Interview: Vitalik Buterin

Yes, that's a good one. He goes on to say"Of course, if Bitcoin actually gets attacked, I do expect that the political will to switch to at least hybrid proof of stake will quickly appear, but I expect that to be a painful transition."

which I thought was funny because he's tweaking them a little by saying they're eventually going to have to accept PoS anyway

What would the absolute worst outcome of that attack be? Miners don't have the option of spending from addresses they don't have the private keys of; all they can do is rewrite history to a certain extent.

Would it be bothersome? Yes. Would a globally used bitcoin monetary base layer have complete backing of nation-states using it? Yes. Would people be hesitant to transact during the attack? Probably.

None of these things are of immediate consequence, while the attacker spends its funds rewriting history and getting blowback from everyone online.

Then there is the issue of getting to 51% in the first place, and retaining that 51% once it is clear something nefarious is happening. Many miningpools are conglomerates of individual miners, who certainly have the option of switching to other parties at their whim. I think proof of work is the only viable way currently known to man to ensure a fair, even monetary playing field at global scale. PoS is not proven, and Ethereum does not scale because it optimized for parameters that aren't relevant for a system that is supposed to be online for at least a century, if not longer.

Just reads like a pitch?

Might be valid but Vitalik has kind of a lot skin in the game so it's hard for me to take it at face value.

Thank god you can't bold.

I would have responded that the security of the original Bitcoin protocol will likely have been rendered void by quantum computers long before the full supply has been minted.

Money is the exclusive right of sovereign nations!

How else are Erdogan, Madura, et al going to fund their piggy banks & militaries?

If you have anything for which banks will take the value seriously enough to borrow against - stocks, for instance, fit in this category - then the path of going from non-money -> money creation is pretty direct.

I'm not sure if banks would let you point to 100k in bitcoin or such as assets that would help qualify you for a mortgage, but doesn't seem too out there. Or do the 2-step route and sell the crypto and use it as your downpayment to leverage up into that mortage from an initial investment of $100 or so in 2011. Still inflationary - you've turned your initial tiny investment into purchasing power for a house and all it took was someone else deciding to invest in the crypto you were selling instead of more traditional vehicles, so they also feel like they have the same amount of assets/wealth as they would've otherwise.

EDIT: putting it another way. Money is one thing. Consumer behavior is another. People spend not just based on their "money" but based on their total assets and expected income as well, so things that pump up those on-paper asset values will lead to higher spending and inflationary pressure in the same way that "giving them money" would.

Kind of, if it is widely accepted as a medium of exchange I would count crypto as money. The irony is that the only crypto that is money is stablecoins. There is RAI but the Terra Luna incident made me sceptical of algorithmic stablecoins. If RAI survives the ETH crash, which it so far does, I am looking forward to the next generation of algorithmic stablecoins. Who knows, maybe it is actually possible to do what the central banks of the euro and dollar do in a smart contract and suddenly Milton Friedman's dream of replacing the central bank with a computer comes true. Yet at the same time it crushes the idea that Bitcoin or Ethereum will ever amount to anything more than a digital collectible.

I personally am interested in a currency that does price level targeting but I have my doubts that it would work with a cryptocurrency because the oracle that collects the CPI is going to be centralised.

I will admit getting the CPI right is easier than getting central bank policy right.

No, it is not.

What about the sovereign nations that accept it as legal currency and/or for taxes?

Exactly.

What happens when 2/3 of the validators are run by companies who follow US financial rules and sanctions?

While validators can’t censor, they can play both sides: Nothing at stake is still not solved on ETH.

Miners in Proof of Work don’t control the rules. There have been multiple attempts to exercise hash power as political control in Bitcoin that have failed. There already exists precedent regarding the political power of running your own node with incredibly low capital requirements relative to mining.

Ethereum is already in a battle over what consensus rules actually exist. Large scale staking enterprises such as exchanges are signaling their intent to follow extra-protocol conventions, and if they control a supermajority of staked ETH, they control the right to slash. The only way to have a voice in it is by acquiring $50,000 in ETH.

He's right, PoS or PoW never were related to governance in Ethereum: the governance process has always been entirely controlled by the Ethereum foundation in a centralized way.

but his argument about “bitcoin civil war”, is disingenuous at best, concluding that miners are “powerless” about governance process is really a strange way to analyze this event (which illustrated that they where not in fact “all powerful” which is quite different from being “powerless” …)

He's also making a common, but misleading claim here:

> A block that violates the protocol rules (eg. if it tries to print more coins than the protocol rules allow) will not be accepted by the network, no matter how many miners or stakers support it

He's separating “miners and stackers” from “the network” which is a common position trope, but in reality a blockchain is a node of validators (miners, or stackers) with optional spectators, most of which don't even have enough data to take positions on whatever the validators are doing. Only the (scarce) full nodes can see that something fishy is happening, but they actually have no control on what happens on chain, all they can do is blow the whistle.

What makes a blockchain work is the game theory incentives alignment which helps making sure miner/stakers don't collude together, not because “the network” (miners/stakers aside) can do anything to prevent malicious actions from a cartel of validators.

Ownership of the minting policy of any currency is ownership of the governance of said currency.

By locking minting behind the gates of riches, you give those same people a perpetual license to govern. They spread their tokens how they wish; they choose which projects live and die by their usage of currency.

Because they are embedded in the minting process perpetually, their stack keeps growing. They can stake earnings and their stack grows at a compounding rate. With exponential growth, they create an accelerating divide between themselves and no stakers.

The limit of this pattern results in a small minority owning a money tree which allows them to feed scraps to the innovators, creators, etc and decide who lives and who dies.

With that money, they also have the influence necessary to dictate what core devs work on.

A lot more to say but the summary is: I am not sure if Vitalik is talking in bad faith (he seems genuine and honest) or he is just naive (he became rich very young and doesn’t seem to be connected with reality). It seems to me he has a surface level understanding of freedom, tyranny, poverty, wealth, etc but a deep technical understanding and he is only focused on achieving the technical goals. This is very dangerous.