August 19, 2021 • 25 mins
On this latest episode of Bloomberg Studio 1.0., Emily Chang speaks with the creator of Ethereum, Vitalik Buterin about creating the second most valuable cryptocurrency behind Bitcoin, the future of a decentralized internet and the possible threat to legacy companies like Facebook and Twitter.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Hi everyone, I'm Emily Chang, and this is Bloomberg Studio
One Point Oh, where I speak with the biggest influencers
and technology and media and talk to them about their
vision for what's coming next. Today we are going deep
down the rabbit hole of the cryptocurrency slash decentralized network
still taking shape, that is Ethereum. He was born in Russia,
(00:21):
emigrated to Canada with his parents at the age of six,
and had already mastered multiple languages, mathematics, and engineering by
the time he got to high school. At age seventeen,
his father introduced him to bitcoin. He couldn't afford to
buy it, so he wrote about it instead, and while
he found bitcoin fascinating, he felt like he had an
even better idea in metallic Butteran wrote the original white
(00:45):
paper that conceived ethereum not just a digital currency, but
an entire network built on the blockchain. It's now worth
more than three hundred billion dollars and the biggest believers
claim it will send the rest of the cryptocurrency market
into the ether. Joining me on this edition of Boomberg
Studio at One Point Oh, the inventor of Ethereum metallic Peuterin.
(01:07):
We're going to talk about Ethereum, but I want to
start first with how you got here. You were born
in Russia, you emigrated to Canada with your parents when
you were just six years old, and you started learning
about bitcoin from your father. What is it about bitcoin
that hooked you both? Bitcoin is really interesting because of
how interdiscipline are it is. I was very interested in
(01:32):
math and computer programming and cryptography and technology. I am
was also very interested in economics and kind of politics
and philosophy. And bitcoin just happens to be this interesting
fusion of all of these things, right and at the
same time, Like it's not just a piece of code
(01:52):
that that's there for fun. It's not even just an app,
like it's uh, something that's really intended to have a
very big and meaningful impact on how the world works um.
And so I think just having both of those aspects
together definitely made a bitcoin very interesting to both me
and my dad. As I understand it, you didn't have
enough money to mind, so you wrote about it instead,
(02:14):
and in you wrote the original white paper that became
the basis for Ethereum. What was it that sparked that
original vision? So I joined the bitcoin space in early
two thousand and eleven, and I wrote the that Ethereum
white paper at the end of two thousand and thirteen,
if that was the time when things first blew up
(02:35):
in and uh, it was clear that this was something
that's significance, right. Well, I remember going to the Bitcoin
conference in San Jose, which had about a thousands people
in it, and that was when I realized that, like, hey,
this isn't just a bunch of weirdo school only exist
on the internet, Like this is real. Elder's people trying
to actually do things. There's people building businesses, a lot
(02:58):
of which are actually pretty successful. What started happening then
with people started thinking, well we have bitcoin? What next? Right?
So what else can you do with the blockchains? Like
what would bitcoin two point o or cryptocurrency two point
oh look like? As I understand it, it's it wants
to be a whole new operating system like a new
(03:19):
Apple iOS, which with a ton of apps built on
top of the blockchain. And the simplest terms, what is
ethereum and how is it different from bitcoin? So bitcoin
is a blockchain that's designed for one application, right, which
is maintaining and letting people use bitcoin the currency, Ethereum
is a general purpose blockchain. So instead of being a
(03:41):
blockchain that's designed for one application, Ethereum is a blockchain
that supports a built in a programming language, and whatever
blockchain application you wants to build, you can just write
the logic of that application in the programming language, upload
that program to the chain in and this becomes what
(04:01):
we call a smart contract, and anyone can then interact
with your application, and the blockchain interprets the rules of
your application for you. So, instead of being something that's
designed to do one thing, is designed to open up
space for creativity to like basically let people do whatever
the thing that they want to do on top of it.
(04:23):
So is the idea then that the next Facebook or
Twitter would not be owned by Jack Dorsey or Mark Zuckerberg,
but be built on the blockchain and owned by everyone.
There are multiple projects already trying to do that, and
lots of them are based on Ethereum. So yes, So
then is ethereum a threat to established centralized companies and
(04:46):
social networks like Facebook, like Twitter, like Google. I think
it can be a threat, but it can also be
an opportunity, Like I think even Jack Dorsey himself, right,
he has the sub project it's called The Boys Guy,
which is trying to figure out how it Twitter can
and incorporate decentralized elements. And I think a lot of
(05:10):
these projects wants to actually do this right because I
think a lot of them are realizing that being are
kind of centralized focus of power and having control and
of so much of everyone's data and all of these things.
Like it's it's not just an asset, it can also
be a liability as well. Now we still don't know
(05:32):
who Satoshi Nakamoto is, whether that's even a single person
or a group of people. What is it like to
be a known and visible figure behind such a popular technology.
I mean there's definitely times when I want to be
less visible um, but I guess that comes with the
(05:55):
with the territory. Why do you want to be less visible?
