Ethereum Co-Founder Vitalik Buterin EXPLAINES Why Ethereum Will Beat Bitcoin!



especially you know a theory em I think is interesting because they have that like you can just go build a smart contracts and you can just go and start interacting with it and I think that's something that's like very powerful and it gets a lot of a developers interested in and in some of the applications that are starting to again built on top of blockchain saying there is all of this like decentralized finance stuff which is very cool to actually even like and I think about any analyze but take very useful as well and there's a lot of work being done to build applications around gaming there's work being starting to be done around these other and of non-financial areas so I mean the other thing I think that's always worth emphasizing is that this is still in a very new field with like a lot of areas where just anyone can start working on and probably and still be able to just build things that lots of people will use the other side is just making the applications themselves easier to use like there's a lot of areas I mean which applications that are built in ways that are kind of more challenging to work with that they need to be and I think a lot of work has been done in even the last few months and making applications that are easier with Lacuna swap for example decentralized exchanges or maybe a 20 times easier to use than they were a year ago and that I think is like one example of a big and fairly important improvement I mean I thought the interface in augur was like fairly well designed for example but I think to make more and have better things like that then you need frameworks like you just needed software tools to make it easier to kind of build good interfaces there you would need software tools to make it just easier to build and test and deploy smart contracts and I know there our team is working on each of those things and they're definitely interesting though I personally am skeptical of this kind of federated model and I think the reason why and one of them is just that it was tried for 15 years and it didn't really work well and like if you look at for example like Facebook competitors like diasporic that which tried to be federated in that just didn't really end up going anywhere and it turned out that most of the participants were actually just ended up using the same the same pod and so a again very quickly turns into a centralized system and then when you have one party that's dominantly have an incentive to just start adding features to make themselves different and then it stops being a standard protocol we have some a and a fully decentralized protocol cited state gets much easier to you know set the protocol up to make it more difficult for things like that to happen and so I I definitely think that some like ideas like that are important but I also just think that project that we should look more adds there why things like that haven't happened so far and like I have a good answer to you know why he is like this attempts to build decentralized thing is going to be different and I think like in watch for watching based applications we do have answers so one of those answers is just that it's a kind of decentralization where like you actually don't need any centralized actors and so it's kind of stronger and more robust that way but also because it's like there's this other whole other aspects to it which has economic incentives and economic incentives are this powerful tool that you can use to and encourage and if people in a community to act in different ways to try to then you have people participate in like all of these different parts of making a protocol and making an ecosystem work and that's something that you basically do need cryptocurrencies to be able to do well like many regulators are suspicious of cryptocurrencies and I think to some extent that is a mistake because Bach chains need cryptocurrencies to participate in applications to pay transaction fees to run that proof of stake validators to make the consensus secure look without the currency part public watchings would would not exist but at the same time like I do think that the we as an industry like I have a responsibility to get the technology to the points where some of these kind of non cryptocurrency related applications of walk chains that can't actually happen and people actually like really start building and using them I have me amita a comment I forget where a few months ago where I described of blockchains as being a kind of spiritual a kind of successor to the ideas of open-source and like what I meant by that was that if you look at the benefits of like free open-source software it's basically that you can create these protocols where people can work together without kind of one party in the middle and basically controlling and being able to extract rent from that and they think like having central controllers in that way is bad like both because it limits the number of people that can really like helping get your me to the ecosystem it also creates this kind of centralization of power that's dangerous I mean they also have like different interests from kind of the wider community and with open-source software like you can basically instead use pro software and pranced protocols that kind of work for you instead and work for the community instead of working for the company that's creating and building them but over the last 20 years like we've seen this big move to software as a service and Talisa kind of social like network services and so it doesn't even matter if the software is open-source because if the whole application in the data is run in a couple of servers then actually it's kind of even more proprietary than it was before and so that's something that I see blockchains as being a way to build applications where it's not just the code that's open but also kind of the data and the brand the entire processes of people interacting with each other happen anyway we're just anyone can kind of plug into and participate in if you're am 2.0 is something that's much more substantial than many of yous right so since the etherium project began we've there's