Decentralizing Everything with Ethereum's Vitalik Buterin | Disrupt SF 2017

hi everyone so thanks for having us this morning it sounds like you're spending a hundred million dollars to find aliens and we haven't won here an alien of extraordinary ability most of you probably know a little bit of italic I'm not gonna go through his whole bio that's what Google is for but just as a quick interesting background or note I discovered cryptocurrencies in 2013 and for me they were it brain virus is kind of the best way to describe it when you first understand the concept it's sort of all you can think about and in the four years subsequent all that managed to do was invest a little bit here and there write a little bit about it and just try and understand it in that period of time in late 2013 Vitalik very young at the time 1819 how old were you when I created etherium yes 19 19 years old conceived of the project tried to build it on top of master coins spun it out as his own thing and created what is the most exciting project in the space since the toshi Nakamoto whoever that is originally created Bitcoin and as you all hopefully know it's a platform for distributed applications in a trustless secure decentralized way and we're going to talk a little bit more about what that means we'll try and keep a very high level because I understand this is a general audience but yeah without further ado here's Vitalik and we're going to talk a little bit about aetherium so please give him a big welcome [Applause] maybe we'll just start very high-level in your own words how would you describe aetherium to the average person why it's important yeah so first of all there's two kinds of average people there is the average person who has already heard of Bitcoin and there's the average person who hasn't right so I mean for the first category it's a bit easier because if you understand what bitcoin is and you and your stands that it's a peer-to-peer digital currency and you and your stands that if he wants to have a digital currency that's decentralized then the like you need some kind of database to store how much money everyone has right like if I have a hundred no digital Bitcoin dollars or digital whatever or no cash and I send one hundred to you and I also send the same hundred to someone else then those are two transactions either one of which is illegal by itself but both of which are illegal in combination because they'd be turning a hundred units of cash into 200 and this is the classic double spending problem and in order to solve it you basically need to have some system that keeps track of you know how these coins already been spent how much money do I actually have at any given time how much money do I have the right to spend at any given time and you can very easily do this with a centralized server but if he wants to do this in a way that's decentralized which has you know bitcoins original point in the spirit of things like BitTorrent you know it's actually a very hard computer science prop problem to figure out how to do it and Satoshi Nakamoto probably came up with a first solution that you know really is practical in this kind of open permissionless context which has Olynyk Emoto blockchain and that was where you know the idea of watching technology in general came from now where aetherium comes from is basically you take that idea the idea that you can use what I call crypto economics so a combination of cryptographic algorithms things like hashing and say and digital signatures and the kinds of economic incentives that keep systems like Bitcoin going and use them to create these kind of decentralized networks with memory so these kind of decentralized database things for a whole bunch of other applications as well right so around 2013 people started realizing really that these blog chains are usable for much more than peer-to-peer digital currency and the first major thing aside from Bitcoin was probably named coin which was trying to do a peer-to-peer decentralized DNS but then people started thinking you know can you do other kinds of digital assets can you do smart contracts can you do financial agreements can you do registries about identity can you do all these other things and there are so many applications that building a blockchain for each one it doesn't really work and so the core idea behind the theorem is you know you can have a general-purpose watch-chain we can have a blockchain where instead of the blockchain working like a Swiss Army knife we have you know five different tools for five different categories of applications you have a blockchain that understands a general-purpose programming language so you know kind of like your phone you know in your phone you have Android or you know iOS and inside of Android or inside of iOS you could have apps the apps are written in you know whatever programming language they're written in anyone can create an app anyone can download an app and run it so that was the kind of general purpose flexibility I was trying to bling to the bring to the blockchain world it's amazing the concept of a turing-complete blockchain and in the computer science speak that can execute any arbitrary program given enough resources is pretty incredible and it seems daunting because the idea of a blockchain is that everybody one of the implementation of block chains that everybody executes a copy of the code on themselves to verify that what is supposed to happen actually happens so that begets a whole slew of problems like scaling and Trust and and so on but just kind of easing into that what kinds of applications do you think any theory and blockchain is suited well for like applications you have both have people building today and ones in the future yeah so I think there's in a few major categories so I mean anything to do with like the currency itself is obviously going to be a major category pretty much forever and you want the security Association exactly I mean like good currency seems to be naturally the kind of application that's fairly well suited because like the general way that I categorize like block applications that are good watching applications is to think of what a blockchain is right so the way I define a blockchain is it's a decentralized system that contains some kind of shared memory and you know in big wins case that your memory is how many bitcoins everyone has at some time but it could be anything so a good watching application is an application that number one means decentralization and number two needs some concept of shared memory and you know the case for decentralization in cryptocurrencies themselves I think is fairly clear but you can actually even go beyond that right you can think about you know if you have decentralized a cryptocurrencies then you know you can build