We have an important preface an important caveat and 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 and securities or in Bitcoin or in crypto currencies or anything.
None of the information presented
today or really any time since you might be listening to this anytime is intended to form the basis for any offer or recommendation or have any regard to the
Vestment objectives financial situation or needs of any specific person that includes you my dear listener. So everything you're going to 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 Etc that you can apply to your own lives. This episode is a special episode and
It is 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 nepo sewed 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 2 is going to cover everything aetherium and the two people joining me. I already named one are navall ramakant 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 navall and a VA L. He is the co-founder and chairman of Angel list. He is an angel investor and has invested in more than 100 companies including many huge.
Isis including Twitter Uber notion Open Door Postmates and wish among many many many many others. You can subscribe to navall his podcast on wealth and happiness on Apple podcast Spotify overcast, wherever you get your podcast, you can also find his blog at know Vol that's nav dot Al the guest of honor and the real expert in this particular episode is vitalik butyrin on Twitter at vitalik butyrin vit.
Tal ikb Ute. Rin metallic is a creator of etherium. 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
since he now leads a theorems research team working on future versions of the etherium protocol in 2014 vitalik was a recipient of the two-year teal 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 and a lot of
Oil and a metallic I believe is now a ripe Old 27 years old. You can find his writing and much more at vitalik dot CA that's vit a l ik dot CA 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 dot blog forward slash Bitcoin.
and you can also find this current conversation with vitalik on all things etherium at Tim dot blog forward slash etherium that see th ER e, um, please enjoy this wide-ranging conversation with vitalik butyrin and of all ramakant,
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Tim this is the Vol speaking Tim. Thanks for having us. We're joined by vitalik. Butyrin. Victaulic 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 etherium or co-created. He also is a multidisciplinary polymath his blog at vitalik dot C A is full of lots of great ideas.
Is an insights and thoughts, he runs the etherium foundation. He's sort of contributed to all kinds of things like automatic market makers roll up Social recovery while it's 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
You on Twitter? And yeah, and we're very lucky to have him I would say that for me along with Nick Szabo and who we interviewed here in 2017 who created big golden coin the term smart contracts and along with Zuko who is the irrepressible founder of Z cash. I've always found Victaulic Nick and and Zuko to be sort of the three people on Twitter that are early on learn a lot about crypto from so welcome vitalik and thanks for taking the time to talk to us about
Yourself and
etherium thank you very much for the introduction of all, it's good to be here.
Yeah, so I'm going to start just right off the bat. We're probably going to try and keep this fairly basic in 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 going to ask metallic some hard questions. We're not going to let him get away with it just 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.
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 current. So once you're kind of up to speed on that, this one will make a lot more sense, but we're going to get right into not what is crypto or what is bitcoin. We're getting a getting to what is the theory mm. So how do you describe it today?
Vitalik? Sure. I'm so the one sentence explanation of a theorem that I sometimes give is it's a general-purpose watching.
So this of course makes more sense. If you had of already know what I've launched in is right. It's the best kind of decentralized network of many different computers that are together maintaining this and like a ledger or lesson of database together different participants have like very particular ways of plugging into that and they can sense transactions that you have your particular things. But no one can tamper with the system in a way that's outside of the rules and if area expands on the
The Bitcoin approach I 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 just build their own applications and the rules for whatever applications they build can be and if executed and the implemented on the ethereum platform. So one explanation that I heard one person give is that Bitcoin is like a spreadsheet where everyone when we controls their own five squares of this.
Cheat but if the area is a a spreadsheet with macros, right? So, you know, everyone 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 interact with each other according to pre-programmed roles and you can build a lot of things on top of that right like Bitcoin builds a cat monetary system on top kind of famously etherium can build, you know decentralized domain names systems again various
Wise Financial Contraptions, you know prediction markets non fungible tokens and all sorts of differences schemes that people have been coming up with and the limit for what you build is that basically your own creativity but make the core difference between building an application on aetherium of versus building it on, you know, some traditional centralized platform. Is this core idea that once you build your application in the application does not need statistic hands on you or any other
Go person for its continued existence and the application is guaranteed to continue running according to the rules that were specified in like you to not have any ability to kind of irregularly go in and tamper
with it. That's a great overview and I like that Excel analogy of it's a spreadsheet with macros instead of just 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 a theorem is one of those things that's now quite a bit bigger than you and it probably has evolved in ways.
Even you didn't fully anticipate. So in some sense, we're discovering a theory of a no longer just building it. I also like to think of it as kind of an Unstoppable application platform. So platform for building Unstoppable applications kind of like a world computer where let's say that we want to 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 in our behalf. Then we create a single World computer where we checked the code on the machines of many many different.
All around the world were properly incentivized to maintain a single Computing state. So if Bitcoin is a shared Ledger than a theorem 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
about so first of all, you know, I think like if the asset is a cryptocurrency and it itself is an application and that after the first application of etherium going Beyond Financial things a bit. I mentioned zns the etherium name system. So yes, you can think of it as a decentralized name system, right? So like for example, you know when you go to a theorem dot-org, there's DNS domain name system, which is this big kind of table.
As maintains this mapping of well, you know, if a person enters the theorem.com the server the actually have to talk to and talk to the website is and you 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's a messaging service called status. It's like in in terms of like what it feels like to use that. You know, it's a messenger. It's similar to telegram we're sitting over WhatsApp or any of those 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 to company, which is nice because it makes the whole thing much more censorship resistance. It makes the whole thing just a much more guarantee. It's to survive, you know, regardless of what
Horses wish for for its existence or wish against its existence in the future? Yeah. Now this is the really important part of it because well if you have a chat application, I used 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 to type in and say I want to talk to Nevada and things like Telegram and signal and WhatsApp that mapping is generally basically going to authenticated and controlled by a server but whereas in the in the state
Is it still just done by the ethereum blockchain it so that as one good example, I think of a kind of not Financial but still very important. If you're in that location now going Beyond those two cases, there's a lot of kind of more complicated things. So the there are State defy decentralized Finance space, which is this big category that has all sorts of interesting Contraptions in it like so for example, there's a prediction.
So what Forbes where you can go in like that 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 prediction markets running on the ethereum blockchain. There's just markets for trading between different kinds of assets. There's what's called synthetic assets. So if you want to have access to let some mainstream real world asset like, you know, what solar could be one example, but you know,
you don't have to like dollars like there's lots of other examples as well. There's versions of this that are kind of purely virtual sort of simulated versions that exist purely, you know within the etherium environments. There's this entire kind of very powerful Financial tool kit that exists within the ethereum ecosystem on the whole like there's just a lot of these interesting things that happened. I mean, there's even games that are based on aetherium. There's a whole bunch of different
things. Yeah and D.
By 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 have 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 on the ethereum blockchain and these smart contracts are kind of at the core of the ethereum blockchain. We talked about these in the next table podcast, but he famously described it as a
like an automated vending machine is 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 the smart contracts obviously now we're getting far far more complicated and 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 has 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 D5 ends up very very advanced in the traditional world when let's say like
A hood bills are application and then Schwab builds another application wisdomtree bills a mutual fund or an ETF those can't combine with each other. But in the etherium world of defy 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 permission list trustless kind of way. So the infrastructure that gets built in defy and etherium, although it's very difficult to build and is complex once a piece.
Is built does available to everybody and sort of stacks on to each other almost to create one of those Japanese style Voltron robots that just gains in power. Yeah. Never let me jump in here just as a proxy. I'm not even a proxy. I am a listener literally in this case and I'm happy to be the listener. 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 no no 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 they get a whole bunch of people to cooperate on what the canonical output should be.
But the code itself is completely open. It is kind of backwards to what we're used to were used to close Source companies capturing value, but here all the values created by open source. But yeah, we talk I'm sure as a different view on this but you know, 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 so far it does seem like the original products and the best products are succeeding the best and they're sort of always in the scoreboard of market cap and transactions and
Usage but yeah, it's a wild west out there.
Yeah, I think ran the blockchain environment is definitely a one that operates under somewhat different rules. Then the here traditional environments right like that. Just one example of this is the idea for working. Right? So one story has that happens 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 nice way is there was this Flash
Form called Steam and in the steam their steam the platform and then there's steam the company right and like steam was its own blockchain and steam the company they did have some steam tokens, but like they didn't have the right to just do whatever they want with this team the platform because it was a decentralized thing, but you know, they had some tokens and then steam the flux where we had a voting mechanism and holders of ice team tokens could vote on changes, but then the steam the company got bought out by just insane.
son, you know the infamous strong person and Justin son, like basically if it started as you like some things too and if increase has control over the edge steam platform the community was going to be very unhappy with him and then he even liked kind of took advantage of some of the voting mechanisms and some coins held it exchanges to sort of seize control of at least the formal rules of the platform even further, but then what happened was that the users were built right what the user is said he has well,
Creating a new platform called hives And Hive is just a fork of scheme. It is going to have a start with the same. Mostly the same rules as IAM and we're even going to copy over most of the balances of this team tokens, except if you participated in the attack, then you know, your balance goes to zero and then you fork and most of the users. I basically got of collectively moved over to this new fork and you know what Justin son had this full control of an Empire, but then, you know, nobody cared about
That Empire anymore because everyone now hearing about Hive right so forking is this primitive that exists and because of it, you know, you do have this ability for just Community as to you know exerts that is collective agency and like basically protect themselves from kind of being exploited. But at the same time if you as a here project team are good to your community is and like those same effects work in your favor, right? So those
Effects work in your favor because in our community is willing to support your project. If someone makes a copy cats, then, you know 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 stressed in which case, you know, that like those kinds of situations of the situations that the copycat is for. I think legitimate developers have plenty of ability to build projects to gain from those projects.