I mean one of the other Ethereum co founders, Anthony Delrio,
recently announced he's quitting crypto because of safety concerns. I mean,
is that part of your concern as well? I mean
it's not so much physical safety per se as just
like I want to take the ability to also, you know,
(06:17):
have a life and not just have like random people
running up and saying, are you the metallic bouderin um?
I don't know, I geah. There's definitely times when I
find such things annoying, and so I don't know. I'm like,
I'm likely to keep wearing my mask in lots of
places in it. And that has nothing to do with COVID.
(06:39):
There was a lot of debate early on about what
Ethereum could be, would be, should be for profit, nonprofit? Nonprofit?
One out, and I know that that was really important
to you. Why did you want Ethereum to be a
nonprofit and how did you come to that decision. It
was just a very importance to me that, like, this
(07:00):
is a technology that decentralized infrastructure that's meant to be
not controlled and not owns by anyone, and it's a
platform that's for the world. And so for that platform
to be connected to a company that had a very
small number of shareholders, I think is something that could
(07:22):
really centralize the ecosystem. And so something that I thought
would be very was a very unhealthy and one it's
to really avoid now. N f teas in particular have
really helped bring new users into the crypto tent. We
saw you at Ashton Kutcher and Mila Kunas's kitchen table
Let's Ethereum, So Ethereum is a general purpose of watching.
(07:44):
You also were not happy about Kim Kardashian getting involved,
and I'm curious where do you draw the line when
it comes to celebrity endorsement. The thing that I was
unhappy with about Kim Kardashian was that she basically like
shields something like Etherium Max. That was I think, you know,
I'd call it a borderline scam. Right. It seems like
(08:06):
this project so that's basically just like at best, a
pure money grab that's not really providing much of value.
This is my conversation with the co founder of Ethereum,
Vitalic Buterin up next. Now that Ethereum has blown up,
how does it get past the growing pains to truly
(08:27):
become the world's computer And what are buterans concerns about
scams and cyber attacks in the crypto space. I'm Emily Chang,
this is Bloomberg Studio. At one point out stay with us.
(08:57):
Ethereum has had some growing pains, whether it is high
transaction costs, traffic jams, front running. Why do these problems exist?
This is the scalability problem. Everyone's been talking about the
scalability problem for at least five years now, and and
in basically it's like a simple supply and demand problem,
(09:18):
right like, if the number of people who want the
cent transactions goes up, but the amount of space for
transactions on chain doesn't go up, then all of these
people who want the cent transactions are bidding against each other,
and only the ones that are willing to pay a
really high amounts can actually get in. The Only way
to solve this is to just improve the technology to
increase the number of transactions that the system can process.
(09:40):
And it's why we're doing We've been doing just all
kinds of incremental improvements to the blockchain clients and the
protocol and the code. Over the last five years. ETHEREM
scalability has increased by about a factor of five since
so the project started. And then there are some problems
that are not like just just scaling problems per se,
(10:00):
But there's still technology problems, right like, there are problems
that have to do with the facts that like, this
entire ecosystem has blown up and gotten big fairly quickly,
there's a lot of aspects of it where people are
still true to know their states, like what is the
correct way and what is the safest way to do
these things, like, for example, the state of just security
(10:23):
auditing for blocking protocols like it. It has gotten much
better since the dal hack back in right, but you know,
at the same time challenges continue to exist, and that's
normal in any space when you know you have I
guess that usage growing faster and then the technology catches up.
Can you contrast proof of stake with proof of work?
(10:44):
Why do you think that's so much better? The reason
why blockchains need to have a proof of something, right
is because like these are decentralized systems. So for example,
and proof of work, like the system actually measures how
much computing power is being put into blook and so
in order for an attacker to take over the network,
(11:05):
they actually have to have more computing power than the
rest of the network combines. Right, Like, so you can't
just spin up a billion virtual machions on one computer.
But the probably is that it requires a huge number
of computers to be constantly running seven So it works,
but it's very expensive. Proof of steak it works differently right,
(11:25):
So proof of steak works by instead using coins as
the economic resource. So if you have coins inside of
the system, then you just sign messages with those coins,
and for an attack or to take over, they have
to basically have like more coins than the rest of
the network put together. So it does the same thing,
but it avoids the need to have these computers running
(11:45):
seven and that's where the efficiency comes from. You're planning
major upgrades meantime, and East two point oh is well underway.
What will that accomplish? What problems will it solve? So
I think what people call eath two point oh as
UH has two big parts, right, One big part is
the switch the proof of steak. So after a full
(12:06):
transition to proof of steak UM, there will not be
more any more mining ethereums energy a consumption will go
down from by like a factor of more than one thousands,
so it will go from being a big problem to
basically not a problem at all UM and the channel
become more secure, more secure, it will become more efficient.
So after that, the next major milestone is what's called
(12:28):
the merge um, which is when basically the proof of
work chain it just stops running and all of the
applications on the proof of work chain get moved over
to the proof of state chain and continue running inside
of the proof stake chain from there. Now, while you're
working on all of this, Ethereum has developed an unseemly
(12:49):
reputation as a fertile ground for scams. And I wonder
how concerned you are about a crackdown like we saw
with I c o S. What are the longer term consequences.
