We have an important preface, an important caveat, an important disclaimer before we get started, and here it is provided from my lovely lawyers. Here we go. I am not an investment adviser. All opinions are mine alone. There are risks involved in placing any investment in securities or in Bitcoin or in cryptocurrency or in anything. None of the information presented today or really any time since you might be listening to this any time is intended to form the basis for any offer or recommendation or have any regard to the investment objectives, financial situation or needs of any specific person that includes you, my dear listener.
So everything you're 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, et cetera, that you can apply to your own lives. This episode is a special episode and it is a very detailed, action packed episode. At least it was for me and in a sense it pairs really well with an earlier episode in 2017, I did an episode with Naval Rovics, who joins me again in this round two with Nick Zabo, and the title of that episode was The Quiet Master of Cryptocurrency, and it really covered everything related to Bitcoin.
So BTC, smart contracts, all of those fundamentals. This Volume two is going to cover everything.
Ethereum and the two people joining me already named one are Navarra overcount, as I might have mentioned. And he is really the pilot for this conversation. So he takes the reins as the interviewer can find him on Twitter at Nivel and Aviel. 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 successes, including Twitter, Uber, Knowshon Opened or Postmus and Wish among many, many, many, many others.
You can subscribe to Nivel, his podcast on wealth and happiness on Apple podcast Spotify Overcast. Wherever you get your podcasts, you can also find his blog at Noval. That's Naveh a tell the guest of honor. And the real expert in this particular episode is Vitalogy Budarin on Twitter at Vitalogy Budarin. Visite alike Beauty and Vitale is the creator of Astrium.
He first discovered lockshin in 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 block chain technology and applications had to offer, wrote the Etherial White Paper in November 2013. It is hard to believe that it was so relatively recent. He now leads a theory research team working on future versions of the theory and protocol. In 2014, Vitali was a recipient of the two year Thiel Fellowship tech billionaire Peter TEALS project that awards one hundred thousand dollars to twenty promising innovators under twenty 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 people and of italic, I believe, is now a ripe old 27 years old. You can find his writing and much more at Vitalogy Seet. That's vitta like dot seet. And for ease of reference and ease of finding, you can find the previous conversation with Nick Zabo on Bitcoin and smart contracts and other core concepts at Tim Dot blog Fortgang Bitcoin.
And you can also find this current conversation with fatales on all things Ethereum at Tim Blog forward a theory that's e r e u m. Please enjoy this wide ranging conversation with Vitalogy, Budarin and Narval Robert.
This episode is brought to you by Therese Gunn, I have to their guns and they are worth their weight in gold. I've been using them every single day. Whether you're an elite athlete or just a regular person trying to get through your day. Muscle pain and muscle tension are real things. That's why I use the third gun. I use it at night. I use it after workouts. It is a handheld percussive therapy device that releases your deepest muscle tension.
So, for instance, at night I might use it on the bottom of my feet. It's helped with my plantar fasciitis. I will have my girlfriend use it up and down the middle of my back and I'll use it on her. It's an easy way for us to actually trade massages in effect. And you can think of it, in fact, as massage reinvented on some level, helps with the performance, helps with recovery, helps with just getting your back to feel better before bed, after you've been sitting for way too many hours.
I love this thing. And the all new Gen Fourth Ergun has a proprietary brushless motor that is surprisingly quiet. It's easy to use and about as quiet as an electric toothbrush. It's pretty astonishing. And you really have to feel the Theron's signature power, amplitude and effectiveness to believe it. It's one of my favorite gadgets in my house at this point, so I encourage you to check it out. Try there again. That's Thera Ague, and there's no substitute for the Gen 4th Ergun with an old screen.
That's OLED. For those wondering, that's organic light emitting, diode screen personalized, they're going to have an incredible combination of quiet and power. So go to Thera Garden.com Tim right now and get your Gen Fourth Ergun today, or you can watch the videos on the site which show you all sorts of different ways to use it. A lot of runner friends of mine use them on their EITE bands after long runs. There are a million ways to use it.
And the Gen four three guns start at just one hundred and ninety nine dollars. I said I have two, I have the Prime and I also have the pro, which is like the super Cadillac version. My girlfriend loves the soft attachments on that.
So check it out. Go to third on dotcom. Tim one more time. Thoroughgood Dotcom Tim. This episode has brought to you by PKP IQ in their brand new supplement, Daily Immune Vitamin C, optimized for absorption, Americans are arguably famous for having the world's most expensive urine. So are you absorbing your vitamin C or just peeing it out? Studies have shown that you might absorb less than 50 percent of vitamin C when you consume amounts over 1000 milligrams.
Also a gram. Those are the same thing. Peake's daily immune is maximized for absorption with liposomal encapsulation technology like bazooms helped deliver vitamin C to exactly where you need it your cells, not just your bladder. And I've been using their packets now for a few weeks, have gone through a number of boxes and I typically take one to two per day, as I would say, maintenance kind of support dose. And I'll take more than that if I feel any type of cold coming on or any symptoms there of Peak's unique formula supports a healthy immune system and daily immune features a Bufford Nonoo acid form of vitamin C that's gentle on your stomach.
It is a powerful and absorbable vitamin C that fits in your pocket and tastes great. So I will often take a handful of these, just stick them in a jeans pocket for the day and then every few hours open up a packet. Plus it contains just seven clean ingredients, no preservatives, refined sugar or additives. All you need to do is open and squeeze it into your mouth. No glass, water or spoon needed. Personally, I like to have a small chaser of water or carbonated water, but you don't need it.
You can do it on the run. It's so easy and tastes so good. Think black European elderberries. That is the flavor I've been consuming. You might choose to take it once or twice a day or more as I do. There's a reason Peake's products have more than 15000 five star reviews. People are very happy with their products. Try it for yourself. Risk free with their thirty day satisfaction guarantee you either love it or you get your money back to go to peak t dotcom tim.
That's QE Atiyeh Dotcom Tim and use code Tim. Tim, check out to get five percent off of your first order plus free shipping when you purchase a bundle that's peak T one more time p q you eat a dotcom slash him and he's kotin for five percent off plus free U.S. shipping on a bundle optimal.
At this altitude I can run flat out for a half mile before my hands start shaking. Can I ask you a question now? It is. What's it like to be a cybernetic organism living tissue over metal inputs go to Paris, so. Tim, this is the speaking Tim, thanks for having us. We're joined by Retallack Uterine overtalk is the, I believe, now 27 year old creator of Etherial, which is the most exciting cryptocurrency since Bitcoin and has incredibly broad ambitions and capabilities and vitality is a really interesting guy because not only did he create Ethereum or cocreator, but he also is a multidisciplinary polymath.
His blog at Botanica is full of lots of great ideas and insights and thoughts. He runs the Etherial Foundation. He's sort of contributed to all kinds of things like automatic market makers, Roll-Up up social recovery while it's decentralized finance, scalability of block chains, 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 on Twitter.
And yeah, and we were very lucky to have him. I would say that for me, along with Nick Serbo and who we interviewed here in twenty seventeen, who create a bit called and coined the term Smart Contracts, and along with Zuka, who is the irrepressible founder of Vikash, I've always found Vitalik and and Zucco to be sort of the the three people on Twitter that are early on learn a lot about crypto from. So welcome Vitale, and thanks for taking the time to talk to us about yourself and in Syria.
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 of cryptocurrency, is this maybe a very general conversation? But at the same time, I'm going to ask for some hard questions. We're not going to let him get away with it, just the the PR angle. And so but we'll start with some basics. Let's assume we know what crypto currencies are.
And for those of you who are not that familiar with it, I would suggest you go back to the podcast that Tim and I did with Nick Serbo back in twenty seventeen, I believe that's titled The Quiet Master of Cryptocurrency. Correct. 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 going to get into what is the theorem.
So how do you describe it today? Retallack?
Sure. So the one sentence explanation of Ethereum that I sometimes gather is it's a general purpose.
Watchem So this, of course, makes more sense. If you already know what of lockshin is right, it's this kind of decentralized network of many different computers that are together maintaining this kind of like a larger or less data base together. Different participants have like very particular ways of plugging into that, and they can sense transactions that use very particular things. But no one can tamper with the system in a way that's outside of the rules. And if it expands on the Bitcoin approach, basically saying, well, instead of having rules that are designed around supporting one application, we're going to make something more a general purpose where people can just build their own applications and the rules for whatever applications they build can be and if executed and implemented on the platform.
So one explanation that I heard one person gave is that Bitcoin is like a spreadsheet where everyone only controls their own five squares of the spreadsheet. But if you're is a spreadsheet with macros, right. So, you know, everyone kind of controls 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 rules. And you can build a lot of things on top of that.
Right. Like Bitcoin, it's a monetary system on top are kind of famously Ethereum can build, you know, desexualized domain name systems and various decentralized financial contraptions, you know, prediction markets, non-flammable tokens and all sorts of different schemes that people have been coming up with. And the limit for what you build is basically your own creativity. But the core difference between building an application auditorium 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 to depend on you or any other single person for its continued existence.
And the application is guaranteed to continue running according to the rules that were specified and that you do not have any ability to have you regularly 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 while also trying to articulate in a few ways that I understand it kind of around the edges, because I think Ethereum is one of those things that's now quite a bit bigger than you. And it probably has evolved in ways. It even you didn't fully anticipate, so in some sense, we're discovering a theory of it no longer just building it.
I also like to think of it as kind of an unstoppable application platform. So a platform for building unstoppable applications, kind of like a world computer where let's say that we 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 on our behalf. Then we create a single world computer where we check the code on the machines of many, many different people all around the world who are properly incentivized to maintain a single computing state.
So if Bitcoin is a shared ledger, then Ethereum is assured 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 crustless world computer is doing. What are the applications today that are the most common and that you're most excited about?
