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Ethereum creator Vitalik and his father Dima Buterin were interviewed by Fortune about the current collapse of cryptocurrencies, the "moral clarifying moment" and why cryptocurrency is more than money. Durov's Code highlighted the main points; the full interview is available here.
Fortune: Dima, when did you start to notice Vitalik’s interest in numbers?
Dima: He was about three years old. His grandfather was teaching Vitalik maths, letters, numbers and the like.
When Vitalik grew up, I really wanted to buy him cool toys, so I started with Lego, and it was very interesting to watch him use it differently than I did. Vitalik really liked building numbers with them
Vitalik: After I came to Canada, my dad bought me some books about programming, and I just started programming. Initially, I started making games for myself to play, and I definitely remember that from the beginning it was very interesting and a lot of fun.
Fortune: Dima, you first introduced Vitalik to Bitcoin, right? What first attracted you to Bitcoin in the first place?
Dima: Technology, computers and the like are one of the most fertile areas of human knowledge to explore in terms of human curiosity. So, I was listening to a podcast that touched on bitcoin, and it made a lot of sense to me.
Vitalik, like me, was curious. So, it has always been fun for me to say things like, "Oh, I found this interesting thing. Hey, Vitalik, check it out. Maybe it'll be interesting to you."
Fortune: What did you think when Vitalik began to work on building Ethereum?
Dima: I remember one particular moment when we were at home and Vitalik shared his white paper with me, and it was really well written. When I read it, it made a lot of sense. I think one of Vitalik's talents is to explain something very complicated in a way that is easy to understand.
Vitalik: In December 2013, I returned to Toronto and my father became interested in what I was doing, and I showed the white paper. He definitely found it very fascinating.
Fortune: As Ethereum gained more traction, were you surprised as people began to use it? Did you ever anticipate what it’d become?
Vitalik: No. At the beginning, I thought it would just be a small project that we would work on and finish it within three or four months, and after that I would just go back to university. But in January I noticed that there was so much interest in the project. And what I didn't expect at all was how big the crypto-space has become first in 2017 and then in 2021. I think that such rapid growth was a big surprise to me.
Fortune: How do you both feel about the current state of the market? Do you have any concerns, or thoughts on what’s ahead?
Vitalik: Cryptocurrencies have had ups and downs before, and they will have ups and downs again. Periods of decline are certainly difficult, but it is often during these periods that the most significant projects develop and are created. I am confident that the Ethereum ecosystem will continue to become a more mature and successful blockchain ecosystem
Dima: Life is cyclical. Markets are cyclical. Cryptocurrencies are very cyclical. They've been going up and down. For me, there is clarity in the fact that ... cryptocurrencies are now entering an era of mass adoption. There is a little short-term fear, speculators will be flushed out, and, yes, there will be some suffering, unfortunately, and pain, and then life will go on.
Fortune: People are worried about contagion and systemic risk since the collapse of the Terra ecosystem. Its domino effect has been impactful in the space. Is there a takeaway here that isn’t spoken about enough that is important?
Vitalik: I think in general, the collapse of Luna is in some ways one of the significant, in some ways healthy moments in cryptocurrency, reminding people that the downside is real. You can't just build a system and magically pretend that a negative event will never happen. I think understanding this will eventually lead to a more stable crypto ecosystem at the same time.
Also, it's a moment of moral clarity where you can see how different people reacted and you get a much better understanding of them.
Dima: It was a very traumatic event for a lot of people who lost a lot of money.
Fortune: To you, what are the upsides of crypto? What are the aspects you’re most passionate about?
Dima: Cryptocurrencies are an opportunity for people anywhere in the world with access to the internet to connect to the global economy. For me, it makes a huge difference. Cryptocurrency blockchains are some of the key technologies that people can use for different purposes anywhere in the world.
Vitalik: I definitely feel the same way.
Often in the West, sometimes even the proponents of cryptocurrencies themselves subconsciously see them as a gamble for rich people. But in places like Argentina, people who live there and use cryptocurrency, for many of them it's a lifeline. People there sometimes use cryptocurrency just to save their money, sometimes to buy and sell things.
Fortune: Are the get-rich-quick schemes among your least favorite parts of Ethereum? I know that you can't control how humans use Ethereum, but do you ever feel regret about any of the ways Ethereum is used? How does it feel when you see the not so good use cases?
Vitalik: Yeah, I mean, I find a lot of financial speculation completely uninteresting. I think, to be fair, sometimes they are quite closely linked to good things, like with NFT, I know there are many artists in many different parts of the world who get to participate in the global economy that they wouldn't otherwise, but at the same time there are rich people selling monkeys for $3 million to other rich people.