many other things on top of them and there was this interesting idea that a nick szabo came up with about 25 years ago that was called a smart contract and he made an analogy to a vending machines right so what he said was that a vending machine is a device implemented in physical hardware that basically implements the conditions of some kind of an agreement in the conditions of an agree of the agreement here are simple you put two dollars in water comes out you do not put two dollars in water does not come out if you put if you do not put it always in but water does come out and that's bad and the vending machine is basically an encoding of this set of rules and that also comes with you know a mechanism that keeps it at least kind of secure and secure enough for $2 water bottles now with digital assets you can think about this kind of concept and make and push it much much further because in the digital world you know within the world of cryptography it's this world where even individuals are capable of basically having to having cryptographic defenses that are strong enough to even sometimes ward off state level actors and when you have that kind of security the possibilities go up right so the general notion of a smart contract is that it's like a computer program that directly controls digital assets now the kind of direct control here is important right it's not a computer program that makes a recommendation to a guy about how the guy should control the digital asset it's a computer program that controls the digital asset like on aetherium you can literally send a bunch of ether into a computer program and once you've done this the computer program itself has basically the you know ability to control you know where the money goes if the computer program sends the money to address a it ghost address a if it wants to send it address be a ghost address fear and if it doesn't want to send it anywhere at all then the money just stays there and you can see this being used in a bunch of applications like insurance just like any kind of self-executing financial contract you can reduce counterparty risk in a lot of those kinds of applications by potentially a really huge amount I mean you could imagine it being used for even for more complex things so there is this idea of daos which are these entire long-running entities that hold onto digital assets and basically use those digital assets in various ways according to and these are fairly complex sets of rules and you could even imagine you know systems for crowdfunding so if you think about what Kickstarter does for example you know let's people throw in money if they've thrown in enough money within 30 days then the money goes to the developer and if they um they do not send in enough money then everyone gets refunded and that's like a set of rules that could be replicated in a piece of code now outside the financial world there's a lot of possibilities as well so like the DNS is just one simple and natural one and you know there is already a system on ethereum called ENS the etherium name system and you know this idea of giving human readable names where that are in some ways I cannot tie to any kind of issuer there's also one that just seems very interesting you could imagine expanding this to identities and you could even look gonna take this myself pretty far so you can replace money you can replace Wall Street you can replace core internet protocols what else can you do in fact I remember I looked at your about me page and it has it's funny story I don't know if it's real or not but you first saw the power of be central or at least the demand for D simplest applications when your World of Warcraft character had his rules changed on him by a blizzard update and that annoyed you so much that you had to go out and build something like etherium so in theory you could even build a massively multiplayer game on top of etherium where everyone can have the rules verified the story's true though the fact the fact that them nerfing siphon life and weeding tinny crying through crying myself to sleep is what what directly to aetherium is a bit exaggerated I do encourage you to check out metallics about me page it's a right so now obviously if you're gonna replace all of these different systems you have a scaling issue you have to figure out especially with the centralized mechanism like that even just to handle visas to put let alone every imaginable smart contract that's not gonna work if everyone's running a copy of every program on their computer yeah it's all the way so you know if you look at like what just the raw numbers of walk chains today Bitcoin is currently processing some a bit less than three transactions a second and if it goes close to four then it's already at peak capacity in theory I'm right you know over the last few days that's been doing about five a second and if it goes above six then it's also at peak capacity so on the other hands you know uber on average twelve rides a second PayPal several hundred visa several thousand major stock exchanges tens of thousands and if you want to go up to IOT and then you're talking hundreds of thousands and if you're you want to go up to non-financial applications so like for example there's a platform called Leroy which is basically just Twitter on the blockchain then you know retail acting also about hundreds of thousands possibly millions so you know there is a kind of gap from here to there and I think right now there already is really a lot of institutional hype in the space and just public hype so when you have you know a vladimir putin having you know knowing what block chains and aetherium are and paris hilton and going out promoting i ce o--'s on twitter you know that's that that's peak hype but the reason i think a large part of the reason why a lot of this hasn't materialized into action yet is precisely because of some of these technical obstacles that make watch chains you know work okay for some nice use cases but not really work work well from each game use now you know our team is working very hard on various kinds of scalability solutions so you hear about buzzwords like plasma charting state channels right and you know all there's you know various newer ones like peru n-- so you know if you you know you all of these are various different ideas that actually we do try to kind of break through this fundamental barrier right but try to either create block chains that still maintain a large amount of security without requiring everyone to literally process everything right so if you think about it I like one extreme is one guy processes everything which is today's world the other extreme is everyone processes everything well what if you can get like square root of everyone so like maybe 500 people processing each