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

Hello everyone, thank you for having us this morning. It seems like they're spending a hundred million dollars to find aliens and we haven't gained an alien of extraordinary ability here. Most of you probably know a little bit about cursive. IM not going to do it. check out his entire 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 brain viruses, that's the best way to describe it when you first understand the concept, it's kind of of

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you can think of and in the next four years all I managed to do was invest a little here and there, write a little about it and try to understand it in that period of time at the end of 2013.

Vitalik was very young at that time . 1819 How old were you when I created etherium? yes 19 19 years old he conceived the project, tried to build it on master coins, made it his own and created what is the most exciting project in space since toshi Nakamoto, whoever he is. that Bitcoin was originally created and, as you all know, it is a platform for applications distributed in a decentralized, secure and trustless way, and we are going to talk a little more about what that means, we will try to maintain a very high standard because I understand So 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, maybe let's just start very high level in his own words, right? how would you describe it? aetherium for the average person why is it important, yes, first of all, there are two types of average people: the average person who has already heard of Bitcoin and the average person who is not right, so I mean, for the first one category is a little bit easier because if you understand what bitcoin is and you and you understand that it is a peer-to-peer digital currency and you and you understand that if he wants to have a digital currency that is decentralized, then you need some kind of foundation of data to store How much money does everyone have?

If I have a hundred non-digital Bitcoin dollars or whatever is digital or no cash and I send you a hundred and I also send the same hundred to someone else, then those are two transactions, either of which is illegal. on their own, but both are illegal in combination because they would turn a hundred units of cash into 200 and this is the classic double spending problem and to solve it you basically need to have some system that keeps track, you know? how these coins have already been spent how much money I actually have at a given time how much money I have the right to spend at a given time and you can do it very easily with a centralized server, but if he wants to do it in a decentralized way that allows you to know the point original of bitcoins in the spirit of things like BitTorrent.

You know it's actually a very difficult computer problem to figure out how to do and Satoshi Nakamoto probably came up with a first solution that you actually know. it's practical in this kind of open permissionless context that the Olynyk Emoto blockchain has and that's where the idea of ​​looking at technology in general came from. Where aetherium comes from, you basically take that idea, the idea that you can use what I call cryptography. economics, so a combination of cryptographic algorithms, things like hash and say and digital signatures and the kinds of economic incentives that keep systems like Bitcoin running and use them to create these kinds of decentralized networks with memory, so this kind of Decentralized databases are things for a lot of other applications too, around 2013 people started to realize that these blog chains can be used for much more than peer-to-peer digital currency and the first important thing apart from Bitcoin was probably called a currency that tried to make a peer-to-peer currency.

Decentralized peer-to-peer DNS, but then people started thinking, You know? Can you make other types of digital assets? Can you make smart contracts? Can you make financial agreements? Can you make records about identity? Can you do all these other things? And there are so many applications that building a blockchain for each one doesn't really work, so the core idea behind the theorem is that you know you can have a general purpose clock chain, we can have a blockchain where, instead For the blockchain to work like a Swiss army knife, do 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 something like your phone, you know that on your phone you have Android or you know iOS and inside Android or inside. On iOS, you could have apps where the apps are written, 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 flexibility. general purpose that I was trying to offer. bringing to the world blockchain is amazing the concept of a Turing complete blockchain and in computer language that can run any arbitrary program with enough resources is quite incredible and seems daunting because the idea of ​​a blockchain is that everyone is a part of the implementation. of blockchains where everyone runs a copy of the code on themselves to verify that what's supposed to happen actually happens, which causes a lot of issues like scaling and trust, etc., but it's just facilitates the type of applications.

Do you think any theory and blockchain are suitable for similar applications that have people building today and others in the future? Yes, I think there are a few main categories, so I mean anything that has to do with the currency itself, obviously. It will be an important category practically forever and you want the Security Association exactly. I mean, good currency seems to naturally be the kind of app that's pretty good because, like the general way I categorize blockchain apps that are good, is to think about what a blockchain is right for. , so the way I define a blockchain is that it is a decentralized system that contains some kind of shared memory and you know, in the case of large profits, that your memory is how many bitcoins everyone has at some point, but it could be anything. a good application to look at is an application that number one means decentralization and number two needs some concept of shared memory and you already know the case of decentralization in cryptocurrencies themselves.

