Insights from Vitalik Buterin

I just read the notes from an interview with Vitalik Buterin (Founder of Ethereum) hosted by the podcast “Conversations with Tyler”. There were a handful of useful insights on;

  1. Describing Blockchains.
  2. Level of institutional trust under proof of work vs proof of stake. (Less not more?!)
  3. Tech, engineering & regulatory innovation needed to realize original vision.
  4. Ethereum valuation. (maybe not that stretched?)
  5. Impact of quantum computing. (Maybe more of an issue for more de-centralised platforms?)

Original episode & full notes.

Key insights ;

  1. Vitalik quoting Alex Tabarrok on describing blockchains “Alex Tabarrok, for example, had that very nice post on Marginal Revolution a couple of weeks back, where he talked about blockchains in terms of being an alternative to platform monopolies, and I thought that was a very good insight”.

  2. Vitalik on how to describe a blockchain to a very smart person from 40Yrs ago “One of the analogies I keep going back to is this idea of <blockchain> as a world computer…But what it provides on top of that is these extra trust guarantees: the guarantee that the computer will run in the way that you expect it to run, and that a few people can’t make that guarantee fail by going out of business, getting hacked, dying, having their company go bankrupt, deciding to be evil one day, deciding they have some monopolistic interest to start acting differently one day, and all of those different issues”.

  3. Vitalik response to  question of whether a move from proof of work to proof of stake or some intermediate solution will require more institutional trust “I would actually expect that, on net, it would require less institutional trust. Part of this is just because a lot of people don’t realize the sheer level of centralization in proof of work already..bitcoin users already trust Jihan Wu and Wang Chun to not team up and start doing 51 percent attacks pretty much every day. They seem to be nice enough or at least rationally self-interested enough not to do that, but that’s definitely still institutional trust”.

  4. Vitalik on whats the biggest tech or engineering breakthrough required to realize the original vision of Ethereum “I think scalability is a huge one. Ethereum blockchain’s capacity right now is about 15 transactions a second. If you even consider something like putting all of the Uber rides on the blockchain, that’s 12 transactions per second already…that could happen through sharding and other base-layer scalability upgrades to the system..It could happen through Layer 2 technologies like state channels and plasma”

  5. Vitalik on what is and what is not needed from regulatory environment to realize his vision “Trying to make it easier for very large piles of money to move into the cryptocurrency space is I don’t necessarily think the thing that the cryptocurrency space needs most at this point…There’s definitely reasons to believe that stuff can be actively counterproductive…innovations in fundraising..requires a regulatory environment which is open to experimentation. That’s something that I do think that places in Asia tend to be fairly ahead of the curve on, in terms of sandboxes in Singapore. I know Hong Kong and Taiwan are looking into sandboxes as well”.

    (Mine;Having been in Asia for most of last 20Yrs I can’t help but concur that Asia seems to have the opportunity & the current lead although I still think regulators in Asia often say one thing but do another i.e appear open & friendly to the innovators but ultimately defending the old guard status quo. Next few years will be key).

  6. Vitalik on Ethereum valuation “Ethereum’s transaction fees tend to be about $500,000 a day recently, which is about $180 million a year. If you tried to value the ether market cap as some kind of corporation, then the “P/E ratio” is only somewhere in the low 200s, which is high for a company, but not off-the-charts absurdly high..”

    (Mine;Definitely doesn’t seem stretched given the growth potential! Even Netflix trades at 250x+ with 20-30% growth rates that are largely stagnant!)

  7. Vitalik on the impact quantum computing could have on crypto assets

    “The good news is that for everything that doesn’t work any more, people have already come up with replacements for them over a decade ago. You have hash-based signatures, you have STARKs for zero-knowledge proofs, you have fancy elliptic curve isogeny-based public key encryption. So I think it will force a transition, but ultimately, we do know how to adapt. The cryptocurrencies that will suffer the most are just the ones whose governance is the most stalled and dysfunctional and won’t be able to figure anything out in time.

    (Mine;can’t help think this is aimed at Bitcoin? Hard not to draw parallels back to the earlier scaling mess & friction within the Bitcoin community. I assume a threat to it’s existence would ultimately align people’s ambitions)

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