Bankless Podcast Summary: Discussing the Future of Ethereum and the Crypto Industry in 2023 with Vitalik Buterin
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Bankless Podcast Summary: Discussing the Future of Ethereum and the Crypto Industry in 2023 with Vitalik Buterin
Vitalik Buterin's outlook for 2023 and his views on Ethereum use cases.
Navigating Web3 tides with focused insightsWritten by: The Reading Ape
Translated by: TechFlow
Introduction: As this year draws to a close, Vitalik Buterin returns to the Bankless podcast to reflect on the 2022 cryptocurrency industry and share his hopes for 2023. He also discusses his views on Ethereum use cases such as money, DeFi DApps, identity, DAOs, and hybrid applications.
Crypto in 2022
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People will remember all the terrible things that happened this year.
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Of course, positive events were also significant (e.g., the Merge).
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The Merge reduced transaction inclusion time.
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Multiple zk-EVMs are expected to launch their mainnets in 2023.
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Sign-in with Ethereum has made huge progress in adoption.
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Cryptocurrency payments played a role during Ukraine's invasion.
Was 2022 an Unusual Year?
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The Mt Gox incident in 2014 was like a survival crisis for crypto.
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In 2022, we had a much thicker and more interconnected crypto space.
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In both cases, vulnerabilities and contagion led to sharp declines in crypto prices.
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Crypto is no longer in the phase of increasing adoption from 0.1% to 10%.
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Crypto is now entering a phase of increasing adoption from 10% to 70%, which requires a different strategy.
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Losing money should not be the primary message we want crypto to convey.
Will We Become a Niche Market?
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In 2011, Vitalik wrote an article comparing Bitcoin to Esperanto, Linux, and the Internet.
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Each of these comparisons began as idealistic movements hoping to replace existing systems with something better.
Esperanto
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Esperanto is an artificial language designed to become a universal language. It didn't succeed and remains a niche interest.
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English won out due to its overwhelming network effects.
Linux
Linux is an interesting middle case—an open-source operating system with both successes and failures:
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It failed on the desktop, lacking appeal for most people.
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But Linux has become crucial backend infrastructure for Android, servers, and developers.
Internet
- Undoubtedly, the Internet has taken over everything.
Bitcoin
The question Vitalik posed in 2011 was whether Bitcoin would ultimately evolve like Esperanto, Linux, or the Internet. The answer seems to be that Bitcoin may end up somewhere in the middle:
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In developed countries, it might occupy a position similar to Linux on the desktop.
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In developing countries, it could be ubiquitous, like the Internet.
Ideas and Suggestions
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Use of the term "ETH" will surpass use of the term "crypto."
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This doesn't mean becoming an Ethereum maximalist.
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The issue is that the crypto space is an ungovernable public space with no entry barriers.
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Talking about Ethereum doesn’t mean ignoring the great things happening in other ecosystems.
Lessons from the 2022 Industry
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Crypto shines brightest when it truly takes its core principles seriously.
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Open and decentralized projects survived, while centralized entities faced scrutiny.
Ethereum as Money Use Case
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There’s a tension within the Ethereum community: some want Ethereum to be just money, others want it to be more than money. These two views appear compatible.
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Stablecoins are part of DeFi. But they’re so simple and direct that most people don’t realize they’re DeFi.
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Applications from the OG era were mostly those genuinely concerned with delivering real utility.
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Newer projects focus on providing liquidity and high yields, regardless of sustainability.
"Newer things often rely more on short-term evidence to prove their worth. This is a very poor epistemology in DeFi because it's easy to achieve short-term success at the expense of long-term performance."
- Vitalik Buterin
Why Does Crypto Matter?
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Personally used crypto for medium-sized investments and charitable donations.
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So far, crypto is the easiest way to send money to family members.
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Fiat currencies are unstable in many regions.
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In these places, crypto has clear use cases and strong potential for long-term success.
"In my country, there was actually hyperinflation. But I could store my money in Bitcoin and ETH, effectively protecting my savings."
- Vitalik Buterin
Thoughts on DeFi DApps
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There are fewer low-hanging fruits available for creators.
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Yet there remain massive opportunities (e.g., building a wallet used by billions, creating a stablecoin resilient to dollar hyperinflation).
Identity
Blockchain identity and identity platforms.
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Concept of authentication: proving the identity you use to sign messages/transactions.
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Over the past decade, Vitalik Buterin has noticed people intentionally trying to build identity platforms and identity blockchains.
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These individuals view identity as an abstract concept rather than starting from concrete use cases people care about.
The Emergence of Identity
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Network effects must first take hold.
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In the Cypherpunk world, everyone had a PGP key. None really worked in practice.
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Now we have Ethereum accounts—private and public key pairs.
How do different identity systems communicate?
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POAP has been more successful in the Ethereum ecosystem than any self-proclaimed proof protocol.
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Many people own dozens of POAPs.
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There’s still plenty of room for entrepreneurs.
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To some extent, they must interoperate and agree on unified cryptographic standards.
Why Is Identity Important?
- People want an identifier they can use to interact with others.
DAOs
Vitalik is excited about DAOs.
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DAOs will replace many things outside of companies.
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Companies are unlikely to be replaced by DAOs.
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Two meaningful architectures: being able to quickly launch multisigs, and creating trusted products resistant to takeover attacks and sustainable over decades.
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DAOs don't emphasize smart contract logic. They emphasize open and spontaneous decentralized collaboration models.
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DAOs attempting to act as venture funds don't make much sense. They’ll move slowly in competitive environments, making them vulnerable to exploitation.
DAO Governance Structures
- Need non-financialized governance to create intentional friction/speed bumps preventing hostile takeovers.
Hybrid Applications
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Applications not fully on-chain but benefit from connections to the chain.
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Hybrid applications don’t face scalability challenges.
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Deployment is much simpler because it doesn’t require users to change their workflows.
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Examples: Proof-of-solvency protocols making CEXs safer, game servers using ZK proofs to publish state on-chain, voting.
Positively Building the Space
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Build more applications that push the space forward, fewer flashy but meaningless ones.
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Continue engaging in dialogue with regulators worldwide.
Vitalik’s Role in 2023
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Help projects building good applications succeed.
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Interact and connect with Ethereum communities around the world.
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