So first of all, I think if the asset is a cryptocurrency and it itself is an application and out of the first application of Ethereum going beyond financial things, which I mentioned, it's NSV, the Ethereum name system. So E.A., you can think of it as a decentralized name system. Right. So like, for example, you know, when you go to etherial MSG, there's DNS, the domain name system, which has this kind of table that maintains this mapping of, well, you know, if a person enters a theory on dotcom, the server, they actually have to talk to you to talk to the website and some particular IP address.
And this DNS system that maintains this kind of public relationship is a fairly centralized system with a very small number of servers running it. So E.A. is a fully decentralized alternative that is running on the theory unblushing. And you can use it not just for websites like you can use it just for accounts. So, for example, like there is a messaging service called status. It's like in terms of like what it feels like to use it, you know, it's a messenger.
It's similar to telegram or Signal or WhatsApp or any of those. But the difference is that it is decentralized and so there is no dependence on any single server or there's still dependence on status to a company, which is nice because it makes the whole thing much more censorship resistance, and it makes the whole thing just a much more guaranteed to survive, regardless of what forces wish for, for its existence or wish against its existence in the future. Yeah, in essence, this really important part of it, because, well, if you have a chat application, needs to have some name by which I can refer to this resource that I want to talk to, like I want to type in and say I want to talk to the devil and things like Telegraph and Signal and WhatsApp, that knapping is generally basically kind of authenticated and controlled by a server.
But whereas in the States it's all just gone by the theory of lockshin. Right. So that is 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 there are some DFI decentralized finance space, which is this big category that has all sorts of interesting contraptions in it. Like so for example, there is a prediction markets.
So platforms 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 theory I'm watching. There's just markets for trading between different kinds of assets. There is what's called synthetic assets. So if you wants to have access to some mainstream real world asset, like, you know, it's all or it could be one example.
But, you know, you don't have to like dollars like there's lots of other examples as well. There is versions of this that are kind of purely virtual, sort of simulated versions that exist purely within the Ethereum environment. Now, there is this entire kind of very powerful financial toolkit that exists within the existing ecosystem. On the whole, there's just a lot of these interesting things that happen. I mean, there's even games that are based on Ethereum.
There's a whole bunch of different things. Yeah. And DFI 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 block chain, on the etherial block chain. And these smart contracts are kind of at the core of the etherial block chain.
We talked about these in the next Serbo podcast, but he famously described it. 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 these smart contracts obviously now are getting far, far more complicated, can actually be used not just to compose financial applications, but even applications that we don't normally think of as financial.
One way to think about it for those of you who are into computer programming is imagine if every piece of a program, every function had an address from which anyone in the world could reach it, a unique identifier address. And it had a slot into which you could insert money so you could call any function wherever it is in the world, you could insert money into it and it would do something on your behalf. And so that gives Ethereum applications this very interesting property called comparability, where you can use them almost like Lego blocks.
Each one builds on the rest. And so the final product in DFI ends up very, very advanced in the traditional world when let's say like Robin Hood bills the application and then Schwab builds another application and WisdomTree builds a mutual fund or an ETF, those can combine with each other. But in the etherial world of DFI, all of these apps by default are open source permission, less programmable and can connect right into each other. They can be identified, called and paid for in a permission list, trustfulness kind of way.
So the infrastructure that gets built in DFI and Ethereum, although it's it's very difficult to build and it's complex, once a piece is built, it is available to everybody and sort of stacks on to each other almost to create one of those Japanese style Voltron robots that just gains in power.
Nivel, 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 it's a really good question. I mean, my high level view on it is that what block chance 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 blocks in its integrity is protected by the block chain. And that's what block chance 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. We're used to clotheshorse companies capturing value. But here all the value is created by open source. But yeah, we talk, I'm sure has 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 there's sort of always in the scoreboard of market cap and transactions and usage. But, yeah, it's it's a Wild West out there.
Yeah. And I think the Blockin environment is definitely one that operates under somewhat different rules than the traditional environments like that. Just one example of this is the idea of forging. Right. So one story that happens around the beginning of last year that I just love to tell because of how it kind of combines together with the values of the space so nicely, is there was this platform called steam. And in the steam there's steam, the platform and then your steam the company.
Right. And steam was its lockshin and steam. The company did have some steam tokens, but they didn't have the right to just do whatever they want with the steam, the platform, because it wasn't a centralized thing, but they had some tokens and then steam. The platform had a voting mechanism and holders of steam tokens can vote on changes. But then the steam the company got bought out by Justin Sun, you know, the infamous Tron person and Justin Sunlike basically started doing some things to increase his control over the steam platform.
The community was very unhappy. What's happening here even kind of took advantage of some of the voting mechanisms and some coins held in 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 right. What the users said is while we're creating a new platform called Hive and Hive is just a fork of steam, it is going to have the same or most with the same rules as M and we're ever going to copy over most of the balances of the steam 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 like basically have collectively moved over to this New York and, you know, adjusting son had this full control of an empire. But then, you know, nobody cared. That empire anymore, because everyone now cared about height, right? So now stalking is this primitive that exists. And because of it, you know, you do have this ability for just communities to, you know, exert its collective agency and basically protect themselves from being exploited.
But at the same time, if you as a project team are good to your community, then those same effects work in your favor. Right. So those effects work in your favor because our community is willing to support your projects. If someone makes a copycats, 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's trust, in which case, you know that those kinds of situations and 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 the crypto 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 is infinite. And in some ways, that's the other beautiful thing about the space.
Vitale has this great line, this blog, where said we want a 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 DFI 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 Ethereum. They're protected by mathematics. Those are the walls in those castles.
And there are moats which are rivers of cryptography, but then they have free trade policy with each other. So that creates a lot of innovation. But if one of them starts misbehaving, that is people can leave and go to the next crypto castle or and this is where the analogy breaks down, they can actually replicate it, just create a copy and move to that one, like in the Stephen Hive example.
Well, that also is I mean, it has comparables outside of the world of blocking and cryptography, insomuch 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, Matt, 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 cerium ecosystem, so to speak, that you can perhaps compare to other things to help educate people as well. I was just sort of connecting some of the stuff. That's a good analogy with WordPress. The place where the analogy is diverge is that WordPress, it's kind of a single player game, like each person owns their own blog writes and Experion World, you could use a 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. Block channels combine this really weird combo of individualism and individual control and the ability to leave along with consensus and community and cooperation and build this giant public good. So it is its own thing. It's hard to figure out, but it's worth 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.
It's like, what was the initial vision for a theory and what has most surprised you, if anything?
You know, 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 says, you know, when I came up with a theory and my first thought was, OK, this thing is too good to be true, and I'm going to have five professional cryptographers raining down on me and telling me how stupid I am for not seeing a bunch of very obvious flaws.
But, you know, dot, dot, dot, two weeks later, I was extremely surprised that none of this happened. As it turned out, the core theorem 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 in your hands to kind of open the gates for people to build what they want to build. On top of it, the background kind of story, for one, if Iran was starting to be formed, was that this was just the time when the idea of abortion beyond Bitcoin was just starting to gain legitimacy and people were just starting to realize that, you know, there are these applications for blockade's other than just them running a currency.
And it would be nice to ability platform. They can actually support them. And so at the beginning, right, you had single purpose actions. You had Bitcoin for currency, you had Namecoin for domain names. You would have like a single purpose. Protocol is like colored coins for issuing assets. The second step is what I called a Swiss Army knife protocols. A Swiss 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 build a to achieve the support of them.
A select master coin was one example of what I called a Swiss Army knife protocol. And the problem with Swiss Army knife protocols is that two weeks later, you know, some 14 year old teenager in Finland comes up with a twenty six application. You have to go hard for the protocol.
So the next natural step is this kind of general-purpose approach where instead of you are blocks in supporting 25 applications, you're watching sports programming, language and whatever a system with whatever rules he wants to build, you write that in a piece of code and the nodes in the network can all execute the code. And the network kind of helps to collaboratively enforce the rules of this code for the 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 financial gadgets, cell contracts for difference, for one example, which is one very particular subset of the thing that today we call it DFI decentralized file storage. Kind of like you don't pay people to storage. Gigabyte of your data was one thing I was excited about.
Decentralized game systems was excited about those, you know, decentralized trading between different assets, like a lot of the examples of just things that people wanted to do with blockade's at the time, like they are just are the same as what people are doing today, though, there are also new applications, right? Select non-flammable tokens that I briefly mentioned, NFTE. The idea here is basically you just create a 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 bragging 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 NFC ecosystem has been extremely successful. On about a week ago, there was a yet again catch NFC that got sold for the equivalent of about five hundred eighty thousand dollars.
And so that's an example of a new thing. Another example of an old thing is that decentralized one-sidedness organizations. And so the idea here is, well, you know, let's build an organization where the rules for the decision making in that organization, you know, the equivalent of like shareholder or board voting or whatever he wants to use, could just be written as rules in aspart 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've seen a couple of examples of that kind of simple Gio's in action, a maker down of which kind of maintains, you know, digestible coin that is algorithmically targets of price of one dollar is one example. Now, there's also RHI. You know, there's a lot of examples of this, a lot of things that we expected from the beginning. Prediction markets also have been part of what we were excited about using watches for since 2014, and they're still around today.
So a lot of old things and also some new things as well.
Thank you. Yeah. I mean, yeah, some of the ones that Vitelli just laid out, like I think your recent guest, Katie Horn, mentioned as Nifty is what she called it, because I wanted to try to I want to try to force that into the lexicon, but got it. What you want is a nifty, nifty, yet so nifty lefties are this crazy idea that like owning a digital copy of something and having your name stamped to it somehow gives it more value.
But it seems to work. It works with collectible trading cards. It seems to work with digital art. And then because of the possibility of the Ethereum infrastructure, you can reuse these nifty items across different games, different museums, different virtual worlds. And so you own it in one place and you own it everywhere, which is a very powerful concept. So digital scarcity was born with Bitcoin, but. Extending 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 has emerged in a theory m theory, it's funny because you're asking Vitale, what did he expect and what do you not expect?
