Vitalik on Starting New Countries and Improving Yourself | The Network State Podcast with Balaji #1
This is a recorded interview (Network State podcast #1) where Balaji Srinivasan interviews Vitalik Buterin about Ethereum’s origin, major historical incidents (the DAO, 2016 client/implementation attacks), protocol milestones (EIP-1559, the Merge to proof-of-stake), and the near-term roadmap (sharding, rollups, data-availability). The conversation then broadens to governance and censorship risks (MEV, proposer-builder dynamics, Tornado Cash legal issues), a thought experiment about founding new cities/countries (trade-offs: people, law, climate, cost), and practical advice on self-improvement and learning (language learning path, learn-by-doing).
This is the first episode of the Network State podcast. I've been on many podcasts. I guess they've had millions of views collectively and I've probably had millions of people asking me to. Whenever you can do your own podcast. Well, we're doing it. Okay. This podcast is about network states, of course, but it's also about everything we're interested in, from the positive vision of human improvement to, you know, obviously cryptocurrency, but also biotechnology, drones, nuclear power, and all the policies we need to actually legalize all of this amazing stuff. And I'm going to be talking to tech people, I'm going to be talking to policy people, going to be talking to interesting people and giving my own commentary and hopefully injecting some levity occasionally into the proceedings. Today I'm actually very happy to have our first guest here. My friend Vitalik Buterin, the founder of Ethereum, here to talk to us today about Ethereum, about network states and starting new countries and also how to improve yourself as well as his particular life hack. One weird trick that allowed him to learn Chinese. And how long was it, Vitalik?
About like three years before I got comfortable enough to talk to people.
Yeah, there you go. One weird trick to learn Chinese in three years of hard work. So he'll tell you what he did. All right, thank you very much. All right, well, we're underway. This is the first, first Network State podcast and obviously, you know, we've talked a lot about a bunch of things like rather than doing, you know, tell us about yourself and background all this stuff, I will assume that that's on tons of other podcasts. I think what is maybe a little topical that we can just talk about is Ethereum from concepts of the present day. Because we just had the merge and you know, what is Ethereum after the merge, what's the future and you know, then what happens after that? Why don't you tell us about that?
Sure. So the Ethereum project started around the end of 2013. So what I had been doing before then was I basically finished a. Well, not really finished, but I was about five months into a bitcoin trip around the world. This is basically something I had started in June of that year, just visiting what was the bitcoin community at the time. So yeah, I visited the libertarians in New Hampshire, the left leaning anarchists in Spain, the, you know, more kind of normie bitcoin community in Switzerland, and people in Israel who are working on math and covered coins and zero knowledge proofs and master coin. I had Accumulated all of these different ideas and a lot of interesting, just recollections of various projects that people are working on. And what was interesting in Israel in particular, right. Was there was this really high density of people who were excited about this problem of, well, what's next? Right, so we have Bitcoin for payments. What is blockchain for, you know, finance domain name systems and more general applications going to look like in general. Right. And what would a protocol that could actually support those kinds of applications look like? The first protocol that was trying to do anything vaguely in that range was Covered coins, right. Which basically just allowed you to access other kinds of assets and issue other kinds of assets which would actually look other other kinds of assets on top of the bitcoin blockchain. But then after this there was mastercoin, which was a financial protocol that supported a couple of applications that were called things like, basically things that we would call defi today.
So all the color coin stuff is in is pre2013 when people still thought all that stuff could run on bitcoin. And then I think we met in late 2013, if I recall. Right before you started.
Yeah, I met in San Francisco actually right after this trip to Israel, right. Where I had started actually working on covered coins and bastard coin. And basically right after I had started asking myself the question like, okay, take these protocols as as they are. What kinds of tweaks can you make to them to try to make them support more things without making the protocols even bigger? Right. So I think at the time I coined and was using the terms with Army Knife protocols, and what I meant by that rate was something like Master coin. It supported 10 different types of applications, but it just had one transaction type for each application. You know, there was a transaction type for like registered domain, there was a transaction type for open binary financial contract. There is, you know, a transaction type for make a bet on an event with this third party as the arbitrator. I mean. And I started poking at these features and trying to save like for example, oh, what happens if we collapse these three features into one feature that's like one feature and it's a little bit more complex, but it supports those applications and it supports even more applications.