Becoming successful and there's a lot of ways in which should be equipped or space does ends up kind of assuring that but you know at the same time it's also not in environments where anyone's level of control was infinite and then some ways that's the other beautiful thing about the
space Botanica. This great line is blog. We said we wanted digital Nations, but we got digital nationalism and there's a lot of Truth in that but basically these are these are like digital Nations and one of the analogies that I use for D Phi is
That these are like crypto castles made of bath that are freely trading with each other. Just imagine like people are building applications on top of aetherium. They're protected by mathematics. Those are the walls and those castles and there are modes 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 is people can leave and go to the next crypto Castle or this is where the analogy breaks down. They can actually replicate it just create a copy of move to that one like in
The Stephen Hive example. Well that also is I mean, it has comparables outside of the world of blockchain and cryptography and so much as if we look at say WordPress as an open source project. You have companies like automatic and Matt mullenweg you might people may notice that M ATT in the middle of automatic duties 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 viability value-add and moral leadership and so on right? So there are some sort of certain elements that contribute to the etherium ecosystem. So to speak that you can perhaps compared to other things to help educate people as well. I was just sort of connecting some of those jobs. That's a good analogy with with WordPress the place where the analogy is diverges.
Is that WordPress? It's kind of a single player game like each person owns their own blog rice and Experian world. You could use the theorem to build a Twitter that everybody owns and it requires social consensus to operate but multiple people can put their data and 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
Senses and community and cooperation and build this giant public good. So it is its own thing. It's hard to figure out but it was figuring out because this is the next phase of the internet after mobile. Yeah, let me if I could jump in just to kind of be the kid in the corner of the class and the back of the class asking questions. I would love to hear from you vitalik. What was the initial vision for etherium 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 mean maybe separately 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's as you know, when I came up with a theory on 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
Really surprised that none of this happened as it turned out. The core etherium 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. So I think the core idea is to make a general-purpose blockchain. It hands to kind of open the gates for people to build what they wants to build on.
Top of it, right? Okay the background kind of story for when if you're in was starting to be formed was that this was just the time when the idea of a blockchain kind of Beyond Bitcoin. I was just starting to gain legitimacy and people just starting to realize that you know, there are these applications for blockchains other than just them running a currency. I'm Angela be nice to Ability quad from they can actually support them. And so at the beginning right you had single-purpose blockchains you had Bitcoin for
In see you had namecoin for its domain names you would have like single-purpose protocols like colored coins for issuing assets. The second step is what I call it a Swiss army knife protocols a so a Swiss army knife protocol basically says, well, here's a list of you know, 25 different applications that we've identified as being important and let's go to watching the support all of them. So it Master coin was one example of what I call to your Swiss army knife protocol and the problem with Swiss army knife protocol. Is that two weeks later, you know some 14
Year old teenager and Finland comes up with a 26th application. You have to go hardcore to the protocol. So the next natural step is this kind of general purpose approach where instead of you are blockchain supporting 25 applications, you're watching support C programming language and whatever a system with whatever rules you wants to build you write that in a piece of code and the nodes in the Network's can all execute the code and some Network kind of helps to collaboratively enforce the rules of this code.
Or the yeah objects that are in your particular application. So that was kind of the technical perspective and then there is 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. I'm like, I remember some of the very earliest applications included and a financial gadgets so contracts for difference for one example, which is you know, one very particular subset of the thing. That's it.
Today we call defy decentralized file storage kind of like, you know paid people to store a gigabyte of your data was one thing I was excited about decentralized m-systems was excited about those, you know, decentralized training between different assets like a lot of the examples of just things that people wanted to do with black shades at the time like they are just are the same as what people are doing today. Those are also new applications, right? So like non-functional tokens that I agree.
He mentions I'm in Ft is the idea here is basically just create a yet token that you know represents something other than a financial asset and one example of this could be that an NFC can represent video game Assets in NFC could represent like a digital work of arch where he wants to sell kind of like basically breaking rights as being the original owner of it. And you know, there's a lot of these different use cases and these right now the nft I'm ecosystem has been extremely successful and about a week ago.
Oh, there was a yet a Nyan cat and FC that got sold for the equivalent of about five hundred eighty thousand dollars. So that's an example of a new thing. Another example of an old thing is that 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 award voting or whatever you wants to use you just be written as rules in a smart contracts 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 see in a couple of examples of a kind of simple daos in action in maker dowel of which kind of maintains, you know died the stable coin that's are going to fail growth mclee targets are price of one dollar is one example, you know now there's also Rye, you know, there's a lot of examples of this a lot of things that we
Expected from the beginning of prediction markets some also have been part of what we were excited about using blockchains for since 2014 and they're still around today. So a lot of old things that also send you things as
well. Thank you extremely. Yeah. I mean, yeah some of the ones that Vitaly just laid out like I think your recent guest Katie Han mentioned and lefties is nifty's is what she called it. Oh, no, I did it because I wanted to try to do you want to try to force that into the Lexicon because it's okay. Well you want to stop if you nifty's yeah.
So Nifty gifties are this crazy idea that like owning a digital copy of something and having your name stamp 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 etherium 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 owned that everywhere which is a very powerful concept. So digital scarcity was born with Bitcoin, but now
Attending into things that are not fungible that are not exchangeable with each other and that that's been frankly for me a surprising thing. That is emerging etherium etherium. It's funny because you're asking vitalik. Like, what did he expect and what do you not expect? I remember when etherium first launched that a lot of computer scientists. I spoke with privately said it would never work because it's kind of as crazy idea that the way we're going to 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 sink it up and make sure
Is so that's the recipe for building the slowest computer in the world and but somehow we've gotten away with it. And so I think the big debate now about aetherium has shifted from will it work to will its scale and when I talk to my friends in the crypto community and say hey, what do you want me to ask vitalik? They send me a list, you know of many many questions, but the center piece is always the same and like how the heck is this thing going to scale and I would like to get in that conversation that is
The more complicated conversation is technically sophisticated. But basically we're saying hey we're going to 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 going to scale? Isn't that going to be the slowest computer of all time? And so now we're in a situation where if Theory mm 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 the gas the price of gas has gone up.
These decentralized Finance applications that can be very lucrative their trading large amounts of money 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 defy transaction the other day and it was a hundred dollar transaction and the price was $25 just to execute the transaction and that's a very very high transaction fee. And I know we're talking crouppen working for years on the etherium to project to bring that cost down by the way as an aside that is one place where theorem 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. There's a big famous Schism over that but now with etherium, you know, the question is the philosophy is we do change it. We do improve it. We do make it better. But in the process there is a greater chance that things can go wrong that it can break. So now we're entering etherium to which is the scalable version of ethereum. So we talk to you wanna give us a quick overview of etherium to at a very high level and then we can kind of dig into the
pieces.
I'm sure I'm sorry. I think one other thing that's important to kind of add just to you know, give a complete picture of scaling is that there's these two families of scaling layer 1 scaling in layer 2 scaling where earlier one scaling basically says well, let's make the Block Chain itself better handle your to scaling says well, let's come up with protocols that are going to sit on top of the Block Chain and that you is the blockchain in more clever ways to provide the same kinds of security guarantee. Is that a blockchain has
But that provide much more scalability because you're not just kind of dumb police taking like literally everything and doing everything on a block shape directly and so like Bitcoin, for example, you know, especially after the scaling war is focused Fury exclusively on lawyer to write at whereas, you know, it's a pic when cash is very layer one
focused and this is it. This is a classic thing in Computing look. So for example, what I go to a website the domain name system is at a different layer, right the DNS servers and then the h
HTTP server is a server of the webpage or another layer on top and 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 want to 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 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 decentralized.
Only what you need to decentralize and so if theorem is going to split into or is going to have multiple layers and I think what you're saying is layer one is really etherium and that's the least scalable part. But that's where the security comes in and later to is where the code is run and that's a that that has different properties which are going to get into
well the way that I would describe it as like in comparison to you know Bitcoin, which is very leery to focus than Bitcoin cash, which is very earlier one focused. Aetherium. Take some moderate approach. So we do both kinds of scaling.
Right. So there is the East to effort which you mentioned which you know, it is layer one scale and right 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 to a proof of stake. We are no proof of work is this current consensus mechanism that keeps the blocks you can secure that runs on having a large number of computers just constantly cranking out these kind of mathematical have Solutions. It's 24/7.