I think it's pretty clear, but you can actually go beyond that, right? You can think of yourself. If you have decentralized a cryptocurrency then you know that you can build a lot of other things on top of them and there was an interesting idea that Nick Szabo came up with about 25 years ago that was called a smart contract and he made an analogy with a vending machines, so What he said was that a vending machine is a device implemented in physical hardware that basically implements the conditions of some type of agreement in the conditions of an agreement of the agreement here they are simple, you put two dollars in water and it comes out you don't put two dollars in water no it comes out if you put it in if you don't put it in always but the water does come out and that's bad and the vending machine is basically a codification of this set of rules and that also comes with you I know a mechanism that keeps it at least safe enough and enough Safe as for $2 bottles of water.

Now with digital assets, you can think about this type of concept and develop it and take it much further because in the digital world you know it within the world of cryptography. It's this world where even individuals are able to basically have cryptographic defenses that are strong enough to even sometimes protect themselves from state level actors and when you have that kind of security the possibilities increase, so the general notion of a smart contract is that it is like a computer program that directly controls digital assets. Now, the type of direct control here is important. It is not a computer program that makes a recommendation to a person about how he should control the digital asset.

It is a computer program that controls the digital asset. like in aetherium you can literally send a bunch of ether to a computer program and once you've done this the computer program itself basically has the ability to control, you know where the money goes if the computer program sends the money to an address. it's a ghost address, if you want to send it, the address will be a ghost address, fear and if you don't want to send it anywhere, then the money just stays there and you can see this being used in a lot of applications like insurance.

Like any type of self-executing financial contract, you can reduce counterparty risk in many of those types of applications by a potentially huge amount. I mean, you could imagine it being used for even more complex things, so there's this idea of ​​daos that are all these long-lived entities that hold digital assets and basically use those digital assets in various ways according to and these are sets of quite complex rules and you could even imagine that you know crowdfunding systems, so if you think about what Kickstarter does for example, we are going to have people contribute money if they have contributed enough money in 30 days, then the money goes to the developer and if they don't send enough money then everyone gets a refund and that's like a set of rules that could be replicated in a piece of code now outside of the financial world there are also many possibilities so DNS is just a simple one and natural and you know there is already a system in

ethereum

called ENS, the etherium naming system, and you know this The idea of ​​giving human readable names that somehow I can't link to any type of issuer.

There is also one that seems very interesting. You could imagine expanding this to identities and you could even take this quite far to be able to replace it. money you can replace Wall Street you can replace the core protocols of the Internet what else can you do? In fact, I remember looking at your about me page and it has a funny story. I don't know if it's real or not, but you saw the power for the first time. of being central or at least the demand for simpler D-applications when your World of Warcraft character had the rules changed due to a blizzard update and it bothered you so much that you had to go out and build something like etherium so that In theory, you could even build a massively multiplayer game on top of etherium where everyone can verify that the rules are true, although the fact that they're nerfing the life siphon and removing Tinny crying myself to sleep is what directly to Aetherium is a bit of a stretch.

I encourage you to check out the Metallics about me page, it's a right, so now obviously if you're going to replace all of these different systems, you have a scale problem that you have to solve, especially with the centralized mechanism like that, even just to handle visas. Not to mention every smart contract imaginable that won't work if everyone runs a copy of every program on their computer, yes it's complete, so if you look at the raw numbers of today's walk chains, Bitcoin is currently processing something. a little less than three transactions per second and if it's close to four, then you're already at maximum capacity in theory.

I'm right, for the last few days it's been doing about five per second and if it goes over six then it's also at full capacity, so on the other hand, you know, uber, on average, twelve trips per second, PayPal , several hundred visas, several thousand major stock exchanges, tens of thousands, and if you want to go up to IOT, then you are talking about hundreds of thousands, and if you want to access non-financial applications, such as for example, there is a platform called Leroy, which is basically just Twitter on the blockchain, so you know that retail also acts on hundreds of thousands, possibly millions, so you know there's kind of a gap between From here to there and I think in this At the moment there is already a lot of institutional enthusiasm in the space and just public enthusiasm, so when you meet Vladimir Putin, you know what blockchains and Aetherium and Paris Hilton are and he goes out to promote. i ce o-- it's on Twitter, you know, that's quite a buzz, but the reason I think a lot of this hasn't materialized into action yet is precisely because of some of these technical hurdles that make The Chains of watches that you know work well for some good use cases, but they don't really work well in every game use.

Now you know that our team is working very hard on various types of scalability solutions, which is why you hear about buzzwords like plasma graphics status channels, right?