The rich statefulness.
Exactly. So rich statefulness actually actually came near the end. Right. So at first I was just making these tiny tweaks. Then I realized, well, what if we made Master Coin that had a feature for generic two party financial contracts where you could specify a formula. And then after that, finally, what happens if you Go beyond two party and you say, okay, well what does an end party contract look like? And that's when we had these big insights like, well, maybe it makes sense for a contract should be an account. What if it makes sense to. To make it possible to send coins directly to a contract. So a contract is like an actual, like virtual agents that you could interact with, that you could call, that you could send coins to do all kinds of things with. And that's where the ideas for Ethereum started to emerge. And at the beginning those ideas were phrased in the form of like, well, how do we modify some of these existing systems? But then as the momentum around the project kind of grew, as more and more people started getting interested in the idea, then it kind of, the ambition quickly grew and it quickly basically became a project to create a new and independent blockchain. Right. So that's kind of how things started. And he had written this big document back in November of 2013 that I refined a bit since then. Well, largely in November, the Ethereum white paper. Right. And I think maybe even when we met for the first time, I might have tried showing it. I'm not even.
I think there was v. It was basically the big room where there was a bunch of people there and actually several companies came out of it, actually, including Blockstream. Everybody came in that room and I said, who are the founders? And everybody raised their hands and I was like, okay, this could be, this could be interesting. I remember they're like, there were quite a few folks on the early Ethereum. There was that conference in San Francisco a few months later where I think it was the one where it was a coin summit or something like that in 2014. Is that right? Or at least 2014. It was like one of the first like sort of formal bitcoin conference like things. And I think around that time the whole thing was coming together. And I mean, I think the white paper was out by then, or close to out by then. I don't recall exactly when it was public around that time.
I think it was out by then.
Yeah. And so that's a beginning. Right? And how much of that early roadmap, you know, the frontier, Homestead, Metropolis. Randy, how much of that did you guys, in your view, did you stick to? What did you end up changing? Obviously, you know, getting to proof of stake was much harder than. Or took. Took a while, but it's now out there. So what? You know, it's impossible to hit something on the first go. And most people would be very happy to have you know, with theorem. But what, what's your retro on the whole thing?
Yeah, I think what we ended up doing was basically in the spirit of the original Frontier, Homestead, Metropolis, Serenity, Separation. So those four words, by the way, they were from a blog post that was published on the Ethereum blog by, I think it was Vinay Gupta back in early 2015, a bit before Ethereum launched. Right. And basically the intended definitions of those four stages were that Frontier was the launch of the chain, but when the chain was launched, it would be launched with like very explicit marketing and understanding among everyone that this was still a beta chain. And Wild West. The Wild west, exactly. Wild West. Lots of things could change. You know, this is the frontier, you know, the standard things that the bank west people say in every episode. And then Homestead would be a milestone of getting like a little bit out of the woods of the Wild West. Right. So basically saying like, okay, you know, the chains run for a while, it's survived, it looks fairly stable, so it's okay to consider it a slightly more mature chain. But then obviously still keep improving things. Metropolis. Actually this is the one difference. Originally there was a goal that the Ethereum foundation would create something called Mist, which was the Ethereum web browser.
Right.