Hands proof of stake is a much more energy efficient alternative. There's also sharding which is a layer of one scaling solution that says that instead of 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. Yeah, the blotchy and protocol is designed in a clever way that still ensures saying of safety despite having that constraints. So think of it as you know, like combining
at least some of the advantages of you know, a Bitcoin style blockchain and BitTorrent right like BitTorrent is very layer 1 scale. Like there's there's nobody who downloads, you know, every movie or even an index of every
movie. Yeah. So before we get the layer to Seoul are one is you're saying is proof of steak which is moving from proof of work to proof of stake and sharding which is breaking it into pieces and having 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
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So the proof of work, I'm familiar with proof of stake. Could we just Define what that
means? The core idea basically is that any decentralized consensus system where you know, you don't have a central registry that keeps track of your crew that different humans. Are you need some way for people to it? Basically vote on like which blocks got and which transactions got included in the network and you need for that vote to be secure against what?
All the Civil exam because civil attack is when one attacker just pretends to have 1 million different accounts normally like in you know, like Reddit and zico Google accounts and Twitter at all of these centralized systems like this is done using centralized mechanisms. Right? Like they sometimes require phone number verification and then phone numbers themselves. Some often ends up having some kind of kyc on top of them. There's various a kind of AI techniques to try to detect Bots but in a decentralized system
But you know, we don't have this set 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 civil attack right to prevent one person from just generating a billion accounts and out voting everyone else. The solution is economics write the solution is basically that the extent to which you can vote on just this very limited question of which transactions get included and what order is proportional to how many economic
You put in so the case of proof of work. There's economic resources come in the form of computing and Hardware that you're running right? Like when you're running this mining software on your computer. You're cranking out these hash Solutions every hash solution gives you the right to generate a vlog 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 ability to and of
in creating the outcome is proportional to how many coins that are in the system that you're staking. And so the reason why prove stake is efficient is because in proof of work like the way that you are basically prove that you have a computer to the system is by just like running the software and on that computer 24/7 in generating have 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 a 12-7, well, then, you know, you could have one computer that just pretends to be too.
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 corporate symbol
supremely helpful. Thank you. Yeah, this is beyond the scope of this podcast, but it is actually hotly debated how much more efficient proof of stake is because there's also these blockchains they have to issue coins, too.
So in exchange for the security to the so-called minors 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 and then people are going to 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 and proof of stake. They'll have to lock up funds or they have to obtain funds to do it. There's a cost to doing that to obtaining those funds. So there's no real free lunch, but there are Arguments for efficiency.
Proof of steak especially as you get to securing very large
amounts the way that I would just Briefly summarize the perfect State case. There is that like proof of stake. You can actually survive at least, you know, in the opinion of purchasing supporters with much lower rewards than a proof-of-work can and the reason is and like because of how brutal State works the ratio between the cost of attacking a system and the cost of just running at like becomes more favorable, but you know, this is a long debate I've written on it I have
A post on vitalik to see a if you just scroll down the most recent one called proof of steak and then you know, proof-of-work proponents have their own posts as well. So encourage you to read all of them.
So going back to this is all layer one scaling switch from proof of work to proof of stake start charting the blockchain and this gets you some tens of times Improvement like, you know, 20 times 25 times Improvement and 300 times a hundred times. Fantastic. Yeah, so then there's layer to which stacks on top.
Yes. So let your to as I mentioned is
About creating protocols that we've on top of the blockchain that only use the Bachchan in very particular ways. So there's lots of techniques for this right like the simplest layer to to explain. I think it's a very special purpose kind of lawyer to called a payment channel. So the idea behind the payment channel is like let's say I am, you know selling you and of all and I'm internet connection and you're paying me per megabyte. Let's say you're paying me and you know look $0.01 per megabyte.
Now if you want to do this over the blockchain the naive way to do it is every time you megabyte of data passes through the connection. You would just make an unchanged transaction and you send me one set. The problem is this requires lots and lots of transactions and the transaction fees are actually much more expensive than one set. So it's just completely economically unviable. So here's what we do instead you put ten dollars into a smart contract, right? So you send ten dollars on the watch.
To an address where according to the rules of the etherium 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 said ten dollars to this contract and so far you actually have it's made any payments because as I'll explain the yes contract has rules that will allow you to get your money out. Now. Here's what you do after one megabyte after you know, we
Have one megabyte worth of internet data passing between us you create an off chain message and you digitally sign that auction message. That just has the number one sense just written on it. So you'll just write the you know, the number one sense 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 two cents and you digitally sign it you send it to me sometime later every
Megabyte happens you just send me one more of these messages. So you keep on incrementing the number and let's say after a few hours of this in total. We've had 347 megabytes. So worth of a communication and you've sent me a message that says three dollars and forty-seven cents, and you are now done no longer wants to use my internet, you know, you're a 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 $3.57 I can attach my own signature to it and I can publish it as a transaction going to the smart contract that you have your ten dollars in the smart contract has a rule that says if I send one of your off chain messages, 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 got to publish your ticket to the blockchain. Then whatever amounts of money is all your ticket goes to me.
And the remainder gets refunded to you, right so I get my three daughters 47 cents and you get your six dollars to 53 cents back now, it's actually incentive outlines, right because I always have the ability to use the most expensive ticket that use 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 going to pick your later ticket. And so I'm always going to claim all of the money that I mowed and you get your money back.
Now if I disappear then after some period of time you have the ability to 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 inside of it. So you go down, but actually there is only two actual blotching.
Transactions that are visible to a 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 178 to Improvement there.
Yeah. So so if I can summarize this for a second right for kind of our listeners be sure what you're saying is let's say that you and I have a long-lived contract for some service rather than publishing every little aspect of that contract.
Under the ethereum blockchain and flooding it we go off to the side. We do a whole series of transactions, but every time we do a transaction each of us like stamp it and say yeah that little piece was done and we update 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 the record of all the transactions and say look at signed by both of us. So this is valid ID, but either one of us can submit it and the blockchain executes it so the blockchain only needs to know when we left with how much money
Take down this transaction and when we came back and what the total change was, it doesn't need to keep track of all the intermediate pieces.
Exactly. Yes, that's a good summary now channels are like, I think the simplest kind of lawyer to but they're also the least powerful layer to they can only do payments. They have a hard time doing many kinds of smart contracts channels exist, and they are being used for more and more things and they're great. But the thing that the theorem ecosystem is the most excited about
It is something called roloffs. Now. I don't want to do I actually, you know, go in and fully explain Roll-Ups because they're even more complicated than channels. But I for those who are interested I do have an article once again, you know, go to vitalik not see a scroll down like a I think it's cold in in complete guide to roll ups. And so I describe channels and also this thing called class by then also Roll-Ups and roll ups are really powerful because they can support not just payments. They can support the full generality of applications like a
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. So it's just a very powerful scalability technology and see if the ram Community loves Roll-Ups because there are very easy to upgrade to because if you run an application on the theory of you can just run the exact same application inside of and etherium virtual machine compatible role of of which a couple of projects exist and
Actually, I think a couple of days ago optimism announced that they're going to launch Chef their main that fairly
soon. Yeah, Roll-Ups are fascinating. I've been looking into them a little bit and they're worth learning about it's basically the idea is just that there's these very complex machines that are not on the Block Chain that are off the Block Chain that are running the transactions, but then they're submitting different kinds of proofs back to the blockchain to say don't worry. This was a valid transaction and the two different approaches optimism is optimistic.
We're basically optimistic rope 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. Where's their these zero knowledge based Roll-Ups in a Pioneer by Stark wearin others, which are basically saying, hey, actually we're going to submit proofs which are much shorter than the actual computation that the computation was done properly. But I think these give together what another hundred X speed up.
Yeah, so if you combine the eith to layer one speed up and the layer to roll up speed up, then you get the 10,000 times speed up
exactly. You can get such somewhere over 100,000 transaction the second and one other really nice feature of sharding. By the way is that I get set quadratic, right? So if the efficiency of computers increases by a factor of 2 then like you the you can support twice as many shards
Each chart can be twice as large. And so you're the capacity of the whole system increases by a factor of 4, right? And so we actually expect that capacity to increase going even far beyond 100,000 over, you know, the next couple of decades.
So is it a stretch to say than that? It would that sharding the sharding increases capacity is a squirrel Moore's Law as opposed to just it Moore's Law.