transaction you still get enough decentralization and security for everything you need but suddenly it's you know with within if it's efficient enough that you know it actually works for stuff in the real world and the other kinds of strategies are strategies that try to use the blockchain you know kind of more intelligently right so it's basically you look one of the analogy is that like Joseph moon from like plasma uses a lot as the idea of the blockchain as a court system right so block chains are great at securely resolving disputes and you know currently the way well the naive watching applications work is they just put every single transaction on the blockchain but what you could do instead is you could have systems where people send messages that I call kind of tickets so digitally signed messages that are off cane by default but we are the blockchain only gets used in those specific cases where there's a disagreement so like if I have a hundred digital and a 100 either and I send the year one hundred easier than that then that might not ever go off chain but if I send you the hundred ether and then you claim that I never sent you the money the or I claim that I never sent me the money then that's a transaction that I could okay we have a dispute and I could actually push it down onto the blockchain and so we still have an or guarantee of security now all of these approaches have their own trade-offs and there's this huge amount of incremental technical work involved in figuring out what the right trade-offs are but you know this starts to looking like a direction that's much more promising and how far along are we how long until you think that maybe we can scale to as I said hundreds of concurrent users how many until we can replace Visa how many until we get replaced AWS I mean first things like Visa I think definitely I'll say a couple of years so maybe one year when we start seeing like prototypes that have you know like a low security level but are still and secure enough for like major organizations to start just doing proof of concepts on and a couple more years for all these solutions to really hit the mainstream for I mean 8w license a trickier one because like there are reasons why blog chains are you know no matter how good they are never going to completely replace centralized cloud computing and probably even more one of the big ones well there's probably two big ones in my opinion one big one is that there are computations that are intensive and that are hard to paralyze so decentralized clouds are really good at paralyzation because you know it's like uber for your laptop you know you've got you've got millions of computers from you know millions of countries millions of providers all ranging all from individual laptops to you know you can you can think of you know even cloud computing companies become basically turning into like specialized mining farms inside of the system but if you have computations that require like a really large amount of serial computation and that's harder to decentralized in the second really tough one is privacy right look if you have computations on private data and then there's basically two approaches one of them is to make sure the computations are only done on Hardware that you trust and the second one is the u.s. fancy cryptography so you know you might have heard of buzzwords like homomorphic encryption indistinguishability obfuscation to do the computations but or but then if you do that then those tends to carry very serious some computational efficiency trade-offs so basically for private or serial applications are gonna do them locally yeah like in general I think like there's obviously there's always going to be this large set of applications where decentralized approaches like actually don't work that well and that's fine yeah and so you're essentially building something that we an operating system in a protocol for the world on the fly it's gonna take a decade probably to get to full scalability and and hopefully adoption what do you do in terms of the there's a classic operating system developer a question that they wonder about is how why do I go and how high do I go so do you start adopting other applications into the stack you all these people are doing icos they're building layer to tokens on top of aetherium do you see a theory I'm adopting any of their functionalities or does it stay as a broad white like one of her theorems slogans right from the start has actually been we have no features right so like a lot of the other projects are definitely going in that direction they're saying oh we support this class of new class of transaction for issuing a token oh we support this new class of transaction that issues an ICO and what you can have your five parameters with like a cap like period like type of auction what or or whatever but you know with the theorem we've never gone down that road basically B couple of reasons one of them is that you know you want the protocol to be maximally simple because simplifying the protocol just improves consensus security so you know the more the more consensus code you have in the protocol rules the more likely it is you'll have issues like two different implementations like not being in sync with each other leading to the blockchain just randomly splitting in half the other big reason of course is just you know unknown unknowns we have really no idea what blog chains are going to be used for like five or ten years from now you know and we don't really want you know we are okay with me making some specialized components that you used a lot so a kathiria yeah or we have a next update metropolis which is coming in October and one of the major things that's coming in that is like explicit in protocol support for certain kinds of cryptographic operations so like a ring signatures I look to curve pairings which get you as as part of zero-knowledge proofs so this is the major theme here basically being like strong cryptography and privacy in like that is kind of specialized but it's also very generic because almost any application could benefit from privacy so we are willing to compromise somewhat in that direction but we really don't want to compromise in favor of like really supporting high efficiency in every single application now if that means that there are specific application categories where some platforms out-compete aetherium then you know that's fine you know what we don't needs to be everything to everyone but you know there are also going to be ways to kind of specialize even within the etherium ecosystem as well right so there's a you know projects like cosmos you know things like plasma all of these are trying to provide second layer systems that connect through aetherium and in many and in many cases are even designed