Basically a web browser designed around the idea of building and using decentralized applications from inside of it. And it was intended to contain things like an App Store. And I think there were even ideas near the beginning of having a Dell that would manage the App Store. There would be security oriented features that could only happen because of the browser. There's just a lot of like really fascinating and advanced ideas. And I think most of that ended up not happening. Right. Instead, you know, we have like browser wallets. So things like, you know, Metamask, the Brave Wallet, and I think more and more new ones starting to pop up lately. The one thing that ended up not really happening, I think Metropolis ended up being kind of, well, first of all split up into three stages. Right. So there's Byzantium, Constantinople and Istanbul, the three forks that happened between 2018 and 2020. Right. And Istanbul was the bigger one. It added support for pairings the cryptographic operation that makes a lot of the zero knowledge proof protocols possible. And then some other features that were enabled by the other two. And then in 2020, EIP 1559, that was something that was totally not predicted initially, but it ended up actually being the first like really significant change to the Ethereum protocol. Right. Basically the idea there was, it's a reform to the fee market. So to what? What happens between you sending a transaction and that transaction getting included in a block, and the process for like deciding which transactions get included, how much the miners get paid for including those transactions, what are the limits for how many transactions can get included in all of those different variables? And basically it's like the kind of econo geek explanation is that it moves the fee market away from being a first price auction, which is known to be inefficient, and it moves it toward being a fixed price system. But one other way of thinking about it is it adds some temporary slack to the block space. So if there's very temporary growth in demand, one block could be a little bit bigger, the next block can be a little bit smaller. And what these things ensure is basically that if you, like users don't have to make this really complicated calculation of am I going to pay a very high fee and get included immediately, or am I going to pay a lower fee and like needlessly wait 5 or 10 minutes. And instead what AP 1559 basically gave us is a fee market where transactions would reliably get included in the next like one or two blocks, right? And then after that we had the merge, which I haven't gotten to that quite yet, but I'll kind of poke into the the future of the past here briefly. The merge would obviously switch has the proof of stake, but one of the interesting side effects was that it made block times more regular, right? Instead of a Poisson distribution where you had a 1/12 of a chance of a block every second with a merge, it's a consistent rhythm, right? Block, 12 seconds block, 12 seconds block. And that actually meant that because of this extra regularity and block time, blocks would happen. On average, you actually have to wait two times less before seeing the next block, even though the average time between blocks is exactly the same. It's this really interesting mathematical artifact, right? And that kind of stacked on top of EIPL and 5.59, right? Because Apollo and 559 reduced how long users have to wait before they get included. And then the merge reduced that even further. And so both of those two things together, I think the effects of them both were just so visible. The difference is night and day, right? Like sending a transaction and waiting for it to get included back in 2019 was like a very frustrating experience. And today it's like, click wait, check ether scan, it's done. Click wait, check either scan, it's done, right? It's like very often a transaction gets included within only a few seconds. Like, I think probably you get a 50% chance after sending a transaction that it'll get included in less than about seven seconds or so. Right. The only reason why it's not six is just the probability that like, whoever the next block creator is just happens to be doing something weird and you have to wait for the next one. So UX improved, Ethereum clients improved. This is also a really important one. Right. In 2016 there. So everyone knows about the dao. And I think, you know, the dao is fascinating. And the dao is kind of fascinating from a protocol politics perspective because there are all of these debates about how, you know, is immutability like an unlimited strong rule that you stick to in every situation? Like, is it like a kind of fiat justitia periat mundusa sort of thing? That's a Latin phrase for like, let there be justice and even though the heavens fall, let the world perish. Or might there be like extreme case limits on it? And, you know, there is a debate of like, would that end up setting a precedent? And I think the answer to that actually ended up being much less than people thought. Right. Because a year later there was another dispute, the EP999, where the parody team tried to unstuck their coins and make a hard fork to do that. And the community just said like, hell no. We know we actually explicitly don't want to create a precedent and. Or we explicitly don't want the DOW to become a precedent. And so they kind of intellectually, what's in the other direction? And since that, there haven't been really any attempts to violate immutability to anything, like what happened with the Dow.
But I want to just ask one question on EIP 1559, because I do remember this and now I'm actually looking at it again and it looks like the big difference is before it was an auction, which was in. Well, first, a first price auction, as opposed to like a second price victory auction is suboptimal. But the second thing is it just introduces noise and unpredictability into everything because you have a fee market and so on. And it looks instead that you went to a protocol set base fee so that if you pay that base fee, you're guaranteed of being included. And so the unpredictability is somewhat decreased. And I'm looking also at block times and they've also flattened out and the variance has gone down since the merge. It was a little bit more variance before the merge. Is that correct? Or am I. Am I off base on that.
Yep, yep, no book, but both are very correct.
Okay, great. And actually it's interesting because I, I, you know, I, I known about EIP 1559. I hadn't like tracked it closely. But it's interesting to see that that com things is what has been responsible for kind of faster and more predictable transaction fee inclusion on the Dow. Do you want my perspective on the outside just watching the whole Dow thing? I, I didn't comment on.
Hear that.
Go ahead.
Yeah.
