Vitalik Buterin — Creator of Ethereum feat. Naval Ravikant

1. 0:00 – 10:47

   Start

   1. TFTim Ferriss0:00

      We have an important preface, an important caveat, an important disclaimer before we get started, and here it is provided from my lovely lawyers. Here we go. I am not an investment advisor. All opinions are mine alone. There are risks involved in placing any investment in securities or in Bitcoin or in cryptocurrencies or in anything. None of the information presented today, or really any time since you might be listening to this any time, is intended to form the basis for any offer or recommendation or have any regard to the investment objectives, financial situation, or needs of any specific person. That includes you, my dear listener. So everything you're gonna hear is for informational entertainment purposes only. And with that said, please enjoy. Hello, boys and girls, ladies and germs. This is Tim Ferriss, and welcome to another episode of The Tim Ferriss Show, where it is normally my job to interview world-class performers to tease out the habits, routines, et cetera, that you can apply to your own lives. This episode is a special episode, and it is [laughs] a very detail, action-packed episode, at least it was for me, and in a sense, it pairs really well with an earlier episode. In 2017, I did an episode with Naval Ravikant, who joins me again in this round two with Nick Szabo, and the title of that episode was The Quiet Master of Cryptocurrency, and it really covered everything related to Bitcoin, so BTC, smart contracts, all of those fundamentals. This volume two is going to cover everything Ethereum. And the two people joining me, I already named one, are Naval Ravikant, uh, as I might have mentioned, and he is really the pilot for this conversation, so he takes the reins as the interviewer. You can find him on Twitter at Naval, N-A-V-A-L. He is the co-founder and chairman of AngelList. He is an angel investor and has invested in more than 100 companies, including many huge successes, including Twitter, Uber, Notion, Opendoor, Postmates, and Wish, among many, many, many, many others. You can subscribe to Naval, his podcast on wealth and happiness on Apple Podcasts, Spotify, Overcast, wherever you get your podcasts. You can also find his blog at Naval. That's nav.al. The guest of honor and the real expert in this particular episode is Vitalik Buterin, on Twitter at VitalikButerin, V-I-T-A-L-I-K B-U-T-E-R-I-N. Vitalik is the creator of Ethereum. He first discovered blockchain and cryptocurrency technologies through Bitcoin in 2011 and was immediately excited by the technology and its potential. He co-founded Bitcoin Magazine in September 2011 and after two and a half years looking at what the existing blockchain technology and applications had to offer, wrote the Ethereum white paper in November 2013. It is hard to believe that it was so relatively recent. He now leads Ethereum’s research team working on future versions of the Ethereum protocol. In 2014, Vitalik was a recipient of the two-year Thiel Fellowship, tech billionaire Peter Thiel's project that awards $100,000 to 20 promising innovators under 20 so they can pursue their inventions in lieu of a post-secondary institution. And boy, oh boy, did that award turn into a hell of a lot of value for the world [laughs] and a lot of people. And Vitalik, I believe, is now a ripe old 27 years old. You can find his writing and much more at Vitalik.ca. That's V-I-T-A-L-I-K dot C-A. And for ease of reference and ease of finding, you can find the previous conversation with Nick Szabo on Bitcoin and smart contracts and other core concepts at tim.blog/bitcoin, and you can also find this current conversation with Vitalik on all things Ethereum at tim.blog/ethereum. That's E-T-H-E-R-E-U-M. Please enjoy this wide-ranging conversation with Vitalik Buterin and Naval Ravikant. This episode is brought to you by Theragun. I have two Theraguns, and they're worth their weight in gold. I've been using them every single day. Whether you're an elite athlete or just a regular person trying to get through your day, muscle pain and muscle tension are real things. That's why I use the Theragun. I use it at night. I use it after workouts. It is a handheld percussive therapy device that releases your deepest muscle tension. So for instance, at night, I might use it on the bottom of my feet. It's helped with my plantar fasciitis. I will have my girlfriend use it up and down the middle of my back, and I'll use it on her. It's an easy way for us to actually trade massages in effect, and you can think of it, in fact, as massage reinvented on some level. 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A lot of runner friends of mine use them on their IT bands after long runs. There are a million ways to use it. And the Gen4 Theraguns start at just $199. I said I have two. I have the Prime, and I also have the Pro, which is like the super Cadillac version. My girlfriend loves the soft attachments on that. So check it out. Go to theragun.com/tim. One more time, theragun.com/tim This episode is brought to you by Pique, P-I-Q-U-E, and their brand-new supplement, Daily Immune, vitamin C optimized for absorption. Americans are arguably famous for having the world's most expensive urine. So [laughs] are you absorbing your vitamin C or just peeing it out? Studies have shown that you might absorb less than 50% of vitamin C when you consume amounts over 1,000 milligrams. Also, a gram. Those are the same thing. Pique's Daily Immune is maximized for absorption with liposomal encapsulation technology. 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   2. TFTim Ferriss8:49

      Optimal minimal. At this altitude, I can run flat-out for a half mile before my hands start to shake. Can I ask you a personal question? Now would have seemed an appropriate time. What if I did the opposite? I'm a cybernetic organism, living tissue over metal endoskeleton. The Tim Ferriss Show.

   3. NRNaval Ravikant9:13

      Tim, this is Naval speaking. Tim, thanks for having us. We're joined by Vitalik Buterin. Vitalik is the, I believe, now 27-year-old creator of Ethereum, which is the most exciting cryptocurrency since Bitcoin, and has incredibly broad ambitions and capabilities. And Vitalik is a really interesting guy because not only did he create Ethereum or co-create it, he also is a multidisciplinary polymath. His blog at Vitalik.ca is full of lots of great ideas and insights and thoughts. He runs the Ethereum Foundation. He's sort of contributed to all kinds of things like automatic market makers, rollups, social recovery wallets, decentralized finance, scalability of blockchains, governance, all kinds of great ideas in the cryptocurrency space. He also thinks a lot about public goods, radical markets, wealth distribution. He runs a very active Twitter account where he good-naturedly engages with all kinds of people who are constantly trying to get into fights with him, which is kind of-

   4. TFTim Ferriss10:12

      [laughs]

   5. NRNaval Ravikant10:13

      ... what people do on Twitter. Um, and, uh, yeah. And, and we're very lucky to have him. I would say that for me, along with Nick Szabo and, uh, who we interviewed here in 2017, uh, who created Bit Gold and coined the term smart contracts, and along with Zooko, who, uh, is the irrepressible founder of Zcash, I've always found Vitalik, Nick, and, and Zooko to be sort of the, the three people on Twitter that I early on learned a lot about crypto from. So welcome, Vitalik, and thanks for taking the time to talk to us about yourself and Ethereum.

   6. VBVitalik Buterin10:45

      No, no, thank you very much for the introduction, Naval. It's good

2. 10:47 – 20:54

   Ethereum vs. Bitcoin

   1. VBVitalik Buterin10:47

      to be here.

   2. NRNaval Ravikant10:48

      Yeah. So I'm gonna start just right off the bat. We're probably w- gonna try and keep this fairly basic and high level. For those of you who are quite experienced with cryptocurrencies, this may be a very general conversation, but at the same time, I'm gonna ask Vitalik some hard questions. We're not gonna let him get away with [laughs] just the, the PR angle. And so but we'll start with some basics. We-- let's assume we know what cryptocurrencies are, and for those of you who are not that familiar with it, I would suggest you go back to the podcast that Tim and I did with Nick Szabo back in 2017. I believe that's titled The Quiet Master of Cryptocurrency.

   3. VBVitalik Buterin11:22

      Correct.

   4. NRNaval Ravikant11:22

      And, uh, so once you're kind of up to speed on that, this one will make a lot more sense. But we're gonna get right into not what is crypto or what is Bitcoin, we're gonna get, get into what is Ethereum. So how do you describe it today, Vitalik?

   5. VBVitalik Buterin11:35

      Uh, sure. Uh, so the one-sentence explanation of Ethereum that I sometimes give is it's a general purpose blockchain. So this of course makes more sense if you kind of already know what a blockchain is, right? It's this kind of decentralized network of many different computers that are together and, like, maintaining this kind of, like, ledger or this kind of database together. Different participants have, like, very particular ways of plugging into that, and they can send transactions that do very particular things, but no one can tamper with the system in a way that's outside of the rules. And Ethereum expands on the Bitcoin approach by basically saying, "Well, instead of having rules that are designed around supporting one application- We're going to make something more general purpose where people can, uh, just build their own applications, and the rules for whatever applications they build can be, uh, kind of executed and, like, implemented, um, on the Ethereum platform. So one explanation that I, um, heard one person give is that, like, Bitcoin is like a, yeah, spreadsheet where everyone only controls their own s- five squares of the spreadsheet. But Ethereum is a, a spreadsheet with, uh, macros, right? Uh, so, you know, everyone, uh, kind of controls, you know, their own accounts, which is kind of their own little piece of this universe, but then these pieces of the universe can have code, and they can, like, interact with each other according to preprogrammed rules. And you can build a lot of things on top of that, right? Like, uh, Bitcoin builds a, yeah, monetary system on top, uh, kind of famously. Ethereum can build, you know, decentralized domain name systems, again, various decentralized financial contraptions, um, you know, prediction markets, you know, non-fungible tokens, and all, all sorts of different, uh, schemes that people have been coming up with. And the limit for what you build is, like, basically your own creativity. But, like, the core difference between building an application on Ethereum versus building it on, you know, some traditional centralized platform is this core idea that once you build your application, it-- the application does not need to depend on you or any other single person for its continued existence, and the application is guaranteed to continue running according to the rules that were specified, and, like, you do not have any ability to kind of irregularly go in and tamper with it.

   6. NRNaval Ravikant13:56

      That's a great overview, and I like that Excel analogy of it's a spreadsheet with macros instead of just a spreadsheet where you control your own cells. I'll also try and articulate in a few ways that I understand it kind of around the edges because I think Ethereum is one of those things that's now quite a bit bigger than you, and it probably has evolved in ways that even you didn't fully anticipate. So in some sense, we're discovering Ethereum and no longer just building it. I also like to think of it as kind of an unstoppable application platform, so a platform for building unstoppable applications, kind of like a world computer, where let's say that we wanna run very, very important computer programs where we don't trust the computer itself and we don't trust the other people to execute code on our behalf. Then we create a single world computer where we check the code on the machines of many, many different people all around the world who are properly incentivized to maintain a single computing state. So if Bitcoin is a shared ledger, then Ethereum is a shared computer for the entire world to run its most important applications. So some of the applications that people are building on it are among the possibly the most important applications of the future. So let's talk a little bit about those applications, about what this trustless world computer is doing. What are the applications today that are the most common and that you're most excited about?

   7. VBVitalik Buterin15:14

      So first of all, you know, I think, like, ETH, the asset, is a cryptocurrency, and it itself is an application and kind of the first application of, uh, Ethereum. Going beyond financial things a bit, I mentioned ENS, the Ethereum Name System. Uh, so ENS, you can think of it as a decentralized name system, right? So, like, for example, you know, when you go to ethereum.org, there's DNS, the domain name system, which is this big, like, kind of table that maintains this mapping of well, you know, if a person enters ethereum.com, the server they actually have to talk to to talk to the website is, you know, like, some particular IP address. And this DNS system that maintains this kind of public relationship is a, yeah, fairly centralized system with a very small number of servers running it. So ENS is a fully decentralized alternative that is running on the Ethereum blockchain. And you can use it not just for websites, right? Like, you can use it just for accounts. So for example, like, there is a messaging service called Status. It's like, in, in terms of, like, what it feels like to use it, you know, it's a messenger. It's similar to Telegram or Signal or WhatsApp or any of those. Um, but the difference is that it is decentralized, and so there is no dependence on any single server, or, like, there's no dependence on Status the company, which is nice because, um, it makes the whole thing much more censorship resistant. It makes the whole thing just much more guaranteed to survive, you know, regardless of what forces wish for, for its existence or wish against its, um, existence in the future. ENS is this really important part of it because, well, if you have a chat application, I need to have some name by which I can refer to, you know, like, the users that I want to talk to, right? Like, I want to, like, type in and say, "I want to talk to Naval." Um, and things like Telegram and Signal and WhatsApp, that mapping is generally basically kind of authenticated and controlled by a server, but whereas in, in Status, it's all just done by the Ethereum blockchain, right? So that, uh, is one good example, I think, of a, like, kind of non-financial but still very important, um, Ethereum application. Now, going beyond those two cases, there's a lot of, like, kind of more complicated things. Um, so the, there's the DeFi, uh, decentralized finance, uh, space, which, uh, is this big category that has all sorts of interesting contraptions in it. Um, like, so for example, there is, uh, prediction markets, so platforms where you can go and, like, bet on different outcomes, like, you know, who's going to win some sports game or, you know, who's going to win some particular election. There have been very successful, uh, prediction markets running on the Ethereum blockchain. There's, uh, just markets for trading, um, between different kinds of assets. There's what's called synthetic assets, um, so if you want to have access to, like, some mainstream real world asset, like, you know, a dollar could be one example, but, you know, you don't have to like dollars. Like, there's, uh, lots of other examples as well. There's versions of this that are kind of purely virtual, sort of simulated versions that exist, um. purely, you know, like within the Ethereum environment. You know, there's this entire kind of very powerful financial toolkit that exists, uh, within the Ethereum ecosystem. On the whole, like, there's just a lot of these, uh, interesting things that happen. I mean, there's even games that are based on, um, Ethereum. There's a, a whole bunch of different things.