Yes, the this is it
now if you get to a hundred thousand-plus transactions per second, that's a lot. I mean it took
give a give a comparable metric. There's a there's about a hundred thousand tweets per second at Twitter during peak times. And obviously these transactions are going to be much more sophisticated than it could be much more sophisticated a single tweet. They can actually be arbitrary computer programs running on the side. So that's quite a bit of scalability. So then I think the question comes up. Well, where is it, you know a lot of people I know who are building apps and top of eith have now had to come up with backup plans. There are competitive block chains that are coming up which trade-off decentralisation
Ready for Speed. So what they'll do is they'll say well we'll only have 20 validators run by our friends or maybe like a hundred people that we know and trust but in exchange is a lot faster, like now we don't have to get consensus from unknown people all over the Internet. We don't need these complicated Contraptions and then they can basically run much faster. So a number of projects are looking at these as as backup plans, but I know that they don't necessarily want to use these because these are less decentralized. They don't really fully live up to the original promise of blockchains to the same extent. So the real question, I think
Is mind is like is there a timetable for these? You know, can we can we reliably Target a date for certain kinds of improvements because people are betting their businesses on this
great and that very important question. So I'll start off with the progress of East to so I think it's important to reiterate because I think a lot of people have it's fully absorbed this the eith to chain is already running, right. So there's already a proof of stake in it does not yet have sharding but the proofs take system is running the thing that
Has not yet happened is the event that we called emerge which is where we basically actually take on the existing activity on this area and we fully move it over from the proof of work into the proof station. And then the proof of work changes that basically becomes irrelevant from there. The reason why we took this hand of multi-step approach where we first start to prove sake system and then you know, we have let both right in parallel for some time. And then we merge at the end is just to give proof of stake some time to prove itself before the
Entire ecosystem is ask suim upgrade over, you know, the Bruce take a thing exists. It's been stable you running ever since so launch and at some point fairly soon. Like we're you know, we are going to actually go and merge all of the proof of work activity on to it. So shorting is also going to happen and shorting right now is in the there's this back there's prototypes of parts of it. I will admit that we were actually prioritizing the
Merge, I kind of even more than shorting recently. It's a reason why for this actually has to do with the other thing which is rolling straight. Like the thing to remember is that if you have roll ups, but you do not have sharding you still have a hundred X Factor scaling right? You still have the ability for the blockchain to go up to somewhere between 1000 and 4000 transaction the second depending on how complex to these transactions are and so with Roll-Ups as I mentioned the optimal some
Um, you know fully TM capable roll-up is likely to them launch an initial mean that really says some in around a month or so. There's also a project called arbitrary mm, which is also an EDM capable roll up. There is actually a simpler roll ups that are only capable of processing simple transactions that exchanging between assets like Loop ring and ZK sink and those Roll-Ups have already been running stably for about a year, right? So Roll-Ups aren't even Theory. They've been
Practical part of scalability event if you're in for a few users for almost a year and the thing that's left is basically taking that same model and just fully extending it to and of not just for transactions, but also arbitrary applications, right? So Roll-Ups are coming very soon and we're fully confident that by the time that we need any more shallow and scaling than that and then you know sharding will have already been ready for a long time by then.
So you're basically saying fully
I'm very confident that something like, you know, an optimism or ZK based roll-up will be solving a hundred X scalability problem within the next few
months. I think so. I mean I think creme like there's definitely a lot of people who are not going to be comfortable moving over just because you know, it's new technology and use technology always has risks, but I expect there'll be plenty of applications. So you possibly even non Financial applications like the Nifty is and you know domain names and
Of course to start off just because like the risks are lower if things do break and then kind of creeping up to higher and higher value things as people become more comfortable over
time. So do you think that etherium could have a scaling Schism like Bitcoin did Bitcoin split famously into Bitcoin and Bitcoin cash over the block size debate a few years back which is all around scaling and people some people were saying Bitcoin should be digital cash. And so therefore it needs these Big Blocks and it needs to handle more transactions and other people said no no Bitcoin is a Swiss bank account is digital.
Gold and it needs to be secure and lots of small nodes have to be able to run it. So we care more about security than we do about handling small transactions and the the small block people one. And so the Bitcoin forked and now of course what we call Bitcoin is a small block Bitcoin that when that debate do you think that there's a possibility that monitors some Miners and people will stay underneath one instead of eith to I think
so except. I do think that the risks are much lower. I'm a big part of the reason why is because we've been very open
Been about refers taken sharding being the vision basically from the first day. He has been experiencing already have this gives a right of ethereum and if they're in classic and a lot of the proof of work proponents did actually move over to put two or three on classic already because they recognize that no other theory on classic community and ideology was one that's more aligned with that continuing proof of work forever. And so, you know, why stay on the Chain where the core developers and lots of
Pilar eagerly expecting a purse a change if you can just move on to a platform already that accepts your values. So I think that was one of the factors that actually ends up making the youth to transition and have a bit more secure. Another thing also is that I don't really think there is a deep Schism of ideology is worth in if there are m in the way that there wasn't Bitcoin right? Like I think you know if they re m-- everyone is roughly on board with the idea that you know, you have some earlier ones.
Only you have similar to scaling there are some kind of longer-term disagreements like that. Like, you know, Justin Drake one of our researchers for example is much more into making layer one more powerful. Whereas I'm more in favor of a simple earlier one and having layer to his do more things. That's not a kind of extreme weight deep and fundamental disagreements. Like, you know, either approach is going to have a lots of scalability and it's going to deliver a cat great environment sets for
Instagram
users, so that's interesting. You don't you don't even really run a theory mm. You have disagreements with developers and they could even change it in a way that you don't like has that happened yet has there been a case where something has been implemented into a theorem that maybe the community or the other developers wanted which you sort of disagreed
with there's definitely been changes that I you wanted to push forward to that. I mean I gave up on fairly quickly because then, you know enough core developers or the
You to be ended up disagreeing on them. There's three changes that were kind of pushed forward by some people who are not myself and then where I just kept completely silenced. So like block reward decreases. For example, I was completely silenced or mostly stylings product Powell was mostly silent as it was obvious that the product real side was losing things that I was trying to push for any those are harder to finds just because like I can suggest naturally understands what the community what it would accept and I
don't really try to push things that I don't think would be successful. I mean, there's like some my new she around them, you know, scaling strategies and statelessness and State Management strategies where 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. Yeah my sense from a far as your more coordinating than dictating and you're doing what are you running? The theorem Foundation is an organization your part of or you just kind
The roving individual with a laptop and a few friends who just kind of write blog posts and submits a proposals
in some of us and idea of you know, if I do this the proposal submitting I have do, you know some some writing proof of Concepts and you know in Python I do or some kind of trying to coordinate people the theorem Foundation as an organization exists. So the executive director of that is ime a grouchy she has been
Doing a lot of the logistical things for about the past three years and has done an amazing job and and I end up and of coordinating and working with her quite a lot on various things. But you even the etherium foundation like it has an important role because it has this kind of a large pool of capital and the Senate of high level of public legitimacy, but it's not nearly the only organization with any theorem. Right? Like there is a lot of proposals that got initiated on the outside.
There's a lot of proposals Sim that got a really huge amount of Community Support coming from the outside even organizations other than ether and Foundation that has a lot of resources with anything. I'm ecosystem. So like for example for the first few years consensus did quite a lot in consensus is still doing a lot and but now we all know there's also a Hyuna swab who's treasury has just grown as huge amounts and they hear or even wealthier than the other and Foundation is so it I think you'd practice it does end up being the
this kind of loose collaborative effort between a lot of different
groups. So, you know swap is interesting, you know swap is for those of you don't know it's an application built on top of a theory and but it has its own token and it's the it's the one of the first automated market makers a decentralized platform for exchanging cryptocurrencies with each other without having to use a centralized Authority like a coinbase or gemini or a coin list instead. You just go on to you go to Eunice swab and it's a smart contract. It's not owned and run by anybody except the
In a few developers and there's a token associated with it, but you can just automatically trade with this smart contract to turn say your etherium into a stable coin to get the equivalent of dollars or back this shows how the theorem ecosystem is very different than the Bitcoin ecosystem in the Bitcoin ecosystem. There's only one coin there's a Bitcoin and they don't really tolerate other tokens in their orbit. Where's the etherium you have a lot of other tokens in the orbit and you'll see block chains that are competing with aetherium that are trying to you know, they're making different trade-offs and you know,
ER 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 Yuna Swap and whatnot. And so what's your view on all these other tokens? How many tokens are they going to be? How do you determine which one makes sense in which one doesn't and do other blockchains make sense at layer 1 or should other tokens only emerge at layer 2 now that the theorem
exist now this is definitely a very important topic in tokens are one of those.
Things that's really like playing with fire. Right? Like on the other hand fire is a crucial to human civilization. But on the other hands fire is if you're evil and can burn up your family if you're not careful. So the thing with tokens right is that the crypto is 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 diaspora the decentralized alternative to Facebook that people try to
build around 2010 is one good example, but the challenge with this kind of pre blockchain or non blockchain decentralization or crypto is that it's harder to kind of align the incentives and motivate people to actually wants to participate in an old 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, you know can appeal to lie kind of universe.
Values right? Like we're you know, the real Universal values get rich for a lot of people.
Yeah, and it seems wealthy have done a bit of both. You've got a bit of both you've got some people who have eith to getting rich and then there's also a
movement right? Exactly and I like I think that balance is important, right? Like I think the failure of a lot of non-blocking crypto shows the inability to do things at scale without that Financial incentive, but at the same time, you know the project a lot of them or at least in my opinion a
Moral projects with in crypto that just care about you know, the pump and the follow you home and you know getting a here powerful and expensive token that they can get rich off of like those projects end up not really doing well in the long term either right and there's been plenty of projects where just like VC funds gave, you know hundreds of millions of dollars of capital to them. But you know, the reality is that like hundreds of millions of dollars of capital just can't buy you a soul.