So first is during the dao you were the. And for those folks who don't know, because this is now ancient history in crypto terms. It's seven years ago, it's 2016 when Ethereum was, I think Bitcoin was starting to hit congestion problems and a bunch of folks were checking out ethereum in early 2016 and it had gotten up to a billion in valuation, I think thereabouts. In early 2016 there's this project, the DAO, that was trying to do effectively an on chain VC fund, but it was trying to be autonomous and so on. Even the name DAO is probably arguably antiquated. It would be really, it's not really an autonomous community and it's or not autonomous organization. And so from the outside what happened was I think it was like 10% or something of all eth was in the Dow. Was that right?
It was actually, it was eleven and a half million ETH, which is a bit under 10% of the ETH that exists today. But it was I think 14% of the ETH that existed back then.
Okay. So it's like a big chunk. And so what happened was this, you know, DAO attacker read the code and figured out some way to sort of drain the, the DAO contract. But there was this thing where there were like, there's like a white hat approach which could keep going back and forth and keep like undoing his thing. And that was just going back and forth. And I think there's like a 30 day clock or something before you, before it was like a final transaction or something like that. Was that, is that right? And then you were going to get in a patch before that 30 day clock went up to stop those funds from being moved somewhere. Am I remembering that correctly? Yep, ballpark. And so the thing about that was I remember from the outside watching that, I was like, you know, now I have sympathy for Bernanke because there was a systemic risk to the whole system. And this sort of intervention could save the system potentially, but would it create moral hazard and so on and so Forth or what have you. And I, I, I just understood in the same way that when you start a company, you're CEO and you understand what it is to be CEO or you, you teach a class, you're a professor, you understand what it is and you're like, okay, now I know what a smart ass kids were, were on the other side, right? Being actually in the position of essentially central banker, you're like, okay, I now understand why you know, they're there. Did you have those thoughts at that time? Where is that something you were thinking about?
I don't think I used the Bernanke as an analogy, but like, I guess just because, you know, those kinds of like monetary and finance issues are probably a little bit less of a primary category for me than they are for a lot of the other earlier crypto people, but definitely similar thoughts.
It's, it's interesting because, I mean ultimately the justification on it is that Ethereum has succeeded and that there hasn't been, despite significant pressure, other sort of reversal things put into Ethereum. Like of course there was that unfortunate hack of the parody Wallet, for example, and then they were trying to get an EIP in there I believe to like move the funds or whatever. But so far, while that's very unfortunate, I don't think there has been another thing that's like that, that is like allowing for community reversals of transactions. So that means now we have stable governance, I guess we're out of Homestead fully. And you know, was it formally in Homestead around the time of the Dow?
Yes. So homestead happened in March 2016 and the DAO got hacked on, I believe it was June 17, 2016.
Yeah, so it's still basically, it's still basically beta. So that's I think a fairly good justification for beta versus prod as to, you know, when edit up. So now we're post merge. I mean and I was, I was just crossing my fingers actually before we.
Get to post merge, I kind of wanted to talk a bit about the other thing that happened in 2016, just because I think it's equally fascinating but like 10 times fewer people have heard of it. So, okay, so the time is 2016, September 19th. And the background of this time was that the DAO had gotten hacked months ago and the DAO hard fork that had done that kind of surgical intervention to the chain to just delete the DAO coins and move them into this other place had happened about two months ago. The whole situation where the Ethereum classic community rebelled and made their own version of Ethereum that refused to implement that change had happened. And the entire kind of market drama where, you know, you had Barry Silbert trying to push Ethereum Classic really hard, a whole bunch of characters kind of buying in early, trying to get it to flip Ethereum when you had a whole bunch of exchanges supporting it. Just a whole bunch of people really like watching and seeing, you know, which of these two chains would win. Because this was the first time there was any kind of like literal crypto civil war between two chains. So that that had all happened and the etc price had had a maximum of, I mean there's 0.4 eth. And then it had dropped again. And it had dropped, I think a bit below 0.1 at the time. And it just felt like maybe, just maybe. I know the Ethereum community was finally on its way out from the being in the kind of dao arc of the plot of the story. But then at 5:15am Shanghai time on September 19, when I was staying in the hotel where the DEFCON 2 was literally about to start, in 3 hours and 45 minutes, I got this military style wake up call. Like just woken up by a call. I picked it up and someone from the Ethereum foundation had said, hey, you