There's definitely going to be a crackdowns on things happening
on blockchains, just like there's crackdowns on things happening on
the Internet. I do think that the state of the industry,
(13:12):
in the state of things is improving, But if you
just compare it to the way that the space was
like five or eight years ago, right, like remember um
Mount Cox just like collapsed and half a billion dollars disappeared.
Like basically, I think we still don't know where most
of it iss and like things do continue to happen
from time to time. But just like as a fraction
(13:34):
of the scale of the space, I do think that
it keeps getting smaller and smaller. One big consequence, of course,
is that mining is moving out of China, which I
mean there's a there's definitely a silver lining there in
terms of decentralization and that you don't have as much
hash power located in one country anymore. Um. But at
the same time, you know, the mining farms there were
(13:56):
you know, real companies with real employees and real people.
Some a degree of regulatory action is happening, but it's
not looking like, you know, anything close to um. You know,
at the level of like say, what people feared ten
years ago, there's concerns about Russia being behind a spate
of cyber attacks and cryptocurrency being used as a tool
(14:19):
of extortion. How do you think about the intersection of
crypto and cyber warfare? To me, I think that this
is a temporary phase. Like I think what's happened is
that just like even like the Internet as a whole,
it grew a huge amount over the last twenty years,
(14:41):
and for most of that twenty years, people just did
not take security seriously. It's even the wrong thing to
be doing, to be trying to blame attackers. Ultimately, the
things that's at fault is the fact that there are
these excellent tools within cryptography and like within you know,
the technology behind cryptocurrency itself that allow you to be
(15:01):
much more secure against these kinds of things. And I
mean my personal hope is that people like at least
see like the level of attacks that are happening now
as a wake up call and that we get a
massive effort to just improve the level of security is
just across every industry and across the world. Because if
(15:22):
if that doesn't happen right like, then you know, it's
not it's not even ransomware attackers or that are going
to be a problem. Like, it's at some point, you know,
whenever the first like full scale cyber war happens, if
people are not prepared, it's something that could end up,
you know, being really being something really bad for the world.
(15:48):
You're listening to my conversation with Vitalic Brant, co founder
of Ethereum, coming up with flocks of new users coming
into the crypto universe, legacy companies like Facebook and Twitter
or paying attention well does butter and think about big
text crypto efforts including Square, Jack Dorsey and Defy. I'm
Emily Chang. This is Bloombrook Studio. At one point, Oh,
(16:09):
stay with us. Right now, it is mostly finance apps
(16:30):
that are built on Ethereum aside from n f t s,
And I'm wondering what is the killer app for ethereum
that could lead to widespread adoption, much like email was
for the Internet. I think there's a few candidates. UM,
so defy is obviously one of them. UM. I think
that like blockchain based financial things have always been attractive
(16:51):
because like the traditional financial system just sucks more than
traditional centralized tech. Right, Like if I send to an
email to um, you know, someone in Guatemala, then they're
going to receive it in one second. With with finance,
you can't even say that. A lot of people in
companies even today just to use grupt the currency to
(17:12):
send money internationally outside of finance. Yeah, think one interesting
area that I where I think blockchains might go. Here.
You notice some that in order to access your assets
in ethereum, he needs to have an account. We're getting
to the point where there's a lot of work that's
been done on making these accounts very secure, and so
(17:33):
instead of just being accounts that hold money like these
these turned into like fully fully blown profiles, right, and
once you have profiles and you can start doing decentralized
social media. On top of that, the social and financial
things that you that you can do with that given
working together, um is something that I think could be
(17:54):
really big. Now, whether Bitcoin, ethereum or the blockchain really
are changing the world seems to be an ongoing debate.
Is crypto the future or is it a fad? I
think it's the future that contains fads, much like the
Internet was the future in the Internet contained fads um.
You know, there's definitely specific kinds of applications that do
(18:16):
get overhyped from time to time, like um I, c
O s back in and then there is certain kinds
of DeFi right now. But at the same time there's
other de hy projects that really are valuable. There's a
combination of both, right adds figuring out which is which is.
Maybe it's something that's difficult to see ahead of time
and it's something that you know, we as an ecosystem
(18:37):
we're going to find out. So the crypto skeptics, many
people that you know are admired in the financial world,
Jamie Diamond, Warren Buffett, Are they just wrong? A lot
of them have definitely been just the wrong already, right
like they expected even back in twenty thirteen to fifteen,
at least some of them to see blockchains that were
(19:00):
currency fail and go down to zero and price just
not get any more interested completely. And even today they've
already been far more successful than any of them expected.
So I can see how people in a traditional finance
or at least some of them, can be inclines to
kind of not see the value of blockchain based finance immediately,
(19:23):
because there's a lot of people even in traditional banks
that see the value that blockchains provide and have been
trying to come up with things and work with them.
