Dialogue with Vitalik and his son: The downturn in the encryption market is usually also a period for cultivating major projects

Author: Taylor Locke,Original compilation: Biscuit, chain catcher

Original compilation: Biscuit, chain catcher

Ethereum founder Vitalik isn't worried about the current cryptocurrency crash momentum, and he doesn't like the use of his creations for speculation.

Vitalik's father's name is Dmitry Buterin, more commonly known as Dima. A Russian-born engineer and entrepreneur whose family moved to Canada, Vitalik learned about Bitcoin from his father as a teenager.

Vitalik and Dima told Fortune that they're used to the volatility of cryptocurrencies, but this Father's Day, the father-son duo, the most prominent in DeFi, has another message for us: what else is there to use for cryptocurrencies.

“Cryptocurrencies have had big ups and downs before, and they’re going to go up and down again,” Vitalik told Fortune. “Downturns are challenging, of course, but they’re also usually times that foster big projects.”

Despite being a billionaire, Vitalik explained that money has never been his focus or motivation. He dislikes the use of Ethereum for speculation, and believes that the blockchain network has more usage scenarios than finance.

Both Vitalik and Dima want to see more applications beyond finance, while continuing to improve Ethereum and its technology, and have already done so. After Russian President Vladimir Putin announced his invasion of Ukraine in February, Vitalik and Dima supported The Ukraine DAO, a decentralized autonomous organization that raised millions of dollars to support Ukrainians in the war. Both father and son have donated to the DAO, and Dima is even a multi-signature wallet administrator for the DAO organization.

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Ethereum co-creator Vitalik with his father Dima Buterin. by Dima Buterin

In this interview, Vitalik and Dima talk to Fortune about their journey in the crypto space, Ethereum's regrets and vision for the industry's future, the highly anticipated merger, the collapse of the Terra ecosystem, and more. The interview took place in early June, before the sharp decline in cryptocurrencies, and Vitalik and Dima also published comments on the crypto market on June 15.

FORTUNE: Dima, when did you first notice Vitalik's interest in numbers?

Dima：Around Vitalik was three years old. His grandfather, who was a very bright man, was teaching Vitalik math, the alphabet, stuff like that.

Like people usually build buildings and stuff out of legos. Vitalik really likes building numbers with them. It's really fascinating to see that. I grew up in the USSR and had very limited access to toys. So as Vitalik was growing up, I wanted to buy him a lot of cool toys. I started with LEGO bricks because LEGO bricks are such a cool building set and it was really fun to see him build them in a very different way.

Vitalik：When I came to Canada, my dad bought me some books to learn programming, and I started programming. I started programming to make games for myself, and I distinctly remember finding programming fun and engaging from the very beginning.

FORTUNE: Dima, the first cryptocurrency you introduced to Vitalik was Bitcoin, right? What initially attracted you to Bitcoin?

Dima：Well, I'm very curious about new things and new technologies, and computers and their surroundings are one of the richest areas of human knowledge to explore human curiosity. So, I've been listening to podcasts on this. The podcast host is also a very curious person who touches on a lot of different topics. Once on his podcast, I heard about Bitcoin and it sounded like a lot.

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Image courtesy of Dima Buterin

Fortune: What were your thoughts when Vitalik started working on building Ethereum?

Dima：I was impressed that we were at home and Vitalik shared his white paper with me and it was very well written. I was really impressed, and frankly, I don't follow cryptocurrencies that closely, but when I read the Ethereum white paper, it made sense to me. I think that's one of Vitalik's talents. He can explain very complicated things in an easy-to-understand way.

Vitalik：In December 2013, I went back to Toronto and my dad was very interested in my research, so I showed him the Ethereum white paper and he thought it was fascinating.

Fortune: As ethereum gained more attention, were you surprised when people started using it? Did you anticipate what it would become?

Vitalik：No. At first I thought it was just a small project and we would finish it in three or four months and then I would go back to college. But in January, I saw a lot of interest in the project, and it was clearly taking longer, and I realized I had to redesign.