know, we have a situation, you need to come down now. So I pretty much stood up, grabbed my computer, put my computer in my computer bag, you know, walked out of the hotel room, elevator down, walked over to this room where I was supposed to go, and I saw about 20 Ethereum developers gathered in a room. And at that time they were still trying to figure out what was going on. Basically what had actually happened was that someone discovered a bug, not in the Ethereum protocol, but in Ethereum implementations that would cause it to process a particular type of transaction much more slowly. Basically, instead of taking like n steps to process a transaction that had n computational steps in it, in this one particular, particular case, it would take N squared steps, right? Basically because it was like each single step of the EVM would add one extra thing that the, that the node would need to worry about. And so the first thing in the first step would need to worry about one thing, and the second step we need to worry about two things. And third step, so you worry about three things, right? And so it went quadratic. Like this kind of bug could totally have happened. Actually, a quadratic bug actually did happen in Bitcoin, right? So one of the justifications for not what are the secondary justifications for not increasing the Bitcoin block size back when the Bitcoin Block size debate had happened. This is one of the select techno work things that again, almost no one knows about, right, Is the quadratic attack issue with hashing. So the quadratic attack issue with hashing in Bitcoin basically is, I think it's, I think it still is, but the only for old style transactions segregated with this fix it. But basically that if you have a transaction that has n inputs, then to compute the hash that gets used for the signature in each of the inputs, you have to hash the whole transaction, right? And so if you have n inputs that each of those n inputs need n different signatures, you have to create n different hashes. And each of those hashes contain at least kind of like the structure of all of those inputs. And so each of those hashes would be size N. And so you would have n hashes of size N in order to sign a size N transaction. So you need O of N squared hashing. Right? And because Bitcoin is just like, because it was just hashing and not EVM execution, and because Bitcoin just has lower absolute limits to its capacity, it ended up being I think okay for Bitcoin as it is like a worst case block at that time, I think ended up taking like 30 seconds to process. But if the block size had increased, that would go up quadratically, right? So if the block size has gone up from 1 to 10, then the, the worst case block time would have gone up from 30 seconds to 3,000 seconds, which is almost an hour. Right? So, so it's not a turkiplitis issue, right? It's a quadratic, like literally. Bitcoin also had a quadratic execution issue. And that ended up influencing, at least to a slight extent. I think it ultimately happened for other reasons. The small block versus big block discussion in the Ethereum case, it was, it had to do with the implementation and way, the way that the system handled recursive calls or just like long towers of calls in general. So like A calls B call C or it could be A calls A calls A. And how it create like basically when it created a call, the VM ended up copying everything. And the amount of stuff that got copied kept increasing with every call. So there are actually a whole bunch of these different quadratic execution attacks. So the attacker discovered the first one in at early morning chinatown time of September 19th. I think the attacker might have even intended to kind of create a nasty surprise and basically make the Ethereum chain break on the morning of defcon.
Ouch.
Right. But we ended up working, you Know, really hard and really intensely for those few hours we had, by about 6:30am, I think, isolated the bug by like maybe 7am or so, created the patches that would fix the bug and then that's pretty legit.
That's hard to do for a subtle bug. That's actually quite difficult. Go ahead.
It absolutely was, yeah. And then by like 8:30am, we had, I think, published the patches and people were starting to download them. And at 9:25am, 25 minutes after the intended start of the conference, we were all kind of confident enough that everything was stable, people were running the new nodes, everything was working as expected, and the network was running fine again. And the conference basically started pretty much as it had been planned to start. Right. So we had turned a, basically an attempt at creating a PR disaster for us, I think, into something that really showed the unity and just the dedication and the competence of the guest developer team. Right. I think it's one of the other reasons why I wanted to tell you the story, which by the way is not done yet, is that like, the core devs really are these kind of unsung heroes of the ecosystem and they tend to be more introverted and they tend to be less podcasty than, you know, myself or Justin, but they've just done a lot to make the Ethereum clients faster and to really enable, like, let's say the 7x capacity increase that the chain has had since. Since it launched. Right. But it took a long time to get there. Right. So that was the first attack. And then when DEFCON finished on the evening of the third day, the attacker discovered a second attack. A few days later, the attacker discovered a third attack. There was a fourth attack.
Oh, wow.
