeah
has that feeling evolved over time or is
that just always been a core feeling
that decentralized control is the future
of a human society
and it's definitely been something that
felt very attractive to me ever since i
could afford that such a thing as
possible possible yeah
so great so you are you join the bitcoin
community in 2011 you said you began
writing
so what was next
started writing uh
moved from high school to university
halfway in between that and spent a year
in university
um then at the end of that year i
dropped out to to do uh bitcoin things
uh full time
and this was a combination of continuing
the right bitcoin magazine but also
increasingly work on software projects
and i traveled around the world for
about six months and just going to
different bitcoin communities like i
went to uh first in new hampshire and
then spain other european voices um
israel and san francisco
and along the way and i've met a lot of
other people that are working on
different bitcoin projects and when i
was in israel there were some very smart
teams there that were working on ideas
that people were starting to kind of
call bitcoin 2.0 so one of these were
covered coins which is basically saying
that hey let's uh not just use the
blockchain for bitcoin but let's also
kind of issue other kinds of assets on
it and then there was a protocol called
mastercoin that supported issuing assets
but also supported many other things
like financial contracts like domain
name registration and a lot of different
things together
and
i
spent some time working with these teams
and i quickly kind of realized that
this mastercoin protocol could be
improved by kind of generalizing it more
right so the master the analogy i use is
that the master coin protocol was like
the swiss army knife you have
25 different transaction types for 25
different applications
but
what i realized is that you could
replace a bunch of them with things that
are more general purpose so one of them
was that you could replace
like three transaction types for three
types of financial contracts with a
generic transaction type for a financial
contract that just lets you specify a
mathematical formula for kind of who
how much money each side gets by the way
it's a small pause what's you say
financial contract just the terminology
what is the contract
um what's a financial contract so the
this is just generally an agreement
where kind of
either one or two parties kind of put
collateral kind of in um and then
they depending on and if certain
conditions like this could involve
prices of assets this could involve
different the actions of the two parties
it could involve other things
but they kind of get different amounts
of uh
of assets out that it'll just depend on
things that happened so a contract is
really a financial contract is the is at
the core it's the it's the core
interactive element of a financial
system yeah there's yeah there's many
different kinds of financial contracts
like there's things like options where
you kind of give someone the right to
buy a thing that you have for some
specific price for some period of time
there's uh
contracts for
difference where you
basically are kind of making a bet that
says like for every dollar this thing
goes up i'll give you seven dollars or
for every dollar that thing goes down
you give me seven dollars or something
like that
and but the main idea that these
contracts have to be enforced and
trusted
yes exactly
you have to trust that they will work
out in a system where nobody can be
trusted yes
this is
such a beautiful complicated system okay
so uh so you were seeking to kind of
generalize this basic uh framework of
contracts
so what does that
entail so what what technically are the
steps to creating ethereum
so i guess just to kind of continue a
bit with this master coin story sure um
so
started by end of giving ideas for how
to generalize the thing and eventually
um this turned into a much more kind of
fully fledged proposal that just says
hey how about you scrap all your
features and instead you just
um put in this programming language and
i gave this idea to them and their
response was something like hey this is
great but this seems complicated and it
seems like something that's we're not
going to be able to put onto our roadmap
for a while and my response to this was
like wait do you not realize how
revolutionary this is well just go do it
myself
and then i
was the name of the programming language
i just called it ultimate scripting
great uh so
then i
kind of went through a couple more
rounds of iteration and
then the idea for ethereum itself
started to form um and
the idea here is that you just have a
blockchain where the core unit of the
thing is what we call contracts it's
these and if accounts that can hold
assets and like like have their own
internal memory but that are controlled
by a piece of code and so
if i send some ether to a contract the
only thing that can determine where that
kind of ether and the currency inside
ethereum and it goes after that um is
the code of that contract itself and so
basically you're kind of sending assets
to computer programs becomes this kind
of paradigm for creating the incentive
agreement self-executing agreements
self-executing it's so cool that code is
sort of part of this contract
so that that's what's meant by smart
contracts yeah
so how hard was it to build this kind of
thing harder than expected um and
originally i actually thought that this
would be a thing that i would kind of
casually work on for a couple of months
publish and then go back to university
um
then
i released it and
a bunch of people or i released a white
paper white paper there is there the
idea the white paper um a whole bunch of
people came in offering to help a huge
number of people and have expressed
interest and this was something i was
totally not expecting
and
then i kind of realized that this would
be something that's kind of much bigger
than i had ever
thought that it would be and
then we started on this kind of much
longer developments log of making
something that
lives up to this sort of much higher
level of expectations what are the some
of the
is it fundamentally like software
engineering challenges it was there
social okay so there's social
so so what are the biggest interesting
challenges that you've learned about
human civilization and in software
engineering through this process
so i guess
one of the challenges for me is that
like i'm one of the kind of apparently
unusual geeks who was kind of never
treated with anything but kindness in
school yes um and so
when i
got into crypto i kind of expected
everyone would just kind of be the same
kind of altruistic and nice in that same
way um but
the um and if the algorithm that i used
for finding co-founders for this thing
was not very good it was sort of
literally one computer scientist called
the greedy algorithm it's kind of the
first 15 people who applied back
offering to help kind of are the
co-founders oh you mean like literally
the the the people
that four will form to be the the
founders co-founders of the community
the algorithm i like how you call it the
algorithm yeah um
and so
what happened uh was that uh
these
um
like especially as the projects got
really big like there started to be a
lot of this kind of infighting and there
are a lot of like i
wanted the thing to be a non-profit and
some of them wanted to be a for-profit
um and then
there started to be people who were just
kind of totally unable to work with each
other there
were
people that were kind of trying to get
an advantage for themselves in a lot of
different ways and
this uh
just
about six months later led to this big
governance crisis and then we kind of
reshuffled leadership a bit
and then uh the project kept on going
then nine months later there was another
governance crisis and then there was a
third governance crisis and
so is there a way to
if you're looking at the human side of
things
is there a way to optimize this aspect
of t