in order to take advantage of the the base ethereum blockchain for security but that can have properties of their own and that you know if they run well could have you know things like a 500 millisecond block time so you can run Starcraft on the blockchain so you know those things are possible and if you adopt this approach where if you have a theory as this kind of base layer that you know what does a you know does a good job of balancing between the kinds of sic the like high level of security and the scalability that a base layer needs and then allows these other things with various different properties to get built on top then you know you actually can't have a blocky an ecosystem that works really well got it so you want it to be a secure base layer that doesn't have too many features and really lets the innovation happen on top but you have things like privacy and security and census at that hole there but the big application that everyone is obsessed about in fact I think the reason why people are so interested in cryptocurrencies it is just cuz they're making money off of them yeah so the fundamental application right now seems to be just money and Bitcoin seems to be willing to the protocol is in service of the currency and here it seems almost the opposite is that fair to say their currency is in the service of the protocol you know definitely I I definitely say that is our philosophy although I mean yeah like it's definitely the case that there's a lot of adoption purely because of like people speculative interest but then on the other hand like that's not you know like that has a bad sign and a good side right now I think one of the good side based good sides really is that in part because of this you know there actually is a lot more interest in the possible social benefits of the decentralized technology then there are in you know like many of the other approaches that have been tried like over the last decade like if you look at diaspora you know great idea ended up feeling completely right and you know a lot of these kind of decentralized projects tends to not work very well and in a large part because basically like a funding and just lack of a kind of good incentive for actually building out the infrastructure you know whereas here in the cryptocurrency land you know base you know there's a lot of money and and we stopped one particular problem can be solved right so now because we marry the economics to the crypto the incentive issues to solve an economic and sent this can unite people in a way that pure politics cannot yeah I mean like you know crypto is really ultimately all about incentives on multiple levels from the community all the way down to you know like the security if they can sense us protocol like you just cannot reason about security of you know like watching a consensus protocols without reasoning about economics you know it's not about if you if you know like half of these people are honest then we can prove the system is secure or you know if magic Bob in the sky is honest we know the system is secure it's you know the system is secure because we have mathematical proofs that say if the system breaks then the guy who did it wheezes 100 million dollars right so that but that's what we mean by crypto economics like combining together in this kind of cryptography mathematical proofs and economic game theory reasoning altogether so if you assemble all this together it used to be in god we trust' then it used to be in nation-states we trust now it's gonna be in math we trust yeah are they the nation-states gonna take this lying down you just came back from China you saw what's happening there yeah I mean it's in the way that like traditional political just economic powers they're going to response to all of this as like definitely going to be a bit I think a big part of the story over the next few years like if you in it is you know ultimately it really does disrupt traditional power structures and you know whether it's Washington you you know in New York or Silicon Valley you know you know it's it really does in Oh opposes like serious challenges to the way the things are are working now but on the other hand it's one of the things we've really we've learned actually is that one of the people even inside these power structures seem like you know not not all of them but we some of them seem quite friendly to you know these ideas of disruption you know what they're definitely in our plenty of you know JPMorgan employees who are really excited about the possibilities of analog watching technology and you know like it's the fact that you work for a large company or that you work for a government you know it doesn't mean you know it doesn't mean that you're hopelessly boring suit right like what in one of my in favorite examples of this is that in Taiwan there's a politician named I'm Audrey Tong and she described she's transgender and she describes herself as a conservative anarchist and yet she is the head of I believe like the digital ministry of of the Taiwanese government right so you know what you kind of people exam lobbyists we are someone who's there no particularly special and she has been recognized as you know like one of the ten you know kind of greatest programmers there but you know it's it's so much much way to greet lesser degrees these kinds of kinds of people do exist and large organization organizations in general are complex right you know you have you know people with one belief a kind of belief on one side with another kind of belief on the other side even if you look at the Chinese government like they're kind of their response I think is clearly been shown that you know there are different groups of people inside of the government who have like different ideas about which direction they wants to go and you know equate lis if you look at all the news a belt like REM regulating VPNs in chat groups and so forth it's obvious that kind of the arc of this decade is that the conservative side over there is winning and you know I mean to be fiower water those things are happening in many other places in the way in the world as well but you know against larger organizations are definitely still diverse it's amazing China's finding out that its financial and capital control policy boils down to it's firewall policy yeah so we could talk for hours I'm invite Alex knowledge is incredible here we'll just scratch just the barest surface I encourage you to follow him in Twitter where he's incredibly good-natured about all the trolls that are constant attacking him so don't be one of those people and learn everything you can about aetherium because it really is very much the future and cryptocurrency so thank you for having it for being with us metallic and after your short trip to China