There was literally this month long period where we were literally in constant cyber war between the Geth and Parity development teams. Geth and Parity were the two Ethereum clients that were functional at the time. And there would be often periods where either Geth worked and Parity did not work, or Parity worked and Geth did not work. And a lot of users ended up switching between the two clients so really frequently. And the two teams were both just like frantically putting out fires that this attacker was starting. The attacker was figuring out every single bug in each of these Ethereum clients.
Pretty smart guy. Or that attacker was.
Yeah, he was really impressive. Right. And then finally a month later, he discovered a bug which was not in the implementation but in the protocol itself.
Right.
This was a bug with the self destruct opcode that basically allowed it to be Used to do some really basically make the Ethereum state much, much bigger using a very tiny amount of gas and that, and that bug, had it been left alone like it would have been fatal within some number of weeks. Right? Because basically the Ethereum state size was just bloating up. And once the Ethereum state size bloats up too much, then there would just be no way to do any kind of caching and that would make Ethereum even slower in other ways there we had to do another hard fork, another emergency, unexpected hard fork to increase the gas costs of a couple of operations to just make those attacks just not viable in the future. You remember that and do you remember the second hard fork that added a feature to clean up all of the junk state objects that the attacker added into the Ethereum chain.
And I remember basically that at the end of 2016, in December, like Ethereum's price had dropped quite a bit over the course of year. It's been like a long slide down. People were demoralized after the Dow and the multiple hard forks and people thought that the, this is not you, but folks, you know, like, who are in the broader crypto community or whatever thought okay, smart contracts are just too hard and just add too much complexity and too much attack surface. It's going to be a while before this thing works and you know, much, much power to them, but it'll probably take a few years. Then three months, four months later you have this gigantic rise and it's like, you know, we should play that rap thing, you know, where the guy is like on his back and he kind of gets up like that, you know that meme I'm talking about. We'll put this in the show edits. Go ahead.
Yeah, the, but you know, the, the, the drama was, that was not, not quite over as you said, until December, right at the end of November there was this situation where like I had to send a bunch of transactions to basically wrote a Python script to send thousands of transactions to clear out this junk that the attacker had added into the chain, into the chain. And one of those transactions triggered another bug that had accidentally been introduced that actually for the first and only time really, actually had a consensus failure. Same thing as what happened in Bitcoin in 2013. Kind of split the chain in half. Like I was the one who sent a, the transaction that basically broke Ethereum in that way for the first and only time. Which was one of these kind of fun stories again. But yeah, after all that the price had been dropping, everyone was definitely demoralized and then 2017 happened and you know, the crazy bubbles of 2017 happened, then 2018 happened and 2019 happened and people in Ethereum were demoralized again. The end of 2018 was the birth of Uniswap, which I think was a good kind of segue into the Defi era. And then in 2020 we have the summer of Defi and then it started to be NFTs. NFTs are probably the one thing that I did not predict, by the way. Right. Like if you look at the list of applications that were in the Ethereum white paper and you look at the applications that are popular today, the big thing that's in the second list, that's not the first is NFTs. But otherwise, you know, there are prediction markets, there are defi, there are a lot of things. Right. And then finally this last year, 2022, the merge happened and that was Serenity. Right. Serenity was always intended to be proof of stake and later on we added on sharding basically some kind of scaling solution to that. And proof of stake has finally happened.
Congratulations on that. So can I say why I was concerned about that? I was, I was just obviously, you know, rooting for the success and everything, but I was like, you know, a full switchover of the. Of course consensus had been tested for about a year or thereabouts, but you're moving the whole ecosystem over and it was a. Everything that isn't tested is usually where bugs arise. And so the fact that that was as smooth as it was and basically a non event and that there hasn't been, I mean maybe there's something that eventually but, but it's certainly nothing at the time, nothing in that few weeks afterwards was really impressive. It was, it's one of those back end changes where the whole point is that it's a non event but a very, very, very difficult to pull off. So congratulations on that. You probably have some thoughts on that whole transition over.