I think another thing is that it's an open system. And ultimately that means that you don't have that fine control over who can use it for what and who can't.
Dima: People are very lonely and we look for love and acceptance from others. It's like: "I have this Lambo. I have this bored monkey. I have so much money." It's really all about hope. And wanting to prove yourself.
Fortune: Vitalik, I saw you recently asked your Twitter followers to share what they disagree with you most on. What provoked that?
Vitalik: I was curious. I just wanted to understand where different groups of people's opinions differ from mine, and to give a safe space to people who are my fans and might be afraid to express disagreement with me. It was an interesting experiment. I think some of the responses were definitely interesting.
Fortune: Biggest takeaway?
Vitalik: I don't think there was a big takeaway. There were a lot of small takeaways.
There was some disagreement about life extension. A few people complained about my style of dress, criticised me for taking part in politics.
You can't satisfy everyone.
Fortune: A lot of people also reacted with disagreement to your post on soulbound tokens. What did you think of the response?
Vitalik: Some people didn't understand the concept. But that's fine.
I think there are always many, many more than two choices. And in the discussion about soul tokens, people have imagined the existence of this thing called soul tokens, although soul tokens are not a thing. It's just a set of ideas in a PDF document.
Sometimes doing something in a chain is good. Sometimes doing something off-chain is good. We have to figure out which is better and in which case, and work on creating the best possible solution.
Dima: One area of blockchain technology that has not yet been explored enough is all sorts of reputation systems, and I think we will see a lot more in this area. Soul bound tokens are, as Vitalik said, a collection of thoughts and ideas.
Fortune: Shifting gears a bit to the highly anticipated merge. Why is proof of stake a better mechanism?
Vitalik: I think there are numerous advantages to switching to share proofing.
I think ecologically, in general, the fact that the Ethereum ecosystem consumes much less resources is a really good and very important advantage. Also, share proofing can increase the security of the system. It is more resistant to censorship because miners are easier to detect and easier to shut down than just the computers running the validator nodes. Thus, it has a whole list of different advantages.
The goal of moving to share proof has been a definite plan in Ethereum since around the end of 2014. I think from early 2014 it was described as a possibility if we discovered an algorithm that would suit us. But towards the end of 2014, I think we reached a point where we were confident enough in that information and we were ready to start development.
Dima: Obviously, a huge reduction in power consumption is very important, and of course network security. I firmly believe, based on all the research I've seen, that this is a good thing. It's really important for the network.
Fortune: Do you have any concerns about the merge, like regarding Lido Finance and risk of centralisation? Is that among the top things that you think about post-merge?
Vitalik: Yes. I mean, I definitely have concerns. We are trying to figure out how to change the share proof in the long term.
Even in the case of Lido, for example. Lido accounts for about a third of the deposits in Ether on the Beacon chain.
Lido is not one entity. I think they have something like 21 delegates and nodes that manage these validators that are inside Lido, and there is a lot of good decentralisation between them. It's not like one warehouse. Twenty-one different locations, and some of them, I'm not even sure we know where they are. So there is a big difference between Lido and centralised betting platforms and even centralised mining pools.
Fortune: Reflecting on the space as a whole, do you think the good outweighs the bad?
Vitalik: I would say it outweighs the good.
I think the most high-profile uses of cryptocurrencies are actually far from the most common. Random people around the world who have now found it easier to just move money around the world and have businesses that cooperate across borders, or store their savings and so on. People who do it are doing it quietly, but it's also very real.
Dima: When we try to evaluate something as good and bad, it is very difficult. There are so many different things, projects, people and so on in the crypto space. Anything and everything has all sorts of eternal and unlimited consequences.
Fortune: To wrap up, how do you see the space, or even just Ethereum, evolving for the better?
Vitalik: I think one of the important things, obviously, is to continue to improve Ethereum, the technology.
So, moving to share proofing, making the system more energy efficient and secure; adding some scalability improvements like sharding and collapsing that will seriously reduce the transaction fees that people have to pay; and finally making the ecosystem cheap enough for regular people to play with - just a lot of work to make the blockchain ecosystem more secure, more user-friendly, and easier for many different types of people to participate.
Moreover, I'm glad to see that all the different kinds of applications we're seeing, especially outside of finance, are really growing. I really think DAOs can be an amazing improvement in how many people can collaborate, create organisations and work together.
Beyond DAO, I think the whole Ethereum identity and soul token thing could be very interesting, as well as applications based on Proof of Attendance or Proof Of Humanity and things like that.
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