always been this expert station that know what making blockchain Consensus work in a way that's more efficient than proof of work and making blockchains more scalable than they are right now it is kind of part of what people expected as being aetherium right so proof of stake and sharding have been a part of the roadmap that we've been talking about since 2014 it's something that we've been actively researching for several years we've gone through many protocols many iterations and these thrill of stake in charting are still part of the roadmap today right but the difference is that unlike in 2014 now proof of stake in charting are well on the path to actually arriving so for those who are not familiar proof of stake is this some alternative approach to proof of work for securing a blockchain where instead of the blockchain being secured by this large set of computers that are constantly running the exec very expensive compute computations 24/7 I'm instead of this you use coins inside of the system as a basis for the system security so people who have coins inside of the network can participate as validators in the network and by doing so you can have the chain come to consensus in a way that's much more energy efficient cheaper and I would argue more secure in multiple ways than proof of work and shorting is this upgrade which massively increases the scalability of a blockchain by moving away from the current approach where every computer in the network has to process every single transaction through an approach that says that each validator each participant in the consensus only needs to verify a small portion of all of the transactions and so by doing so the scalability of the entire network can be much higher than the scalability of any of one computer in the system so architecture right so the architecture of aetherium 2.0 looks roughly as follows at the center of the etherium 2.0 system there is what we call the beacon chain and the purpose of the beacon chain is essentially to manage the consensus so the beacon chain stores information about the approve active proof of stake validators in the system what message is they have they have sent it it from the chain it acts as this kind of central chain that the shard chains which actually hold data plug into and it is the kind of thing that the consensus itself revolves around the beacon chain has a connection to the existing etherium 1.0 chain so it is a new chain but this is not a separate ecosystem this is this is an extension to if the existing etherium chain and ecosystem and the bridge basically allows you to take ether and potentially other assets that you have inside of the existing etherium 1.0 network and move them through the beacon chain into the shards and into the etherium 2.0 network so if you have ether on the etherium of 1.0 chain and you have 32 es then you can sends the 32 es into a contract and this when you send the ease into the special contract it generates a merkel proof it generates a chain of cryptographic hashes that you can then include into the beacon chain to prove that you did this and by sending the 32 es into a contract what you are doing is you're registering as one of the proof of stake validator is one of the participants in the beacon chains consensus so in the beacon chain itself keeps track of this validator pool this set of users that have put their own ether in and have agreed to help kind of uphold the security of the system ends the consensus of the network runs between these validators so this is just a brief technical overview as to how the a beacon chain works so time on the beacon chain is split into these six minutes I parks during each six-minute epoch there are 64 slots I'm during each slot there is a block on the beacon chain and each block I'm get some and have signed first by a single block proposer and then it gets attested – it gets kind of approved by this very large set of alligators basically one over 64th of the entire validator set and this process basically just continues and over and over again and the goal of this is basically to be able to rapidly propose and rapidly agree on new blocks that are being added to the beacon chain right so that's what our attestations so here talked about this idea that every single block gets attested to by one sixty-fourth of the entire validator set what do these aDNA stations do so first of all they contribute to the fork choice so what this means is that every single one of these attestations which could be anywhere from a hundred to tens of thousands they get up added to every block can contribute to kind of solidifying that blocks position in the etherium chain can contribute to making that blocks position more secure so that once a block gets published within maybe even about three seconds you there could be a very large number of signatures backing that block and kind of firmly entrench in that blocks position in the chain now if that's not enough there is also this other algorithm that runs in the background called Caspar FF Gaea and the purpose of Caspar FFG is to give a kind of finality to a block so after this period of six minutes a block that gets included in the chain gets finalized at which point the consensus algorithm makes this final agreement on it and it cannot get reverted right so these two functions that contribute to rapid consensus and this is a large improvement on the existing proof of work chain right in the existing proof of work chain you have a block coming in on average every 15 seconds and if you wants to have security you might need to wait for maybe five maybe ten informations so really you need to wait maybe up to two to three minutes to get some security and much longer to get much more security here you get a fairly high level of security almost immediately within less than six seconds now the second thing that each one of these at the stations does is it also is a signature in kind of message of approval of a block on some particular chart right so basically the way that this works is that during each one of these epochs um every validator is randomly assigns to one shard and there is a thousand and twenty four of these shards in total and there are transactions and