Yeah, the transition took a lot of work. Right. Like I think it actually surprised all of us that the transition wasn't on event to the extent that it was. Right. Because every single test was run that we had attempted had at least one tiny thing break in it. Like never anything bad enough that it would have been a big problem had it happened on the live network. But it was always like some combination of client settings ended up not surviving and like 10% of the nodes dropped off one time, 35% of the nodes dropped off and that actually caused finalization to delay by an hour, there's just like always, a couple, one or two tiny things that would break. And then when the real merge finally happened, everything just went extremely smoothly. Right. And I think that again is a testament to the quality of all of the Ethereum client development teams that worked hard for multiple years to write the software that would make the transition to proof of stake possible. Right. And basically pull off something that I think some people were describing as changing the engine of a jet while the jet was still flying. Right. It's a pretty real complicated operation. I mean, a lot of people I think definitely did believe that it couldn't be done, but eventually it was done. So now that the merge is done, and I think the main thing that's left for in the original kind of roadmap is sharding. Right? And sharding is something that we talked about for a long time, but I think the ideas around how sharding would be implemented have changed. It's gotten more ambitious. Right. Like early versions of Sharding were willing to trust honest majority assumptions and basically are willing to trust the idea that like, let's assume 50% of the nodes are going to be good people, which is, is like a lot less ambitious than like say the Bitcoin spirit, right? Which basically says that, you know, hey, even if 90% of biters are pushing the wrong chain, you as an operator of a node should be able to reject it. Right? Like, Bitcoin is not a minor oligarchy, it's like a constitutional system where it's supposed to only accept things that are valid. And the original vision for Ethereum Sharding had been like, okay, fine, no, obviously we have to trust that 50% are going to be honest. But then we started being more ambitious and saying like, oh, can we actually make a system that supported many more transactions that a single node could verify, but that was still verifiable in the sense that the system would still kind of force itself to follow the rules and where users could verify the rules are being followed, even if a great majority of the consensus participants were trying to subvert that objective. Right. And there's a lot of really interesting research and one of the big, I think.
So what percentage would be trying to subvert in that case? So not even like, what's the honest. It's not the honest majority anymore, it's the honest fraction of what.
Yeah, right. So we had like an honest minority assumption in some of our protocols that basically required like the user and maybe a few hundred other. Other.
So a fixed number not Even a fixed percentage, basically no. Or am I right?
Right, exactly.
That's really interesting. Okay, I actually. I should look at that. Go ahead.
Yeah. But one of the fateful decisions that we made around 2020. This is, I think, another one of these trivia that is well known within Ethereum circles, but probably hasn't really kind of filtered out the wider narrative meme plaques is the roll up centric roadmap, right? This is basically this idea that instead of Ethereum itself trying to kind of boil the ocean with scaling and turn itself into this complicated hyperscale system, we would make some changes to Ethereum that would make it be more friendly to people making layer two scaling solutions. Right. So layer two scaling solutions are like protocols that try to do the same thing that Ethereum does, but that plug into Ethereum for security without doing every single thing on top of Ethereum. Right. So most of the work would happen off chain, but just enough work would or could be done on chain that if something happens, the Ethereum system would kind of keep the rest of the system honest. Right. So one of the defining analogies for layer twos in general is like the concept of a court, Right, like the concept of a. Exactly. The Supreme Court is what things kind of ultimately rest on. But you don't literally have the Supreme Court hearing every single case, right? You have a whole bunch of these appeals courts and like a whole bunch of lower courts. And then you just have the fact that the threat of a court case being possible can drive honest behavior without most of that behavior ever needing to get into a court system. Right? That kind of analogy drives the lightning network, which is basically the only kind of layer two that's possible on Bitcoin. And it also drives state channels, which are like the lightning network equivalents on Ethereum, as well as roll ups, which are this more complicated thing that was only discovered later on Ethereum that are actually powerful enough that you could use smart contracts on top of that. Right? So lighting network and state channels support transactions and they support very limited kinds of contracting. The roll ups they support like kind of full on EVMs that are, that kind of get indirectly verified inside the evm. So layer twos have kind of been the Ethereum scaling direction since then. And since then there have been these discussions around data availability, Right? Basically the. The practical capacity limit to a layer two is how much data the Ethereum chain itself can store, Right? Because one of the trade offs of rollups is that they do require the Ethereum chain to store a few bytes of data for every single transaction. Like a lot less than using Ethereum directly, but still a settlement of data. And that's