   8. NRNaval Ravikant18:41

      Yeah. In fact, uh, DeFi, uh, decentralized finance, is this gigantic new category in which entire companies and protocols are being built in a decentralized way that allow you to do a lot of things that would've required Wall Street, along with bankers and judges and lawyers and accountants to handle, but now is done through smart contracts that are living on the blockchain, uh, on the Ethereum blockchain. And these smart contracts are kind of at the core of the Ethereum blockchain. We talked about these in the Nick Szabo podcast, but he famously described it as like a, an automated vending machine as an example of a smart contract, where you, you put in money in a certain slot, and there's a certain set of rules, and you press certain buttons, and you get certain products in exchange. But these smart contracts obviously now are getting far, far more complicated, can actually be used not just to compose financial applications, but even applications that we don't normally think of as financial. One way to think about it, for those of you who are into computer programming, is imagine if every piece of a program, every function, had an address from which anyone in the world could reach it, a unique identifier address, and it had a slot into which you could insert money. So you could call any function wherever it is in the world, you could insert money into it, and it would do something on your behalf. And so that gives Ethereum applications this very interesting property called composability, where you can use them almost like Lego blocks. Each one builds on the rest. And so the final product in DeFi ends up very, very advanced. In the traditional world when, uh, let's say, like Robinhood builds their application, and then Schwab builds another application, and WisdomTree builds a mutual fund or an ETF, those can't combine with each other. But in the Ethereum world of DeFi, all of these apps by default are open source, permissionless, programmable, and can connect right into each other. They can be identified, called, and paid for in a permissionless, trustless kind of way. So the, the infrastructure that gets built in DeFi and Ethereum, although it's, it's very difficult to build and it's complex, once a piece is built, it is available to everybody and sort of stacks onto each other almost to create one of those Japanese-style Voltron robots that just gains in power.

   9. VBVitalik Buterin20:51

      [laughs]

   10. NRNaval Ravikant20:52

       Um, yeah. [laughs]

3. 20:54 – 25:30

   Intellectual property in blockchain

   1. TFTim Ferriss20:54

      Naval, let me jump in here just as a proxy. I'm not even a proxy. I am a listener, [laughs] literally in this case, and I'm happy to be the listener. Uh, so I'm both a proxy and an actual listener. But how does one think about intellectual property if all of these otherwise separate or previously separate applications and so on are now Lego pieces that are kind of natively interconnected? Is that a silly question? I'm just wondering if-

   2. NRNaval Ravikant21:23

      No, no, it's a, it's a really good question. I mean, my high-level view on it is that what blockchains do is through consensus. They protect the data. So the users own their own private data, and then sort of the public data that's needed to make the blockchain work, its integrity is protected by the blockchain, and that's what blockchains do. And they get a whole bunch of people to cooperate on what the canonical output should be. But the code itself is completely open. It, it is kind of backwards to what we're used to. We're used to closed source companies capturing value, but here, all the value is created by open source. But yeah, uh, Vitalik, I'm sure, has a different view on this, but, you know, there's, there's lots of copycats and clones, and there's attacks and forks and so on, and it's kind of a Wild West out there. But generally, uh, so far, it does seem like the original products and the best products are succeeding the best, and they're sort of always in this scoreboard of market cap and transactions and usage. But, uh, yeah, it's, it's a Wild West out there.

   3. VBVitalik Buterin22:16

      Yeah, no, and I think, um, the blockchain environment is definitely, uh, one that operates under somewhat different rules than the traditional environments, right? Like, uh, just one example of this is, like, the idea of forking, right? Uh, so one, uh, story, uh, that happened, uh, around the beginning of last year that I just love to tell because of how it kind of combines together the values of the space so nicely is, uh, there was this platform called Steem. And in Steem, uh, like there's Steem the platform, and then there's Steem the company, right? And, like Steem was its own blockchain, and Steem the company, like they did have some Steem Tokens, um, but, like they didn't have the right to, like, just do whatever they want with the Steem the platform because it was a decentralized thing. But, you know, they had some tokens, and then Steem the platform had a voting mechanism, and holders of, uh, Steem Tokens could vote on changes. But then the Steem the company got bought out by Justin Sun, you know, the, uh, infamous Tron person. And, uh, Justin Sun like basically, like started, uh, doing some things to kind of increase his control over the, uh, uh, Steem platform. The community was, uh, kind of very unhappy with him, and then he even, like kind of took advantage of, um, you know, some of the, uh, voting mechanisms and some coins held in exchanges to sort of seize control of, uh, at least the formal rules of the platform even further. But then what happened was that the users rebelled, right? What the users, um, said is, "Well, we're creating a new platform called Hive, and Hive is just a fork of Steem. It is gonna have, uh, start with the same or mostly the same rules as Steem, and we're even gonna copy over most of the balances of the Steem Tokens, except if you participated in the attack, then, you know, your balance, um, goes to zero in the new fork." And most of the users, like basically kind of collectively moved over to this new fork. And, you know, Justin Sun had this full control of an empire, but then, uh, you know, nobody cared about that empire anymore because everyone now cared about Hive, right? So, like forking is this primitive that exists, and because of it, you know, you do have this ability for just communities to, you know, exert kind of collective agency and, um- like, basically protect themselves from kind of being exploited. Um, but at the same time, if you as a project team are good to your community, then, like, those same effects work in your favor, right? Uh, so those e- effects work in your favor because, you know, a community is willing to support your project. If someone makes a copycat, then, you know, n- generally very few people are willing to kind of support and provide any assistance to that copycat project, unless, of course, you do something to betray the community's trust, um, in which case, you know, that, like, those kinds of situations are the situations that the copycat is for. I think, like, legitimate developers have plenty of ability to build projects to gain from, uh, those, uh, projects, uh, becoming successful, and there's a lot of, uh, ways in which the crypto space does end up, uh, kind of assuring that. But, you know, at the same time, it's also not an environment where anyone's level of control is infinite, and in some ways that's, you know, the other beautiful thing about the space.

4. 25:30 – 27:53

   Digital nationalism

   1. NRNaval Ravikant25:30

      Vitalik had this great line in his blog where he said, "We wanted digital nations, but we got digital nationalism." [laughs]

   2. VBVitalik Buterin25:35

      [laughs]

   3. NRNaval Ravikant25:35

      Um, and- and there's a lot of truth in that. Uh, but basically these are, these are like digital nations, and one of the analogies that I use for DeFi is that these are like crypto castles made of math that are freely trading with each other.

   4. VBVitalik Buterin25:47

      Mm-hmm.

   5. NRNaval Ravikant25:47

      Just imagine, like, people are building applications on top of Ethereum. They're protected by mathematics. Those are the walls in those castles, and there are moats which are rivers of cryptography. But then they have free trade policy with each other, so that creates a lot of innovation. But if one of them starts misbehaving, then its people can leave and go to the next crypto castle, or... And this is where the analogy breaks down. They can actually replicate it, just create a copy-

   6. VBVitalik Buterin26:11

      [laughs]

   7. NRNaval Ravikant26:11

      ... and move to that one, like in the-

   8. VBVitalik Buterin26:13

      Mm-hmm

   9. NRNaval Ravikant26:13

      ... Steam and Hive example.

   10. TFTim Ferriss26:14

       Well, that also, uh, is, I mean, it has comparables outside of the world of blockchain and cryptography, in so much as if we look at, say, WordPress as an open source project, you have companies like Automattic and Matt Mullenweg. You might, people may notice that M-A-T-T in the middle of Automattic [laughs] has two Ts.

   11. NRNaval Ravikant26:35

       Yeah.

   12. TFTim Ferriss26:35

       Uh, which layers then these for-profit services on top of an open source platform, and technically someone could create a competitor. But like you said, there are these questions of, uh, viability, value add, and moral leadership and so on, right? So, so there are s- sort of certain elements that contribute to the Ethereum ecosystem, so to speak, that you can perhaps compare to other things to help educate people as well. I was just sort of connecting some of those dots.

   13. NRNaval Ravikant27:08

       That's a good analogy with, with, uh, WordPress. The, the place where the analogies diverge is that WordPress, it's kind of a single-player game. Like, each person owns their own blog.

   14. TFTim Ferriss27:17

       Right. Exactly.

   15. NRNaval Ravikant27:18

       Whereas in Ethereum world-

   16. TFTim Ferriss27:19

       Mm-hmm

   17. NRNaval Ravikant27:19

       ... you could use Ethereum to build a Twitter that everybody owns, and it, it requires social consensus to operate, but multiple people can put their data in. So it's this really weird thing where it's decentralized, it's open source, but it's still used to coordinate and bring people together. Blockchains combine this really weird combo of individualism and individual control and the ability to leave, along with consensus and community and cooperation, and build this giant public good.

   18. TFTim Ferriss27:46

       Mm-hmm.

   19. NRNaval Ravikant27:47

       Um, so it, it, it is its own thing. It's hard to figure out-

   20. TFTim Ferriss27:50

       It is

   21. NRNaval Ravikant27:50

       ... but it's worth figuring out because this is the next phase of the internet after

5. 27:53 – 34:21

   Ethereum: concept to current day

   1. NRNaval Ravikant27:53

      mobile.

   2. TFTim Ferriss27:53

      Yeah, let me, if, if I could jump in, just to kind of be the kid in the corner of the class, in the back of the class [laughs] asking questions. I would love to hear from you, Vitalik, what was the initial vision for Ethereum, and what has most surprised you, if anything? You know, I was, I was doing a bit of reading just on the, the Genesis story, and first of all, I, I... I mean, maybe separately, [laughs] maybe for another conversation, it seems like a lot was done right in the beginning, and I was reading a quote from a Wired piece in 2016, and it's... And this, please feel free to fact-check if it's not accurate, but it says, you know, "When I came up with Ethereum, my first thought was, okay, this thing is too good to be true, and I'm going to have five professional cryptographers raining down on me and telling me how stupid I am for not seeing a bunch of very obvious flaws. But, you know, dot, dot, dot, two weeks later, I was extremely surprised that none of this happened. As it turned out, the core Ethereum idea was good, fundamentally completely sound." I'd love to hear what the core idea was. Maybe we've already stated it and it's redundant, but the initial vision and if anything has been really surprising to you that has transpired since those early days.

   3. VBVitalik Buterin29:02

      So I think the core idea is, um, you know, to make a general purpose blockchain, um, and to kind of open the gates for people to build what they want to build on top of it, right? Like, uh, the background kind of story for when Ethereum was starting to be formed was that this was just the time when the idea of a blockchain kind of beyond Bitcoin was just starting to gain legitimacy, and people were just starting to realize that, you know, there are these applications for blockchains other than just them running a currency, and, and it would be nice to build a platform that can actually support them. And so at the beginning, right, you had single purpose blockchains. You had Bitcoin, uh, for currency. You had Namecoin for domain names. You would have, like, single purpose protocols, like covered coins for issuing assets. The second step is what I call the Swiss Army knife protocols. So a Swiss Army knife protocol basically says, well, here's a list of, you know, 25, uh, different applications that we've identified as being important, and let's build a blockchain to support all of them. Uh, so like Mastercoin was, uh, one example of what I call the Swiss Army knife protocol. And the problem with the Swiss Army knife protocol is, is that two weeks later, you know, some 14-year-old teenager in Finland comes up with a 26th application.

   4. TFTim Ferriss30:16

      [laughs]

   5. VBVitalik Buterin30:16

      You have to go hard fork the protocol. So- The next and natural step is this kind of general purpose approach, where instead of your blockchain supporting 25 applications, your blockchain supports a programming language. And whatever system with whatever rules you want to build, you write that in a piece of code, and the nodes in the network can all execute the code, and the network kind of helps to collaboratively enforce the rules of this code for the, um, objects that are in your particular application. So that was kind of the technical, uh, perspective, and then there was also the perspective of, well, you know, what did I envision people building on top of it? It's actually surprising how it hasn't changed that much. Um, like, uh, I remember some of the very earliest applications included kind of financial gadgets. Uh, so contracts for difference were one example, uh, which is, uh, you know, one very particular subset of the thing that today we call DeFi. Decentralized file storage, uh, kind of like, you know, pay people to store a gigabyte of your data, um, was one thing I was excited about. Um, decentralized name systems was, um, excited about those. You know, decentralized trading between different assets. Like, a lot of the examples of just things that people wanted to do with, uh, blockchains at the time, like they are just, are the same as what people are doing today, though there are also new applications, right? So, like non-fungible tokens, um, that I briefly mentioned, um, NFTs. The idea here is basically just create a token that, you know, represents something other than a, uh, financial asset. And, uh, one example of this could be that an NFT can represent video game assets. An NFT could represent like a digital work of art where he wants to sell kind of like basically bragging rights as being the original owner of it. And, you know, there's a lot of these different use cases, and these, uh, right now the NFT, um, ecosystem has been extremely successful. Um, about a week ago, there was a, uh, a Nyan Cat NFT that got sold for the equivalent of about $580,000. Um, so that's an example of a new thing. Another example of an old thing is, uh, DAOs, decentralized autonomous organizations. And so the idea here is, well, you know, let's build an organization where the rules for the decision-making in that organization, you know, the equivalent of like shareholder or board voting or whatever he wants to use, can just be written as rules in a smart contract, and then the program that executes those rules can be directly in control of whatever assets the organization is supposed to control. And, you know, we've seen a couple of examples of, uh, kind of simple DAOs in action. Uh, MakerDAO, uh, which, uh, kind of maintains, um, you know, Dai, the stablecoin, that sort of algorithmically targets a price of $1 is, uh, one example. I mean, now there's also Rai. Uh, you know, there's a lot of examples of this. A lot of things that we expected from the beginning. Um, prediction markets, um, also have been part of, um, you know, what we were excited about using blockchains for since 2014, and they're still around today. So a lot of old things and also some new things as well.

   6. TFTim Ferriss33:24

      Thank you. Extremely helpful.

   7. NRNaval Ravikant33:26

      Yeah, I mean, so, uh, yeah, some of the ones that Vitalik just laid out, like I, I think your recent guest, Katie Haun, mentioned NFTs as nifties is what she called it. Um, and, and this is-

   8. TFTim Ferriss33:34

      [laughs] Oh, no, I did 'cause I wanted to try to force that.