It's and so a lot if I people ends up kind of stumbling and falling on that to some
extent. 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, but you know how far the distribution is today, but everyone's help sort of started mining at the same time or everyone who is aware of it. Where's a lot of coins that have come subsequently the team has a pre mine where they get a bunch of the coin advance and as the
the amount of the pre mind goes up in the competition moves from hey, let's - much Bitcoin is possible to hey, let's just create the winning blockchain and then get the big pre mine. So it's just move the competition from mining to creating or forking. So it's almost sort of inevitable one supreme Minds became a little bit accepted that there would be so many different blockchains.
Yeah. I think that's definitely fear to like a Norwood is here. I am once again as a kind of Fairly a kind of moderate there like there was a pretty mind but no the pre mine was the only
About 12% of actually think about 10% of the total Supply and it's you know, people did have the opportunity to mine or to combine 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 and if the last monitoring and of the movement aspects of this is important, it's right, like if you're just, you know, go to coin market cap and you look at some of the top 10 coins other than likes a Bitcoin and the theorem, but you can't always give a good answer.
Sir for you know, what values does that so we can represent whereas, you know for Bitcoin you can for theorem you can foresee cash. For example, I think you can so I think they're definitely as this kind of a complicated balance between different factors. Basically the coin can help but too much emphasis on the on just a coin can hurt and it's challenging. I think, you know swab actually did really well with their coin because on the one hand, you know, you could kind of criticized and
A you know, oh, this was only just a measure that it was kind of reactionary that was reacting to you know, kind of sushi swap trying to kind of swoop in and basically try to push everyone to quickly migrate over and they had a coin and so people, you know got into Sushi swap because they just wanted to get rich off of it. And so, you know swap reacted by making their own coin, but at the same time like they did this one really cool thing, which has a big part of the initial distribution was this very kind of egalitarian.
An airdrop, right? Like basically if you had used the Unis one of even once before the air-dropped, I began you would get 400 uni tokens. So at the time those unit opens worth about three and a half dollars or so, the joke was like, you know, you know swap actually delivered on giving everyone a stimulus check and you know people really love that the, you know, the this should supply distribution distribution of uni was going to vary widely dispersed in the whole thing. Was this kind of doubt
Where a lot of people could participate in decision-making so I think there's wasted you tokens well, and there's ways to do tokens
poorly. Yeah the backdrop on you wanna swap Sushi swap is Eunice. What was this automated market makers decentralized exchange that launched and then they sort of got attacked. They got clone by this other one called Sushi swap, you know joking uni Sushi, and then they tried to like steal the units of community by saying hey come here and we'll pay you more by giving you tokens in the Eunice was forced to actually create a token.
Ian which way then gave away to their Community which are called air drops like helicopter drops of money except now it's a made-up tokens. So there's all this interesting stuff that goes on in crypto. We're 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 are dropping Facebook stock on the user's and you don't see Jack Dorsey are dropping Twitter revenues in the users, but that's exactly what happens in blockchain land and you know, if theoria might have had a small pre mind.
Do remember early on looking at a theorem? And I think I talked about G srinivasan one of your other guests about it Tim where we were looking at eith 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 but that's my way of saying that this was not a metallic get-rich-quick scheme. I don't think the taluk even had, you know was even this
Single largest token holder. I think there were many other people who frankly, you know have a lot less to do with aetherium success who ended up holding a huge number of tokens. So to the extent that metallic 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 etherium as I could lift to Bitcoins Uber right? There's sort of a crypto right-wing
Terrorism versus a crypto left-wing sort of libertarianism the Vault. Let me jump in for one second here. If I may ask a naive question. I'll run a novice question maybe and if I'm completely looking at this the wrong way, I'd love to be corrected thinking of aetherium and comparing it to say Bitcoin and considering the possible regulatory threats to bitcoin and I think probably a stronger focus on
Cryptocurrency than blockchain by regulators and just by extension if we're thinking of ethereum on some level as both cryptocurrency, but also as a world computer maybe as if Amazon had its own cryptocurrency, right Biz own Ian's or whatever they whatever they might call it. And then AWS that even if there were a Crackdown on currencies that etherium would have some resilience and antifragility in that.
Is it mean that etherium in its entirety is less subject to regulatory threat or that it can thrive in the face of regulatory threat along the lines of that which Bitcoin could
face. Let me comparing the enough regulatory situation of a theory a man's Bitcoin and I think like both benefit from being highly International right like Bitcoin has a strong community in the US and has a strong community.
In China, it has a strong community and you know the EU and lots of other places etherium is a very similar in that regard in others. These very strong Community is in lots of different countries, you know, including countries that are not a kind of Gia politically on the same page with each other. So there's a lot of resiliency am in that sense. Now, of course the other kind of aspect.
Of all the T axis that's like it's not just about what they can do and it's also about Nick what they want to do. The reality is that Regulators have cracked sound on cryptocurrency significantly less than they theoretically could right. Let's say theoretically could like make something like one basically go over night. Right and like I think the reality is that you know that yet don't in part because they do see a lot of the positive value that's coming out of these.
Platforms right there's even Regulators that once the users, you know public blockchains and I even things like if you rem to build applications on top of them, you know, they can see value in some of the kind of advantages that the things like stable points for example could provide or even you know, non Financial applications if area is kinds
yeah, if you wanted to build a fraud proof voting application, you probably do it in the theory. Mm-hmm.
I'll beat ya
cryptocurrencies are inherently designed to be Sovereign resistant right there. 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 the for a while people think China tried to ban it and that sort of failed and right now India is talking about banning it and that will end in tears, right? That's not going to go. Well when you leave your country out of the Innovation and next 10 years, so hopefully they don't do that. But there's also a redundancy in terms of design for example going to proof of stake is a
And kind of redundancy than being just all proof of work. So you're not subject to the same kinds of attacks. I think being used for all kinds of applications and of all, could you speak to that? Yeah, it's a proof of work is you should done Miners and miners have hardware and Equipment, you know where they live, right? They need to physical presence where proof of stake is validators. We just need an internet connection. And so they're they're kind of harder to stop and harder to find in theory. Hmm. 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, you know functioning prediction markets public goods 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 in the internet that are centralized like caching and
in routing and spam filtering that should be decentralized involve crypto payments for efficiency. And once we sort of start getting to those applications, it will 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 ceased to function as some levels. Thank you back to you Neva. Yeah. Yeah. Yeah. No. No. Yeah. It's I mean there's there's there's there's an infinite number of rabbit holes we can go.
Coming back to theorem for a second. So there's Bitcoin which is clearly digital gold. There's a theorem which is the world computer and you know with digital gold high price is good. You want your goal 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 policies becoming more valuable at my life insurance policy, right? I don't know how I feel about that. But with eith it's not clear at the price going up is always that good for adoption. It's good for the people who are pumping and holding.
It is it so good for the people who are trying to use it. I mean, what do you have any thoughts on the price of Ethan how much for example we don't even know exactly how much ether is going to be the future, right? The supply curve is a little bit undefined and some people say, oh it could be too big this thing will get inflated. Where's the other arguments? They know there's certain applications were going to have for which you have to lock up E30 even destroyeth to use these applications. So Heath may end up being more valuable. Do you have a what is your current point of view and where the East Supply heads and what the eith price means for the ecosystem?
Yeah, so one thing that I think you alluded to a little bit is that there's this proposal called EIP 1559, which I'm going to read the signs how the transaction fee Market works and you know, there's a lot of kind of very wonky a kind of economic mask for kind of why the specific changes that makes them make sense. But one of the consequences of that change is that the majority of fee is instead of going to the minor whoever creates the block we get burned like it was just literally
delete it over existence. And so if to me and still use the theorem is high enough, then there would actually be more evil than there are being destroyed and is being created and so you know, the joke that so sometimes make is you know, if Bitcoin no us fix supplies sound body then, you know, if you have a decreasing Supply does that make us some ultrasound money and it actually is not even that far fetched to possibility like if you look at the transaction fees for the last month like they actually have been on a lot of days greater than the
Rewards for that day for that day. So it's interesting because like it basically creates this more direct connection between people using the ethereum blockchain and you know, he's having some value right like at the beginning the way that East was even describes when we were doing the sale is that this is like gas, you know, you're buying this token that you need to use and if you wants to spend transactions and if it's open is actually a consumable right than it actually
She behaves even more like well, I guess you know gasoline as the original metaphor, right? Like if people wants to use of the oh - we have to consume it. And so the value of it is actually something that sort of depends on the etherium network being useful and let's say yeah, like it's a bit of a difference kind of guiding principle than something like Bitcoin right? We're Bitcoin just arrives value from you know, Bitcoin the currencies around value from Bitcoin the currency and Bitcoin blockchain is
Kind of thing off in the side that well. Okay find it has to exist whereas in aetherium. Like it's much more of a system worth of watching is the point and you know, the East the asset gains value from the blockchain doing it. So it's job
successful. It's interesting. So big Bitcoin the value is in the currency or in the Bitcoin itself where it's a neath the values and the blockchain being used in the eith is the byproduct of it. Yeah to use my strained castles made of math analogy. Yeah.