I remember when in theory first launched that a lot of computer scientists I spoke with privately said it would never work because it's kind of this crazy idea that the way we're 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 sync it up and make sure it matches so that 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 a theory has shifted from will it work to will it scale? And when I talk to my friends in the crypto community and say, hey, what do you want me to ask Italic? They send me a list 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 a 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 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 theory block chain.
And frankly, the gas, the price of gas has gone up these decentralized finance applications that can be very lucrative. They're 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 DFI transaction the other day and it was one hundred dollar transaction and the price was twenty five dollars just to execute the transaction. And that's a very, very high transaction fee.
And an overtalking Cribben working for years on the etherial to project to bring that cost down. By the way, as an aside, that is one place where Ethereum really differs from Bitcoin. Bitcoin is saying we're digital gold, this thing is immutable, don't change it. And the fights in the past have been about changing Bitcoin or not. There was a big famous schism over that. But now with Ethereum, you know, the question is the philosophy is we do change it.
We do improve it. We do make it better. But in the process, there is a greater chance that things can go wrong, that it can break. So now we're entering Ethereum, too, which is the scalable version of Ethereum. So it's talk. You want to give us a quick overview of Ethereum, too, at a very high level and then we can dig into the pieces, I'm sure.
So I think one other thing that's important to kind of add, just to give a complete picture of scaling, is that there is these two families are scaling layer one scaling and layer to scaling where layer one scaling basically says, well, let's make the blocking itself better. Handle your two scaling says, well, let's come up with protocols that are going to sit on top of the watch in. And I used to watch in in more clever ways to provide the same kinds of security guarantees set up, which it has, but that provide much more scalability because you're not just kind of ws taking literally everything and doing everything on a Vijayan directly.
And so like Bitcoin, for example, you know, especially after the scaling was focused very exclusively on layer two, whereas, you know, Bitcoin cash is very layer one focused.
So there is a long, rich history and 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 Ethereum is going to split into or it's going to have multiple layers. And I think what you're saying is layer one is really Ethereum, and that's the least scalable part.
But that's where the security comes in. And layer two is where the code is run. And that's that that has different properties which you're going to get into.
That was the way that I would describe it is in comparison to Bitcoin, which is very clear to focus that Bitcoin cash, which is very clear, one focused Ethereum takes a moderate approach. So we do both kinds of scaling. Right. So there is the EU effort, which you mentioned, which, you know, it is layer one scale. Right. Is basically saying, well, we're going to make this big upgrade of the blocks, then we're going to move it from a fork to approve of stake of we are, you know, proof of which is this current consensus mechanism that keeps supply chain secure, that runs on having a large number of computers just constantly cranking out these kind of mathematical hash solutions 24/7 and.
Steak 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 note to the network only has to download and process a small portion of all of the data. The Washington protocol is designed in a clever way that still ensures safety despite having that constraints. So think of it as like combining at least some of the advantages of a Bitcoin style auction.
And BitTorrent, right. Like BitTorrent is very layer one scale like this. There's nobody who downloads every movie or even an index of every movie. Yeah.
So before we get to layer two, so layer one is you're saying it's proof of stake, which is moving from proof of work to proof of stake and sharding, which is breaking it into pieces and having different pieces do different things and then try to reconcile them on the proof of stake side. I mean, that itself is a whole big debate that could take up the entire podcast.
Just a quick thanks to one of our sponsors, and we'll be right back to the show. This episode is brought to you by Wealth Front. Did you know if you missed 10 of the best performing days after the 2008 crisis, you would have missed out on 50 percent, five zero percent of your returns? Don't miss out on the best days in the market. Stay invested in a long term automated investment portfolio. Wealth Front pioneered the automated investing movement, sometimes referred to as robo advising, and they currently oversee 20 billion dollars of assets for their clients.
Wealth Front can help you diversify your portfolio, minimize fees and lower your taxes.
Takes about three minutes to sign up and then Wealth Front will build you a globally diversified portfolio of ETFs based on your risk appetite and manage it for you at an incredibly low cost wealth front. Software constantly monitors your portfolio day in and day out so you don't have to.
They look for opportunities to rebalance and tax loss harvest to lower the amount of taxes you pay on your investment gains. Their newest service is called Autopilot, and it can monitor any checking account for excess cash to move into savings or an investment account. They've really thought of a ton. They've checked a lot of boxes. Smart investing should not feel like a roller coaster ride. Let the professionals do the work for you. Go to wealth front dotcom Tim and open a wealth front investment account today and you'll get your first 5000 dollars managed for free for life.
That's wealth front dotcom time. Wealth Front will automate your investments for the long term and you can get started today at wealth front dotcom tim.
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 in any decentralized consensus system where you don't have a central registry that keeps track of the different humans, are you need some way for people to basically vote on like which blocks and which transactions got included in the network. And you need for that vote to be secure against what's called a civil attack. A civil attack is when one attacker just pretends to have one million different accounts normally like in like Reddit and Google accounts and Twitter at all of the essential systems like this is done using centralized mechanisms.
Right. Like they sometimes require phone number verification and then phone numbers themselves often ends up having some kind of KYC. On top of that, there is various techniques to try to detect bots. But in a decentralized system that we don't have the sort 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 outvoting everyone else, the solution is economics, right?
The solution is basically that the extent to which you can vote on just this very limited question of which transactions get included, in what order is proportional to how many economic resources you put in. So in the case of proof of work, those economic resources come in the form of computing and hardware that you're running. Right. Like when you're running this mining software on your computer, you're cranking out these have solutions. Every hash solution gives you the right to generate a plug in.
The number of 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 participate in creating the outcome is proportional to how many coins that are in the system that you're taking. And so the reason why grubstake is efficient is because in proof of work, like the way that you're basically prove that you have a computer to the system is by just like running the software on on that computer 24/7 and generating have solutions read like that's the only way to safely do it.
Because if you did not have to run the computer 24/7, like if you only had to run it 24/7, well, then, you know, you could have one computer that just pretends to be two different computers, but with proof of stake. If you have coins, those coins are saved in an account that accounts has an associated public and private key. And you can just make a digital signature with the private keys so you don't have to, like, run any computer for longer than a few milliseconds.
That's the kind of core principle, the 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 block chains they have to issue coins to in exchange for the security to the so-called miners or validators in the case of proof of stake. And people will spend a dollar to get a dollar, so to speak. If you're giving out free coins on the block chain, then people are going to hustle in any which way possible and improve the 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'll have to obtain funds to do it. And there's a cost of doing that to obtaining those funds. So there's no real free lunch. But there are arguments for efficiency with proof of stake, especially as you get to securing very large amounts.
The way that I would just briefly summarize the state case there is that the states can actually survive, at least in the opinion of state supporters with much lower rewards than Orkan. And the reason is and like because of how the state works, the ratio between the cost of attacking a system and the cost of just running, it becomes more favorable. But, you know, this is a long debate. I've written on it. I have a post on Fatalis NEA, if you just scroll down, the most recent one called of Stake and then, you know, proof of works.
Republicans have their own posts as well. So encourage you to read all of them.
So going back. So this is all there. One Skillings switch from work to proof of stake starts charting the block chain and this gets you some tens of times improvement like twenty times twenty five times improvement and 300 times a hundred times. Fantastic. So then there's layer two which stacks on top.
Yes. So layer two as I mentioned, is about creating protocols that live on top of the block chain that only used abortion in very particular ways. So there's lots of techniques for this. Right. Like the simplest layer to to explain I think is a very special purpose kind of layer to call it a payment channel. So the idea behind a payment channel is like, let's say I am selling you enough novel and an Internet connection and you're paying me back like let's say you're paying me one cents per.
Now, if we want to do this over the watch in the naive way to do it is every time megabyte of data passes through the connection, you just make an unchanged transaction. And you said to me once said, 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 spend ten dollars on the watch in to an address where according to the rules of the 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. So at the beginning, you said ten dollars to this contract and so far you actually haven't made any payments because as I explain, the contract has rules that will allow you to get your money out.
Now, here's what you do. After one megabyte, after we have one megabyte worth of Internet data passing between us, you create an off chain message and you recite that awful message that just has the number one set just written on it. So you will just write the number one set and you attach your signature and you send this to me. None of this goes on yet. Then one more megabyte happens. You write out the message that has the number two sets and you sign it.
You send it to me sometime later. Every time a megabyte happens, you just send me one more of these messages that you keep on incrementing the number. And let's say after a few hours of this, in total, we've had three hundred and forty seven megabytes worth of communication. And you've sent me a message that says three dollars and forty seven cents and you are now no longer wants to use my Internet. You're signing off for the day. And so we're done.
So now here's what happens. I can then take your message and your message that says two dollars. Forty seven cents. I can attach my own signature to it and I can publish it as a transaction. Going to the smart contract and you have your ten dollars in the smart contract has a rule that says if I send one of your messages, I call them Tippett's. If I send one of your tickets, if I kind of wrap one of your tickets in an actual transaction and I actually kind of publish your ticket to the auction, then whatever amount of money is on your ticket goes to B and the remainder gets refunded to you.
Right. So I get my speed always forty seven cents and you get your six dollars and fifty three cents back. Now it's actually incentive. Aline's right because I always have the ability to use the most expensive ticket that 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 take your later ticket. And so I'm always going to claim all of the money that I'm owed and you get your money back.
Now, if I disappear, then after some period of time, you have the ability to 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 these one hundred and forty seven times. Right. Like we've had three hundred and forty seven interactions during which the amount of money that's entitled to me goes up and the amount of money that's inside.