Channel: TechCrunch

Views: 1,604,648

Rating: 4.7129974 out of 5

Keywords: tech, bitcoin, ethereum, cryptocurrency, currency, ico

Id: WSN5BaCzsbo

Length: 25min 47sec (1547 seconds)

Published: Mon Sep 18 2017

Reddit Comments

[u/quantumdwayne]

Vitalik is an alien from another dimension giving us a taste of the technology his people have created.

[u/timmyboy188]

Guys like him I'll share any fox hole with, and put it all on the line for. Straight up, no BS, class act. Doesn't judge, doesn't take jabs in arguments, and just produces facts in the most humbling way.

To me, he carries that physical image to prove it's all about producing a product, and not about spewing BS and trying to look slick to make up for something.

Take us home Vitalik

[u/SteveeMeetsWorld]

He is so geeky, awkward and passionate.. this guy is going to be bigger than Steve Jobs.

[u/rollie88]

Vital is extremely well-spoken. Definitely don't expect that from the way he looks. That combined with the way he dresses and presents himself makes him such a badass.

I think the people who don't see the potential of Ethereum now are going to be severely kicking themselves in the rear in the near future.

[u/sonnytron]

I know the next big thing...
decentralized decentralization. Boom.

[u/Zalakat]

I fucking love that he just rolled out of bed and got on stage, didn't bother combing his hair or giving two shits.

[u/ActAshton]

Genius spilling the benefits of blockchain... While in an awesome shirt.

[u/AA0208]

Looks like Matt Smith, sounds like Stephen Hawking

[u/JohnnyLingoMusic]

IMO most important topic is SCALING. What's ppls thoughts on this?