I think it is Bitcoin is like the big impregnable Citadel the Fort Knox into which you're putting your gold and you and that 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 eith is sort of this Dynamic network of little city states that are trading with each other's 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 it will
more hacks and break-ins and failures in the ecosystem as a whole not a neat itself, but in the ecosystem around eith then we will in the ecosystem around Bitcoin necessarily, but at the same time eith is dynamic and growing and adaptive which just makes it more of a, you know, an evolving
creature and I'd agree with that was one reservation, which is that I think the Bitcoin ecosystem does have its own kind of ticking time-bomb demons to like a tether is one example
Yeah, there are pieces around the Bitcoin ecosystem that are semi centralized or run of unknown trustworthiness and do rely on untrusted untrusted third parties. I should say but you know as the Bitcoin people say like not your keys not your coin right and trust and trusted third parties or security holes. So they're aware of that. I think the Bitcoin maximalist which I believe is a term that Yuko coined the Bitcoin maximalist would say well that's not Bitcoin, right? That's something else. So I mean one of the things
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 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 eith holders and how do you think about the distribution of wealth in a crypto run economy as opposed to a fiat currency aka the US dollar
Our and you know the Euro run economy.
This is definitely one. I think one of the challenging I kind of questions for the community to Grapple with this is actually one of the reasons why I kind of really like if you're iums kind of more, you know, multi-currency welcoming ecosystem, right? Like, you know, sure okay you have es and you know, there is a here limited set of opportunities to kind of get you eith directly from the tap and at some points
The supply is going to stabilize and if you're buying ether just you're buying used from a previous people. But at the same time there are these new applications that are launching, you know, you have your uni as I mentioned where the distribution has a mean. I thought quite egalitarian, right like the as I mentioned, you know, the the 400m you any stimulus checks that just go to everyone who ever use the application at least once and I kid tried really hard to not favored wealthy users too much and then
Then there's fake tornado cash him an imagineer drop a couple of weeks back. There's more of these assets coming in and I think like that kind of churn is healthy like it, you know, it breathes new life into the ecosystem, you know every second if you life into the wealth distribution, and it does create opportunities for new people to be able to come in and kind of participate on a yes somewhat level footing as well. But then if we
Compare all of this to the Fiat ecosystem. I it's a difficult comparison to make just because you know, the hearing and of Institutions are so different and it's kind of difficult to you know, match one up against the other right leg cut fiat currency is that you know, they basically get created by and of a combination of you know, the central bank and the a Commercial Banking and of ecosystem and in terms of where the kind of you've newly generated value comes in,
In like, you know both sides of that gets some share essentially and like there's bad things that come out of it. There's also good things that come out of it. So like I know like this is a controversial position among Libertarians, but like I actually like the idea that you know, if you have a fiat currency, then the government can print it and just use that as a source of government revenue. And the reason why I like it is because a fake if the government's can earn can get money through unobtrusive means that
Uses the extent to which I asked the relying on getting money through more intrusive means and you know rely on Taxation and kind of more
directly. The problem is when it's unobtrusive. It's very easy to do a tree sneakily pretend at least tax taxes have to be collected Now where's printing can kick the can down the road for the next person to solve.
Right? Right. This is argument to the other direction because it doesn't there's a
moral hazard there and I think we're watching it play out where we printed a trillion dollars last year and whose
Gonna pay for it,
right? You know the nice thing about cryptocurrency. Of course, is that like the ecosystem as much more transparent? And so, you know, it's easier to analyze and understand what the rules are and like within the context of a corrupt or ecosystem. You know, as I mentioned you can still do very a gal egalitarian things. You can still you know rewards people who were very important early contributors to things that ended up being very important so you can still do all of
Those things and you know, we do have a responsibility to get the balance. Right but the environments is just inherently a more kind of open and honest one just because you know, these are decentralized systems and everyone does just they've see exactly what's going
on. Yeah, certainly more transparent like you can tell what the money supply of eith is at any given point good luck doing that with the US dollar money supply or you can tell that the inflation on eith is at any given point and as you say there's opportunities to build more applications on top of
Heath and maybe eith 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 eith itself. So I think that'll be it the really interesting development in the last year is just to see applications and top of 'if 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 that the 2017 run up which was based on just
A lot of hype frankly. So as we see sort of crypto playing out you've also had some very interesting thoughts and 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 20/20 and it was about a lot more than just crypto. So what else that you really interested in these days. I mean, is it a GI? Is it life?
Tension is it public goods is it different kinds of voting scheme is what's really on top of mind for you. That's not directly crypto related
sum of all those so like I think the changing kind of way in which you cannot mix works is definitely one of those really important stomachs. There's a couple of different second of changes that's happening. Like one of them that I talked about is just public or it's becoming more important right like a lot of the ways that like people thought of Economics like Fifty or a hundred years ago. They just that kind of focused on
project Goods, like cars houses food a you know, things like that but there's also public goods, right which are projects that benefits a large and on selective group of people and so no individual person who benefits has the incentive to personally funds the whole thing, but it's hard to push people to pay for it because like you can't, you know, denying the benefits of the thing to people who don't pay it forward for example, right and
So scientific research is one example of a public good. My blog is one example of a public good open source software is an example of a public good and I call the internet public goods are even more common than private goods are and so like our economics just has to you know, just take that fact serious way and a lot of what's been happening in the watching space in some ways just is you know, the crypto world trying to Grapple against them those
So basically these public goods are aware that the costs are concentrated. Like if I want to find scientific research, I do it on my own pocket, but it benefits all of humanity. So the benefits are distributed and so these tend to be undersupply they tend to be too few 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. Yes. What is quadratic funding?
So quadratic funding is this interesting mechanism that basically
Lee says anyone can donate money to public roads through the mechanism but to compensate for this and if under provision that you talk about the mechanism provides a subsidy to every public good and that's subsidy depends not just on the email that was contributing 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 a say eighty dollars from one person and $20 from another person and the second project just got one dollar from each of
People II 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 see 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, one dollar from a hundred each of a hundred people project that it does from the project that got just the $100.
From a split between two people and so we've been experimenting with the quadratic funding. There's this thing called get coin grants that happens a few times a year and that's had about a seven or eight rounds by now. I forget the exact number just for public goods within the theorem ecosystem and that's works really well. So that's been one of the interesting experiments that I've been
following question on quadratic funding just to hop in here since
Involved with a few different types of scientific research are those funders in those experiments that you've run anonymized or D anonymised because I'm thinking through the example you gave and how there are other plausible explanations for why there might be to funders. I'm just thinking about for instance reputational risk associated with certain types of scientific research. There are other plausible explanations, but those largely hinge on
named names versus them being anonymous. So how do you think about other contributing factors depending on how you're conducting the
experiments? Sure. So first of all, like in quadratic funding, unfortunately, you do needs to have some kind of model of for identity because you know, you needs to prevents the two people from just pretending that they are 100 people right? But with cryptography you actually can do fancy things that give you most of the benefit from having anonymity despite needing to have
Identity system basically, you can have a system where people can make all these contributions and there are 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 idea of exactly which particular person donated how much money to which particular project this is done using this really important.
Orton fascinating topic of a zero knowledge proof cryptography and zero knowledge proof cryptography. Like basically the idea is that it allows you to make cryptographic proofs that sub statement is true so I can make a cryptographic proof that says that you know, I have 100 coins or that you signed a message that contains like some some facts about me and it was signed with your key and you can make these proofs but where the proof does not
Reveal the contents of 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 today 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 of 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. So there's this incredibly powerful cryptography. It's it's behind Z cash. For example, there's also a theory and applications like tornado cash that are using it. There's zero knowledge proof. So also have these really nice scalability proofs. So the proofs are very quick to verify even if the statement that they're proving is incredibly complex and Ezekiel Roll-Ups, like some of these are scaling Solutions and up are really benefiting from using them. So very powerful technology and I think
It's also very significant for me 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. Yeah, zero knowledge cryptography is really powerful because it may puts in a lot of cases allow us to get both good things at the same time. Like you could get us the benefits of the things like persistent reputations. Well the same time getting a lot of the benefits of anonymity
Dave 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 and I know you have some interest in life extension as evidenced by the dragon-slaying parable on your website 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
Amplified 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. Yes. Now this is also a very important point 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 finding with other mechanisms so I can give two examples one example of how you could do this as you could just set up an organization where their 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.
Heard of funding, you know, the studies that actually do ends up turning out to be meaningful five years down the line and then people will just that contribute through the quadratic funding scheme to this organization and the organization be able to leverage its own reputation. Now if that organization hands up, you know doing bad things and abusing its this kind of public trust that it's earns then, you know people could you very easily just stop contributing to it and start to contributing to it into another roof. So that's one approach another approach.