One of them is Jack Dorsey. Jack Dorsey recently announced
Square is creating a new business focused on decentralized financial
services based on bitcoin using bitcoin. What have you learned
(19:46):
about Jack Dorsey's plans. Does it seem like he's building
something that sounds a lot like ethereum. I'm skeptical about these,
uh decentralized finance on top of bitcoins projects, So basically
because like the difference between bitcoin and ethereum, right, this
(20:06):
is a is um that on ethereum, there's like native
functionality that allows you to essentially directly put either ether
or etherorium based assets into these smart contracts into these
walk boxes, when where there's then arbitrary conditions of any
kinds that can then govern how those assets get released.
(20:27):
Bitcoin does not have that functionality to the same extent.
Like Jack is basically going to have to essentially create
his own system that enforces those rules and then on
the Bitcoin alway, or the bitcoins will just have to
be owned by probably a multi sigual it controlled by
either Jack or just or the participants in the system.
It looks similar, but it'll end up being something with
(20:49):
a much weaker trust model, right Like, I really think that,
like this is the whole reason why Ethereum started as
an independent system in the first place. Right Like, there's
there's technical limits to your ability to a kind of
graft new functionality onto a system that's not powerful enough
to support that new functionality. Facebook Mark Zuckerberg is also
(21:10):
making some big moves behind the metaverse. And you know,
what do you make of them waiting into this decentralized world.
Could they replicate some of the same problems that we
see in Facebook and Twitter today? I think Marcus clearly
trying to figure out what the next stage after the
Internet is and like actually get into it and created um.
(21:34):
But you know, before the rest of the I get
the world goes in some different direction, and Facebook is
sort of you know, left in the dust and begins
becomes one of these kind of previous generation old world companies. UM.
So you know, we we've seen Facebook try to get
into the crypto space with Libra though, and I think
(21:57):
in you know, in the end, like Libra did end
up being possibly the wrong approach because like the problem
that someone like Facebook has, right is that a lot
of people mistrust them and so building their own platform,
Like I know, I know, they tried really hard to
create something that's a consortium with all these different industry participants,
(22:19):
but at the same like even that was not enough, right,
and there's just a huge amount of mistrust of them.
But with the metaverse, I guess the thing that happens
during the pandemic is that we've basically very quickly switched
from a world where the physical world was people's kind
of primary center of experience and the Internet was this
(22:43):
new add on to a world where the internet really
is a center of people's experiences. And so we basically
are spending most of our time in a virtual world,
And the question is just like what level of quality
does that virtual world have so ethereum in five years
and ten years, where is it? I mean hopefully running
the metaverse, but I guess we'll see how it goes.
(23:05):
You've got a lot of people out there, a lot
of people who are trying to understand cryptocurrency, who are
placing their bets. What's your prediction for Bitcoin? Does it
replace the dollar doesn't exist in in fifty years or
is it something else? And then similarly, what's your prediction
for etherory m Because a lot of investors are choosing
to hold both or one or the other. I think
(23:28):
replacing that olver completely is unlikely just because like there's
things that the dolver provides, like price stability for example,
that Bitcoin is I'm not going to provide, Like I
think even in a theoretical world where the US dollar collapses,
like even then, I think Bitcoin is not going to
be able to provide the level of stability that users
(23:50):
and businesses expects to be able to set prices in um.
And in that kind of world, look, we we would
need something else, like like it could be decentralized stable coins,
it could be something us but we'll see it um so.
But at the same time, I think curbtocurrency can still
have a very powerful and important role alongside existing currencies.
Ethereum seems to have this reputation of being a community
(24:14):
of creative engineering types who like rainbows and cats and
mythical creatures. I know you have some fun t shirts yourself.
Is that a fair depiction of the community. The community
is a diverse place, and um, you know, it has
many different kinds of people, and you know, you definitely has.
(24:34):
It's it's fair share of cat people and and dog
people in unicorn people as well. And I think that's awesome,
and I think it's uh, I mean, it's really healthy
to yess and not take yourself it's too seriously. And
that's definitely something that the the Ethereum community strives to do.
You know, remember that U the world is supposed to
(24:56):
be a place to have fun too, all right, talent
Peter and inventor of Ethereum, thank you so much for
joining us. I learned so much. I appreciate you taking
the time to talk to us and talk to people
around the world about what you're working on and how
important it could be. Thank you Bloomberg Studio. A One
(25:20):
Point was produced and edited by Kevin Hines and Lauren Ellis.
Our managing editor is Daniel Culbertson, with production assistance from
malorye Abelhausen. If you like our show, please share it
or write a review on Apple Podcasts or wherever you
get your podcasts. Those reviews really help. I'm Emily changing
your host and executive producer. This is Bloomberg
Hi everyone, I'm Emily Chang, and this is Bloomberg Studio
One Point Oh, where I speak with the biggest influencers
and technology and media and talk to them about their
vision for what's coming next. Today we are going deep
down the rabbit hole of the cryptocurrency slash decentralized network
still taking shape, that is Ethereum. He was born in Russia,
(00:21):
emigrated to Canada with his parents at the age of six,
and had already mastered multiple languages, mathematics, and engineering by
the time he got to high school. At age seventeen,
his father introduced him to bitcoin. He couldn't afford to
buy it, so he wrote about it instead, and while
he found bitcoin fascinating, he felt like he had an
even better idea in metallic Butteran wrote the original white
(00:45):
paper that conceived ethereum not just a digital currency, but
an entire network built on the blockchain. It's now worth
more than three hundred billion dollars and the biggest believers
claim it will send the rest of the cryptocurrency market
into the ether. Joining me on this edition of Boomberg
Studio at One Point Oh, the inventor of Ethereum metallic Peuterin.