Also you go down. But actually there is only two actual lockshin transactions that are visible to and needs to be processed by the rest of the network. Right. So we make three hundred forty seven payments but the you we two of them. And that's a factor of one hundred and seventy eight to approvement there. Yeah. So surveyance summarizes for a second kind of our listeners basically 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 theory block chain floodgate, 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 block chain and submit the the the record of all the transactions and say, look, it's signed by both of us. So this is valid. But either one of us can submit it and the block and executes it.
So the chain only needs to know when we left with how much money staked on 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, I think, the simplest kind of lawyer, too, but they're also the least powerful tool. 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 is that you have an ecosystem is the most. Excited about is something called Roelofs. Now, I don't want to actually go in and fully explain roll ups because they're even more complicated than channels. But for those who are interested, I do have an article once again, you know, go to italics, Isaiah, scroll down like a I think it's called an incomplete guide to Roelofs.
And so I just write channels and also the second class and also Roelofs and roll ups are really powerful because they can support not just payments, they can support the full generality of applications like exactly the same applications that you can run directly on the author and blocking itself. But if you do those things, it's had a role up. They become one hundred times cheaper. So it's is a very powerful scalability technology. And see if your community loves Roelofs because they're very easy to upgrade to it, because if you run an application on experience and you can just run the exact same application inside of an ethereal virtual machine compatible ROELOF, of which a couple of projects exist.
And actually, I think a couple of days ago, optimism announced that they're going to launch if they're made that fairly soon. Europe's 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 block chain to say, don't worry, this this was a valid transaction. And the two different approaches. Optimism is optimistic. We're basically optimistic, Rob, 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 there is zero knowledge base rule ups pioneered by Starkweather and 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 one hundred speed-up?
So if you combine the two layer, one speed up and the layer to roll up, speed up, then you get the ten thousand times speed up.
Exactly. You could get some somewhere over one hundred thousand transactions a second and one other. A really nice feature of charting, by the way, is that I get quadratic, right. So if the efficiency of computers increases by a factor of two, then like the you can support twice as many shards and each shard can be twice as large. And so you're the capacity of the whole system increases by a factor of four. Right. And so we actually expect that capacity to increase going even far beyond one hundred thousand over the next couple of decades.
So is it a stretch to say then that it would that sharding the sharding increase its capacity as a square of Moore's Law as opposed to just that Moore's Law? Yes, this is now if we get to one hundred thousand plus transactions per second, that's a lot.
I mean, to give a give a comparable metric. There's a there's about one hundred thousand tweets per second at Twitter during peak times. And obviously these transactions are going to be much more sophisticated than or could be much more sophisticated than a single tweet that can actually be arbitrary computer programs running on the side. So that's quite a bit of scalability. So so then I think the question comes up, well, where is it? You know, a lot of people I know who are building apps on top of ethe have now had to come up with backup plans, their competitive block chains that are coming up, which trade off decentralization and security for speed.
So what they'll do is they'll say, well, we'll only have 20 validators run by our friends or maybe the one hundred people that we know and trust. But an 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 backup plans. But I know that they don't really want to use these because these are less decentralized.
They don't really fully live up to the original promise of block change to the same extent. So the real question, I think, in everybody's minds 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 the very important question. So I'll start off with the progress that used to. So I think it's important to reiterate, because I think a lot of people have it's fully absorb this.
The to a chain is already running. Right. So there is already a proof of stake in it does not yet have sharding, but the system is running. The thing that has not yet happened is the event that we call demerged, which is where we basically actually take on the existing activity on Ethereum and we fully move it over from the work chain to the station and then the proof work changes. That basically becomes irrelevant from there. And the reason why we took this kind of multi step approach where we first start the process system and then we have both running parallel for some time and then we merge at the end is just to give privacy, take some time to prove itself before the entire ecosystem is asked to upgrade over the stake thing exists that's been stably running ever since the launch.
And at some point fairly soon, you know, we are going to actually go and merge all of the activity onto it. And so shorting is also going to happen as Sharding right now is in the there are suspects. There is prototypes of parts of it. I will admit that we were actually prioritizing the merge even more than Sharding recently. There's a reason why for this actually has to do with the other thing, which is Ralf's right. The thing to remember is that if you have roll ups but you do not have sharding, you still have 100 X Factor scaling.
Right. You still have the ability for the bloodshed to go up to somewhere between one thousand and four thousand transactions a second, depending on how complex these transactions are. And so with roll ups, as I mentioned to the optimism, you know, fully ETM Capable Roll Up is likely to launch an initial Minett release, some in around a month or so. There's also a project called Arbitral, which is also on ECM capable roll up. There is actually a simpler roll ups that are only capable of processing simple transactions and exchanging between assets like Labrang and Zik Sync and those Roelofs have already been running stably for about a year.
Right, syrup's Artim. In theory, they've been a practical part of scalability of Ethereum for a few users for almost a year. And so the thing that's left is basically taking that same model and just fully extending it to not just for transactions but also arbitrary applications. Right. So Rolf's are coming very soon and we're fully confident that by the time that we add any more scaling, that that sharding will have already been ready for a long time by then.
So you're basically saying. A very confident that something like an optimism or XXX based Roll-Up will be solving one hundred scalability problem within the next few months?
I think so. And then I think 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 new technology always has risks. But I expect there will be plenty of applications and possibly even nonfinancial applications like the Niftiest and Zammuto and domain names and so forth 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 Ethereum 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 Bitcoin forked. And now, of course, what we call bitcoin is a small block Bitcoin that won that debate. Do you think that there's a possibility that miners, some miners and people will stay on ethe one instead of ethe two?
I think so, except I do think that the risks are much lower. A big part of the reason why is because we've been very open about privacy and sharding being the vision basically from the first day and I think we already have. This gives a bit of a theory on that and Ethereum Classic and a lot of the proof of what proponents did actually move over to two or three unclassy already because they recognize that the theory and classic community and ideology was one that's more aligned with the continuing proof of work forever.
And so, you know, why stay on the chain where the core developers and lots of people are eagerly expecting a perfect 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 did actually ends up making the EU transition of a bit more secure. Another thing also is that I don't really think there is a deep schism of ideologies within a theory. I mean, the way that there wasn't Bitcoin like I think in theory everyone is roughly on board with the idea that, you know, you have some layer, one scale and you have somewhere to scale it.
There are some kind of longer term disagreements like Justin Drak, one of our researchers, for example, is much more into making layer one more powerful, whereas I am more in favor of a simpler layer one and having layer to do more things. That's not a kind of extremely deep and fundamental disagreements. I like either approach is going to have lots of scalability and it's going to offer a great environment for Ethereum users. So that's interesting. You don't you don't even really run a theorem.
You have disagreements with developers and they could even change it in a way that you don't like. Has that happened yet? Has has there been a case where something has been implemented into a theorem that maybe the community or the other developers wanted, which you sort of disagreed with?
There's definitely been changes that I wanted to push forward that I mean, I give up on fairly quickly because I know enough words. Developers or these community ended up disagreeing on them. There's been changes that were kind of pushed forward by some people who are not myself and then where I just kept completely silent. So like block reward decreases, for example, I was completely silent or mostly silence. It was mostly silence until it was obvious that the bell side was losing things that I was trying to push forward.
I mean, those are harder to find just because, like, I tends to just naturally understand what the community would accept. And they don't really try to push things that I don't think would be successful. I mean, there's like some minutia around, 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 afar is you're more coordinating than dictating and you're doing what are you running? The Theorem Foundation is an organization you're part of or you just kind of a roving individual with a laptop and a few friends who just kind of writes blog posts and submits proposals and some of those.
And I do I do the proposal submitting ideas, do some some writing proof of concepts. And in one place I do a some and of trying to coordinate people. The Ethereum Foundation as an organization exists. So the executive director of that is in the aggregate, she has been. Doing a lot of the logistical things for about the past three years and has done an amazing job, ends and ends up then of coordinating and working with her quite a lot on various things.
But even the Ethereum Foundation, like it has an important role because it has this kind of a large pool of capital and this sort of high level of kind of public legitimacy. But it's not nearly the only organization that is here. Right. Like there is a lot of proposals that got initiated on the outside. There's a lot of proposals that got a really huge amount of community support coming from the outside, even organizations other than the foundation that has a lot of resources within their own ecosystem.
So like, for example, for the first few years, consensus did quite a lot in consensus, is still doing a lot. But now there's also a DNA swab who's Treasury has just grown a huge amount of they here are even wealthier than the Ethereum Foundation is. So I think in practice it does end up being this kind of loose collaborative effort which made a lot of different groups.
So what is interesting to swap is for those of you don't know, it's an application built on top of Ethereum, but it has its own token. And it's the it's one of the first automated market makers, a decentralized platform for exchanging crypto currencies with each other without having to use a centralized authority like a Coinbase or a Jemini or a coin list. Instead, you just go on to go to UniSuper and it's a smart contract. It's not owned or run by anybody except the community and a few developers.
And there's a token associated with it. But you can just automatically trade with this smart contractor and say you're etherial into a stable coin to get the equivalent of dollars are back. This shows how the Ethereum ecosystem is very different than the Bitcoin ecosystem and the Bitcoin ecosystem. There's only one coin. There's Bitcoin and they don't really tolerate other tokens in their orbit. Whereas with cerium, you have a lot of other tokens in the orbit. And so you'll see block chains that are competing with Ethereum that are trying to, you know, they're making different tradeoffs and whether it's Flow or Evony 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 in unit swap and whatnot. And so what's your view on all these other tokens? How many tokens are there going to be? How do you determine which one makes sense and which one doesn't? And do other block chains makes sense at layer one, or should other tokens only emerge layer two now that Ethereum exists?
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 crucial to human civilization. But on the other hand, fire is if you're evil and you burn up your family if you're not careful. So the with tokens. Right. Is that the crypto space is not the only space that tried to build decentralized things, like there were a lot of decentralized projects that are outside the purview of space, like a diaspora.