Another thing that I didn't expect at all is how much the crypto space has changed in 2017 and 2021. The rapid growth was definitely a big surprise to me.

FORTUNE: How do you feel about the current market conditions? Have any concerns or thoughts about the future?

Vitalik：The encryption industry has had its ups and downs, and there will be ups and downs in the future. Downturns are certainly challenging, but they are also times when major projects are nurtured. I am confident that the Ethereum ecosystem will become a more mature and successful blockchain ecosystem, fulfilling the hopes and dreams of millions of people in the crypto space in the next decade.

Dima：Markets are cyclical, especially the crypto market. I've been following cryptocurrencies for over a decade, and it goes up again, and it goes down again.

In terms of its long-term potential, nothing changes for me. I think cryptocurrencies are now entering an era of mass adoption.

A growth curve is never a straight line. It's not as smooth. Right now, there's a lot of fear in the global markets, a lot of questions. Ukraine is at war. The Fed is raising rates and so on. But humans are resilient and adaptable, so we will experience market drops and then build more stuff. Ethereum will be merged into Proof of Stake. It's very exciting. As far as the crypto landscape goes, nothing has changed for me. There are some short-term fears in the market right now that speculators will be wiped out and yes, there will be a period of pain in the crypto space.

FORTUNE: Since the collapse of the Terra ecosystem, there have been concerns that systemic risk will spread. Its domino effect has had an impact on all crypto ecosystems, is there any aspect that is missing to be discussed?

Vitalik：I think the Luna debacle in general was one of the great moments in crypto, a reminder that people can't just build a financial system and pretend the negative never happens. One can't just look at the level of interest rates in the short run, one has to look at the long tail and these very special circumstances. I think this insight will ultimately bring stability to the crypto ecosystem.

Also, I think whenever something like this happens in the crypto space, at least in my experience, there's always a frontline leader coming out to clarify morally, and you can see how different people in the market react, which is more Get a good sense of their personalities and what kind of people they actually are.

Dima：The Luna crash was a very traumatic event for many people who lost a lot of money in the crash.

I hope we're not limited to "Let's limit. Let's ban. Let's stop this." These slogans. There are all sorts of conundrums in the crypto industry going forward that we can learn from to keep us moving forward, rather than trying to keep us parked and safe.

FORTUNE: What are the benefits of cryptocurrencies for you? What is your favorite aspect?

Dima：When Russia announced its invasion of Ukraine, I was impressed by pro-Ukraine crypto community organizations (such as The Ukraine DAO). They’re using cryptocurrency very effectively to fundraise and then funnel the money to a specific city where there’s already infrastructure for people to convert it into their local currency, so that’s really cool.

Another aspect of encryption that I'm very passionate about is the ability for people anywhere on the planet to access the Internet to plug into their economies. For me, this is huge progress. People can use the encrypted blockchain to make money, participate in companies, DAO organizations, sell their own artworks around the world, build encrypted finance and other projects. So I'm passionate about that. Because I grew up in the Soviet Union, which was very isolated from the rest of the world.

Finally, I have to say that the new organizational structure, the DAO - I think there is a lot to figure out about how they govern, how they control resources, make decisions, and so on. But to me, it's the future of how humans organize.

Vitalik：I definitely feel the same way.

One of the things I noticed during my trip to Argentina late last year was that the regulators there have a different attitude towards cryptocurrencies. Often in the West, and sometimes even subconsciously, its supporters see it as a gamble for the rich. But in places like Argentina, it's a lifeline for native residents. People there use cryptocurrencies sometimes to save money and sometimes to buy and sell things. There are projects like Proof Of Humanity that are trying to use cryptography to build UBI (Universal Basic Income) out there. There are projects that are trying to experiment with DAOs and decentralized arbitration and all these other technologies.

So, I think there's really a lot of that demand in many corners of the world. NFTs are definitely a good example as well.

Fortune: Is Your Least Favorite Part of Ethereum the Speculative Attribute? I know you can't control how humans use Ethereum, but do you have any regrets about Ethereum being used in any way? How does it feel when you see not-so-good use cases?