a cam happening on each one of these shards and you as a validator get assigns to a random one of these shards and it is your job to for that period of six minutes validate the data on that shard and if that data is correct you would sign a message attesting to what the current ball um what the current block come on the shard chain is so at the stations both support the beacon chain consensus and they also support via and secure the consensus on the short chains and they also serve two lengthy be contained in the shard chains together so consensus um runs on these two big algorithms one of them is this lmd ghost fork choice rule which is an adaptation of this ghost algorithm that was invented by amulet ensemble insky in 2013 to a proof of stake context and the main goal of lmd ghost is to be able to handle am a network wait-and-see be able to handle fast messages and be able to kind of help rapidly confirm blocks even if many messages come in parallel right so the longest chain rule for example this is how aetherium comes to consensus now even if you look at the name you'll it's the longest chain it's it's not a mechanism as i can kind of get more security if you have more blocks coming in parallel lmg ghost is an optimized algorithm that can now Casper FFG is this algorithm whose goal is to and if quote finalized blocks so that after enough messages have been made on top of a blog for some period of time that block just cannot be reverted so shards and cross links we have these 1,024 shards and inside each of the each of the shards people are sending transactions there's accounts there is activity happening on each one of the shards the capacity of each one of the shards is about the same as the capacity of the existing aetherium chain and the committee and now on the beacon chain you have these committees right so what the committee's are is that basically this mechanism that says that the vet the entire set a validator is the entire set of nodes that participate in the proof of stake system yet kind of randomly shuffled and randomly assigns to one of these shards and the smaller set of validator is that got randomly assigns to one of these shards has to verify the data that was submitted on that shard since the one the last time a committee for that shard was selected so what this er kind of random sampling mechanism does is it allows you to get the full security or something close to the full security of the whole set of validators but only use a very small portion of the set of validators to actually check the each individual block right so the idea is that unless some attacker has a very large portion of the entire set of validators when one of these random committees gets chosen there the chance that the attacker will have will be able to have say more than half of the validators in that committee is extremely tiny right so instead of security by random sampling so one of the em interesting of things that will happen in the etherium system is staking right so if cerium is moving from a a proof-of-work system to a proof of stake system and part of this is just a kind of thing that happens in the background that makes the blockchain more secure but it's also a mechanism that you can participate in right so if you have at least 32 es you can deposit that if in this deposit contract after you deposit it you can wait a few hours and after that you are kind of cool logged in as an active validator right so when you're an active validator basically you're running a piece of software on your computer and this piece of software is just connected to the network that software has some cryptographic key inside of it and you're using this cryptographic key to sign message is basically saying which blocks in the blockchain you think are go are going to be correct validating has some rewards so the current expectation is somewhere between 2.2 to 6% of the deposit value every year if you go offline then the rewards for going offline or lower but it's not too punitive right so even if you're on will offline 10% of the time you still get something some were about or about three-quarters of the rewards you would have gotten if you were online the whole time now this is not passive interest right you actually have to keep a note online you actually actually have to keep verifying transactions if your node does something wrong you can get penalized and the cost of running a node the verification costs are and if proportional to the size of your the amount of each that you're putting in right so if you put in 32 es then you only need to verify it currently about 25 kilobytes per second of chain data but if you put in 320 es then you have to verify 250 kilobytes per second of chain data so this is a kind of very different from what I love what the property is that I mean a lot of other protocols have right in in the etherium 2.0 protocol like we've been trying very hard to you know achieve certain kinds of properties that are difficult for other protic aynd zuv protocols to achieve right so first of all make this proof of stake in charting system it's basically actual iäôs a blockchain to process a very high number of transactions without requiring any individual node to process many transactions themselves and furthermore it creates this kind of egalitarian staking mechanism where a validator with a small amount of EF that does not have kind of high fixed costs and a validator that had that staking a lot of EF has to deal with higher costs of verifying transactions so I mean there's considerable kind of technical complexity involved in making all this work right and a lot of the time people ask us well why do we need to do this and if this particular approach to proofs taken sharding why couldn't we instead you know just make a simpler proof of stake blockchain where you just require that every single validator in the network has a very powerful computer has to process a really large number of transactions and where the number of these notes is much smaller um and the answer here is basically decentralization right so especially in in in any proof of work or proof of stake or any this kind of network where the consensus is controlled by this kind of economic