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that's out there, you know, several newer ones like Peru n-- so if you know, these are all several different ideas that we're actually trying to break this fundamental barrier, but we're trying to create blockchains that still hold a lot ofsecurity without requiring everyone to process literally everything right, so if you think about it, I like that one end is a guy who processes everything in the current world, the other end is everyone processes everything right, what if you could get like the square root of all, like 500 people processing each transaction, you still get enough decentralization and security for everything you need, but suddenly you know internally if it's efficient enough to know that it actually works for things in the real world and the other types of strategies are Strategies that try to use the blockchain are smarter, so basically it seems like one of the analogies is that Joseph Moon from Like Plasma uses the idea of ​​the blockchain as a judicial system a lot, so that blockchains are great. to resolve disputes securely and is currently well versed in naive observation applicationsThe job is to simply put every transaction on the blockchain but what could be done instead is have systems where people send messages which I call tickets, messages digitally signed that are out of place by default, but we are the only blockchain used. in those specific cases where there is a disagreement, for example if I have a hundred digital and 100 and I send the year one hundred easier than that, it may never go off chain, but if I send you the hundred ether and then you claim that I never sent you the money, or I claim that I never sent the money to myself, then that is a transaction that I could accept, we have a dispute and in fact I could send it to the blockchain, so we still have a security guarantee .

Now all of these approaches have their own tradeoffs and there's a huge amount of incremental technical work involved in figuring out what the right tradeoffs are, but you know this is starting to look like a much more promising direction and how far along it is. how long until you think maybe we can scale to, like I said, hundreds of concurrent users how many until we can replace Visa how many until we replace AWS I mean, first things like Visa, I think I'll definitely say a couple of years So, maybe once a year when we start to see prototypes that have a low level of security but are secure enough for major organizations to start doing proof of concepts and a couple more years for all of these solutions to really achieve success.

The mainstream, I mean, the 8w license is more complicated because there are reasons why blog chains, you know, no matter how good they are, will never fully replace centralized cloud computing and probably even more so one of the big ones, well there's probably two big ones in My opinion, one of the biggest ones, is that there are computations that are intensive and they're hard to paralyze, so decentralized clouds are really good for paralyzation because you know it's like a super for your laptop, you know you have, you have millions of computers. you know, millions of countries, millions of providers, they all range from individual laptops to you know, you can, you can think about, you know, even cloud computing companies basically become specialized mining farms within the system, but if You have calculations that require like a really large number of serial calculations and that's harder to decentralize.

The second, really difficult one, is privacy. Look if you have calculations on private data and then there are basically two approaches, one of them is to make sure that the calculations are only done on hardware that you trust and the second is the United States. sophisticated cryptography so you know you may have heard of buzzwords like homomorphic encryption indistinguishability obfuscation to do the math but or but then if you do that then they tend to carry some very serious tradeoffs in computational efficiency so basically for private or serial applications they're going to do it locally yeah in general I think there's obviously always going to be a large set of applications where decentralized approaches don't really work that well and that's okay yeah and you're basically building something that we are an operating system.

In a protocol for the world on the go, it will likely take a decade to reach full scalability and, hopefully, adoption. What is done in terms of? There is a classic operating system developer. One question they ask themselves is, “Why am I going?” And how high should I go? So do you start adopting other applications in the stack? All these people are doing icos, they are building layers of tokens on top of aetherium. Do you see a theory? Am I adopting some of its features or not? remain a broad target as one of their theorem mottos from the beginning has actually been that we don't have the right features, so like a lot of the other projects are definitely going in that direction, they're saying oh, we support this kind of new class. of transaction to issue a token oh we support this new class of transaction that issues an ICO and what can have its five parameters with a limit like a period like type of auction what or whatever, but you know with the theorem that never we've gone down that path, basically B, a couple of reasons, one of them is that you know you want the protocol to be as simple as possible because simplifying the protocol only improves the security of the consensus, so you know that the more code The more consensus you have in the protocol rules, the more likely it is that you will have problems such as two different implementations, such as not being in sync with each other, which will cause the blockchain to randomly split in half.

The other big reason, of course, is that you know unknown things, we really have no idea what blog chains are going to do. it's going to be used for five or ten years from now, you know, and we really don't want you to know that we're okay with it making some specialized components that you used a lot, so Kathiria, yeah, or we have an upcoming Metropolis update that's to arrive. October and one of the biggest things coming up is explicit in protocol support for certain types of crypto operations, so as a signature ring I'm looking for curve pairs that include it as part of zero-knowledge proofs , so this is the main topic.

Here it's basically solid cryptography and privacy is kind of specialized, but it's also very generic because almost any application could benefit from privacy, so we're willing to compromise somewhat in that direction, but we don't really want to. make concessions in favor of like really supporting high efficiency in every application now, if that means that there are specific application categories where some platforms outperform aetherium, then you know that's fine, you know that we don't need to be everything to everyone, but you know that there are too. There will also be ways to specialize even within the etherium ecosystem, so there are 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 .