Vitalik：Yes, I'm not interested in a lot of financial speculation. I think that sometimes Ethereum is really connected to emerging things - like NFT, I know that there are many artists around the world who are participating in the global economy through NFT that they would not otherwise be able to participate in, but at the same time, there are rich people who sell 300 to other rich people. million dollar monkey.

I think Ethereum is an open system. This means that no one has granular control over who can and cannot use it. We should actively support many applications that better reflect our values, but then again, if the system is fully decentralized, you have to trust people's choices.

Dima：Humans are very lonely and we are always looking for love and approval from others. Like, "I've got a Lamborghini. I've got a Boring Ape NFT. I've got a lot of money." Inside we're like, "Oh, I suck, but if I show the world that I have all these cool things, maybe People will love me and build relationships with me."

FORTUNE: Vitalik, I saw that you recently asked your Twitter followers to share what they disagree with you the most. What caused this thought?

Vitalik：I'm curious. I just want to understand the opinions of different groups of people and give my fans an equal space to talk, they may be afraid to express different opinions with me. This is an interesting experiment. I think some of these answers are definitely interesting.

FORTUNE: What was the biggest takeaway?

Vitalik：I don't think there are any big gains. There's a lot of low-impact feedback.

I have some disagreements with the fans about life extension. Also, several people complained about my fashion style.

Some people say I shouldn't be involved in politics, or that I should be less involved in politics. Still others said, "No, you shouldn't actually try so hard to be neutral, when you believe in something, you should be willing to express yourself more openly."

You can't please everyone.

FORTUNE: Do you donate to political organizations or parties?

Vitalik：I think the challenge with donating to a political party is that politics is a very complex and very messy system. It is easy to have an effect that is completely different from the purpose of the donation. I just don't quite understand how the US political machine works internally.

My take is that I'll focus on other things, so far so good.

Fortune: A lot of people also disagreed with your post on soulbound tokens. What do you think of the response?

Vitalik：There's definitely been a lot of positive, interesting discussion, and a lot of people who have misunderstood the concept. But that's okay. I think that's something that has to be addressed, because what's supposed to happen happens.

An interesting dynamic I'm seeing and think people are misunderstanding something, I've noticed that people tend to define a debate as a choice between two pre-packaged solutions and people like to compare all of the two solutions Benefits and costs. And my preferred style of debate is: Let's break down the issues one by one.

I think there are always many options, far more than two. And in the soulbound token discussion, people imagine that this thing called soulbound token exists, but it's just a collection of ideas in a PDF document.

Sometimes it is beneficial to do things on-chain, and sometimes off-chain. We should figure out when to choose on-chain or off-chain, and work towards the best solution.

Dima：image description

Portrait of father and sons Dmitry Buterin and Vitalik Buterin. Image courtesy of Dima Buterin

I think there are many benefits for Ethereum switching to Proof of Stake. In terms of environmental issues, the Ethereum ecosystem can be made to consume less resources. In addition, the proof-of-stake mechanism can improve the security of the system. It makes attacks more expensive and makes it easier to recover the network from an attack than people thought possible. Additionally, proof-of-stake is more censorship-resistant, and the computers running validators make it easier for miners to detect and shut down the program. Therefore, the proof-of-stake mechanism has a series of different advantages.

Vitalik：I think there are many benefits for Ethereum switching to Proof of Stake. In terms of environmental issues, the Ethereum ecosystem can be made to consume less resources. In addition, the proof-of-stake mechanism can improve the security of the system. It makes attacks more expensive and makes it easier to recover the network from an attack than people thought possible. Additionally, proof-of-stake is more censorship-resistant, and the computers running validators make it easier for miners to detect and shut down the program. Therefore, the proof-of-stake mechanism has a series of different advantages.

I think the goal of converting Ethereum to Proof of Stake is a definite plan around the end of 2014. I think it's been described as a possibility since early 2014, and we'd be happy if a new algorithm was discovered. At the end of 2014, we were confident enough with this information that we were ready to start development.

Dima：The drastic reduction in energy consumption is obviously beneficial, and of course the security of the network. Based on all the research articles I've seen, I strongly believe this is a good thing. This is very important for the network.