   9. NRNaval Ravikant33:35

      Oh, you did. I'm sorry.

   10. TFTim Ferriss33:36

       I wanted to try to force that into the lexicon. [laughs] But yes.

   11. NRNaval Ravikant33:39

       Got it. Okay. Well, well you won.

   12. TFTim Ferriss33:40

       Nifties.

   13. NRNaval Ravikant33:41

       It stuck.

   14. TFTim Ferriss33:41

       Nifties. [laughs]

   15. NRNaval Ravikant33:42

       Yeah. Nifties, yeah. So nifty, nifties are this crazy idea that, like, owning, uh, a digital copy of something and having your name stamped to it somehow gives it more value, but it seems to work. It works with collectible trading cards. It seems to work with digital art. And then because of the composability of the Ethereum infrastructure, you can reuse these nifty items across different games, different museums, different virtual worlds, and so you own it in one place, and you own it everywhere, which is a very powerful concept. Um, so digital scarcity was born with Bitcoin, but now extending into things that are not fungible, that are not exchangeable with each other, and that, that's been, frankly, for me, a surprising, uh, thing that has emerged in Ethereum.

6. 34:21 – 41:45

   Making Ethereum scale

   1. NRNaval Ravikant34:21

      You know, Ethereum, uh, it's, it's funny 'cause you're asking Vitalik like what did he expect and what did he not expect. I remember when Ethereum first launched, that a lot of computer scientists I spoke with privately said it would never work because it's kind of this crazy idea that the way we're gonna get a trusted computer in the cloud is we will each run a copy of all the computations on all of our computers, and then we'll sync it up and make sure it matches. So that's the recipe for building the slowest computer in the world. And, uh, but somehow we've, we've gotten away with it, and so I think the big debate now about Ethereum has shifted from will it work to will it scale? And when I talk to my friends in the crypto community and I say, "Hey, what do you want me to ask Vitalik?" They send me a list, you know, of many, many questions, but the centerpiece is always the same, and like, how the heck is this thing gonna scale? And, uh, I would like to get in that conversation. That is a more complicated conversation. It's technically sophisticated. But basically we're saying, "Hey, we're gonna have one giant mainframe computer in the cloud running everyone's applications so that we can all trust the computer instead of trusting each other." But how is that gonna scale? Isn't that gonna be the slowest computer of all time? And so now we're in a situation where Ethereum, uh, it's actually cleverly named, it runs on so-called "gas," quote unquote, and there's a limited amount of gas per block in the Ethereum blockchain. And frankly, uh, the gas, the price of gas has gone up. These decentralized finance applications, they can be very lucrative. They're trading large amounts of money, uh, and people are eager to use them, but the price of each of these transactions is going up. I was trying to do a small DeFi transaction the other day, and it was a $100 transaction, and the price was $25 just to execute the transaction, and that's a very, very high transaction fee. And I know Vitalik and crew have been working for years on the Ethereum 2 project to bring that cost down. By the way, as an aside, that is one place where Ethereum really differs from Bitcoin. Bitcoin is saying, "We're digital gold. This thing is immutable. Don't change it." And the fights in the past have been about changing Bitcoin or not, and there was a big famous schism over that. But now with Ethereum, you know, the question is, the philosophy is we do change it, we do improve it, we do make it better. Uh, but in the process, there is a greater chance that things can go wrong, that it can break. So now we're entering Ethereum 2, which is the scalable version of Ethereum. So Vitalik, do you wanna give us a quick overview of Ethereum 2 at a very high level, and then we can kinda dig into the pieces?

   2. VBVitalik Buterin36:41

      Um, sure. Um, so I think one other thing that's important to kind of add just to, um, you know, give a complete picture of scaling is that there's these two families of scaling, Layer 1 scaling and Layer 2 scaling, where Layer 1 scaling basically says, "Well, let's make the blockchain itself better," and Layer 2 scaling says, "Well, let's come up with protocols that are gonna sit on top of the blockchain and that use the blockchain in more clever ways, uh, to provide the same kinds of security guarantees that a blockchain has," um, but, you know, that provide, um, much more scalability because you're not just kind of dumbly staking, like, literally everything and doing everything on a blockchain directly. And so, like Bitcoin, for example, like, you know, especially after the scaling wars, like focused very exclusively on Layer 2, right? Uh, whereas, you know, like say Bitcoin Cash is very Layer 1 focused.

   3. TFTim Ferriss37:31

      And this is a, this is a classic thing in computing. Like so for example, when I go to a website, the domain name system is at a different layer, ri- the DNS-

   4. VBVitalik Buterin37:39

      Mm-hmm

   5. TFTim Ferriss37:39

      ... servers, and then the HTTP servers that serve up the web page are another layer on top, and then there's a caching layer where some of the data might be kept closer to me, and then on my own computer is where I run the JavaScript, because I don't wanna run that JavaScript way back on the HTTP server or the DNS server. So there is a long, rich history in computing of stacking layers upon layers. As you get closer to the point of, uh, the user, that's the point at which you use more compute and you execute more and more of the code. So basically, the idea here is decentralize only what you need to decentralize. And so Ethereum is gonna split into or it's gonna have multiple layers, and I think what you're saying is Layer 1 is really Ethereum, and that's the least-

   6. VBVitalik Buterin38:21

      Mm

   7. TFTim Ferriss38:21

      ... scalable part, but that's where the security comes in.

   8. VBVitalik Buterin38:24

      Mm-hmm.

   9. TFTim Ferriss38:24

      And Layer 2 is where the code is run, and that's a, that-

   10. VBVitalik Buterin38:27

       Right

   11. TFTim Ferriss38:27

       ... that has different properties, which you're gonna get into.

   12. VBVitalik Buterin38:30

       Right. Well, the, the, the way that I would describe it is like in comparison to, you know, Bitcoin, which is very Layer 2 focused, and Bitcoin Cash, which is very Layer 1 focused, Ethereum takes a moderate approach, so we do both kinds of scaling, right? So there is the Eth2, um, effort, which you mentioned, um, which, uh, you know, it is Layer 1 scaling, right? It is basically saying, "Well, we're going to make this big upgrade of the Ethereum blockchain. We're going to move it from a proof of work, uh, to a proof of stake," uh, where, you know, proof of, uh, work is this current consensus mechanism that keeps the blockchain secure that runs on having a large number of, uh, computers just constantly cranking out these kind of mathematical hash solutions, uh, 24/7, and proof of stake is a much more energy efficient alternative. Uh, there's also sharding, which is a Layer 1 scaling solution that says, um, that instead of, uh, every node in the network having to download and process everything, every node in the network only has to download and process a small portion of all of the data. You know, the blockchain protocol is designed in a clever way that still ensures certain safety despite having that constraint. So think of it as, you know, like combining at least some of the advantages of, uh, you know, a Bitcoin-style blockchain and BitTorrent, right? Like BitTorrent-

   13. TFTim Ferriss39:46

       Yeah

   14. VBVitalik Buterin39:46

       ... is very Layer 1 scaled. Like, there's, there's nobody who downloads, um, you know, every movie or even, like an index of every movie.

   15. TFTim Ferriss39:53

       Yeah. So before we get to Layer 2, so, so Layer 1 is, you're saying, is proof of stake, which is moving from proof of work to proof of stake, and, uh-

   16. VBVitalik Buterin40:01

       Mm-hmm

   17. TFTim Ferriss40:01

       ... sharding, which is breaking it-

   18. VBVitalik Buterin40:02

       Mm-hmm

   19. TFTim Ferriss40:02

       ... into pieces and having, uh, you know, different pieces do different things and then try to reconcile them. On the proof of stake side, I mean, that itself is a whole big debate that could take up the entire podcast. [instrumental music] Just a quick thanks to one of our sponsors, and we'll be right back to the show. This episode is brought to you by Wealthfront. Did you know if you missed 10 of the best performing days after the 2008 crisis, you would have missed out on 50%, 5-0% of your returns? Don't miss out on the best days in the market. Stay invested in a long-term automated investment portfolio. Wealthfront pioneered the automated investing movement, sometimes referred to as robo-advising, and they currently oversee $20 billion of assets for their clients. Wealthfront can help you diversify your portfolio, minimize fees, and lower your taxes. Takes about three minutes to sign up, and then Wealthfront will build you a globally diversified portfolio of ETFs based on your risk appetite and manage it for you at an incredibly low cost. Wealthfront's software constantly monitors your portfolio day in and day out so you don't have to. They look for opportunities to rebalance and tax loss harvest to lower the amount of taxes you pay on your investment gains. Their newest service is called Autopilot, and it can monitor any checking account for excess cash to move into savings or an investment account. They've really thought of a ton. They've checked a lot of boxes. Smart investing should not feel like a rollercoaster ride. Let the professionals do the work for you. Go to wealthfront.com/tim and open a Wealthfront investment account today, and you'll get your first $5,000 managed for free for life. That's wealthfront.com/tim. Wealthfront will automate your investments for the long term, and you can get started today at wealthfront.com/tim. [instrumental music]

7. 41:45 – 45:54

   Proof of stake

   1. TFTim Ferriss41:45

      So the proof of work I'm familiar with. Proof of stake, could we just define what that means?

   2. VBVitalik Buterin41:51

      The core idea basically is, um, that a- any decentralized consensus system where, you know, you don't have a central registry that keeps track of, you know, like who the different humans are, you need some way for people to, like, basically vote on, like, which blocks go and which transactions got included in the network, and you need for that vote to be secure against what's called a Sybil attack. A Sybil attack is when one attacker just pretends to have one million different accounts. Normally, like, uh, in, you know, like Reddit and, like, uh, Google accounts and Twitter and all of these centralized systems, like this is done using centralized mechanisms, right? Like, uh, they sometimes require phone number verification, and then phone numbers themselves, um, often end up having some kind of KYC on top of them. There's various, uh, kind of AI techniques that try to detect bots, but in a decentralized system- That, you know, we don't have this kind of centralized registry of who gets to be an actual user, right? And we don't want to have that. And so to prevent this, uh, Sybil attack, right, to prevent one person from just generating a billion accounts and outvoting everyone else, the solution is economics, right? The solution is basically that the extents to which you can vote on just this very limited question of which transactions get included in what order is proportional to how many economic resources you put in. So in the case of proof of work, those economic resources come in the form of computing, um, hardware that you're running, right? Like, when you're running, um, this, uh, mining software on your computer, you're cranking out these hash solutions. Every hash solution gives you the right to generate a block, and the number of hash solutions that you can generate is proportional to how many computers you put in. In proof of stake, it works a little differently, but the core principle is that your, um, ability to kind of participate in creating the outcome is proportional to how many coins that are in the system that you're staking. And so the reason why proof of stake is efficient is because in proof of work, like, the way that you basically prove that you have a computer to the system is by just, like, running this software on, on that computer 24/7 and generating hash solutions, right? Like, that's the only way to safely do it, because if you did not have to run the computer 24/7, like if you only had to run it 12/7, well then, you know, you could have one computer that just pretends to be two different computers. But with proof of stake, if you have coins, those coins are saved in an account. That account has an associated public and private key, and you can just make a digital signature with the private key. So you don't have to, like, run any computer for longer than a few milliseconds. That's the kind of core principle.

   3. TFTim Ferriss44:31

      That's supremely helpful. Thank you.

   4. NRNaval Ravikant44:33

      Yeah, this is beyond the scope of this podcast, but it, it is actually hotly debated how much more efficient proof of stake is, because there's also... These blockchains, they have to issue coins to, uh, in exchange for the security, uh, to the so-called miners or validators in the case of proof of stake, and people will, you know, spend a dollar to get a dollar, so to speak. If you're giving out free coins in the blockchain, then people are gonna hustle in any which way possible. And in proof of work, they'll do it by buying more computing equipment to run more hashes to get the new coins coming out. In proof of stake, they'll have to lock up funds or they'll have to obtain funds to do it, and there's a cost to doing that, to obtaining those funds. So there's no real free lunch, but there are arguments for efficiency with proof of stake, especially as you get to securing very large amounts.

   5. VBVitalik Buterin45:18

      The way that I would just briefly summarize the proof of stake case there is that, like, proof of stake can actually survive, um, at least, you know, in the opinion of proof of stake supporters, with much lower rewards than, uh, proof of work can. And the reason is... and, like, because of how proof of stake works, the ratio between the cost of attacking a system and the cost of just running it, like, becomes, uh, like, more favorable. But, you know, this is a long debate. Um, I've written on it. I have a post on Vitalik.ca. Um, uh, like, if you just scroll down, the most recent one called Proof of Stake, and then, you know, proof of, uh, work proponents have their own posts as well, so encourage you

8. 45:54 – 1:01:42

   Layer 2 vs. layer 1

   1. VBVitalik Buterin45:54

      to read all of them.

   2. NRNaval Ravikant45:54

      So going back, so this is all Layer 1 scaling. Switch from-

   3. VBVitalik Buterin45:57

      Mm-hmm

   4. NRNaval Ravikant45:57

      ... proof of work to proof of stake, uh, start sharding the blockchain, and this gets you some tens of times improvement, like, you know, 20 times, 25 times improvement in throughput.

   5. VBVitalik Buterin46:07

      Um, a hundred times.

   6. NRNaval Ravikant46:07

      Hundred times, fantastic.

   7. VBVitalik Buterin46:09

      Yeah.

   8. NRNaval Ravikant46:09

      So then there's Layer 2, which stacks on top.