Roach is that there could be clever ways to combine quadratic funding with venture capital A. So the idea here is that imagine if when people make a public good they create a coin associated with that public good and see just what people buy the coin and when people buy the coins or I can do is just go to the people who issue it and then what you can do with quadratic funding is you can basically kind of collectively by out these coins, right so you can just say okay, you know, this coin is a coin
Represents a project 7 that gave the world say a million dollars worth of value. And so we're going to quadratically find two billion dollars into the coin. And so anyone who bought that coin would be able to benefit right? And and so the idea is that 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 if they will be able to make a profit off of this and if anyone has something that like is may be difficult for the kind.
Of wider public to determine is invaluable 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 envious investors can fill the Gap, right? So if you have these two approaches like you can either rely on reputation and kind of do a retrospective lie, or you can rely on this kind of combination of quadratic funding with, you know, tokens investment that you would Prospect of late so I think both
Those are really
interesting. I love this possibility to combine. Also writing a you could potentially have all of the elements that you described combined and know all you sound like you want to jump in. I was just thinking that the campaign financing kind of works a little bit like this maybe accidentally maybe the system is just navigated to it through kind of a complex system 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 your sort of creating a quadratic, although it's not truly quadratic like I you know, someone very wealthy I guess they could give a lot more through a side vehicle, but then that's less efficient because they're not allowed to coordinate with the main campaign. So there is kind of a really badly implemented version of
Funding with matching dollars already in existence in federal campaign financing. It's a good point. Yeah vitalik what areas of scientific inquiry or research are on your short list of most personally interesting at
the moment.
Yeah, so you brought up life extension life extension is definitely a really important to me. Like I think in the coronavirus says I'm actually even had the positive side effect of kind of speeding this along in some ways, but there is a lot of extremely promising things happening in 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 1915, right? And so if you imagine, you know, the difference between the any
And you know like a modern kind of laptop or smartphone. That's the difference that we're going to see between the biotech over 2020 and the biotech of 2090. And so if right now we can already come up with vaccines for a virus. Well a year for deployment to start but really the whole of the whole thing actually happens much faster and you know, most of the delay can be blamed on like bio conservatism, but that's a whole other discussion if you go from even there and then you know add
Many years of progress to that like it seen it's very easy to see even the process of Aging turning into something that just becomes reversible and it being a regular thing for people to live, you know, one and a half two centuries and then go even further from there. There's such a huge kind of nice sex humanitarian outcome that can come from that, you know, basically like the concept of your grandmother dying is just going to kind of slowly leave the public consciousness.
The same way that the concept of I getting lost in a city. So we left the public Consciousness over the last 25 years has a we got better cell phones and I think that's a really lovely and you just kind of much better role to spend a lot of resources to shoot
for. Do you think that's realistic though given all the three-letter agencies? It's slow down experimentation development because I worry it's more like nuclear power right where they can tolerate a single death. So the Innovation isn't really allowed
right? So this is where I say a controversial thing, which has I think I'm very happy that
The coronavirus has helped to delegitimize bio conservatism to the extent that it has.
Yeah, I agree with that. The Moderno vaccine was ready in Jan 13th, right?
Yes, and like even things like human challenge studies, right like the default. I think bioethics opinion around a year ago. I was 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. Yeah,
you know, it is good if it breaks down bio conservatism to some extent because the pace of innovation is too low. It's like what we've done to nuclear power.
We do that biotech and we kind of have already to some extent but if we do it even more than there's no chance of you know, Grandma living forever. There's not even a chance of me living, you know, 50 years longer than one crime of living forever. You know, you're 27, I'd love to see where you're at 47 you're going to be a you know, really interesting guy you already are but you're going to be an even more interesting guy even more interesting at 447. Yeah. Well,
I hope you guys can both come to my thousandth birthday party.
Are you are you on some kind of caloric restriction or intermittent
fasting so so far? Yeah. Well, I do like the poor man's that arm in fasting which is that I just usually don't eat breakfast. I do again the usual exercise nothing too fancy. I eat kind of at least a couple of the basic supplements that though that the life extension cord people are recommending nothing too much fancier than that so far though, you know if you
Closely watching the space and then I'm sure like end up doing much more things. So, you know 10 or even five years
from now. Do you take rapamycin?
I do not take rapamycin I'm it for me and as the one that I take a tremendous and other that I take
and just for those people listening who who should know this number one this none of this is medical advice. Number two metformin just as an example. None of these things should be taken without advice of
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. I just ask around a lot of people and the life extension that Community. Yeah, you know read the studies. Yeah, you know look at and just what are some of the high level results and then just kind of narrow down to a couple of things.
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 want to say 500 milligrams per day. So you were able to identify certain long-term effects and side-effects a granted anecdotally.
But still having an N of I don't know maybe a thousand people on this forum. So there's a lot to be gleaned from these from these groups. Yeah, there's even a new one making the rounds glucagon-like peptide 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 and what works and what doesn't and able to run some kind of human.
You know more efficiently because fighting aging is a very time sensitive tasks it is. Yeah.
So this is literally half the deaths of World War II for every year that you know, it gets delayed or how was that number of lives saved for every year that gets brought earlier.
Yeah one analogy. I heard that I liked was you know, we're all born time billionaires with billions of seconds of life and then we spend those and now you get to someone like Warren Buffett and I'm sure he would trade a hundred billion dollars for more
billions of seconds, but he can't write in fact Healthcare is the ultimate inelastic good on your deathbed you'll spend any amount of money to live even now an hour longer. So certainly the economic incentives are there the personal incentives are there but because of this concept that you know people who don't know what they're doing are going to hear something and run out and like ingest some substance and then die, you know, drink bleach or take too much rapamycin because of that kind of fear, we're not allowed to do any real Innovation or Discovery and it's literally killing us out.
Right and if we just reframed it as well. No, it's not that we're dying of Aging we're dying because you won't let us do the Innovation do the research. It might take on a different take but I was actually a little disappointed with the coronavirus response because I thought we would have had faster Trials of the vaccines, but the fact that they were still kind of slow and even now the deployment is being held up because we have to create these perfect vaccine delivery packages instead of just the kind of quick and dirty vaccination and we have to go through these very regimented.
Protocols rather than just saying everybody just line up and let's just go as quickly as possible because we insist on doing things and kind of this bureaucratic overly control way. We're still slowing things down and if coronavirus would get us to accelerate or normal processes into a wartime footing then what will yeah. I also just want to add that I think given my experience with a highly stigmatized field of scientific research, which is psychedelics and psychedelic compounds for intractable or difficult.
psychiatric conditions, I think that life extension or the community itself and proponents there of could spend a lot of their oxygen and calories trying to convince regulators and three letter acronyms to classify aging as a disease and therefore allocate funding and I think that that is going to be very difficult and possibly wasteful compared to decentralized and distributed funding from
um, the citizen philanthropists or donors are various types of think a lot of its going to come down to two independent financing since that has been the case even all the way up to phase 3 trials for compounds that show tremendous effect sizes in the katyn treatment of depression and PTSD and so on
and they can another important thing also is just kind of international Outreach and marketing actions because ultimately, you know, the u.s. Is not the center of the universe and there's plenty of
Very smart people and you know the EU like Singapore China India Canada, whatever other places there's a lot of great talent there that I think could help all of us Humanity solving these problems faster. So if we can adjust work together on the problem or hopefully prevents stupid nationalism from adding too much friction between
things. Yeah. I think a lot of the newer generation rather than just being patrons of the
It's they're trying to figure out how to become patrons of Science. And instead of just doing Venture Capital. We'd all like to figure out a model for Venture research because we need more science right science is Upstream of technology and the faster we can move science the more it'll benefit us across the board. So I don't know where else you want to take this Tim, but I have some kind of more of the closing questions type for Victaulic if you're ready for those I want to take this where you want to take this of all okay. Yeah. So one question I kind of have is given all the time.
Which was changed in 2020 because 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 has 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 going to play out that are not yet consensus and it is unfair because aging was a good one. You made a solid you went out on a limb on an
example. That's like the contrarian in the world, but definitely not.
Not country and among I kind of my circles I
guess. Yeah, when I went through your writings, I mean the idea that there will be many blockchains in many tokens right is quite different the idea that yes, the internet has increased the number of public goods rather than the number of private Goods is actually quite contrary and because we think of it as going more and more private property, but on the Internet is one too 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
Another thing might like that might have been here iconoclastic two years ago, but is very much not today would be going to just Geographic decentralization. Even with the etherium like we meet we took a very active effort of you know, not making it to a centralized in any one country or anymore or anyone sitting any one place and I feel like we've benefited a lot from that. But now of course I'm you know, everyone is geographically decentralizing and coin basis announced that you like.
Like none of its management of live in San Francisco and so forth.
It's pretty hard to associate a theory with a single country. I think it was created by mostly Canadians and your blog has a DOT c a top-level domain.