(01:07):
We're going to talk about Ethereum, but I want to
start first with how you got here. You were born
in Russia, you emigrated to Canada with your parents when
you were just six years old, and you started learning
about bitcoin from your father. What is it about bitcoin
that hooked you both? Bitcoin is really interesting because of
how interdiscipline are it is. I was very interested in
(01:32):
math and computer programming and cryptography and technology. I am
was also very interested in economics and kind of politics
and philosophy. And bitcoin just happens to be this interesting
fusion of all of these things, right and at the
same time, Like it's not just a piece of code
(01:52):
that that's there for fun. It's not even just an app,
like it's uh, something that's really intended to have a
very big and meaningful impact on how the world works um.
And so I think just having both of those aspects
together definitely made a bitcoin very interesting to both me
and my dad. As I understand it, you didn't have
enough money to mind, so you wrote about it instead,
(02:14):
and in you wrote the original white paper that became
the basis for Ethereum. What was it that sparked that
original vision? So I joined the bitcoin space in early
two thousand and eleven, and I wrote the that Ethereum
white paper at the end of two thousand and thirteen,
if that was the time when things first blew up
(02:35):
in and uh, it was clear that this was something
that's significance, right. Well, I remember going to the Bitcoin
conference in San Jose, which had about a thousands people
in it, and that was when I realized that, like, hey,
this isn't just a bunch of weirdo school only exist
on the internet, Like this is real. Elder's people trying
to actually do things. There's people building businesses, a lot
(02:58):
of which are actually pretty successful. What started happening then
with people started thinking, well we have bitcoin? What next? Right?
So what else can you do with the blockchains? Like
what would bitcoin two point o or cryptocurrency two point
oh look like? As I understand it, it's it wants
to be a whole new operating system like a new
(03:19):
Apple iOS, which with a ton of apps built on
top of the blockchain. And the simplest terms, what is
ethereum and how is it different from bitcoin? So bitcoin
is a blockchain that's designed for one application, right, which
is maintaining and letting people use bitcoin the currency, Ethereum
is a general purpose blockchain. So instead of being a
(03:41):
blockchain that's designed for one application, Ethereum is a blockchain
that supports a built in a programming language, and whatever
blockchain application you wants to build, you can just write
the logic of that application in the programming language, upload
that program to the chain in and this becomes what
(04:01):
we call a smart contract, and anyone can then interact
with your application, and the blockchain interprets the rules of
your application for you. So, instead of being something that's
designed to do one thing, is designed to open up
space for creativity to like basically let people do whatever
the thing that they want to do on top of it.
(04:23):
So is the idea then that the next Facebook or
Twitter would not be owned by Jack Dorsey or Mark Zuckerberg,
but be built on the blockchain and owned by everyone.
There are multiple projects already trying to do that, and
lots of them are based on Ethereum. So yes, So
then is ethereum a threat to established centralized companies and
(04:46):
social networks like Facebook, like Twitter, like Google. I think
it can be a threat, but it can also be
an opportunity, Like I think even Jack Dorsey himself, right,
he has the sub project it's called The Boys Guy,
which is trying to figure out how it Twitter can
and incorporate decentralized elements. And I think a lot of
(05:10):
these projects wants to actually do this right because I
think a lot of them are realizing that being are
kind of centralized focus of power and having control and
of so much of everyone's data and all of these things.
Like it's it's not just an asset, it can also
be a liability as well. Now we still don't know
(05:32):
who Satoshi Nakamoto is, whether that's even a single person
or a group of people. What is it like to
be a known and visible figure behind such a popular technology.
I mean there's definitely times when I want to be
less visible um, but I guess that comes with the
(05:55):
with the territory. Why do you want to be less visible?
I mean one of the other Ethereum co founders, Anthony Delrio,
recently announced he's quitting crypto because of safety concerns. I mean,
is that part of your concern as well? I mean
it's not so much physical safety per se as just
like I want to take the ability to also, you know,
(06:17):
have a life and not just have like random people
running up and saying, are you the metallic bouderin um?
I don't know, I geah. There's definitely times when I
find such things annoying, and so I don't know. I'm like,
I'm likely to keep wearing my mask in lots of
places in it. And that has nothing to do with COVID.
(06:39):
There was a lot of debate early on about what
Ethereum could be, would be, should be for profit, nonprofit? Nonprofit?