   9. VBVitalik Buterin46:12

      Yes. So Layer 2, as I mentioned, is about creating protocols that live on top of the blockchain, that only use the blockchain in very particular ways. So there's lots of techniques for this, right? Like, the simplest Layer 2 to explain, I think, is a very special-purpose kind of Layer 2 called a payment channel. Uh, so the idea behind a payment channel is, like, let's say I am, you know, selling you, Naval, an, um, internet connection, and you're paying me per megabyte. Like, let's say you're paying me, you know, like 1 cent per megabyte. Now, if we wanna do this over the blockchain, the naive way to do it is every time, uh, a megabyte of, uh, data passes through the connection, you just make an on-chain transaction and you send me 1 cent. The problem is this requires lots and lots of transactions, and the transaction fees are actually much more expensive than 1 cent, so it's just completely economically non-viable. So here's what we do instead. You put $10 into a smart contract, right? So you send $10 on the blockchain to an address where, according to the rules of the Ethereum network, once those funds are at that address, those funds are controlled not by a human, but by a computer program. And that computer program will then have some rules that I'll explain later, right? So at the beginning, you send $10 to this contract, and so far you actually haven't made any payments because, as I'll explain, the, uh, s- contract has rules that will allow you to get your money out. Now, here's what you do after one megabyte. Um, after y- uh, no, we have one megabyte worth of, um, internet data passing between us, you create an off-chain message and you digitally sign that off-chain message. That just has, um, the number 1 cent, um, just written on it, right? So you just write the, you know, the number 1 cent, and you attach your signature, and you send this to me. None of this goes on-chain. Then one more megabyte happens. You write out a digital message that has the number 2 cents, and you digitally sign it, you send it to me. Uh, sometime later, every time, uh, a megabyte happens, you just send me one more of these messages. Um, you keep on incrementing the number. And let's say after a few hours of this, in total, um, we've had 347 megabytes, uh, worth of, uh, communication, and you've sent me a message that says $3.47, and you are now do- uh, no longer wants to use my internet, you know, you're signing off for the day, and so, you know, we're done. So now here's what happens. I can then take your message and your message that says $3.47 cents- I can attach my own signature to it, and I can publish it as a transaction going to the smart contract, and you have your $10 in it. The smart contract has a rule that says if I send one of your off-chain messages, I, I, I call them tickets, if I send one of your tickets, if I kind of wrap one of your tickets in an actual transaction and I actually kind of publish your ticket to the blockchain, then whatever amount of money is on your ticket goes to me and the remainder gets refunded to you, right? So I get my $3.47 and you get your $6.53, uh, back. Now, it's actually incentive-aligned, right? Because, um, I, um, always have the ability to use the most expensive ticket that you s- the most recent ticket that you sent me, and I don't really have any reason to use one of your older tickets, right? So I'm always gonna pick your later ticket, and so I'm always gonna claim all of the money that I'm owed, and you get your money back. Now, if I disappear, then after some period of time, you have the ability to, uh, just go in and take the money back for yourself, right? So the idea is that it's this contraption where, you know, in reality, you've made a payments to me 347 times, right? Like, you- we've had 347 interactions during which the amount of money that's entitled to me goes up and the amount of money that's entitled to you go down. But actually, there's only two, um, actual blockchain, uh, transactions that, uh, are visible to and needs to be processed by the rest of the network, right? So we make 347 payments, but the blockchain only sees two of them, and that's, you know, a factor of, uh, 178, uh, two improvement there.

   10. NRNaval Ravikant50:31

       Yeah. So, so, so if I can summarize this for a second-

   11. VBVitalik Buterin50:34

       Right

   12. NRNaval Ravikant50:34

       ... um, for kind of our, our listeners. Um-

   13. VBVitalik Buterin50:36

       Sure

   14. NRNaval Ravikant50:36

       ... basically what you're saying is let's say that you and I have a long-lived contract for some service.

   15. VBVitalik Buterin50:41

       Uh-huh.

   16. NRNaval Ravikant50:41

       Rather than publishing every little aspect of that contract onto the Ethereum blockchain and flooding it, we go off to the side, we do a whole series of transactions, but every time we do-

   17. VBVitalik Buterin50:51

       Mm

   18. NRNaval Ravikant50:51

       ... a transaction, each of us, like, stamp it and say, "Yeah, that-

   19. VBVitalik Buterin50:54

       Mm-hmm

   20. NRNaval Ravikant50:54

       ... little piece was done," and we update-

   21. VBVitalik Buterin50:56

       Mm

   22. NRNaval Ravikant50:56

       ... the transaction between the two of us. And then when we're finished, either one of us can go back to the blockchain and submit the f- the, the record of all the transactions and say, "Look, it's signed by both of us, so this is valid." E- but either one of us can submit it, and the blockchain executes it.

   23. VBVitalik Buterin51:11

       Right.

   24. NRNaval Ravikant51:11

       So the blockchain only needs to know when we left, with how much money s- staked on this transaction, and when we-

   25. VBVitalik Buterin51:16

       Mm-hmm

   26. NRNaval Ravikant51:16

       ... came back and what the total change was. It doesn't need to keep track of all the intermediate pieces.

   27. VBVitalik Buterin51:21

       Exactly, yes. That's a good summary. Now, channels are, like, I think, uh, the, the simplest, uh, kind of Layer 2, but they're also the least powerful Layer 2. They can only do payments. Um, they, uh, have a hard time doing many kinds of smart contracts. Channels exist, and they are being used for more and more things, um, and, uh, uh, they're great. Uh, but the thing that the Ethereum ecosystem is the most excited about is something called rollups. Now, I don't want to actually, you know, go in and fully explain rollups because they're even more complicated than channels. But I, for those who are interested, I do have an article. Um, once again, you know, go to Vitalik.ca, scroll down like, uh, I think it's called An Incomplete Guide to Rollups. And so I, I describe channels and also this thing called Plasma and then also rollups. And rollups are really powerful because they can support not just payments, they can support the full generality of applications, like exactly the same applications that you can run directly on the Ethereum blockchain itself. But if you do those things inside a rollup, they become 100 times cheaper. Um, so it's this very powerful scalability technology. And the Ethereum community loves rollups because they're very easy to upgrade to because if you run an application on Ethereum, you can just run the exact same application inside of, uh, an, uh, Ethereum virtual machine compatible rollup, of which, uh, a couple of projects exist. And actually, I think a couple of days ago, Optimism, uh, announced that they're going to launch, uh, f- uh, their mainnet fairly soon.

   28. NRNaval Ravikant52:52

       Yeah, rollups are fascinating. I've been looking into them a little bit, and, uh, they're, they're worth learning about. It, it's basically the idea is just that there's these very complex machines that are not on the blockchain, that are off the blockchain, that are running the transactions, but then they're submitting different kinds of proofs back to the blockchain to say, "Don't worry, this, this was a valid transaction." And the two different approaches, Optimism is optimistic, where basically optimistic rollups say, "We assume people are doing the right thing, but we're watching, and if someone commits fraud or makes a mistake, then they get punished for that fraud." Whereas there are these, uh, zero knowledge base rollups, you know, pioneered by StarkWare and others, which are basically saying, "Hey, actually we're gonna submit proofs which are much shorter than the actual computation, that the computation was done properly." But I think these give together what, another 100X speed up?

   29. VBVitalik Buterin53:41

       Mm-hmm. Yes.

   30. NRNaval Ravikant53:41

       So if you combine the Eth2 layer 1 speed up and the layer 2, uh, rollup speed up-
9. 1:01:42 – 1:03:02

   When Vitalik disagrees with developers

   1. NRNaval Ravikant1:01:42

      So that's interesting. You don't, you don't even really run Ethereum. You have disagreements with developers, and they could even change-

   2. VBVitalik Buterin1:01:47

      Mm-hmm

   3. NRNaval Ravikant1:01:47

      ... it in a way that you don't like. Has that happened yet? Has, has there been a case where something has been implemented into Ethereum that maybe the community or the other developers wanted which you sort of disagreed with?

   4. VBVitalik Buterin1:01:57

      There's definitely been changes that I have wanted to push forward that, I mean, I gave up on fairly quickly because, uh, you know, enough core developers or the community ended up, uh, disagreeing on them. There's been changes that were kind of pushed forward by some people who are not myself, um, and then where I just kept completely silent. So, like, block reward decreases, um, for example, I was completely silent or mostly silent. ProgPoW was mostly silent until it was obvious that the ProgPoW side was, uh, losing. Things that I was, uh, trying to push forward, I mean, those are harder to find just because, like, I tend to just naturally understand what the community would, would accept, and I don't really try to push things that I don't think would be successful. Uh, I mean, there's, like, some minutia around, um, you know, scaling strategies and, like, statelessness and state management strategies where, like, myself and some other core developers have some different opinions. And so there's a lot of back and forth where we try to sort of satisfy each other's concerns.

10. 1:03:02 – 1:05:24

    Organizational coexistence within Ethereum

    1. NRNaval Ravikant1:03:02

       Yeah, my sense from afar is you're more coordinating than dictating, and you're doing what? Are you running the Ethereum Foundation? Is there an organization you're a part of, or are you just kind of a roving individual with a laptop and a few friends who just kind of writes blog posts and submits, uh, proposals?

    2. VBVitalik Buterin1:03:18

       [laughs] I mean, some of both, and I do, you know, have, uh ... I do the, the proposal submitting. I have ... do, you know, some, some writing proof of concepts, um, and, you know, in Python I, uh, do some, uh, kind of trying to coordinate people. The Ethereum Foundation as an organization exists. So the executive director of that is, um, Aya Miyaguchi. Um, she has been doing a lot of the logistical things for about the past, uh, three years and has done an, uh, amazing job, and, you know, I end up, uh, kind of coordinating and working with her quite a lot on, uh, uh, various things. But, you know, even the Ethereum Foundation, like, it has an important role because it has this kind of a large pool of capital and this kind of high level of, uh, kind of public legitimacy. But it's, uh, not nearly the only organization within Ethereum, right? Like, there's a lot of proposals that got initiated on the outside. Um, there's a lot of proposals, um, that got a really huge amount of community support coming from, uh, the outside, even organizations other than the Ethereum Foundation that have a lot of resources within the Ethereum ecosystem. So, like, for example, for the first few years, ConsenSys, um, did quite a lot, and ConsenSys is still doing a lot. Um, but now we al- there's also Uniswap, whose treasury has just grown a huge amount, and they, uh, are even wealthier than the Ethereum Foundation is. So it, it ... I think in practice it does end up being this kind of loose collaborative effort between a lot of dif- different groups.

    3. NRNaval Ravikant1:04:44

       So Uniswap is interesting. Uniswap is, uh, for those of you don't know, it's an application built on top of Ethereum, but it has its own token, and it's the f- uh, it's the f- uh, one of the first, uh, automated market makers, a decentralized platform for exchanging cryptocurrencies with each other without having-

    4. VBVitalik Buterin1:04:59

       Mm-hmm

    5. NRNaval Ravikant1:05:00

       ... to use a centralized authority like a Coinbase or a Gemini or a CoinList. Instead, you just go onto, you go onto Uniswap, and it's a smart contract. It's not owned or run by anybody except the community and a few developers, and there's a token associated with it. But you can just automatically trade with this smart contract. It turns, say, your Ethereum into a stablecoin to get the equivalent of dollars or back. This shows how the Ethereum ecosystem is very different than the

11. 1:05:24 – 1:13:14

    Blockchain tokens are like fire.

    1. NRNaval Ravikant1:05:24

       Bitcoin ecosystem. In the Bitcoin ecosystem, there's only one coin. There's Bitcoin, and they don't really tolerate other tokens in their orbit. Whereas with Ethereum, you have a lot of other tokens in the orbit, and so you'll see blockchains that are competing with Ethereum that are trying to ... You know, they're making different trade-offs and, you know, whether it's Flow or Ava or Near or whatever, there's a whole bunch of those. But then there's also people who are built on top of you, like Balancer and Curve and Uniswap and whatnot. And so what's your view on all these other tokens? How many tokens are there gonna be? How do you determine which one makes sense and which one doesn't? And do other blockchains make sense at Layer 1, or should other tokens only emerge at Layer 2 now that Ethereum exists?

    2. VBVitalik Buterin1:06:03

       No, this is definitely a, a very important topic. Uh, and tokens are one of those, uh, things that's really like playing with fire, right? Like, on the other hand, um, fire is, uh, crucial to human civilization. But on the, um, other hand, fire is, uh, very evil and can burn up your family if you're not careful. So the, the thing with tokens, right, is that the crypto space is not the only space that tried to build decentralized things, right? Like, there are a lot of decentralized projects that are outside the crypto space, like, um, Diaspora, the, uh, decentralized alternative to, to Facebook that people tried to build around 2010. ... is one good example. But the challenge with, um, this, uh, kind of pre-blockchain or non-blockchain decentralization or crypto is that it's harder to, uh, kind of align the incentives and motivate people to actually... wants to participate in, you know, building and growing the community at a large scale. Like, you can get idealists, but the problem with idealism is that idealism is not very socially scalable. Cryptocurrency, on the other hand, um, you know, can, uh, appeal to a kind of universal values, right? Like, where-

    3. NRNaval Ravikant1:07:11

       Mm-hmm

    4. VBVitalik Buterin1:07:12

       ... you know, the real universal value is getting rich for-

    5. NRNaval Ravikant1:07:14

       [laughs]

    6. VBVitalik Buterin1:07:15

       ... um, a lot of people.

    7. NRNaval Ravikant1:07:16

       Yeah. A- and it seems with Eth, you've done a bit of both. You've got a bit of both. You've got-

    8. VBVitalik Buterin1:07:19

       Exactly

    9. NRNaval Ravikant1:07:20

       ... people who have Eth, they're getting rich, and then there's also a movement.