mechanism there's always this constant risk that the network is going to become centralized that it's going to become this kind of concentrated by one or two pools mining pool staking pools exchanges large actors that then just ends up kind of grabbing control of the system and here our goal in many ways is to try to push really hard against that right we're basically saying you know no you do not need to have a professional personal mining and staking farm in order to participate in the in securing the network if you have only 32 eath then you can just do it at home if you have if you have anywhere up to of a few hundred yes you might even be able to do it on your laptop now if you have more than you'll need a specialized computer if you have many more you will need a very powerful server rack right but the goal here is that it should be possible to participate in the network kind of at all scales and the network should be able to survive even if these kind of highly highly professional central centralized parts of the network just do not end up existing so technologies that make this possible and this includes some advances in cryptography including like pls aggregate signatures a technology called proof of custody optimizations on Merkel proofs or work on Casper that consensus algorithm I mean a long time spent mate just trying to make the protocol maximally simple scalable and secure and with this goal of no preserving the decentralization of the base layer right so phases so this some and if the rollout of a theorem 2.0 is expected to come in multiple phases and one of basically you can you can look at it this way right so right now we're here but really we're here right so really there has been a huge amount of work done and if already and what's the left is essentially deployment right so phase zero is basically going to bring proof of stake so this basically means that you can deposit your if you can start staking and the chain itself doesn't really have much functionality and this is a deliberate decision right the goal here is basically that the chain can launch and people can try out using the chain and the chain itself can kind of start running and operating and it's still it's still a very early stage right the goal is to basically give time for the network and for the staking mechanism itself to under stabilize and prove itself phase one data sharding so this basically means that the shard chains start working except older doing is verifying data they're not verifying transactions they're not running smart contracts they're not verifying and validity of transactions all they're doing is they're just verifying the data has actually been published and this already is actually usable for like a lot some very interesting protocols I mean I had a presentation at the Seoul aetherium meetup yesterday where I talked about something called zk roll up and basically even just phase one by itself can be used and really scale blocks and applications phase 2 state execution account smart contracts and full functionality and phases three and beyond basically further technical upgrades right so if you wants to participate in the simplest step ways to learn yes there are some updates that have been done by these aetherium if you're AM 2.0 Quine implementations there is the specification that's kind of led by some if you're AM foundation researcher is there's a site called if hub which has a lot of independent community information um and I mean the main ways to participate here is basically a theorem 2.0 smart contract development and kind of experimenting with sneaking on tests that's as something that's and people coming very soon and it is something that you know I hope that people are going to find interesting right so the next thing I wanted to talk about is like what kinds of why is all of this useful right look what kinds of things are we trying to accomplish with all of this so a big part of the answer comes in what in andreas talked about it yesterday in the morning when he talked about this idea that at some point blockchain technology adjust in terms of its usability is going to reach parity with traditional systems and when that happens then suddenly a lot of thing like instead of the question being well why should this be on a blockchain in some cases the question will be well why not put this on the blockchain definitely not in every case but in more cases than today I mean so if we look at the way block chains work today the scalability is limited to about 15 transactions per second block times are on average about 14 seconds sometimes they go above one minute privacy is in many cases almost non-existent and the so on this kind of platform like there's not that many applications that can really effectively survive and even if transaction fees are fairly low today there is a lot of applications that just aren't being developed because they know that if they are the application that succeeds then they themselves will be the ones that pushes transaction fees up to infinity until like basically their application stops being useful because their fees are too high the goal of these improvements is to just basically on every front try to me I've cut down the difference cut down this Delta of usability between blog chains as they exist now and centralized systems right so scaling in the goal here is to improve scalability to increase the number of transactions that can happen on the network and to increase it to a level that seems like it's it's something that you can start working with to kind of power parts of the global economy right 15 transactions a second is not it here we're talking about potentially tens of thousands of transactions per second and arguably that's still not enough but it's kind of it's a major stepping stone and it's something that can be combined with other technology and other improvements later on hopefully to actually allow us to get there now proof of stake so in addition to proof of stake making the ethereum blockchain more efficient and I would argue much more kind of long-term sustainable and not dependent on these kind of constant technical arms races with GPUs and Asics and one ASIC monopoly that might be disrupted