They are even designed to take advantage of the base Ethereum blockchain for security purposes, but that can have properties of its own and if you know that they work well, you could know things like a 500 millisecond block time so you can run Starcraft on the blockchain to that you know that those things are possible and if you take this approach where if you have a theory like this type of base layer that you know what does a good job of balancing the types of sic like the high level of security and the scalability that a base layer needs and then allows these other things with various different properties to be built on top of it, then you know you can't really have a blocky ecosystem that works very well, you have it, so you want it to be a secure base layer that doesn't have too many features and it really allows innovation to happen at the top, but you have things like privacy, security, and census in that hole, but the big app that everyone is obsessed with, in fact, I think it's the reason why people are so interested in cryptocurrencies is only because they are making money with them, yes, so the fundamental application at the moment seems to be just money and Bitcoin seems to be willing to have the protocol serve the currency and here it seems almost the opposite it's fair to say that their currency is in service of the protocol, you know, I definitely, I definitely say that's our philosophy, although I mean, yes, it's definitely the case that there is a lot of adoption simply due to speculative interest from similar people, but then.

On the other hand, not like that, you know, that has a bad sign and a good side at the moment. I think one of the good sides based on the good side really is that partly because of this you know that there's actually a lot more interest in what's possible. The social benefits of decentralized technology are there, you know, like many of the other approaches that have been tried over the last decade. If you look at the diaspora, you know that a great idea ended up feeling completely right and you know a lot of these guys. of decentralized projects tends to not do very well and largely because they basically like the funding and they just lack some kind of good incentive to build the infrastructure, whereas here in the land of cryptocurrencies, you know there is a lot of foundation. of money and we stopped a particular problem that can be solved right now because we married economics with cryptocurrencies, incentive problems to solve an economy and sent this can bring people together in a way that pure politics cannot, yeah, I mean, like you know cryptocurrencies.

Ultimately, it's really about incentives at multiple levels, from the community all the way down, you know, like security, if they can sense our protocol, like you just can't reason about security, you know, like seeing protocols. of consensus without reasoning about economics. It's not about if you know that half of these people are honest, then we can prove that the system is safe or you know, if magical Bob in the sky is honest, we know that the system is safe, you know that the system is safe because we have mathematics. tests that say that if the system fails, then the guy who did it loses 100 million dollars, but that is what we mean by cryptoeconomics, like combining in this type of cryptography mathematical proofs and economic game theory reasoning together, so if you put this all together it used to be god we trust' then it used to be nation-states we trust now it will be mathematics we trust yeah are they the nation-states that are going to take this in stride ?

You just came back from China, you saw what's happening there, yeah, I mean, it's in the way that, like the traditional political and economic powers, they're going to respond to all of this, I definitely think that's going to be a big part of history in the coming years, like in it, you know it ultimately really

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s the traditional power structures and you know whether it's Washington, you know, in New York or Silicon Valley, you know, you know, it really does it in Oh, it stands against serious challenges to the way things are working. Now, but on the other hand, one of the things we've really learned is that one of the people, even within these power structures, you don't seem to know all of them, but some of them seem pretty friendly to you.

Learn about these

disrupt

ive ideas, know what they are definitely among us, many of you know JPMorgan employees who are really excited about the possibilities of analog display technology and you know it's the fact that they work for a large company or for a government that you know it doesn't mean you know it doesn't mean you're hopelessly boring, like in one of my favorite examples of this is in Taiwan there's a politician called I'm Audrey Tong and she described that she's transgender and she describes herself. as a conservative anarchist and yet she is the head of, I believe, the digital ministry of the Taiwanese government, so you know what kind of people vet lobbyists, we are someone who is not there, is not particularly special and she has been recognized as one of the ten best programmers that exist, but you know that it is a very great way to salute minor titles, these types of people exist and large organizations in general are complex, right?

You have, you know people with one belief, one type of belief on one side and another type of belief on the other, even if you look at the Chinese government as if it's their answer, I think it's been clearly demonstrated that you know what's there. There are different groups of people within the government that have different ideas about the direction they want to take and you know, equate this. If you look at all the news, a belt like REM regulating VPNs in chat groups, etc., it's obvious that kind of The arc of this decade is that the conservative side is winning and, you know, I mean being flower of water, those things are also happening in many other places in the world, but you know that the organizationslarger ones definitely remain diverse.

It is surprising that China has discovered that its financial and capital control policy boils down to its firewall policy. Yeah, so we could talk for hours. I invite Alex. The knowledge is incredible. We'll only touch the most basic surface here. I invite you to follow him on Twitter. where he is incredibly kind to all the trolls that constantly attack 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 and being with it . us metallic and after his short trip to China