    10. VBVitalik Buterin1:07:22

        Yeah. Right. Exactly, and I, like, I think that balance is important, right? Like, I think the failure of a lot of non-blockchain crypto shows the, uh, inability to do things at scale without that financial incentive. But at the same time, you know, the project, a lot of the more, at least in my opinion, amoral projects within crypto that just care about, um, you know, the pump, and, uh, the volume and, um, you know, getting a, uh, powerful and expensive token that they can get rich off of, like, those projects end up, uh, not really doing well in the long term either, right? And there's been plenty of projects where just, like, VC funds gave, um, you know, hundreds of millions of dollars of capital to them. But, you know, the reality is that, like, h- hundreds of millions of dollars of capital just can't buy you a soul, right? Uh, and, and so a lot of, uh, people end up, uh, kind of stumbling and falling on that to some extent.

    11. NRNaval Ravikant1:08:17

        Yeah. I think some of that is just driven by the pre-mine phenomenon, where Bitcoin had a so-called fair launch, although you can debate how fair it was, uh, but, you know-

    12. VBVitalik Buterin1:08:25

        Mm-hmm

    13. NRNaval Ravikant1:08:25

        ... how fair the distribution is today. But, uh, everyone sort, sort of started mining at the same time, or everyone who was aware of it, whereas, uh-

    14. VBVitalik Buterin1:08:33

        Mm-hmm

    15. NRNaval Ravikant1:08:33

        ... a lot of coins that have come subsequently, the team has a pre-mine, where they get a bunch of the-

    16. VBVitalik Buterin1:08:38

        Mm-hmm

    17. NRNaval Ravikant1:08:38

        ... uh, the coin in advance. And as the amount of the pre-mine goes up and the competition moves from, "Hey, let's mine as much Bitcoin as possible," to, "Hey, let's just create the winning blockchain and then get the big pre-mine." So it's just moved the competition from mining to creating or forking. Uh, so it, it's almost sort of inevitable once pre-mines became a little bit accepted that there would be so many different blockchains.

    18. VBVitalik Buterin1:09:00

        Yeah, no, I think that's, uh, definitely fair, too. Like, and, w- well, Ethereum, once again, is a kind of fairly, uh, kind of moderate there. Like, there was a pre-mine, but, you know, the pre-mine was only about 12, uh, percent of... actually I think about 10% of the total supply. And, you know, people did have the opportunity to mine or to buy the sale, and so a lot of people had the opportunity to kind of become part of the ecosystem. But, I mean, I do think that kind of the, the less monetary and kind of the movement aspects of this is important, right? Like, if you just, um, you know, go to CoinMarketCap and you look at some of the, like, top 10 coins other than, like, say, Bitcoin and Ethereum, like, you can't always give a good answer for, you know, what values does that token represent. Um, whereas, you know, for Bitcoin you can, for Ethereum you can, for Zcash, for example, I think you can. So I think there definitely is this, uh, kind of, like, a complicated balance between different factors. Basically, the coin can help, but too much emphasis on the, um, on just the coin can hurt, and it's challenging. I think Uniswap actually did really well with their coin, uh, because, uh, like, on the one hand, like, you, you know, you could kind of criticize it and say, you know, "Oh, this was only just a measure, that it was kind of reactionary, that was reacting to, you know, kind of SushiSwap, uh, trying to kind of swoop in, and, uh, basically try to push everyone to quickly migrate over, and they had a coin. And so people, you know, got into SushiSwap because, uh, they just wanted to get rich off of it. And so Uniswap reacted by making their own coin." Um, but at the same time, like, they did this one really cool thing, which is a big part of the initial distribution was this very, uh, kind of egalitarian airdrop, right? Like, basically if you had used Uniswap even once before the airdrop had began, you would get 400 UNI tokens. So at the time, those, uh, UNI tokens were worth about three and a half dollars, and so the joke was, like, you know, Uniswap actually delivered on giving everyone a stimulus check. And, uh [laughs] you know, people really loved that. And, uh, you know, the, the distri- supply distribution, uh, distribution of UNI was kind of very widely dispersed, and the whole thing was this kind of DAO where, um, a lot of people could, uh, participate in decision-making. So I think, like, there's ways to do tokens well, and there's ways to do tokens poorly.

    19. NRNaval Ravikant1:11:19

        Yeah, the backdrop on Uniswap, uh, SushiSwap is Uniswap was this automated market maker, this decentralized exchange that launched, and then they sort of got attacked. They got cloned by this other one called SushiSwap, you know, joke on UNI, sushi.

    20. VBVitalik Buterin1:11:31

        [laughs]

    21. NRNaval Ravikant1:11:32

        And then they tried to, like, steal the Uniswap community by saying, "Hey, come here and we'll pay you more by giving you tokens." And then Uniswap was forced to actually create a token, which way then gave away to their community, which are called airdrops. It's like helicopter drops of money, except now it's in made-up tokens. So there's all this interesting stuff that goes on in crypto where trying to build and maintain communities, you have to figure out how to distribute the spoils. But contrast how this is compared to, say, Facebook or Twitter. You don't see Mark Zuckerberg airdropping Facebook stock on the users, and you don't see Jack Dorsey airdropping Twitter revenues on the users, but that's exactly what happens in blockchain land. And, you know, E- Ethereum might have had a small pre-mine, but I do remember early on looking at Ethereum, and I think I, I, I talked to Balaji Srinivasan, one of your other guests, about it, Tim, where we were looking at Eth back in the day when it was first launching, and we were just really confused because it seemed like there was this one brilliant technical guy surrounded by, like, 15 other people who all had the title co-founder. And it was very confusing to evaluate as an investor, so we ended up not investing, to our detriment. [laughs]

    22. VBVitalik Buterin1:12:33

        [laughs]

    23. NRNaval Ravikant1:12:34

        Uh, but that's, that's my way of saying that this was not a Vitalik get rich quick scheme. I don't think Vitalik even had... you know, was even the single largest token holder. I think there were many other people who frankly, you know, had a lot less to do with Ethereum's success who ended up holding a huge number of tokens. So to the extent that Vitalik is the one who's working on it and pushing it forward, it's a labor of love. And I've always been super impressed by how his team is very altruistic, and really kind of wants to make the world a better place. Maybe they're young and naive, but it's, you know, it's refreshing to see that. So I think, you know, in terms of branding, a lot of people look at Ethereum as like Lyft to Bitcoin's Uber, right? There's sort of a crypto right-wing libertarianism versus a crypto left-wing, uh, [laughs] sort of libertarianism.

12. 1:13:14 – 1:23:08

    Cryptocurrencies and regulation

    1. TFTim Ferriss1:13:14

       Naval, let me jump in for one second here, if I may ask a naive question. I'll... Or a novice question, maybe. And if, if I'm completely looking at this the wrong way, I'd love to be corrected. Uh, e- thinking of Ethereum and comparing it to, say, Bitcoin, and considering the possible regulatory threats to Bitcoin, and I think probably a, a stronger focus on cryptocurrency than blockchain by regulators, and just by extension, if we're thinking of Ethereum on some level as both a cryptocurrency but also as a world computer, maybe as if Amazon had its own cryptocurrency, right, Bezanians or whatever they, whatever they might call it, and then AWS, that even if there were a crackdown on currencies, that Ethereum would have some resilience and anti-fragility in that respect. Does it mean that Ethereum in its entirety is less subject to regulatory threat, uh, uh, or that it can thrive in the face of regulatory threat along the lines of that which, uh, Bitcoin could face?

    2. VBVitalik Buterin1:14:27

       I mean, comparing the kind of regulatory situation of, uh, Ethereum and Bitcoin, I mean, I think, like, both benefit from being highly international, right? Like, Bitcoin has a strong community in the US, it has a strong community in China, it has a, uh, strong community in, uh, you know, the EU, and lots of other places. Um, Ethereum is, uh, very similar in, uh, that regard. Um, you know, there's these very strong communities in lots of, uh, different, uh, countries, you know, including countries that are, uh, you know, not, uh, kind of geopolitically on the same page with each other. So, uh, th- there's a lot of, I mean, of resiliency, uh, um, in that sense. Now, of course, the other, uh, kind of aspect of, uh, politics is that, like, it's not just about what they can do, it's also about, like, what they want to do. The reality is that regulators have cracked down on, uh, cryptocurrencies significantly less than they, uh, theoretically could, right? Like, they theoretically could, like, make something like Coinbase completely go overnight.

    3. TFTim Ferriss1:15:29

       Right.

    4. VBVitalik Buterin1:15:29

       Um, and, like, I think the reality is that, you know, they, uh, don't, uh, in part because, like, they do see a lot of the positive value that's, uh, coming out of, uh, these, uh, platforms, right? And there's even regulators that wants to use, um, you know, public blockchains and, uh, you know, even things like Ethereum to build applications on top of them. You know, they, uh, see value in, uh, some of the kind of advantages that the things like stablecoins, for example, could provide or even, you know, non-financial applications of various kinds.

    5. NRNaval Ravikant1:16:03

       Yeah, if you wanted to build a fraud-proof voting application, you'd probably do it in Ethereum.

    6. VBVitalik Buterin1:16:08

       Mm-hmm.

    7. TFTim Ferriss1:16:09

       Hmm.

    8. VBVitalik Buterin1:16:10

       Hmm. That'll be interesting.

    9. NRNaval Ravikant1:16:11

       Yeah. Cryptocurrencies are inherently designed to be sovereign resistant, right? They're- they're designed to be stateless. And so the geographic redundancy is one aspect of it, and some countries try to ban it. Like, I think, uh, for- for a while, people think China tried to ban it, and that sort of failed. And right now India's talking about banning it, and that will end in tears, right? [laughs] That's not gonna go well when you leave your country out of the innovation in the next 10 years, so hopefully they don't do that. But there's also redundancy in terms of design. For example, going to proof of stake is a different kind of redundancy than being just all proof of work, um, so you're not subject to the same kinds of attacks, I think being used for all kinds of applications.

    10. TFTim Ferriss1:16:48

        Naval, could you speak to that?

    11. NRNaval Ravikant1:16:49

        Yeah. So pro- proof of work is you shut down miners, and miners have hardware and equipment, and you know where they live, right? They need a physical presence.

    12. TFTim Ferriss1:16:56

        Right.

    13. NRNaval Ravikant1:16:56

        Whereas proof of stake is validators who just need an internet connection, and so they're- they're kind of harder to stop and harder to find, in theory.

    14. TFTim Ferriss1:17:03

        Mm-hmm.

    15. NRNaval Ravikant1:17:04

        And then you also have just what applications are running on top of these platforms. So if you're just running digital gold, that's one application, but if you're also running, as Vitalik said, uh, you know, functioning prediction markets, public goods, uh, financial systems, voting systems, gaming systems, nifty tokens, art galleries, right, and all those kinds of things, then it gets very hard to shut it down. And I actually think eventually all internet traffic will be encrypted, and all of it will require cryptocurrencies to kind of just allocate scarce resources. Like, even today, there are things that we do on the internet that are centralized, like caching and routing and spam filtering, that should be decentralized and involve crypto payments for efficiency. And once we sort of start getting to those applications, it'll be very hard to turn off crypto without turning off the internet. It's the native money of the internet, and so if you take away value transfer from the internet, the internet as we know it will be stunted at best, and more likely, just cease to function at some levels.

    16. TFTim Ferriss1:18:01

        Thank you. Back to you, Naval. [laughs]

    17. NRNaval Ravikant1:18:03

        Yeah. Oh, yeah, yeah, yeah. No, not at all. No. Yeah, it's, I mean, there's a, there's- there's- there's an infinite number of- of rabbit holes we can go down. Coming back to Ethereum for a second, so there's Bitcoin, which is clearly digital gold. There's Ethereum, which is the world computer. And, you know, with digital gold, high price is good. You want your gold to go up in value, except to the extent these days digital gold, Bitcoin, has been going up. But it actually gives me some trepidation. I tell people it's like my insurance policy is becoming more valuable, uh, my life insurance policy, right? [laughs] I don't know how I feel about that. But with Eth, it's not clear that the price going up is always that good for adoption. It's- it's good for the people who are pumping and holding, but is it so good for the people who are trying to use it? I mean, well-

    18. TFTim Ferriss1:18:42

        Hmm

    19. NRNaval Ravikant1:18:42

        ... do you have any thoughts on the price of Eth and how much... For example, we don't even know exactly how much Eth there is gonna be in the future, right? The supply curve is a little bit undefined.

    20. TFTim Ferriss1:18:50

        [laughs]

    21. NRNaval Ravikant1:18:51

        And some people say, "Oh, it could be too big. This thing will get inflated," whereas there are other arguments saying, "No, there are certain applications we're gonna have for which you have to lock up Eth or even destroy Eth to use these applications, so Eth may end up being more valuable." Do you have a-

    22. TFTim Ferriss1:19:03

        Mm-hmm

    23. NRNaval Ravikant1:19:03

        ... what is your current point of view on where the Eth supply heads, and what the Eth price means for the ecosystem?

    24. VBVitalik Buterin1:19:09

        Yeah. Like, so one thing that I think you alluded to a little bit is that there's this proposal called EIP-1559, which, uh, kind of redesigns how the transaction fee market works, and, you know, there's a lot of, uh, kind of very wonky, uh, kind of economic math for, um, kind of why the specific changes that it makes, uh, make sense. But one of the consequences of that change is, um, that the majority of fees, instead of going to the miner, whoever creates the block, would get burned. Like, it would just literally get deleted out of existence. And so if demands to use Ethereum is high enough, uh, then there would actually be more Eth than, uh, they're, uh, being destroyed than is being created. And so, you know, the, the joke that, so we sometimes make is, you know, if, uh, Bitcoin, you know, if a fixed supply is sound money, then, you know, if you have a decreasing supply, does that make us, um, ultrasound money? Um-

    25. NRNaval Ravikant1:19:59

        Mm-hmm

    26. VBVitalik Buterin1:20:00

        ... and it actually is not even that far-fetched a possibility. Like, if you look at the transaction fees for the last month, like, they actually have been on, uh, a lot of days greater than the, uh, block rewards for that d- um, for that day. Um, so it's interesting because, like, it basically creates this more direct connection between people using the Ethereum blockchain and, um, you know, Eth, um, having some value, right? Like, um, at the beginning, the way that Eth was even described when we were doing the sale is that this is like gas, you know, you're buying this token that you need to use, um, if you want to spend transactions. And if the token is actually a consumable, right, then it actually behaves even more like, um, well, I guess, you know, gasoline, as, uh, the original metaphor, right? Like, uh, if people want to use it, they would actually have to consume it. And so the value of it is actually s- uh, something that sort of depends on the, uh, Ethereum network being useful. And let's say, yeah, like, it's a bit of a different, um, kind of guiding principle than something like Bitcoin, right? Where Bitcoin just derives value from... You know, Bitcoin the currency derives value from Bitcoin the currency, and Bitcoin the blockchain is this kind of thing off to the side that, well, okay, fine, it has to exist. Um, whereas in Ethereum, like, it's much more of a system where the blockchain is the point. Um, and, you know, the Eth the asset gains value from the blockchain, um, doing its, uh, i- its job successfully.