Well, I'm Canadian, but then write my blog has a dossier. The foundation is Swiss and to the elders. Yes Singaporean entity as well of water. The initial developers were German, you know, a lot of developers are from the US as well, but one of the most
Efficiency few clients as based in Australia. So I feel like we've added actually like took the those values seriously ended and did it well,
and the theorem is spent you have the foundation has spent a lot of time in East Asia. I think I've seen you kind of quickly conference to conference in East Asia and Korea and Japan and places like that spreading the word. So it is quite a centralized geographically. What advice do you have for someone who wants to get into etherium and doesn't just want
to go and buy the token right who actually wants to dive into the ecosystem. What is it person to do to get involved in the theorem community and ecosystem where the points of Leverage I think what
warning to build an application and actually trying to build an application as I think one a great place to start if that's the sort of thing that interests you like even if you don't turn it in a hotel say yeah full-time developer. It's like forcing yourself through the process still help.
Just understands that you know, what are the different pieces and actually what function do they serve another example another approach? There's well now obviously a kind of temporarily suspended but generally there's a lot of local communities that you look kind of in-person meetups and all that that people can be part of and that's often a great opportunity to get to meet other etherium people. There's a lot of materials online though. Generally. I am making enough much more big fan of
Hands-On learning so it kind of learning by doing instead of learning by taking in information. So, you know highly recommend like just trying to build one application for a lot of people then otherwise, yeah, there's just a lot of different communities and the kids you have to just stick go in and start taking part in
them. Yeah, for those of you who are curious I think of italics Blog has spawned quite a few of the things in the etherium ecosystem. Like I think it was one of your musings that led to the creation of you.
Swapping you recently been talking about Roll-Ups and social wallets and and all kinds of other things that we built in top. Although I may be this is the first year where I feel like the community is outpacing your ideas, but Nifty is and with some of the games that are coming up on top of Ethan. So on it does seem like that. There's a lot of innovation going on. It's hard to keep up. It's very very hard to keep up. Hey, that's a good thing for those of you also looking for what's next down the rabbit hole vitalik briefly mention zero knowledge proof. So I would say that, you know,
No, the beginning of the rabbit hole the entrance as Bitcoin. Then you go a little further down you find Eve but then when you find zero knowledge proof, that's the big mind-blowing moment when 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 no not everything necessarily maps onto exactly how I observe it the same way when you get to zero knowledge proof. So you realize that the levels of creativity and
That enables are greater than what we might have had pre crypto. So that's also an interesting space to kind of learn about and I think zero knowledge proof have probably been incorporated into an emergency theorem system ecosystem even more than we expected right because a lot of people call it Moon math early on it was considered too hard to be practical but people have been chipping away at
it. Yeah, that's setting mode. The moon math is definitely significantly less money than it was even one or two years ago, like even snarf so another
Return for these a zero knowledge proof some have just become considerably simpler sometime around one and a half years ago. I might even try to make another post of one of my most recent ones. I never thought I'd see a more I tried to talk about like how roughly how is he gay snarks work? I actually feel like I need 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. I think this is kind of taking a kind of cultural and social contexts seriously which sounds obvious but in some ways it really isn't right, like even within the crypto space. I feel like a lot of people in their models of you know is Bitcoin going to beat governments or are these things going to be censorship resistance? They tend to look at it?
Purely from a yet technical point of view and they basically are kind of implicitly assuming that you know, the government's are going to try as hard as they can and the crypto space is going to try as hard as it can and it will be a battle and 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 not even so much in entity as it is a battlefield right hands like what are the soldiers?
Just waiting on the battlefield. A lot of it is just they cultural movements and a lot of the success of cryptocurrency and blockchains. I think they could really have to do with the way that they have a kind of interplay with a lot of the important cultural trends of the last 10 years like this including things like people's distrust of financial institutions after 2008. I think people's distrust of centralized tech companies after 2020 is also going to
play a big part. Also just another fascinating thing I think is like even what 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 ends up in a even blindsiding a lot of people and the reason why that happens has to do with kind of very deep and specific aspects of like how people think it's kind of how people think ideologically
like 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 a lots of people who are in favor of very specific restrictions or even in favor of restrictions that benefit their own team, but they're just as he's very easily flip 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 you know, what should the government
is due and into the cultural context of well, you know, like how she technology work. So there's a lot of these kind of very subtle effects and that determine, you know, whether blood chains and some of the ideals behind watchings. I'm going to succeed and fail and these kind of very subtle property is of how humans think and even how humans interact with each other are extremely important in a lot of ways and the reason why they are important is they just determine the effect
that's what which people can coordinate right like, you know humans are naturally kind of very attuned to kind of social trends and humans have a lot of motivations that have to do directly with, you know, what position they have with them kind of social trends and contacts that are made up by other people and this is just a space that the you know watching in cryptocurrency space is going to navigate well, and if it navigates it poorly then
Then I think watchings will be stocked by governments or like they won't be stopped entirely. But know the amount of usage can easily be more than 90 percent lower than in otherwise would be but on the other hand if up watching scan, you know successfully show to kind of large enough coalition's that this is a valuable and this is a good thing for the world. Then they can be very successful and like this is just something that you know, the space needs to have a better understanding of and take seriously.
Yeah.
I think there's a lot of good points. You just made what I like is that government is not an entity or enemy on the battlefield. 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 in one place where you said that in 2020, you know, big government one big social media one big centralized applications one but decentralize also 1 so there you can have multiple winners. These are Nestle either or you've also made a an argument and 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 are evaluating how these things will end up have it a so-called Nash equilibrium. They have a solution in Game Theory because a lot of individuals and making decisions independently, but because majority coalition's rule and people can collude or they can form coalition's that you end up in these unstable Cycles where even majority win one round and then the definition of the majority reach
Fools, 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. Oops. No now the Republicans are in charge forever. Oops. No now the Democrats are in charge forever again and subtly underneath what's going on is a definition of Democrat and Republican is unstable. They're just coalition's that are being formed and reformed as needed. So yeah, these are lots of great thought-provoking points. I'd really love to touch base with a metallic who's 37 in the ripe old age of 37 out of his Thousand-Year Methuselah.
Lifespan and see where you got to so navall. I don't know if you have questions remaining. So 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 QA at some point. I don't know the year in Mandarin and I was very impressed. I went to two universities in China and need young drawing.
The hung ha so I wanted to ask if you could give advice now having tested many things use many approaches for someone who wants to learn Mandarin. What would your current recommendations be to them?
Sure. So for any language, my usual approach is I think at the beginning like you do need some kind of explicit program. So like one thing that I've used is their payments over podcasts. So that's Pi M SLE
you are so it's just a series of these 90 minutes or start 90 30-minute podcasts or 2700 minutes ago two days in total that you know, you'll 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 over the course of these and then the episodes so you start from that but then even after that you don't have nearly enough to understand anything. I'm so from there. Sometimes you can find other podcasts like and eventually you graduate to adjust like
Give or podcasting that language so up things that are not even optimized for language learning. Well, I got to be getting you do want to find like resources that are off to - for learning flashcard apps. I'm helped for Chinese specifically for memorizing the characters or at least, you know, the first thing about of you know, five hundred or a thousand or so and there's plenty of flashcard apps through all about equally good and then once you kind of get asked some levels and you get to a level where the best way to get even better is to just talk to people
Well, another kind of paths that works somewhat at the beginning actually is like if you just go into, you know a city you just like start like reading various signs of the street and you try your best to just understand what you know, and what they mean. I mean if you see a word that you don't understand you look it up like that's often useful. I also use Duolingo as well that's been helpful in some cases. So it's just like a combination of these techniques and like you have to do when you start it's difficult.
When you get past some points like you you get to a point where you can just that kind of level up just from talking to people
from there.
Yeah, great advice and I'll just add to that that Google translate with image translation can be a incredible savior in lands where you don't understand the orthographies of the in Japan. My brother doesn't speak Japanese, but we traveled there and he was able to more or less accurately translate. Kanji the honson. The Chinese characters using Google Translate is it was remarkably accurate? It's improved a lot and as I understand it, you know, another thing that
You've done is is watching now. I'd like to clarify her. Is it watching films and other languages or is it watching English language films with subtitles in your target language, which is also something I've
done it is watching films in other languages. Sometimes will subtitles in
English. Got it. Thank you Navarro. Would you like to wrap up? No, thank you. Thank you for talaq. It's really been an honor. I think along with you know, Nick Szabo and health Finney and way die in a few other, you know, very influential people in Zoo.
Zuko and so on you've just been incredibly influential in the development of blockchains, and I believe that blockchains were the third wave of the internet after the web and mobile and they're quite fundamental to how the internet does and will operate in the future. You're probably the youngest one of that group. So you're going to be involved in for hopefully a very long time and it's going to change the Computing as we know it. I'm betting on it. I know many people are and so thanks for your work and thanks for taking the time to
Will help bring this to a broader audience.
I am I think I'm not even the youngest already. I'm like hi. This is what hiding from you know swap is even younger than I am and you know, the universal of Treasury has more funds and if than either and Foundation treasury, so this revolution precedes fast,
man. Yeah when I was first starting out my first company, I remember I was 25 and CEO and Company was valued highly and the CTO of the company. He was in his mid-30s. He said huh? He said so you're used to being the smartest young guy in the room, right? Just wait till you get a little
oh and here we are. Thank you gentlemen. Thank you.
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