The decentralized alternative to Facebook that people tried to build around 2010 is one good example. But the challenge with this kind of free block chain or non blocking decentralization or crypto is that it's harder to kind of align the incentives and motivate people to actually want to participate in, you know, building and growing their 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, can appeal to the kind of universal values like where, you know, the real universal values get rich for a lot of people.
Yeah, and it seems with if you've done a bit of both, you've got a bit of both. You've got people who have ethe to getting rich. And then there's also a movement. Right, exactly.
And I like I think that balance is important. Like, I think the failure of a lot of non blocking crypto show is the inability to do things at scale without that financial incentive. But at the same time, you know, the project, a lot of them, more of, in my opinion, immoral projects within crypto that just care about, you know, the pump and the volume and, you know, getting a powerful, expensive token that they can get rich off of, like those projects set up, but not really doing well in the long term either.
Right. And there has been plenty of projects where just like VC funds gave, you know, hundreds of billions of dollars of capital to them. But, you know, the reality is that like hundreds of billions of dollars of capital just can't buy you a soul. Right. And so a lot of people end up kind of stumbling and falling on that to some extent. Yeah, I think some of that is just driven by the premodern phenomenon where Bitcoin had a so-called fair launch, although you can debate how fair it was, but you know how fair the distribution is today.
But everyone sort of started mining at the same time or everyone who was aware of it, where a lot of coins that have come subsequently, the team has a pre mine where they get a bunch of the Bitcoin in advance. And as the amount of the premium goes up and the competition moves from, hey, let's mine as much Bitcoin as possible to hey, let's create the winning block chain and then get the big prize mine. So it's just move the competition from mining to creating or forking.
So it's almost inevitable once premiums became a little bit accepted that there would be so many different block chains.
Yeah, I think that's definitely fair to say. They can work in this area once again as a kind of fairly a kind of moderate there, like there was a pre mine. But now the mine was only about 12 percent of actually going about 10 percent of the total supply. And people did have the opportunity to mine or to divide the sale. And so a lot of people had the opportunity to and have become part of the ecosystem. But I do think that the less monitoring of the movement aspects of this is important, like if you just go to market cap and you look at some of the top 10 coins other than like, say, Bitcoin and diphtheria, but you can't always give a good answer for, you know, what values does that toolkit represent?
Whereas for Bitcoin you can for everything you can for XYZ cash, for example. I think you can. So I think there definitely is this kind of a complicated balance between different factors. Basically, the coin can help, but too much emphasis on just a coin can hurt. And it's challenging. I think you to swap actually did really well with their coin because like on the one hand, you know, you could kind of criticize it and say, you know, oh, this was only just a measure that it was kind of reactionary that was reacting to, you know, kind of Souci SWAPO trying to kind of swoop in and basically try to push everyone to quickly migrate over.
And they had a coin. So people got into such a swap because they just wanted to get rich off of it. And so in a swap reacted by making their own coin. But at the same time, they did this one really cool thing, which has a big part of the initial distribution was this very kind of egalitarian airdrop. Right. Like basically, if you had used the swap even once before the airdrops that began, you would get four hundred unique tokens.
So at the time those tokens were worth about three and a half dollars. So the joke was like, you know, doing a swap actually delivered on giving everyone a Samuel check. And, you know, people really love that. And although the supply distribution distribution of Yuni was going to vary widely dispersed and the whole thing was this kind of dowl where a lot of people could participate in decision making. So I think there's wastage of tokens while there's ways to do tokens poorly.
Yeah, the backdrop on UniSuper sushi swap is Younus, what was this? Automated market makers decentralized exchange that launched and then they sort of got attacked. They got Klown by this other one called Sushi Soire Jokin Looney's Sushi. And then they tried to, like, steal the UNICEF community by saying, hey, come here and we'll pay you more by giving you tokens. And then, Eunice, what was forced to actually create a token which we then gave away to their community, which are called eardrops, like helicopter drops of money, except notes and 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 airdropping Facebook's stock on the users and you see Jack Dorsey airdropping Twitter revenues and the users. But that's exactly what happens in block chain land. And, you know, etherial might have had a small pre mine.
But I do remember early on looking at Ethereum and I think I talked to Baloji Sreenivasan, one of your other guests about Atim, where we were looking at Ethe 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 that's my way of saying that this was not a Batalla get rich quick scheme. I don't think the Tarlac even had, you know, was even the single largest token holder. I think there were many other people who, frankly, you know, had a lot less to do with Ethereum success, who ended up holding a huge number of tokens. So to the extent that Retallack is the one who was working on it and pushing it forward, it's a labor of love.
And I've always been super impressed by how his team is very altruistic and really kind of wants to make the world a better place. Maybe they're young and naive, but it's, you know, it's refreshing to see that. So I think, you know, in terms of branding, a lot of people look at Ethereum as like lift to bitcoins, Uber. Right. There's sort of a crypto right wing libertarianism versus a crypto Left-Wing sort of libertarianism Narval.
Let me jump in for one second here. If I. May ask a naive question or a novice question maybe. And if if I'm completely looking at this the wrong way, I'd love to be corrected, thinking of a theorem and comparing it to, say, Bitcoin and considering the possible regulatory threats to Bitcoin. And I think probably a stronger focus on cryptocurrency than block chain by regulators. And just by extension, if we're thinking of cerium on some level as both cryptocurrency but also as a world computer, maybe as if Amazon had its own cryptocurrency, Bosnians or whatever, whatever they might call it, and then RWC that even if there were a crackdown on currencies, that Ethereum would have some resilience and a.
. Fragility in that respect. Does it mean that Astrium 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?
And that comparing the kind of regulatory situation of etherial Bitcoin and I think like most 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. Ethereum is very similar in that regard. You know, there's these very strong communities in lots of different countries, you know, including countries that are a no, not kind of geopolitically on the same page with each other.
So there's a lot of resilience here in that sense. Now, of course, the other negative aspect of politics is that it's like it's not just about what they can do. It's also about what they want to do. The reality is that regulators have cracked down on cryptocurrency is significantly less than they theoretically could theoretically could make something like Coinbase illegal overnight. Right. And I think the reality is that, you know, they yetto 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 wants to use public auctions and even things like Ethereum to build applications on top of them. You know, they see value in some of the kind of advantages that the. Things like Steve walkaways, for example, could provide even financial obligations of various kinds.
Yeah, if you wanted to build a fraud proof voting application, you'd probably do it a material.
Crypto currencies are inherently designed to be sovereign resistant, right? 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 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 in the next 10 years.
So hopefully they don't do that. But there's also redundancy in terms of design. For example, going to proof of stake is a different kind of redundancy than being just all proof of work. So you're not subject to the same kinds of attacks, I think, being used for all kinds of applications.
Could you speak to that? Yes, I prefer workers.
You shut down miners and miners of hardware and equipment. You know where they live, right? They need a physical presence. Were proof of stake as validators, we just need Internet connection. And so they're kind of harder to stop and harder to find in theory. Mm 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 Vatileaks 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 cryptocurrency is to kind of just allocate scarce resources. Like even today, there are things that we do on the Internet that are centralized, like caching and routing and spam filtering that should be decentralized and involve crypto payments for efficiency. And once we sort of start getting to those applications, it'll be very hard to turn off crypto without turning off the Internet.
It's the native money of the Internet, and so if you take away value transfer from the Internet, the Internet as we know, it will be stunted at best and more likely just ceased to function at some levels.
Thank you. Back to Universal. Yeah. Yeah. No, not at all. No. Yeah. It's I mean, there's there's there's there's an infinite number of rabbit holes we can go down coming back to a theorem for a second. So there's bitcoin which is clearly digital gold. There's a theory which is the world computer and you know, digital gold high price is good. You want your gold to go up in value, except to the extent these days digital gold bitcoin has been going up.
But it actually gives me some trepidation. I tell people it's like my insurance policy is becoming more valuable and my life insurance policy. Right. I don't know how I feel about that, but with if it's not clear, the price going up is always that good for adoption, it's good for the people who are pumping and holding. But is it so good for the people who are trying to use it? I mean, what do you have any thoughts on the price of IEF and how much, for example, we don't even know exactly how much if there is going to be the future rate.
The supply curve is a little bit undefined and some people say, oh, it could be too big, this thing will get inflated, whereas the other arguments say, no, there's certain applications we're going to have for which we have to lock up it or even destroy if to use these applications. So if 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 price means for the ecosystem?
Yeah, OK, so one thing that I think you alluded to a little bit is that there is this proposal called IP one five five nine, which kind of decides how the transaction fee market works. And there is a lot of kind of very wonkier, a kind of economic base for kind of why the specific changes that it makes makes sense. But one of the consequences of that change is that the majority of fears, instead of going to the mine or whoever creates the block, would get burned if you just sort of against weeded out of existence.
And so if demands to use that the uranium is high enough, then there would actually be more use them as they're being destroyed than is being created. And so, you know, the jokes that sometimes make us and bitcoin. No. A fixed supply of sound body that, you know, if you have a decreasing supply, does that make us some ultrasound money?
And it actually is not even that far fetched. The 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 block rewards for that for that day. So it's interesting because, like, it basically creates this more direct connection between people using the asset watching and, you know, yes, having some value. Right. Like at the beginning, the way that was even described earlier in the sale is that this is like gas.
You know, you're buying this token that you need to use. And if you watched you Spetz transactions and if the token is actually a consumable rate, then it actually behaves even more like, well, I guess, you know, gasoline, as said, the original metaphor. Right. Like if people wants to use it, they would actually have to consume it. And so the value of that is actually something that sort of depends on the Ethereum network being useful.
And that's see, yeah, it's a bit of a difference, kind of the guiding principle then something like Bitcoin, right, where Bitcoin just derives value from, you know, because the currency derives value from Bitcoin, the currency, Bitcoin, the blocks is this kind of thing often decide that, well, OK, fine, it has to exist, whereas in a theory it's much more of a system worth a fortune is the point. And, you know, if the asset gains value from the blocks in doing its its job successfully, it's interesting.