    27. NRNaval Ravikant1:21:25

        That's interesting. So Bit- Bitcoin, the value is in the currency or in the Bitcoin itself, whereas in Eth the value is in the blockchain being used, and the Eth is the byproduct of it. Yeah, to use my strained castles made of math analogy-

    28. VBVitalik Buterin1:21:37

        [laughs]

    29. NRNaval Ravikant1:21:38

        ... you know, [laughs] uh, I, I, I, I think of it as Bitcoin as like the big impregnable citadel, the Fort Knox into which you're putting your gold, and you-- and the thing has high walls and is guarded really well, and they don't change much. And, you know, it's the same as it was in 2009 or 2011, so that no one can break in. But Eth is sort of this dynamic network of little city states that are trading with each other. So the more trade there is, the more free flow of information and goods, the more valuable the whole system becomes. But no single point of it is necessarily as impregnable. Like, for example, I do expect that we'll see more hacks and break-ins and failures in the Eth ecosystem as a whole, not in Eth itself, but in the ecosystem around Eth, than we will-

    30. VBVitalik Buterin1:22:16

        Mm-hmm
13. 1:23:08 – 1:30:30

    Wealth inequality

    1. NRNaval Ravikant1:23:08

       So, uh, I mean, one of the things to think about here, and I think you care about this more than most people in crypto, which is nice, is that you do seem to care about wealth inequality, the Gini coefficient, and the distribution of coins.

    2. VBVitalik Buterin1:23:19

       Mm.

    3. NRNaval Ravikant1:23:19

       And one of the criticisms about crypto that I see a lot is like, well, okay, so you're getting rid of the old oligarchs with this new financial system, but you're just replacing them with new oligarchs, who are the original Bitcoin and Eth holders. And how do you think about the distribution of wealth in a crypto-run economy as opposed to a fiat currency, uh, AKA the US dollar and, uh, you know, the euro-run economy?

    4. VBVitalik Buterin1:23:42

       This is definitely one, I think, one of the challenging, uh, kind of questions for the, the community to grapple with. Um, and this is actually one of the reasons, um, why I kind of really like Ethereum's, uh, kind of more, you know, multi-currency welcoming ecosystem, right? Like, uh, you know, sure, okay, you have Eth and, uh, you know, there is a, uh, limited set of opportunities to kind of get new Eth directly from the tap, and at some point, uh, you know, the supply is going to stabilize, and if you're buying Eth, you're just, you're buying Eth from a previous people. But at the same time, there are these new applications that are launching. You know, you have your, um, um, UNI, as I mentioned, where the, uh, distribution was, uh, I mean, I thought quite egalitarian, right? Like the, as I mentioned, you know, the, the 400, um, UNI stimulus checks that just go to everyone who, um, ever used the application at least once, and they could try really hard to not favor wealthy users too much. And then there's, uh, I think Tornado Cash, um, um, had an airdrop, uh, a couple of weeks back. Um, you know, there's more of these assets coming in, and I think, like, that kind of churn is, um, healthy. Like it, you know, it breathes new life into the ecosystem. You know, it breathes kind of new life into the wealth distribution, and it does, um, create opportunities for new people to, uh, be able to come in and, uh, kind of participate on a, uh, somewhat level footing as well. But then if we wanna compare all of this to the, uh, fiat ecosystem, like, it's a difficult comparison to make just because, um, you know, the, uh, kind of- Institutions are so different, and it's kind of difficult to, you know, match one up against the other, right? Like, uh, fiat currency is, um, you know, they basically get created by kind of a combination of, uh, you know, the, the central bank and the, uh, commercial banking, uh, kind of ecosystem. And in terms of where the, the, uh, kind of new f- newly generated value comes in, like, you know, both sides of that gets, uh, some share essentially. And, like, there's bad things that come out of it. There's also good things that come out of it. Um, so, like... I mean, I know, like, this is a controversial position among, uh, libertarians, but, like, I actually like the idea that, um, you know, if you have a fiat currency, then the government can print it and just use that as a source of government revenue. Um, the reason why I like it is because I think if the government can earn, can get, um, money through unobtrusive means, that reduces, uh, the extents to which it has to rely on, um, getting money through more intrusive means and, um, you know, rely on, like, taxation and, uh, kind of more direct-

    5. NRNaval Ravikant1:26:18

       Right. The problem is when it's unobtrusive, it's very easy to do it very sneakily. Um-

    6. VBVitalik Buterin1:26:22

       Right. Uh, yeah

    7. NRNaval Ravikant1:26:23

       ... and, and these tax, taxes have to be collected now, whereas, uh-

    8. VBVitalik Buterin1:26:26

       Yes

    9. NRNaval Ravikant1:26:26

       ... printing can kick the can down the road for the next person to solve.

    10. VBVitalik Buterin1:26:30

        Right. Right. This is, uh, arguments in the other direction, I guess. Um-

    11. NRNaval Ravikant1:26:32

        Yeah, no, there's a, there's a mor- there's a moral hazard there, and I think we're watching it play out, where we printed $8 trillion last year, and who's gonna pay for it?

    12. VBVitalik Buterin1:26:40

        Right. Now, the nice thing about cryptocurrency, of course, is that, like, the ecosystem is much more transparent. Um, and so, you know, it's easier to, uh, analyze and understand what the rules are. And, like, within the context of a crypto ecosystem, you know, as I mentioned, you can still do very egal- egalitarian things. Um, you can still, you know, reward people who were very important early contributors to things that ended up being very important. Um, so, you know, you can still do, um, a kind of all of, uh, those things, and, you know, we do have a responsibility to get the balance right. But the environment is just inherently a more kind of open and honest one just because, you know, these are decentralized systems and everyone does just... They see exactly what's going on.

    13. NRNaval Ravikant1:27:26

        Yeah, it's certainly more transparent. Like, you can tell what the money supply of Eth is at any given point. Good luck doing that with the US dollar money supply, or you can tell what the inflation on Eth is at any given point. And, and as you say, there's opportunities to build more applications on top of Eth, and maybe Eth is the app store for decentralized applications. But some of those applications can go on to capture just as much value and create just as much value as Eth itself.

    14. VBVitalik Buterin1:27:49

        Mm-hmm. Yep.

    15. NRNaval Ravikant1:27:49

        Um, so I think that'll be, uh... It, it... The, the really interesting development in the last, uh, year is just to see applications on top of Eth really creating and capturing and building lots of wealth and, and value. And so in that sense, this 2021 and 2020 run-up seem a little different to me than the 2017 run-up, which was based on just, you know, a lot of hype, frankly. Um-

    16. VBVitalik Buterin1:28:11

        Mm-hmm

    17. NRNaval Ravikant1:28:11

        ... so as we see sort of crypto playing out, you've also had some very interesting thoughts on everything from radical markets to political philosophy, to kind of what happened in 2020 and so on, and we could spend a whole podcast on that. But just at a very high level, you had a really good post on your blog saying, "End notes on 2020," and it was about a lot more than just crypto. So what else are you really interested in these days? I mean, uh, is it AGI? Is it life extension? Is it public goods? Is it different kinds of voting schemes? What's really on top of mind for you that's not directly crypto related?

    18. VBVitalik Buterin1:28:47

        Some of all of those. Uh, so, like, I think the changing, uh, kind of way in which economics works is definitely one of those really important topics. There's a couple of different kind of changes that's happening. Like, one of them that I talked about is just public goods becoming more important, right? Like, uh, a lot of the ways that, like, people thought of economics, like, 50 or 100 years ago, they just, they kind of focused on private goods like, uh, cars, houses, food, uh, you know, things like that. But there's also public goods, right, which are projects that benefit, um, a large and unselective group of people. And so no individual person who benefits, um, has the incentive to personally fund the whole thing. But it's hard to push people to pay for it because, like, you can't, you know, deny the benefits of the thing to people who don't pay for it, for example, right? And so scientific research is one example of a, a public good. My blog is one example of a public good. Open source software is, um, an example of, uh, a public good. And, like, on the internet, public goods are even more common than private goods are. Uh, and so, like, our economics, um, just, uh, has to, uh, uh, you know, just take that fact seriously. And, uh, a lot of, uh, like what's, uh, been happening in the blockchain space in some ways just is, you know, the crypto world trying to grapple against those things.

    19. NRNaval Ravikant1:30:10

        So basically, these public goods are where the, the costs are concentrated. Like, if I wanna s- fund scientific research, I do it out of my own pocket, but it benefits all of humanity, so the benefits are distributed.

    20. VBVitalik Buterin1:30:19

        Mm-hmm.

    21. NRNaval Ravikant1:30:19

        And so these-

    22. VBVitalik Buterin1:30:20

        Exactly

    23. NRNaval Ravikant1:30:20

        ... tend to be undersupplied. There tend to be too few-

    24. VBVitalik Buterin1:30:22

        Yes

    25. NRNaval Ravikant1:30:22

        ... of them. And so there are, there are schemes out there to tackle some of them. I think you've talked about quadratic funding as an example.

14. 1:30:30 – 1:39:23

    Quadratic funding

    1. VBVitalik Buterin1:30:30

       Mm-hmm. Yes.

    2. NRNaval Ravikant1:30:31

       What is quadratic funding?

    3. VBVitalik Buterin1:30:33

       Huh. Um, so quadratic funding is this, um, interesting mechanism that basically says anyone can donate money to public goods through the mechanism. But to compensate for this kind of underprovision that you talk about, the mechanism provides a subsidy to every public good, and that subsidy depends not just on the amount that was contributed, but also on the total number of people who contributed, right? So, like, for example, if there's two projects, they both got $100, but one of them got, let's say $80 from one person and $20 from another person, and the second project just got $1 from each of 100 people, the second public good is much more public than the first public good. And the tragedy of the commons on the second one is much greater, right? And so the fact that the s- that the second one managed to get to $100 despite the 100-way tragedy of the commons implies that it's a really important project. And so the quadratic funding mechanism actually gives a much greater subsidy to the, you know, $1 from 100... each of 100 people project, um, than it does from the project that got just, uh, um, $100 from, um, you know, a, a split between two people. And so we've been experimenting with the quadratic funding. There's this, uh, thing called Gitcoin Grants that happens a few times a year, uh, and that's had about, like, seven or, um, or eight rounds by now, I forget the exact number, um, just for public goods within the Ethereum ecosystem, and that's worked really well. Um, so that's been one of the kind of interesting experiments that I've been following.

    4. TFTim Ferriss1:32:05

       Question on quadratic funding, just to hop in here since I'm involved with a few different types of scientific research. Are those funders in those experiments that you've run anonymized or de-anonymized? Because I'm thinking through the example you gave and how there are other plausible explanations for why there might be two funders. I'm just thinking about, for instance, reputational risk associated with certain types of scientific research.

    5. VBVitalik Buterin1:32:34

       Mm-hmm. Right.

    6. TFTim Ferriss1:32:35

       Uh, th- th- there are other plausible explanations, but those largely hinge on named names versus them being anonymous.

    7. VBVitalik Buterin1:32:42

       Yeah.

    8. TFTim Ferriss1:32:43

       So how do you think about-

    9. VBVitalik Buterin1:32:44

       Right

    10. TFTim Ferriss1:32:44

        ... other contributing factors depending on how you're conducting the experiments?

    11. VBVitalik Buterin1:32:48

        Sure. So first of all, like, in quadratic funding, unfortunately, you do need to have some kind of model of for identity because, you know, you need to prevent the two people from just pretending that they are 100 people.

    12. TFTim Ferriss1:33:00

        Right.

    13. VBVitalik Buterin1:33:00

        Um, but with cryptography, you actually can do fancy things that give you most of the benefit from having anonymity despite, um, needing to have an identity system. Basically, you can have a system where people can make all these contributions and they're, you know, done in such a way that the system identifies, like, how many unique contributors there are for each project, but where the system does not get an idea... Like, nobody actually gets any, um, idea of exactly which particular person, um, donated how much money to which particular project. This is done using this, like, really important and fascinating topic of, uh, zero-knowledge proof cryptography. In zero-knowledge proof cryptography, like, basically, the idea is that it allows you to make cryptographic proofs that some statement is true. Um, so, like, I can make a cryptographic proof that says that, you know, "I have 100 coins," or that you signed a message, um, that contains, like, some p- um, some fact about me and it was signed with your key. And you can make these proofs, but where the proof does not reveal the, uh, contents of, uh, the thing that it's proving, right? So, like, for example, I can prove that I have an account that has at least 100 coins, but I don't have to prove which account it is. I don't have to prove exactly how many coins I have. And there's a lot of this very fancy mathematical magic that basically creates this protocol where if you give me a proof, then I know that the statement is true because if the statement is false, you would have had no way to generate the proof. But if I have just the proof, I can learn nothing else beyond the fact that that particular statement is correct.

    14. TFTim Ferriss1:34:40

        I understand.