One out, and I know that that was really important
to you. Why did you want Ethereum to be a
nonprofit and how did you come to that decision. It
was just a very importance to me that, like, this
(07:00):
is a technology that decentralized infrastructure that's meant to be
not controlled and not owns by anyone, and it's a
platform that's for the world. And so for that platform
to be connected to a company that had a very
small number of shareholders, I think is something that could
(07:22):
really centralize the ecosystem. And so something that I thought
would be very was a very unhealthy and one it's
to really avoid now. N f teas in particular have
really helped bring new users into the crypto tent. We
saw you at Ashton Kutcher and Mila Kunas's kitchen table
Let's Ethereum, So Ethereum is a general purpose of watching.
(07:44):
You also were not happy about Kim Kardashian getting involved,
and I'm curious where do you draw the line when
it comes to celebrity endorsement. The thing that I was
unhappy with about Kim Kardashian was that she basically like
shields something like Etherium Max. That was I think, you know,
I'd call it a borderline scam. Right. It seems like
(08:06):
this project so that's basically just like at best, a
pure money grab that's not really providing much of value.
This is my conversation with the co founder of Ethereum,
Vitalic Buterin up next. Now that Ethereum has blown up,
how does it get past the growing pains to truly
(08:27):
become the world's computer And what are buterans concerns about
scams and cyber attacks in the crypto space. I'm Emily Chang,
this is Bloomberg Studio. At one point out stay with us.
(08:57):
Ethereum has had some growing pains, whether it is high
transaction costs, traffic jams, front running. Why do these problems exist?
This is the scalability problem. Everyone's been talking about the
scalability problem for at least five years now, and and
in basically it's like a simple supply and demand problem,
(09:18):
right like, if the number of people who want the
cent transactions goes up, but the amount of space for
transactions on chain doesn't go up, then all of these
people who want the cent transactions are bidding against each other,
and only the ones that are willing to pay a
really high amounts can actually get in. The Only way
to solve this is to just improve the technology to
increase the number of transactions that the system can process.
(09:40):
And it's why we're doing We've been doing just all
kinds of incremental improvements to the blockchain clients and the
protocol and the code. Over the last five years. ETHEREM
scalability has increased by about a factor of five since
so the project started. And then there are some problems
that are not like just just scaling problems per se,
(10:00):
But there's still technology problems, right like, there are problems
that have to do with the facts that like, this
entire ecosystem has blown up and gotten big fairly quickly,
there's a lot of aspects of it where people are
still true to know their states, like what is the
correct way and what is the safest way to do
these things, like, for example, the state of just security
(10:23):
auditing for blocking protocols like it. It has gotten much
better since the dal hack back in right, but you know,
at the same time challenges continue to exist, and that's
normal in any space when you know you have I
guess that usage growing faster and then the technology catches up.
Can you contrast proof of stake with proof of work?
(10:44):
Why do you think that's so much better? The reason
why blockchains need to have a proof of something, right
is because like these are decentralized systems. So for example,
and proof of work, like the system actually measures how
much computing power is being put into blook and so
in order for an attacker to take over the network,
(11:05):
they actually have to have more computing power than the
rest of the network combines. Right, Like, so you can't
just spin up a billion virtual machions on one computer.
But the probably is that it requires a huge number
of computers to be constantly running seven So it works,
but it's very expensive. Proof of steak it works differently right,
(11:25):
So proof of steak works by instead using coins as
the economic resource. So if you have coins inside of
the system, then you just sign messages with those coins,
and for an attack or to take over, they have
to basically have like more coins than the rest of
the network put together. So it does the same thing,
but it avoids the need to have these computers running
(11:45):
seven and that's where the efficiency comes from. You're planning
major upgrades meantime, and East two point oh is well underway.
What will that accomplish? What problems will it solve? So
I think what people call eath two point oh as
UH has two big parts, right, One big part is
the switch the proof of steak. So after a full
(12:06):
transition to proof of steak UM, there will not be
more any more mining ethereums energy a consumption will go
down from by like a factor of more than one thousands,
so it will go from being a big problem to
basically not a problem at all UM and the channel
become more secure, more secure, it will become more efficient.
So after that, the next major milestone is what's called
(12:28):
the merge um, which is when basically the proof of
work chain it just stops running and all of the
applications on the proof of work chain get moved over
to the proof of state chain and continue running inside
of the proof stake chain from there. Now, while you're
working on all of this, Ethereum has developed an unseemly
(12:49):
reputation as a fertile ground for scams. And I wonder
how concerned you are about a crackdown like we saw
with I c o S. What are the longer term consequences.
There's definitely going to be a crackdowns on things happening
on blockchains, just like there's crackdowns on things happening on
the Internet. I do think that the state of the industry,
(13:12):
in the state of things is improving, But if you
just compare it to the way that the space was
like five or eight years ago, right, like remember um
Mount Cox just like collapsed and half a billion dollars disappeared.
Like basically, I think we still don't know where most
of it iss and like things do continue to happen
from time to time. But just like as a fraction
(13:34):
of the scale of the space, I do think that
it keeps getting smaller and smaller. One big consequence, of course,
is that mining is moving out of China, which I
mean there's a there's definitely a silver lining there in
terms of decentralization and that you don't have as much
hash power located in one country anymore. Um. But at
the same time, you know, the mining farms there were
(13:56):
you know, real companies with real employees and real people.