I'm really excited to see this come to fruition, as I've seen a lot of people put in a lot of effort into it.

But having proof-of-stake doesn't mean, "We're there. This is the perfect technology." At some point, proof-of-stake will probably be replaced, not sure when, but it's inevitable of.

Fortune: Do you have any concerns about mergers, such as Lido Finance and centralization risk? Is that what you think is the most important thing after the merger?

Vitalik：Yes, I'm definitely worried. I think that's one of the bigger questions we're thinking about as we try to figure out how to change proof-of-stake long-term. But I also think it's important not to catastrophize the issue, a lot of people are overly negative at the moment.

For example, even Lido owns roughly one-third of the staked deposits on the Ethereum Beacon chain. First, if the attacker holds another third of the staked deposits, then we can't restore the beacon chain or anything else. But really, the worst an attacker can do is stop the merge for about a day or so, which is messy but not that scary. So, it's one thing.

Another thing is that Lido is not a single staking node. I think they have something like 21 nodes representing running these validators inside Lido and it's decentralized between them. It's like an attacker sending a team of heavily armed men into the building and carrying out a kidnapping. The attacker can take Lido's entire staked ETH, but has to go to 21 different locations, some of which don't even know where they are. Therefore, Lido is very different from centralized staking platforms and even centralized mining pools.

I think it's easy to manage even something like this today, and it's still a healthy decentralized proof-of-stake system. At the same time, I think in the Ethereum community, we really set ourselves a very high bar, and a higher level of decentralization is definitely something we're actively working towards.

Fortune: Looking back at the entire crypto space, do you think the good outweigh the bad?

Vitalik：I would say yes.

I don't think the crypto apps that get the most attention are not the most common ones. Someone used $3 million to trade Boring Ape NFT, and some projects were occasionally hacked to steal $20 million. These events are all real. But I don't think that's what cryptocurrencies are doing day-to-day, not like active apps, not like those activists are saying use cryptocurrencies to protect themselves, but like people around the world, they're finding Using cryptocurrencies makes it easier to transfer funds internationally, allow businesses to collaborate or accept payments from them across borders, and more. There are people doing this quietly, but it's also a very real use case.

Dima：It's very complicated when we try to assess how good or bad anything is. There are a lot of different things, projects, people, etc. in the crypto space. Everything has different outcomes. So we have these great crypto apps, but also speculation, scams, and so on. this is life.

Fortune: To sum up, how does Ethereum and even the encryption field develop in a better direction?

Vitalik：Obviously, I think one of the important things is to continue to improve Ethereum's technology.

So switch Ethereum to Proof of Stake to make it a greener and more secure system; add some scalability improvements like sharding and Rollup, which will drastically reduce transaction fees for people; Get cheap enough for the average person to use it - just a lot of work to make the blockchain ecosystem more secure, more user-friendly, and easier for many different types of people to participate in. I'm really hoping to get back some of the constructive experimentation we had in 2015 and 2016.

Also, I'm excited to see different types of applications emerge, especially outside of finance, which is a real growth in the crypto space. I think DAOs can greatly improve human collaboration, organizing and working together. This really requires us to do a lot of experimentation and figure out what kind of DAO mechanism makes sense. This is what people are doing, and a lot of progress has been made on it. In the future we will see many more amazing experiments and successes.

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Image courtesy of Dima Buterin

FORTUNE: Dima, do you have any words of parental wisdom for Vitalik this Father's Day?

Dima：Parenthood is one of the greatest challenges facing humanity. Besides Vitalik, I have two daughters who are younger. Supporting the growth of another human being is a wonderful and challenging thing about being human, with so much growth and so much difficulty. I want to wish all parents a happy Father's Day.

No matter what you do, you are likely to fail. We are all trying to create the best possible future for our children, but the future is full of hope and unknown. At the end of the day, it's not about our thoughts about the future, it's about how we as parents can be more present in the moment, how we can love our children more and have as much support as possible. So, I want to celebrate this concept of parenthood.