    15. VBVitalik Buterin1:34:40

        So this is incredibly powerful cryptography. It's, uh, it's behind Zcash, for example. Um-

    16. TFTim Ferriss1:34:45

        Mm-hmm

    17. VBVitalik Buterin1:34:45

        ... there's also Ethereum applications like Tornado Cash, um, that are using it. There's... Zero-knowledge proofs also have these really nice scalability proofs. Um, so the, uh, proofs are very quick to verify even if the statement that they're proving is incredibly complex.

    18. TFTim Ferriss1:35:00

        Mm-hmm.

    19. VBVitalik Buterin1:35:01

        Um, and, uh, ZK-rollups, like some of these, uh, scaling solutions end up, uh, really benefiting from using them. So very powerful technology, and I think it's also very significant from a social perspective because, you know, we have this broader kind of anonymity versus accountability debate, right? Of, like, you know, the benefits of privacy versus the benefits of, like, basically persistent reputations.

    20. TFTim Ferriss1:35:22

        Mm-hmm.

    21. VBVitalik Buterin1:35:23

        And zero-knowledge cryptography is really powerful because it may, in a lot of cases, allow us to get both good things at the same time. Like, you could get us the benefits of, uh, you know, things like persistent reputations while at the same time getting, uh, a lot of the benefits of, uh, anonymity.

    22. TFTim Ferriss1:35:39

        Seems very powerful. Just to follow up on that, thinking of scientific research, I'm going to ask you what areas you might have particular personal interest in. I know you have some interest in life extension, uh, as evidenced by the, the dragon-slaying parable on your website, uh, or that you link to from your Twitter bio. But it strikes me that the quadratic funding experiments would also be heavily dependent on equally simplistic or simplified communication of competing... not necessarily competing, but contrasted scientific studies, right? Because there are some instances, just in my experience, where scientific studies that require a lot of scientific knowledge or due diligence would have fewer funders compared to others, but that doesn't necessarily reflect less importance or impact potential.

    23. VBVitalik Buterin1:36:33

        Yes. No, this is also a very important point. Um, and I think the solution to this is that, like, quadratic funding by itself doesn't solve all the problems, and you have to combine quadratic funding with other mechanisms.

    24. TFTim Ferriss1:36:45

        Mm-hmm.

    25. VBVitalik Buterin1:36:46

        Um, so I can give two examples. One example of how you could do this is you could just set up an organization where the organization has some smart people and, you know, those smart people do a good job of picking who the scientists are that are really worth funding. And then that organization gets a 5 or 10-year history and people see that, oh, you know, yes, this organization does have a surprisingly good track record of, uh, funding, you know, the studies that actually do end up, uh, turning out to be meaningful five years down the line. And then people will just, uh, contribute through the quadratic funding scheme to this organization, and the organization will be able to kind of leverage its own reputation. Now, if that organization ends up, you know, doing bad things and abusing, um, its, this kind of public trust that it's earned, then, you know, people could j- very easily just stop contributing to it and start, uh, contributing to it to another group. So that's one approach. Another approach is that there could be clever ways to combine quadratic funding with venture capital. Uh, so the idea here is that imagine if, uh, when people make a public good, they create a coin associated with that public good, and they just let people buy the coin. And when people buy the coin, the revenues just go to the people who issue it. And then what you can do with quadratic funding is you can basically, um, kind of collectively buy out these coins, right? So you can just say, "Okay, you know, this coin is a coin that represents a project, um, that gave the world, uh, say, a million dollars worth of value, and so we're gonna quadratically fund a million dollars into the coin." And so anyone who bought that coin would be able to benefit, right? And the, and so the idea is that, like, if there are intelligent investors that are able to recognize that something will be valuable, you know, 10 years in the future, then, like, basically they will be able to make a profit off of this. And if anyone has something that, like, is maybe difficult for the kind of wider public to determine is valuable at the beginning, but then is likely to lead to some important outcome that just everyone recognizes is really valuable sometime in the future, then, you know, kind of in, these investors can fill the gap, right? So, like, you have these two approaches. Like, you can either rely on reputation and kind of, uh, do it retrospectively, or you can rely on, um, this kind of combination of quadratic funding with, um, you know, tokens and investment to do it prospectively. Um, so I think, uh, both of those are really interesting.

    26. TFTim Ferriss1:39:11

        I love this, uh, possibility to combine also, right? I mean, you could potentially have all of the elements that you described combined.

    27. VBVitalik Buterin1:39:18

        Mm-hmm. Yeah.

    28. TFTim Ferriss1:39:19

        And, uh, Naval, you, you sound like you wanna jump in.

15. 1:39:23 – 1:40:17

    Naval on campaign financing

    1. NRNaval Ravikant1:39:23

       I was just thinking that the campaign financing kind of works a little bit like this, um, maybe accidentally.

    2. TFTim Ferriss1:39:27

       Mm-hmm.

    3. NRNaval Ravikant1:39:27

       Maybe the system has just navigated to it through kind of a complex systems level intelligence. But if you look at campaign financing for when people run for office, there's a maximum limit they can get per donor, right? And so an individual can only gift a certain amount to a congressman or to a senator or a presidential candidate, and then the feds also have matching funds on top of that. So it's a combination of these schemes, because by limiting the amount that any one person can give, you're sort of creating a quadratic, although it's not truly quadratic. Like, a, you know, someone very wealthy, I guess they could give a lot more through a, a side vehicle, but then that's less efficient because they're not allowed to coordinate with the main campaign. So there's kind of a really badly implemented version of quadratic funding with matching dollars already in existence in federal campaign financing.

    4. TFTim Ferriss1:40:14

       Hmm. That's a good point.

    5. NRNaval Ravikant1:40:16

       Yeah.

    6. TFTim Ferriss1:40:16

       Uh,

16. 1:40:17 – 1:49:54

    Scientific research Vitalik supports + living to 1,000

    1. TFTim Ferriss1:40:17

       yeah, Vitalik, uh, are, what areas of, of scientific inquiry or research are on your shortlist of most personally interesting at the moment?

    2. VBVitalik Buterin1:40:28

       Yeah. So you brought up life extension, and life extension is definitely really important to me. Um, like, I think, and the coronavirus has, um, actually even had the positive side effect of, uh, kind of speeding this along in some ways. But there's a lot of extremely promising things happening in, uh, biotech. I think there's a very significant chance that, like, where we're standing today is basically, is for biotech the equivalent of where computers were in 1950, right? And so if you imagine, you know, the difference between the ENIAC and, um, you know, like, a modern, uh, kind of laptop or a smartphone, that's the difference that we're gonna see between the biotech of, uh, 2020 and, uh, the biotech of 2090. And so if right now we can already come up with, uh, vaccines for a virus, uh, well, a- a year for deployment to start, but really, the whole, the whole thing actually happens much faster and, and, uh, you know, most of the delay can be blamed on, like, bioconservatism, but that's, you know, a whole other discussion. If you go from even there and then, uh, you know, add 70 years of progress to that, like, it seem, it's very easy to see, like, just even the process of aging turning into something that just becomes reversible and it being a regular thing for people to live, um, you know, one and a half, uh, two centuries and then, um, uh, go even further from there. There's a just a huge, uh, kind of nice, like, humanitarian outcome that can come from that. You know, basically, like, the concept of, uh, your grandmother dying is just going to kind of slowly leave the public consciousness the same way that the concept of, like, getting lost in a city, um, slowly left the public consciousness over the last 25 years as we got better cell phones. And, and I think that's, uh, a really lovely and just kind of much better world to spend a lot of resources to shoot for.

    3. NRNaval Ravikant1:42:11

       Do you think that's realistic, though, given all the three-letter agencies that slow down experimentation and development? Because I worry it's more like nuclear power, right, where they can't tolerate a single death, so the in- innovation isn't really allowed.

    4. VBVitalik Buterin1:42:23

       Right. So this is where I say a controversial thing, which is I think I'm very happy that the coronavirus has helped to de-legitimize, uh, bioconservatism to the extent that it has.

    5. NRNaval Ravikant1:42:33

       Yeah, I agree with that. The Moderna vaccine was ready on Jan 13th, [laughs] right?

    6. VBVitalik Buterin1:42:37

       [laughs] Yes. And, like, even things like human challenge studies, right? Like, uh, the default, I think, bioethics opinion around a year ago is like, you know, "Oh my God, this is unethical." And, you know, now, like in the UK, they're actually happening. No, this is great.

    7. NRNaval Ravikant1:42:50

       Yeah, no, it, it is good if it breaks down bioconservatism to some extent, because the pace of innovation is too low. It's like what we've done to nuclear power, if we do that to biotech, and we kind of have already to some extent, but if we do it even more, then there's no chance of, you know, Grandma living forever. There's not even a chance of me living, [laughs] you know, 50 years longer-

    8. VBVitalik Buterin1:43:08

       Yes. [laughs]

    9. NRNaval Ravikant1:43:08

       ... let alone Grandma living forever.

    10. VBVitalik Buterin1:43:10

        Yeah.

    11. NRNaval Ravikant1:43:10

        Um, you know, you're 27. I, I'd love to see where you're at 47. You're gonna be a, you know, really interesting guy. You already are, but you're gonna be an even more interesting guy. [laughs]

    12. TFTim Ferriss1:43:18

        Even more interesting at 447.

    13. NRNaval Ravikant1:43:20

        [laughs] Yeah. I love that.

    14. VBVitalik Buterin1:43:22

        Oh, well, that'll be fun, Naval.

    15. NRNaval Ravikant1:43:23

        Methuselah, right. [laughs]

    16. VBVitalik Buterin1:43:24

        It's, well, uh, but no, I hope you guys can both come to my, uh, 1,000th birthday party.

    17. NRNaval Ravikant1:43:27

        [laughs] Well, are you, are, are you on some kind of caloric restriction or intermittent fasting?

    18. VBVitalik Buterin1:43:32

        Um, so, so far, I, yeah, well, I do like the poor man's intermittent fasting, which is that I just usually don't eat breakfast. I do, again- The usual exercise, uh, nothing too fancy. Uh, I eat, uh, kind of at least a couple of the basic supplements that the, that the life extension cool people are, um, recommending. Nothing too much fancier than that so far. Uh, though, you know, very closely watching the space, and then I'm sure I'll end up doing much more things, uh, you know, 10 or even five years from now.

    19. TFTim Ferriss1:44:05

        Do you take rapamycin?

    20. VBVitalik Buterin1:44:07

        I do not take rapamycin. Um, metformin is the one that I take. Um, astaxanthin-

    21. TFTim Ferriss1:44:11

        Mm-hmm

    22. VBVitalik Buterin1:44:12

        ... is another that I take.

    23. TFTim Ferriss1:44:13

        Mm-hmm. And, uh, just for those people listening who, [laughs] who, who should know this, number one, this, none of this is medical advice. Number two, uh, metformin, just as an example, none of these things should be taken without advice of a medical professional. Metformin is used in the treatment of type 2 diabetes, Glucophage. But I'm also familiar with it. How do you decide what to implement versus not implement for yourself personally?

    24. VBVitalik Buterin1:44:41

        Um, I just, um, I ask around a lot of people in the life extension, uh, community. I, uh, you know, read the studies, uh, you know, look at, uh, um, just what are some of the high level results, um, and then just kind of narrow down to a couple of things.

    25. TFTim Ferriss1:44:58

        Mm-hmm. It, it is remarkable how many people in various sub-communities have been using a lot of these interventions longitudinally. I remember when I was working on my second book looking into trans-resveratrol and finding even at that time, this was 2008, 2009, people who had for years been using, I wanna say 500 milligrams per day. So you were able to identify certain long-term effects and side effects, uh, granted anecdotally, but still having an N of, I don't know, maybe 1,000 people on this forum. So there, there is a lot to be gleaned, uh, from these, from these groups.

    26. NRNaval Ravikant1:45:38

        Yeah, there's even a new one making the rounds, glucagon-like peptides, GLP-1. I'm sure you've seen some study floating around on that. But yeah, these things are very unknown. I wish these were more out in the open and that there was a very, very strong anti-aging research community that was functioning out in the open that was trading notes on what works and what doesn't, and able to run some kind of human trials, you know, more efficiently because, uh, fighting aging is a, is a very time sensitive task.

    27. VBVitalik Buterin1:46:03

        It is, yeah. It's, uh-

    28. NRNaval Ravikant1:46:05

        [laughs]

    29. VBVitalik Buterin1:46:05

        ... half the deaths of world-

    30. NRNaval Ravikant1:46:06

        [laughs]
17. 1:49:54 – 1:52:09

    Vitalik’s predictions

    1. NRNaval Ravikant1:49:54

       yeah, so one question I kind of have is, given all the tumultuous change in 2020, 'cause coronavirus was a trigger, but it was a trigger for accelerating a lot of things that were already happening, like, where do you think the world heads in the next few years where maybe your peers might disagree with you? What are your contrarian views or your kind of uniquely held individualistic views on how things are gonna play out that are not yet consensus? And this is unfair, 'cause aging was a good one. You, you made a solid... [laughs] You went out on a limb on aging.

    2. VBVitalik Buterin1:50:22

       Right. Well, aging is, aging is an example that's, like, s- contrarian in the world, but definitely not contrarian among, kind of, my circles, I guess.