So Bitcoin, the value is in the currency or in the bitcoin itself, whereas in ethe the values and the blockin being used in the earth is the byproduct of it. Yeah.
To use my strained castles made of math analogy, you know, I think bitcoin is like the big impregnable citadel, the Fort Knox into which you're putting your gold and you and the thing has high walls and it's 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 Ethe is sort of this dynamic network, a little city states that are trading with each other.
The more trade there is, the more free flow of information and goods, the more valuable the whole system becomes. But no single point of it is necessarily as impregnable. Like, for example, I do expect that we'll see more hacks and break ins and failures in the ecosystem as a whole, not an earth itself, but in the ecosystem around ethe then we will in the ecosystem around Bitcoin necessarily. But at the same time, if it's dynamic and growing and adaptive, which just makes it more of a, you know, an evolving creature.
Yeah, 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 tether is one example. Mm hmm. Yeah.
There are pieces around the bitcoin ecosystem that are semi centralized or of unknown trustworthiness and do rely on untrusted on trusted third parties, I should say. But, you know, as the big. When people say, like, not your keys, not your coin, right, and trusted third parties are security holes, so they're aware of that, I think the Bitcoin maximalists, which I believe is a term that you coined, the Bitcoin maximalists, would say, well, that's not Bitcoin, right.
That's something else. So, I mean, one of the things to think about here, and I think you care about this more than most people in crypto, which is nice, is that you do seem to care about wealth inequality, the Gini coefficient and the distribution of coins. And one of the criticisms about crypto that I see a lot is like, well, OK, 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 ethe holders.
And how do you think about the distribution of wealth in a crypto run economy as opposed to a fiat currency, a.k.a. the US dollar and you know, the euro run economy? This is definitely one. I think one of the challenging kind of questions for the community to grapple with. This is actually one of the reasons why I kind of really like ashram's, kind of more, you know, multi-currency, a welcoming ecosystem. Right. Like, you know.
Sure you have. Yes. And, you know, there is a limited set of opportunities to kind of get UTF directly from the tap. And at some point, you know, the supply is going to stabilize that. If you're buying if you're just you're buying just from a previous people. But at the same time, there are these new applications that are launching. You know, you have your you need, as I mentioned, where the distribution was been isolated, quite egalitarian.
Like as I mentioned, you know, the 400 huni stimulus checks that just go to everyone who ever use the application at least once. And they could try really hard to not favor wealthy users too much. And then there's tornado cash had an air drop a couple of weeks back. So there's more of these assets coming in. And I think, like, that kind of churn is healthy, like it. You know, it brings new life into the ecosystem, you know, every second, as you liken it to the wealth distribution.
And it does. Create opportunities for new people to be able to come in and kind of participate on a somewhat level footing as well. But then you have want to compare all of this to the ecosystem. It's a difficult comparison to make just because these institutions are so different and it's kind of difficult to, you know, match one up against the other. Right. Like a fiat currency is, you know, they basically get created by kind of a combination of, you know, the central bank and the commercial banking ecosystem.
And in terms of whereas in the market, you've newly generated value comes in like, you know, both sides of that gets some share, essentially, and there's bad things that come out of it. There's also some good things that come out of it. So, like I mean, I know like this is a controversial position among libertarians, but 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 I think if the governments can earn to get money through unobtrusive means, that reduces the extent to which it has to rely on getting money through more intrusive means and, you know, relying on taxation and kind of more directly.
The problem is when it's unobtrusive, it's very easy to do it very sneakily. And these tax taxes have to be collected now, whereas printing can kick the can down the road for the next person to solve. This is arguments in the other direction. Yeah, there's a there's a moral hazard there. And I think we're watching it play out where we printed a trillion dollars last year and who's going to pay for it right now.
The nice thing about cryptocurrency, of course, is that, like, the ecosystem is 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 crypto ecosystem, you know, as I mentioned, you can still do very egalitarian things. You can still, you know, reward people who were very important early contributors to fix it ended up being very important. So, you know, you can still do all of those things.
And, you know, we do have a responsibility to get the balance right. But the environment is just inherently a more kind of open and honest one just because, you know, these are decentralized systems and everyone does just see exactly what's going on.
Yeah, it's certainly more transparent, like you can tell with the money supply of ether's at any given point. Good luck doing that with the US dollar money supply. Or you can tell with the inflation and if there's any given point and as you say, there's opportunities to build more applications on top of it and maybe even 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 Ethe itself.
So I think that'll be the really interesting development in the last year, is just to see applications on top of if you're really creating and capturing and building lots of wealth and add value. And so in that sense this twenty, twenty one and twenty, twenty two run up seem a little different to me than the twenty seventeen 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 on everything from radical markets to political philosophy to kind of what happened in twenty, twenty and so on. And we could spend a whole podcast on that, but just set a very high level. You had a really good post on your blog saying endnotes on twenty twenty. And it was about a lot more than just crypto. So what else are you really interested in these days?
I mean, is it AGI, is it life extension, is it public goods? Is it different kinds of voting schemes? What's really on top of mind for you?
That's not directly crypto related?
Some of all those. So I think the changing kind of way in which economics works is definitely one of those really important topics. There's a couple of different kind of changes that's happening. Like one of them that I talked about is just public goods becoming more important. Right. Like a lot of the ways that people thought of economics, like 50 or 100 years ago, they just kind of focused on private goods like cars, houses, food, you know, things like that.
But there's also public goods, right. Which are projects that benefit a large and unselective group of people. And so no individual person for benefits has the incentive to personally finance the whole thing. But it's hard to push people to pay for it because like, you can't deny the benefits of other things to people who don't pay for it, 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 like on the Internet, public goods are even more common than private goods are. And so, like, our economics just has to. Just take that fact seriously and a lot of what's been happening in the blogging space in some ways just is, you know, the crypto world trying to grapple against those things.
So basically, these public goods are where the costs are concentrated. Like if I want to fund scientific research, I do it out of my own pocket, but it benefits all of humanity. So the benefits are distributed. And so these tend to be undersupplied. 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 says anyone can donate money to public goods through the mechanism. But to compensate for this, under a provision that you talk about, the mechanism provides a subsidy to every public good. And that subsidy depends not just on the amount that was contributed, but also on the total number of people who contributed. Right. So, for example, if there's two projects, the both got 100 hundred dollars, but one of them got a say, eighty dollars from one percent and twenty dollars from another person.
And the second project just got one dollar from each of 100 people. The second public good is much more public sent the first public good and the tragedy of the Commons on the second one is much greater. Right. And so the fact that that the second one managed to get to a hundred dollars despite the one hundred, a 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 one dollar from one hundred each of 100 people project than it does from the project that got just the one hundred dollars from, you know, a split between two people.
And so we've been experimenting with the quadratics funding. There's this thing called Bitcoin 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 Ethereum ecosystem, and that's worked really well. So that's been one of the kind of interesting experiments that I've been following.
Question on quadratic funding, just to hop in here, since I'm involved with a few different types of scientific research, are those funders in those experiments that you've run anonymized or DNA Islamized? Because I'm thinking through the example you gave and how there are other plausible explanations for why there might be two funders. I'm just thinking about, for instance, reputational risk associated with certain types of scientific research. 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, look, in quadraphonic funding, unfortunately, you do need to have some kind of model for identity because, you know, he needs to prevent the two people from just pretending that they are one hundred 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 an identity system. Basically, you can have a system where people can make all these contributions and.
They are 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 I've donated, how much money to which particular project this is done. Using this really important and fascinating topic of zero knowledge of cryptography and zero proof cryptography, like basically the idea is that it allows you to make cryptographic proofs that some statement is true.
So, like, 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 naughtier 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 could prove that I have an account that has at least one 100 coins, but I don't have to prove which account to do this.
I don't have to prove exactly how many coins I have. And there is a lot of this very fancy mathematical magic that basically creates this protocol where if you give me a proof, then I know that the statement is true, because if the statement is false, you would have had no way to generate the proof. But if I have just a proof, I can learn nothing else beyond the fact that that particular statement is correct. So this is incredibly powerful cryptography itself.
It's behind the cash. For example, there's also with your own applications like tornado cash that are using it. There is zero proofs also have these really nice scalability proofs. So these proofs are very quick to verify, even if the statement that they're proving is incredibly complex, not AntiSec Roelofs like some of these are scaling solutions, end up really benefiting from using them. So very powerful technology. And I think it's also very significant from a social perspective because, you know, we have this broader kind of anonymity versus accountability debate, right.
Of like, you know, the benefits of privacy versus the benefits of like basically a process of reputations and zero knowledge. Cryptography is really powerful because it 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 things like persistent reputations, while at the same time getting a lot of the benefits of anonymity.
It seems very powerful. Just to follow up on that, you're thinking of scientific research. I'm going to ask you what areas you might have particular personal interest in. I know you have some interest in life extension, 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 simplified communication of competing, not necessarily competing, but contrasted scientific studies.
Right. Because there are some instances just in my experience where scientific studies that require a lot of scientific knowledge or due diligence would have fewer funders compared to others. But that doesn't necessarily reflect less importance or impact potential.
Yes. Now, this is also a very important point. And I think the solution to this is that quadratic funding by itself doesn't solve all the problems. And you have to combine quadratic logic with other mechanisms. So I can give two examples. One example of how you could do this says you could just set up an organization or that 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 five or 10 year history and people see that, oh, you know, yes, this organization does have a surprisingly good track record 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 quadratics funding scheme to this organization and the organization to be able to sort of leverage its own reputation. Now, if that organization ends up, you know, doing bad things and abusing this kind of public, trust it, then, you know, people could very easily just stop contributing to it and start contributing to it to another group.
So that's one approach. Another approach is that there could be clever ways to combine quadratic logic with venture capital. So the idea here is that imagine if when people make a public good, they create a coin associated with that public good and you just let people buy the coin. And when people buy the coin, the revenues just go to the people who achieve it. And then what you can do with quadratic flooding is you can basically kind of collectively buy out these coins.