Some a degree of regulatory action is happening, but it's
not looking like, you know, anything close to um. You know,
at the level of like say, what people feared ten
years ago, there's concerns about Russia being behind a spate
of cyber attacks and cryptocurrency being used as a tool
(14:19):
of extortion. How do you think about the intersection of
crypto and cyber warfare? To me, I think that this
is a temporary phase. Like I think what's happened is
that just like even like the Internet as a whole,
it grew a huge amount over the last twenty years,
(14:41):
and for most of that twenty years, people just did
not take security seriously. It's even the wrong thing to
be doing, to be trying to blame attackers. Ultimately, the
things that's at fault is the fact that there are
these excellent tools within cryptography and like within you know,
the technology behind cryptocurrency itself that allow you to be
(15:01):
much more secure against these kinds of things. And I
mean my personal hope is that people like at least
see like the level of attacks that are happening now
as a wake up call and that we get a
massive effort to just improve the level of security is
just across every industry and across the world. Because if
(15:22):
if that doesn't happen right like, then you know, it's
not it's not even ransomware attackers or that are going
to be a problem. Like, it's at some point, you know,
whenever the first like full scale cyber war happens, if
people are not prepared, it's something that could end up,
you know, being really being something really bad for the world.
(15:48):
You're listening to my conversation with Vitalic Brant, co founder
of Ethereum, coming up with flocks of new users coming
into the crypto universe, legacy companies like Facebook and Twitter
or paying attention well does butter and think about big
text crypto efforts including Square, Jack Dorsey and Defy. I'm
Emily Chang. This is Bloombrook Studio. At one point, Oh,
(16:09):
stay with us. Right now, it is mostly finance apps
(16:30):
that are built on Ethereum aside from n f t s,
And I'm wondering what is the killer app for ethereum
that could lead to widespread adoption, much like email was
for the Internet. I think there's a few candidates. UM,
so defy is obviously one of them. UM. I think
that like blockchain based financial things have always been attractive
(16:51):
because like the traditional financial system just sucks more than
traditional centralized tech. Right, Like if I send to an
email to um, you know, someone in Guatemala, then they're
going to receive it in one second. With with finance,
you can't even say that. A lot of people in
companies even today just to use grupt the currency to
(17:12):
send money internationally outside of finance. Yeah, think one interesting
area that I where I think blockchains might go. Here.
You notice some that in order to access your assets
in ethereum, he needs to have an account. We're getting
to the point where there's a lot of work that's
been done on making these accounts very secure, and so
(17:33):
instead of just being accounts that hold money like these
these turned into like fully fully blown profiles, right, and
once you have profiles and you can start doing decentralized
social media. On top of that, the social and financial
things that you that you can do with that given
working together, um is something that I think could be
(17:54):
really big. Now, whether Bitcoin, ethereum or the blockchain really
are changing the world seems to be an ongoing debate.
Is crypto the future or is it a fad? I
think it's the future that contains fads, much like the
Internet was the future in the Internet contained fads um.
You know, there's definitely specific kinds of applications that do
(18:16):
get overhyped from time to time, like um I, c
O s back in and then there is certain kinds
of DeFi right now. But at the same time there's
other de hy projects that really are valuable. There's a
combination of both, right adds figuring out which is which is.
Maybe it's something that's difficult to see ahead of time
and it's something that you know, we as an ecosystem
(18:37):
we're going to find out. So the crypto skeptics, many
people that you know are admired in the financial world,
Jamie Diamond, Warren Buffett, Are they just wrong? A lot
of them have definitely been just the wrong already, right
like they expected even back in twenty thirteen to fifteen,
at least some of them to see blockchains that were
(19:00):
currency fail and go down to zero and price just
not get any more interested completely. And even today they've
already been far more successful than any of them expected.
So I can see how people in a traditional finance
or at least some of them, can be inclines to
kind of not see the value of blockchain based finance immediately,
(19:23):
because there's a lot of people even in traditional banks
that see the value that blockchains provide and have been
trying to come up with things and work with them.
One of them is Jack Dorsey. Jack Dorsey recently announced
Square is creating a new business focused on decentralized financial
services based on bitcoin using bitcoin. What have you learned
(19:46):
about Jack Dorsey's plans. Does it seem like he's building
something that sounds a lot like ethereum. I'm skeptical about these,
uh decentralized finance on top of bitcoins projects, So basically
because like the difference between bitcoin and ethereum, right, this
(20:06):
is a is um that on ethereum, there's like native
functionality that allows you to essentially directly put either ether
or etherorium based assets into these smart contracts into these
walk boxes, when where there's then arbitrary conditions of any
kinds that can then govern how those assets get released.
(20:27):
Bitcoin does not have that functionality to the same extent.
Like Jack is basically going to have to essentially create
his own system that enforces those rules and then on
the Bitcoin alway, or the bitcoins will just have to
be owned by probably a multi sigual it controlled by
either Jack or just or the participants in the system.