    3. NRNaval Ravikant1:50:30

       Yeah, when I went through your writings, I mean, the, the idea that there will be many blockchains and many tokens, right, is quite-

    4. VBVitalik Buterin1:50:36

       Right

    5. NRNaval Ravikant1:50:36

       ... different. The idea that-

    6. VBVitalik Buterin1:50:37

       Yes

    7. NRNaval Ravikant1:50:38

       ... the internet has increased the number of public goods-

    8. VBVitalik Buterin1:50:41

       Mm-hmm

    9. NRNaval Ravikant1:50:41

       ... rather than the number of private goods is actually quite contrarian. Because we think of it as going more and more private property, but on the internet, it's one to many, so there's all these public goods. And I think you were the first one to really hammer that point home in a big way, and then I think this aging thing is another one. So I'm just digging, seeing if there's any more. [laughs]

    10. VBVitalik Buterin1:50:57

        Yeah, no. Um, another thing might, like, uh, that might have been, um, ver- i- iconoclastic two years ago but is, um, very much not today would be kind of just geographic decentralization. Even with Ethereum, like, we ma- we took a very active effort of, um, you know, not making it too centralized in any one country or anyw- or, or any one city and any one place, and I feel like we've benefited a lot from that. But now, of course, um, you know, everyone is, uh, uh, geographically decentralizing, and Coinbase has announced that, like, none of its, uh, management, uh, live in San Francisco, and so forth.

    11. NRNaval Ravikant1:51:31

        It's very hard to associate Ethereum with a single country. I think it was created by mostly Canadians, and your blog has a .ca top-level domain.

    12. VBVitalik Buterin1:51:39

        Well, it depends. Well, I'm Canadian, but then, uh, right, my blog has a .ca. The foundation is, uh, Swiss, and now there's, um, a Singaporean entity as well. A lot of the initial developers were German. Um, you know, a lot of, uh, developers are from the US as well.

    13. NRNaval Ravikant1:51:56

        Mm-hmm.

    14. VBVitalik Buterin1:51:56

        Uh, but one of the most efficient ETH2 clients is, uh, based in, uh, Australia. Uh, so I feel like we kind of actually, uh, like, took tho- those values seriously and, uh, did, and did it well.

18. 1:52:09 – 2:11:39

    Vitalik’s advice to newcomers and language learners

    1. NRNaval Ravikant1:52:09

       And, and, and Ethereum has spent, you've s- the foundation has spent a lot of time in East Asia. I think I've seen you kind of-

    2. VBVitalik Buterin1:52:14

       Yeah, I have

    3. NRNaval Ravikant1:52:15

       ... going from conference to conference in East Asia, and Korea, and Japan-

    4. VBVitalik Buterin1:52:18

       Mm-hmm

    5. NRNaval Ravikant1:52:18

       ... and places like that, spreading the word, so, um, it is quite-

    6. VBVitalik Buterin1:52:21

       Yeah

    7. NRNaval Ravikant1:52:21

       ... decentralized geographically. Um, what advice do you have for someone who wants to get into Ethereum and doesn't just wanna go and buy the token, right, who actually wants to dive into the ecosystem? What, what is a person to do to get involved in the Ethereum community and the ecosystem? Where, where are the points of leverage?

    8. VBVitalik Buterin1:52:38

       I think one is learning to build an application and actually trying to build an application is, I think, one, uh, great place to start if, uh, that's the sort of thing that interests you. Like, even if you don't turn it, uh, out as a, uh, full-time developer, it's, like, forcing yourself through the process still helps you just understand, like, you know, what are the different pieces and actually what function do they serve. Another example, uh, another approach, and there's... Well, now, obviously, they're kind of temporarily suspended, but generally, uh, there's a lot of local communities that, you know, like, kind of in-person meetups and all that that people can be part of, and that's, um, often a great opportunity to, uh, get to meet other Ethereum people. Um, there's a lot of materials online, although generally, I am a, kind of, much more big fan of, uh, hands-on learning, so kind of learning by doing instead of learning by taking in information. Um, so, you know, highly recommend, like, just trying to build one application for, uh, a lot of people. Um, and then otherwise, yeah, there's just a lot of different, uh, communities, and like, you do have to just, like, go in and start taking part in them.

    9. NRNaval Ravikant1:53:48

       Yeah. For, for those of you who are curious, I think Vitalik's blog has spawned quite a few of the things in the Ethereum ecosystem. Like, I think it was one of your musings that led to the creation-

    10. VBVitalik Buterin1:53:57

        Mm-hmm, mm-hmm

    11. NRNaval Ravikant1:53:57

        ... of Uniswap, and you'd recently-

    12. VBVitalik Buterin1:53:59

        Mm-hmm

    13. NRNaval Ravikant1:53:59

        ... been talking about rollups and social wallets and, uh, and all kinds of other things that could be built on top. Although I... Maybe this is the first year where I feel like the community's outpacing your ideas. With Nifties and with, uh, some of the games that are coming up on top of ETH and so on, it does seem like, that there's a lot of innovation going. It's hard to keep up. It's very, very hard to keep up.

    14. VBVitalik Buterin1:54:19

        It is.

    15. NRNaval Ravikant1:54:19

        But that's a good thing. For those of you also looking for what's next down the rabbit hole, uh, Vitalik briefly mentioned zero-knowledge proofs. I would say that, you know, the, the beginning of the rabbit hole, the entrance is Bitcoin. Then you go a little further down, you find ETH, but then when you find zero-knowledge proofs, that's the big mind-blowing moment where you realize just what crypto is capable of, and there are analogs for what crypto can do that almost cannot be done in the real world. It's sort of like when you go into physics and when you encounter quantum mechanics, it sort of makes you rethink that, you know, not everything necessarily maps onto exactly how I observe it. Um, the same way, when you get to zero-knowledge proofs, you realize that the levels of creativity in crypto that it enables are greater than what we might have had pre-crypto. Um, so that's also an interesting space to kind of learn about, and I think zero-knowledge proofs have probably been incorporated into and emerged in the Ethereum system, ecosystem even more than we expected, right? 'Cause a lot of people called it moon math early on. It was considered too hard to be practical, but people have been chipping away at it.

    16. VBVitalik Buterin1:55:18

        Yeah, no, it's, uh, in moon... Well, the moon math is definitely significantly less moony than it was even one or two years ago. Like, uh, even SNARKs, uh, well, well, another term for these, uh, zero-knowledge proofs, um, have just become considerably simpler, uh, sometime around one and a half years ago. Um, I even tried to make another post, um, uh, one of my, my most recent ones on nav.al/vitalik.ca, where I tried to talk about, like, how roughly how ZK-SNARKs work. I actually feel like I made an explanation that at least the high school version of myself would have understood, which is, like, it's still not perfect, but it's, like, significantly more understandable than any of the previous ones have been. So I feel like the ideas are definitely trickling down. Oh, so I, yeah, I do have another answer to the question of, like, what things are you thinking about that other people are not thinking about yet.

    17. NRNaval Ravikant1:56:04

        Mm-hmm, mm-hmm.

    18. VBVitalik Buterin1:56:04

        Um, I think this is, uh, kind of- Taking a kind of cultural and social context, uh, seriously, which sounds obvious, but in some ways it really isn't, right? Like, uh, even within the crypto space, I feel like a lot of people in their models of, uh, you know, is Bitcoin going to beat governments, um, or are these things going to be censorship resistant, they tend to look at it purely from a technical point of view. And they basically are kind of implicitly assuming that, you know, g- governments are gonna try as hard as they can. Um, and, uh, the crypto space is gonna try as hard as it can, and it'll be a battle. And like one side and, you know, that person's preferred side is going to win. But the reality is that governments are not trying as hard as they can, and a big part of the reason why is that government is, uh, not even so much an entity as it is a battlefield, right? And like what are the soldiers fighting on the battlefield? A lot of it is just the cultural movements. And a lot of the success of cryptocurrency and blockchains, I think they really have to do with the way that they have, uh, kind of interplayed with a lot of the important cultural trends of the last 10 years. Like, this including things, um, like people's distrust of financial institutions after 2- 2008. I think people's distrust of centralized tech companies, um, after, uh, 2020 is, uh, also going to play a big part. Also, just, um, another fascinating thing I think is, like even like one thing that surprised me is how cryptocurrency managed to appeal to a lot of people who would not normally think of themselves as libertarians, and that's something that I think like did end up, uh, kind of even blindsiding a lot of people. And the reason why that happened has to do with kind of very deep and specific aspects of like how people think, um, and kind of how people think ideologically, right? Like, uh, a lot of people think of like, say, authoritarians for example, as just people who hate freedom and want to restrict things. But like the reality is there's lots of people who are like in favor of very specific restrictions or even in favor of restrictions that benefit their own team, but they're just as eas- very easily flipped to being very pro-freedom when, you know, it's their own team that's being threatened. Or even when you just kind of take things out of the cultural context of, uh, you know, what should the governments do and into the cultural context of, well, you know, like how should technology work? So there's a lot of these kind of very subtle effects, um, and that determine, you know, whether blockchains and some of the ideals behind blockchains, uh, kind of succeed and fail. And these, uh, kind of very subtle properties of like how humans think and even how humans interact with each other are extremely important in a lot of ways, and the reason why they're important is they just determine the effectiveness with which people can coordinate, right? Like, uh, you know, humans are naturally, uh, kind of very attuned to, uh, kind of social trends, and humans have a lot of motivations that have to do directly with, um, you know, what position they have within, uh, kind of social trends and contexts that are, um, made up by other people. Uh, and this is just a space that, uh, the, uh, you know, blockchain and cryptocurrency space is going to navigate well. Um, and if it navigates it poorly, then I think blockchains will be stopped by governments. Or like they won't be stopped entirely, but you know, the amount of usage can easily be more than 90% lower than it otherwise would be. But on the other hand, if blockchains can, you know, successfully show to a kind of large enough coalitions that this is a valuable and this is a good thing for the world, um, then they could be very successful. Uh, and like this is just something that, uh, you know, the space needs to have a better understanding of and take seriously.

    19. NRNaval Ravikant1:59:57

        Yeah. I think, uh, there's a lot of good points you just made. Uh, one I like is that government is not an entity or an enemy in the battlefield. It, it may just be the battlefield. That all of these factors can kind of win simultaneously. I think you made this point in your blog at, at, in one place where you said that in 2020, you know, big government won, big social media won, big centralized applications won, but decentralized also won.

    20. VBVitalik Buterin2:00:18

        Mm-hmm.

    21. NRNaval Ravikant2:00:19

        So there you can have multiple winners. These aren't necessarily either/or. You've also made, uh, an argument in one of your blog posts, which is also beyond the scope of this podcast, but I think is worth digging into for people interested in game theory, where you basically point out that a lot of the toy models that we consider when we're evaluating how these things will end up have a, a so-called Nash equilibrium. They have a solution in game theory because a lot of individuals are making decisions independently. But because majority coalitions rule and people can collude or they can form coalitions, that you end up in these unstable cycles where you have a majority win one round, and then the definition of the majority reshuffles, and then they win the next round. And so we see this in politics where it seems like, okay, now the Democrats are in charge forever, and oops, no, now the Republicans are in charge forever, and oops, no, now the Democrats are in charge forever again. And subtly underneath what's going on is the definition of Democrat and Republican is unstable. They're just coalitions-

    22. VBVitalik Buterin2:01:14

        Mm-hmm

    23. NRNaval Ravikant2:01:14

        ... that are being formed and reformed as needed. So yeah, these, these are lots of great thought-provoking points. I, I'd really love to touch base with a Vitalik who's 37, you know, the ripe old age of 37 out of his 1,000-year Methuselah-like lifespan and see where you've gotten to. [laughs]

    24. VBVitalik Buterin2:01:32

        [laughs]

    25. TFTim Ferriss2:01:32

        So Naval, I don't know if you have, uh, questions remaining. So I, I really just have one question, and that is a pet curiosity of mine. It's related to language learning. So you have studied quite a few languages. I looked at a clip of you answering questions in a Q&A at some point, I don't know the year, in Mandarin, and I was very impressed. I went to two universities in China, and speaking Mandarin. So I wanted to ask if you could give advice now, having tested many things, used many approaches. For someone who wants to learn Mandarin, what would your current recommendations be to them?

    26. VBVitalik Buterin2:02:13

        Sure. Uh, so for any language, my usual approach is, like, I think at the beginning, like, you do need some kind of a explicit program. So, like, one thing that I've used is the Pimsleur podcasts. Uh, so that's P-I-M-S-L-E-U-R.

    27. TFTim Ferriss2:02:28

        Mm-hmm.

    28. VBVitalik Buterin2:02:28

        Um, so it's just a series of these 90 minutes, uh... or sorry, 90 30-minute podcasts, or 2,700 minutes, or about two days in total, that, you know, you listen to one of them every day and they just, like, teach you the language from nothing up to, you know, some very basic level, um, over the course of these, uh, 90 episodes. So you start from that, but then even after that you don't have nearly enough to understand anything. Um, so from there sometimes you can find other, um, podcasts, like... And eventually you graduate to just, like, regular podcasts in that language. So, like, things that are not even optimized for language learning. But, like, at the beginning you do wanna find, like, resources that are optimized for learning. Flashcard apps, um, helped for Chinese specifically for, um, memorizing the characters, or at least, you know, the first, like, out of, you know, 500 or 1,000 or so. And there's plenty of flashcard apps. They're all about equally good. And then once you, uh, kind of get past some level, then you get to a level where the best way to get even better is to just talk to people. Another, um, kind of path that works somewhat at the beginning actually is, like, if you just go into, like, you know, a city and you just, like, start, like, reading various signs on the street and you try your best to just understand what, you know, what they mean. Um, and if you, uh, see a word that you don't understand, you look it up. Like, that's, um, often useful. I also use Duolingo as well. Uh, it's, uh, been helpful in some cases. So it's just, like, a combination of these, uh, techniques and, like, you have to... You know, when you start it's difficult, and then when you get past some points, like, you, you get to a point where you can just, uh, kind of level up just from, uh, talking to people from there.

    29. TFTim Ferriss2:04:06

        Yeah, great advice. And I'll, I'll just add to that, uh, that Google Translate with image translation can be a incredible savior in lands where you don't understand the orthography. So in Japan, my brother doesn't speak Japanese, but we traveled there and he was able to more or less accurately translate kanji.

    30. VBVitalik Buterin2:04:26

        Mm.

Episode duration: 2:11:50