Right. So you can just say, OK, you know, this coin is a point that represents a project that gave the world a, say, a million dollars worth of value. And so we're going to try to find a billion dollars. Into the coin. And so anyone who bought that coin would be able to benefit, right? 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 basically they will be able to make a profit off of this.
And if anyone has something that is maybe difficult for the of wider public to determine is valuable at the beginning, but then is likely to lead to some important outcome that just everyone recognizes is really valuable sometime in the future that, you know, the investors can fill the gap. Right. So you have these two approaches, like you can either rely on reputation and kind of do it retrospectively or you can rely on this kind of combination of quadratics funding with some, you know, tokens and investments that you want prospectively.
So I think both of those are really interesting.
I love this possibility to combine also. Right. I mean, you could potentially have all of the elements that you described combined. And I know 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 has just navigated to it through kind of complex systems, level intelligence. But if you look at campaign financing for when people run for office, there's a maximum limit they can get per donor.
Right. And so an individual can only gift a certain amount to a congressman or to a senator or a presidential candidate. And then the feds also have matching funds on top of that. So it's a combination of these schemes because by limiting the amount that any one person can give, you're sort of creating a quadratic, although it's not truly quadratic like, you know, someone very wealthy. I guess they could give a lot more through a side vehicle, but then that's less efficient because you're not allowed to coordinate with the main campaign.
So there is kind of a really badly implemented version of quadratic funding with matching dollars already in existence in federal campaign financing.
Hmm, that's a good point. Yeah, yeah. But 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 and life extension is definitely really important to me, like I think in the coronaviruses actually even had the positive side effects 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 1950.
And so if you imagine, you know, the difference between the Aniak and a modern kind of laptop or a smartphone, that's the difference that bruddah see between the biotech of 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 70 years of progress to that much. And it's very easy to see even the process of turning into something that just becomes irreversible 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 just a huge kind of nice 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 getting lost in a city absolutely lost to the public consciousness over the last twenty five years as we got better cell phones and mean.
I think that's a really lovely I just kind of a much better world to spend a lot of resources to shoot for.
Do you think that's realistic, though, given all the three letter agencies that slow down experimentation development? Because I worry it's more like nuclear power, right, where they can't tolerate a single death. So the innovation isn't really allowed. Right.
So this is where I say a controversial thing, which is I think I'm very happy that the coronavirus has helped to delegitimize the bio conservatism to the extent that it has.
Yeah, I agree with that. The Moderna vaccine was ready in June 13th, right? Yes. And like even things like human challenge studies. Right. Like the default, I think bioethics opinion around a year ago is like, you know, oh my God, this is unethical. And, you know, now, like in the UK, they're actually happening that this is great.
Yeah, it is good if it breaks down by a conservatism to some extent because the pace of innovation is too low. It's like what we've done to nuclear power if we do that to biotech and we kind of have already to some extent. But if we do it even more, then there's no chance of, you know, grandma living forever. There's no chance of me living, you know, 50 years longer than the lone grandma living forever. You know, you're twenty seven.
I'd love to see where you're at. Forty seven. You're going to be a, you know, really interesting guy. You already are, but you're going to be even more interesting guy, even more interesting at 447.
Yeah. Oh, well, I don't know. It's simple and I hope you guys can both come to my birthday party. Well, 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 intermittent fasting, which is that I just usually don't eat breakfast. I do the usual exercise, nothing too fancy. I eat kind of at least a couple of the basic supplements that those that's the life extension, what people are recommending. Nothing too much fancier than that so far, though, you know, very closely watching the space. And I'm sure I'll end up doing much more things, you know, ten or even five years from now.
Do you take rapamycin? I do not take rapamycin for me is the one that I take this and other that I take. Hmm.
And just for those people listening, who who who should know this, No. One, this none of this is medical advice. No. To Metformin, just as an example, none of these things should be taken without the advice of a medical professional. Metformin is used in the treatment of Type two diabetes, Glucophage. But I'm also familiar with it. How do you decide what to implement versus not implement for yourself?
Personally, I just and ask around a lot of people in the life extension community. I, you know, read the study is, you know, look at this, just what are some of the high level results? And then just narrow it down to a couple of things. Hmm.
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 one to say five hundred milligrams per day. So you were able to identify certain long term effects and side effects. Granted, Alnwick. Totally, but still having an end of, I don't know, maybe a thousand people on this forum.
So there is a lot to be gleaned from these from these groups.
There's even a new one making the rounds like peptides, GOP one. I'm sure you've seen some study floating around in 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 votes on what works and what doesn't and able to run some kind of human trials more efficiently. Because fighting aging is a is a very time sensitive task.
It is, yeah. So it's not literally half the justice of World War two or four every eight years that, you know, it gets delayed or however 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 one hundred billion dollars for more billions of seconds.
But he can't. Right. In fact, health care is the ultimate inelastic good. On your deathbed, you'll spend any amount of money to live even an hour longer. So certainly the economic incentives are there, the personal incentives are there. But because of this concept that 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 outright.
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 in kind of this bureaucratic over the control way. We're still slowing things down. And if Coronavirus would get us to accelerate our normal processes into a wartime footing, then what will?
Yeah, I, I also just want to add that I think given my experience with a highly stigmatised field of scientific research, which is psychedelics and psychedelic compounds for intractable or difficult to treat psychiatric conditions, I think that life extension or the community itself and proponents thereof 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 or distributed funding from the citizen philanthropists or donors of various types.
I think a lot of it's going to come down to to independent financing since that has been the case, even all the way up to phase three trials for compounds that show tremendous effect sizes in the treatment of depression and PTSD and so on.
And I think another important thing also is just kind of international outreach and more connections, because ultimately, you know, the US is not the center of the universe and there is plenty of very smart people. And, you know, the EU like Singapore, China, India, Canada, whatever other places, you know, there's a lot of great talent there that I think could help all of humanity solve these problems faster. So if we can just work together on the problem or hopefully prevent 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 arts, they're trying to figure out how to become patrons of science.
And instead of just doing venture capital, we all like to figure out a model for venture research because we need more science, right. Sciences 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 of italic. If you're ready for those. I want to take this where you want to take this at all.
OK, yeah. So one question I kind of have is given all the tumultuous change in twenty twenty, 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 heads in the next few years where maybe your peers might disagree with you. What are your contrarian views or you're kind of uniquely held individualistic views on how things are going to play out that are not yet consensus.
And this is unfair because aging was a good one. You made a solid you went out on a limb on aging is an example. That's like the contrarian in the world, but. Contrarian among a kind of my circles, I guess, yeah, when I went through your writings, I mean, the idea that there will be many chains and 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 contrarian because we think of it as going more and more private property.
But on the Internet is one to many. So there's all these public goods. And I think you were the first one to really hammer that point home in a big way. And then I think this aging thing is another one.
So I'm just digging, seeing if there's any more, you know, another thing like that might have been very iconoclastic two years ago, but is very much not today would be kind of just geographic decentralization. Even with hearing. I'm like when we took a very active effort of, you know, not making it to a centralized in any one country or any or any one city in any one place. And I feel like we've benefited a lot from that.
But now, of course, everyone is geographically decentralizing and Coinbase has announced that like that, if its managements, they'll live in San Francisco and so forth. It's very hard to associate etherial with a single country. I think it was created by mostly Canadians. And your blog has a dot com top level.
Well, I'm Canadian, but then my blog has a dossier, the foundation of Swiss stands. And now there's a Singaporean entity as well. A lot of the initial developers were German. You know, a lot of developers are from the US as well. And one of the most efficient EU clients is based in Australia. So I feel like we've had is actually like took those values seriously, Inderjit and did it well. And Ethereum has spent the foundation has spent a lot of time in East Asia.
I think I've seen you kind of go to conference, to conference in East Asia and Korea and Japan and places like that spreading the word. So it is quite decentralized geographically. What advice do you have for someone who wants to get into Ethereum and doesn't just want to go and buy the token? Who actually wants to dive into the ecosystem? What is the person to do to get involved in the Ethereum community and the ecosystem where the points of leverage?
I think what is learning to build an application and actually trying to build an application? Yes, I think one great place to start, if that's the sort of thing that interests you, like, even if you don't turn out as a full time developer and start forcing yourself through, the process still helps you. Just understands that, you know, what are the different pieces and actually what function do they serve? Another example. Another approach there is well, now obviously check out of temporarily suspended.
But generally there's a lot of local communities that that of in-person meet ups and all that that people can be part of. And that's often a great opportunity to get to meet other people. There's a lot of materials online, although generally I and it's much more big fan of hands on learning. So we're kind of learning by doing instead of learning, by taking in information. And so, you know, I highly recommend, like just trying to build one application for a lot of people.
Otherwise there's just a lot of different communities and kids. You have to just like go in and start taking part in those. Yeah.
For those of you who are curious, I think Photonics Blog has spawned quite a few of the things in the Ethereum ecosystem, like I think it was one of your musings that led to the creation of unit swap. And you'd recently you've been talking about roll ups and social wallets and in all kinds of other things that we built on top, although maybe this is the first year where I feel like the community is outpacing your ideas with niftiest and with some of the games that are coming up on top of ethe and 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 to date. That's a good thing for those of you also looking for what's next down the rabbit hole, briefly mentioned zero knowledge proofs. I would say that, you know, the beginning of the rabbit hole, the entrance is Bitcoin. Then you go a little further down. You find if but then when you find Zuoren proofs, 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 proofs, you realize that the levels of creativity in crypto 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 proofs 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, not in the moon. Math is definitely significantly less money than it was even one or two years ago, like even snarks. Another term for this, as your knowledge proofs have just become considerably simpler, sometime around one and a half years ago, Amazon even tried to make another post. One of my most recent ones I never thought I'd see or I tried to talk about how roughly how he 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 significantly more understandable than any of the previous ones have been.