It looks similar, but it'll end up being something with
(20:49):
a much weaker trust model, right Like, I really think that,
like this is the whole reason why Ethereum started as
an independent system in the first place. Right Like, there's
there's technical limits to your ability to a kind of
graft new functionality onto a system that's not powerful enough
to support that new functionality. Facebook Mark Zuckerberg is also
(21:10):
making some big moves behind the metaverse. And you know,
what do you make of them waiting into this decentralized world.
Could they replicate some of the same problems that we
see in Facebook and Twitter today? I think Marcus clearly
trying to figure out what the next stage after the
Internet is and like actually get into it and created um.
(21:34):
But you know, before the rest of the I get
the world goes in some different direction, and Facebook is
sort of you know, left in the dust and begins
becomes one of these kind of previous generation old world companies. UM.
So you know, we we've seen Facebook try to get
into the crypto space with Libra though, and I think
(21:57):
in you know, in the end, like Libra did end
up being possibly the wrong approach because like the problem
that someone like Facebook has, right is that a lot
of people mistrust them and so building their own platform,
Like I know, I know, they tried really hard to
create something that's a consortium with all these different industry participants,
(22:19):
but at the same like even that was not enough, right,
and there's just a huge amount of mistrust of them.
But with the metaverse, I guess the thing that happens
during the pandemic is that we've basically very quickly switched
from a world where the physical world was people's kind
of primary center of experience and the Internet was this
(22:43):
new add on to a world where the internet really
is a center of people's experiences. And so we basically
are spending most of our time in a virtual world,
And the question is just like what level of quality
does that virtual world have so ethereum in five years
and ten years, where is it? I mean hopefully running
the metaverse, but I guess we'll see how it goes.
(23:05):
You've got a lot of people out there, a lot
of people who are trying to understand cryptocurrency, who are
placing their bets. What's your prediction for Bitcoin? Does it
replace the dollar doesn't exist in in fifty years or
is it something else? And then similarly, what's your prediction
for etherory m Because a lot of investors are choosing
to hold both or one or the other. I think
(23:28):
replacing that olver completely is unlikely just because like there's
things that the dolver provides, like price stability for example,
that Bitcoin is I'm not going to provide, Like I
think even in a theoretical world where the US dollar collapses,
like even then, I think Bitcoin is not going to
be able to provide the level of stability that users
(23:50):
and businesses expects to be able to set prices in um.
And in that kind of world, look, we we would
need something else, like like it could be decentralized stable coins,
it could be something us but we'll see it um so.
But at the same time, I think curbtocurrency can still
have a very powerful and important role alongside existing currencies.
Ethereum seems to have this reputation of being a community
(24:14):
of creative engineering types who like rainbows and cats and
mythical creatures. I know you have some fun t shirts yourself.
Is that a fair depiction of the community. The community
is a diverse place, and um, you know, it has
many different kinds of people, and you know, you definitely has.
(24:34):
It's it's fair share of cat people and and dog
people in unicorn people as well. And I think that's awesome,
and I think it's uh, I mean, it's really healthy
to yess and not take yourself it's too seriously. And
that's definitely something that the the Ethereum community strives to do.
You know, remember that U the world is supposed to
(24:56):
be a place to have fun too, all right, talent
Peter and inventor of Ethereum, thank you so much for
joining us. I learned so much. I appreciate you taking
the time to talk to us and talk to people
around the world about what you're working on and how
important it could be. Thank you Bloomberg Studio. A One
(25:20):
Point was produced and edited by Kevin Hines and Lauren Ellis.
Our managing editor is Daniel Culbertson, with production assistance from
malorye Abelhausen. If you like our show, please share it
or write a review on Apple Podcasts or wherever you
get your podcasts. Those reviews really help. I'm Emily changing
your host and executive producer. This is Bloomberg
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Amy Robach & T.J. Holmes present: Aubrey O’Day, Covering the Diddy Trial
Introducing… Aubrey O’Day Diddy’s former protege, television personality, platinum selling music artist, Danity Kane alum Aubrey O’Day joins veteran journalists Amy Robach and TJ Holmes to provide a unique perspective on the trial that has captivated the attention of the nation. Join them throughout the trial as they discuss, debate, and dissect every detail, every aspect of the proceedings. Aubrey will offer her opinions and expertise, as only she is qualified to do given her first-hand knowledge. From her days on Making the Band, as she emerged as the breakout star, the truth of the situation would be the opposite of the glitz and glamour. Listen throughout every minute of the trial, for this exclusive coverage. Amy Robach and TJ Holmes present Aubrey O’Day, Covering the Diddy Trial, an iHeartRadio podcast.
Good Hang with Amy Poehler
Come hang with Amy Poehler. Each week on her podcast, she'll welcome celebrities and fun people to her studio. They'll share stories about their careers, mutual friends, shared enthusiasms, and most importantly, what's been making them laugh. This podcast is not about trying to make you better or giving advice. Amy just wants to have a good time.