by another ASIC monopoly you know just to remove the needs to have all of these arguments about economies of scale in this one weird industry as a key security assumption we basically moving to this approach where the security of the system is just secured by coins inside of the system itself but that's not the only benefit right proof of stake also gives us an opportunity to and every architect many aspects of the system and particularly in the one of the major pieces of this is this and of architecture that we've had that we've developed where you have basically every block on the chain instead of being confirmed by one additional block every 15 seconds it gets confirmed by hundreds to thousands of messages within a few seconds so here we're not talking about a system where like after you send a transaction you have to go get a coffee before it gets confirmed here we're talking about transactions where you can send a transaction to a merchant and the merchant can see and confirm that the transaction is confirmed within about the same amount of time as it takes for the merchant to process a credit card and the iock I personally believe that are getting these differences in use of in usability really down and getting decentralized out of baseball your platforms to the point where they actually are powerful and kind of efficient enough that but from a just users point of view it's something that regular people can actually work with and it doesn't kind of impose all on all of these weird unexpected costs transaction fee is waiting – waiting time on them then we can start spirit serious we're seeing many more blockchain applications appear and especially in this fear where we're not just talking about blockchain applications where you only needs to have one transaction every couple of months but we're also talking about payments and potentially all of these non-financial use cases that people are talking about as well right if transaction fees are at a dollar then blockchain platforms are the set of things that blockchain platforms are useful for is really going to be fairly limited but if we can cut costs down much more then we can get the costs of using these platforms down much closer to something that would be acceptable for a much larger array of industries and that would allow us to actually test and see you know are there what kinds of things could block where what kinds of places could blockchains help you know if we had the means to because with this kind with this kind of technology and I hope that we will have the means to so that is data scalability that is usability through things like reducing block times but this doesn't solve every problem right so for example this doesn't by itself solve the problem of privacy and that's something that we're gonna be talking about then in the next panel and there is also going to be the need for and if ongoing improvements in technology but once the base layer itself is powerful enough then it's often becomes more and more possible to do those upgrades just by making kind of a second layer protocols on top of the existing blockchain I mean so the in general this kind the path of development of I mean both etherium and blockchain technologies in general is something that where we still have quite a long way to go but it's um in I think it's clear at this point that you know there is there's a lot of people working on making this happen and there's a lot of people work working on making alternative approaches the scalability happen including layer two protocols state channels plasma lightning networks systems including I'm using zero knowledge proof for security and many other things and so we really can't expect that within a couple of years the scalability a usability this all of the necessary properties of these systems are going to be much better than they are today and when that happens I think that you know we're not just going to see block chains being kind of used for a few small niche things and expanded and a few experiments they're going to be something where if someone wants to build put some registry on the blockchain build some applique a some application on the blockchain use the blockchain to just secure any kind of information then in many cases the default is that they will be able to I mean and I am confident that there are going to be things that will get built because like I go around come around and talk to many people in both inside of the watching space and also outside of it and while it is true that it's very difficult to get existing institutions to change their approach especially if they have an approach that works perfectly fine if you talk to people who are building new projects then you know very often like they will say that oh they're building something we have some kind of blockchain components and there are people that you know really do believe in these kind of ideals of have transparent open decentralized networks as the backbone of their systems to eliminate themselves as central points of trust and central points of failure but we as developers of Technology need to make sure that when the time comes and they actually build the things that they wants to build the technology is ready to accept it and that's something that I'm confident that we can we can work together and actually achieve thank you

3 thoughts on “Ethereum Co-Founder Vitalik Buterin EXPLAINES Why Ethereum Will Beat Bitcoin!”

  1. Blockchain Technology is about an Immutable ledger of agreement (ETH is already proved itself useless in that respects). Making a blockchain secure and stable is a very important issue: ETH is a very very complex Turing Complete blockchain. To say that it is safe is the same as saying your PC does not need an anti-virus. They are falling behind because they could have built ETH as second layer tech: In fact Vitalik concedes this by recently suggesting that they piggy back of a Shitcoin like BCash (BCH). ETH is not stable, they are stuck trying to square their circular reasoning…always finding new vulnerabilities and responding to protocol hacks that they create with every "UPDATE"….

Leave a Reply

Your email address will not be published. Required fields are marked *