So I feel like the ideas are definitely trickling down. Oh, so 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 context so seriously, which sounds obvious. But in some ways it really isn't 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 technical point of view, and they basically are kind of implicitly assuming that, you know, governments are going to try as hard as they can into the crypto space, is going to try as hard as it can. And it'll 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 an entity as it is a battlefield.
Right. And like, what are the soldiers fighting on the battlefield? A lot of it is just their cultural movements and a lot of the success of cryptocurrency. And what I think it really has to do with the way that they have kind of interplay with a lot of the important cultural trends over the last ten 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 even 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 it ends up even blindsiding a lot of people. And the reason why that happens has to do with kind of very deep and specific aspects of how people think instead of how people think ideologically. Right. Like a lot of people think of like, say, authoritarians, for example, as just people who hate freedom and want to restrict things.
But the reality is there's lots of people who are in favor of very specific restrictions or even in favor of restrictions that benefit their own team. But there's just this is very easily flipped to being very pro freedom when 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 governments do? And into the cultural context of what, you know, like how should technology work.
So there's a lot of these kind of very subtle effects that determine whether bloodstains and some of the ideals behind watchman's kind of succeed and failed and these kind of very subtle properties of how humans can even how humans interact with each other are extremely important in a lot of ways. And the reason why they are important to us, they just determine the effectiveness with which people can coordinate, like humans are naturally very attuned to all kinds of social trends, that humans have a lot of motivations that have to do directly with, you know, what position they have within a kind of social trends and context that are made up by other people.
And this is just a space that these, you know, watching in cryptocurrency space is going to navigate. Well, if it navigates it poorly, then I think fortunes will be stalked by governments or they won't be stopped entirely. But the amount of usage can easily be more than 90 percent lower than it otherwise would be. But on the other hand, if supply chains can, you know, successfully show to a kind of large enough coalitions that this is a valuable and this is a good thing for the world, 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 in one place where you said that in twenty twenty, you know, big government, one big social media, one big centralized applications, one, but decentralized also one.
So you can have multiple winners. These are nicely either or. You've also made an argument in one of your blog posts, which is all. Beyond the scope of this podcast, but I think it's 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 were evaluating how these things will end up have a so-called Nash equilibrium, they have a solution in game theory because a lot of individuals are making decisions independently, but because majority coalitions rule and people can collude or they can form coalitions, that you end up in these unstable cycles where you have a majority win one round and then the definition of the majority reshuffles and then they win the next round.
And so we see this in politics where it seems like, OK, now the Democrats are in charge forever and oops, no, now the Republicans are in charge forever. And whoops, no. Now the Democrats are in charge forever again. And suddenly underneath what's going on is the definition of Democrat and Republican is unstable. They're just coalitions 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 vitriolic who's 37 know ripe old age of thirty seven out of this thousand year Methuselah lifespan.
And you've got so nivel, I don't know if you have questions remaining. So I really just have one question, and that is the curiosity of mine. It's related to language learning. So you have studied quite a few languages. I looked at a clip of you answering questions in a Q&A at some point, I don't know the year in Mandarin. And I was very impressed. I went to two universities in China and Nayoung doing Zhang the Hulkower.
So I wanted to ask if you could give advice now, having tested many things using 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 the papers over podcasts. So that's where you are. So it's just a series of these 90 minutes or 90, 30 minute podcasts or twenty seven minutes or about two days in total that you'll listen to one of them every day. And they just they teach you the language from nothing up to, you know, some very basic level over the course of these 90 episodes.
So you start from that, but that even after that, you don't have nearly enough to understand anything from there. Sometimes you can find other podcasts like and eventually you graduate to just like regular podcasts in that language. So things that are not even optimized for language learning. Well, like at the beginning, you do want to find like resources that are optimized for learning flashcard apps for Chinese, specifically for memorizing the characters or at least, you know, the first, you know, 500 or a thousand or so.
And there's plenty of flashcard apps are all about equally good. And then once you kind of get past some levels and you get to a level where the best way to get even better is to just talk to people. Another kind of task that works somewhat at the beginning actually is like if you just go into a city and you just like start like reading various signs on the street and you try your best and just understand what you know, what they mean.
If you see aware that you don't understand, you look it up like that's often useful. I also use Duolingo as well. It's been helpful in some cases. So it's just like a combination of these techniques. And you have to when you start, it's difficult. And then when you get past some points, you get to a point where you can just kind of level up just from talking to people from their. 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 orthography.
So in Japan, my brother doesn't speak Japanese, but we travel there and he was able to more or less accurately translate country that hunts the Chinese characters using Google Translate.
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 here, is it watching films in 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 with subtitles in English. Got it. Thank you, Narval. Would you like to to to wrap up.
No, thank you. Thank you for that. It's really been an honor, I think, along with Nick Serbo and Hal Finney and Wadeye and a few other very influential people in Zucco and so on. You've just been incredibly influential in the development of block chains. And I believe that block chains are 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 it for hopefully a very long time and it's going to change 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 help bring this to a broader audience.
Know, I think I'm not even the youngest already. Like are you hiding from Younus lobbies even younger than I am. And that, you know, the U.S. Treasury has more funds in Indonesia and the U.S. Treasury. So, you know, this revolution is fast, man. Yeah.
When I was first starting out my first company, I remember I was twenty five and CEO and company was valued highly. And the CEO of the company, he was in his mid thirties, he said, he said so you're used to being the smartest young guy in the room. Right. Just wait till you get old. And here we are. Yes. Thank you, gentlemen.
Oh hey guys, this is Tim again. Just a few more things before you take off. Number one, this is five bullet Friday. Do you want to get a short email from me? And would you enjoy getting a short email from me every Friday that provides a little morsel of fun before the weekend and five? Black Friday is a very short email where I share the coolest things I've found or that I've been pondering over the week that could include favorite new albums that I've discovered.
It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up into the world of the esoteric as I do. It could include favorite articles that I have read and that I've shared with my close friends, for instance. And it's very short. It's just a little tiny bite of goodness before you head off for the weekend. So if you want to receive that, check it out. Just go to four hour work week dotcom.
That's four hour work week dot com all spelled out. And just drop in your email and you will get the very next word. And if you sign up, I hope you enjoyed this episode is brought to you by p p q you e in their brand new supplement, Daily Immune Vitamin C optimized for absorption, Americans are arguably famous for having the world's most expensive Europe. So are you absorbing your vitamin C or just peeing it out? Studies have shown that you might absorb less than 50 percent of vitamin C when you consume amounts over 1000 milligrams.
Also a gram. I think Peak's daily immune is maximized for absorption with liposomal encapsulation technology like bazooms helped deliver vitamin C to exactly where you need it if your cells, not just your bladder. And I've been using their packets now for a few weeks and gone through a number of boxes and I typically take one to two per day, as I would say, maintenance support dose. And I'll take more than that if I feel any type of cold coming on or any symptoms there of peaks.
Unique formula supports healthy immune system and immune features. A Bufford non acid form of vitamin C this gentle on your stomach. It is a powerful and absorbing vitamin C that fits in your pocket from tastes great. So I will often take a handful. These just stick them in a jeans pocket for the day and then every few hours open up a packet. Plus it contains just seven ingredients, no preservatives, fine sugar or additives. All you need to do is open and squeeze it into your mouth.
No glass of water or food to eat it. Personally, I like to have a small chaser of water for carbonated water, but you don't need it. You can do it on the line. It's so easy and tastes so good. Think black is European elderberries. That is any flavor I've been consuming. You might choose to take it once or twice a day or more as I do. There's a reason Peake's products have more than fifteen thousand five star reviews.
People are very happy with their products. Try it for yourself. Risk free with their thirty day satisfaction guarantee you either love it. Or you get your money back to go to t dot com. Tim, that's pick, you eat a dot com tim and use code Tim Jim check to get five percent off of your first quarter plus free shipping when you purchase a bundle. That's peak T one more time Kikue you eat tda dot com slash tim he's kotin for five percent off plus free shipping for about.
This episode is brought to you by, but I have to their guns and they are worth their weight in gold. I've been using them every single day. Whether you're an elite athlete or just a regular person trying to get through your day, muscle pain and muscle tension are real things. That's why I use the Thoroughgood. I use it at night. I use it after workouts. It is a handheld percussive therapy device that releases your deepest muscle tension.
So, for instance, at night I might use it on the bottom of my feet. It's helped with my plantar fasciitis. I will have my girlfriend use it up and down the middle of my back and I'll use it on her. It's an easy way for us to actually trade massages in effect. And you can think of it, in fact, as massage reinvented on some level, helps with performance, helps with recovery, helps with just getting your back to feel better before bed, after you've been sitting for way too many hours.
I love this. And the all new Gen Fourth Ergun has a proprietary brushless motor that is surprisingly quiet. It's easy to use and about as quiet as an electric toothbrush. It's pretty astonishing. And you really have to feel that their guns signature power, amplitude and effectiveness to believe it. It's one of my favorite gadgets in my house at this point, so I encourage you to check it out. Try there again. That's Sarah t h e r ague and try third on risk free for 30 days.
There's no substitute for the Gen 4th Ergun with an old screen. That's OLED. For those wondering that's organic light emitting, diode screen personalized, they're going to have an incredible combination of quiet and power. So go to therapy dotcom Tim right now and get your gen fourth Ergun today, or you can watch the videos on the site and show you all sorts of different ways to use it. A lot of runner friends of mine use them on their I.T. bands after long runs.
There are a million ways to use it. And the Gen 4th Dragons start at just one hundred and ninety nine dollars. I said I have two, I have the Prime and I also have the pro, which is like the super Cadillac version. My girlfriend loves these soft attachments on that. So check it out. Go third on dotcom slash Tim one more time. Stereogum Dotcom Tim.