where stuff like data availability sampling and EIP 4844 which is looking scheduled to come early to bed, maybe later next year is all about. Exactly. Well, prototing shorting is like a bit of a pun, right? Because so first there's sharding and then there is dank sharding which is this version of Sharding which was created by Ethereum researcher named Dankrad. And then there is Proto Dank sharding which is called that because it's a stepping stone to full dank sharding. It doesn't technically shard data yet though it does shard history and computation, but it was also created by another Ethereum researcher, his name is Proto Lambda. Right. So yeah, so probably charting happening next year. And the other thing that like I've talked to the roll up teams that they all want to do next year is they want to start taking off training wheels, right? So the roll ups and layer 2s that exist on Ethereum today, they basically all have what I call training wheels, like some kind of backdoor that lets developers come in and like say stop and change the protocol if they see that some kind of bug has happened. And like training wheels are obviously a, you know, an affront to the moral idea of trustlessness and all of those things. And nobody wants training wheels to be the status quo long term, but basically they're like a compromise saying okay people, like we want to hit the ground running and we want applications to be able to start, you know, start deploying on layer twos before we can be fully confident that thing, that the thing has no bugs. And, and so we're going to have a backdoor for a while and then once things are stabilized and once we're confident enough in the code, then we can finally start seeking the backdoors out. Right. And so next year some of the projects are going to actually, I think might be actually taking their backdoors out. Some of them are going to be kind of limiting their backdoors and going to a hybrid right, where a backdoor exists. But there's like, it's not like one person that manages it and it's not even a multi SIG with a 51% threshold. It's like a multi SIG with an 80% threshold or 75% threshold with members that are like highly distributed between a bunch of different organizations. And so it's like a halfway house between being A kind of trusted sidechain in the style of, you know, something like liquid or in the style of something like Polygon today versus being a fully decentralized system, right, where it's like, you know, the humans have half the votes and the code has half the votes is probably one sort of mathematically accurate way to think about it. And so, like the Senate and the House, if you want to override the code, you know, exactly. Like, if the, you know, if even a majority of the humans are dishonest as long, like, unless, you know, you have, like, almost all the humans are dishonest. Like, if it's just a majority, then, you know, the code still kind of carries the day. Right? But so the idea would be that if there is some political controversy, that then, you know, you're not gonna, you know, you could see yourself getting 51 of the humans, but, you know, you're not gonna get like 80% of the humans. Whereas if it's a bug, then, like, that's something where it's easy to get like a, you know, 100% even agreement that the bug needs to be fixed. You know, not total kind of, you know, take the training wheels off and leave it to the code, but like a very large step toward that. And actually, one of the teams I talk to actually is more ambitious than even that. One of the. Their approach is to basically say we're going to have a system where we only turn on the humans when someone submits a proof that the code disagrees with itself.
Itself.
So if the code can create a valid proof for something that's valid and. And for something that's invalid, then it's inconsistent.
And so you switch to humans, like, Exactly.
If you make a proof of inconsistency, right, which is much easier than a proof of incorrectness. Like, basically just show that it provides two different answers to the same question. Right? Like, you know, if, like if I ask Chad GPT, you know, who was the president of the United States in 1850, and ask it ten times, and one of those times it gives a different answer, like, that's. That by itself is proof that it's not a perfect system, even to someone who knows nothing about U.S. history, right? It's like that kind of idea. So, but this is all like, I think the details of that are still being figured out. But the thing that everyone is dead set on is that 2023 is going to be the year when, you know, rollups really come to maturity. We have 4844 that gives ROS more space and we have the trading wheels on rollups like really get weakened a lot and like basically yeah, we go most of the way to these, you know, Ethereum scaling being this kind of fully trustless and so not fully trustless but you know, most of the way to being fully trustless. So most, which, most which rustles system that kind of gets us to like most of, you know, we would call sharding being finished and then after that there is roll ups going fully trustless and then there is full day sharding and I think those things are going to take a couple of years longer. But like for me personally, I think after the changes in next year, like that would be the point, the first points where I would feel comfortable saying even if nothing else happened past that point, I would be happy with Ethereum. Right. And that to me is like, that's the personal milestone for me, right? Like the, you know, equivalent of like when can we call Ethereum done if we really have to call it done? Well, end of 2023, right. So merge done, withdrawals done. So being able to withdraw from the proof of stake system, you know, basic scaling done, you know, a lot of basic improvements done, enough cryptography added to Ethereum that we can support privacy solutions as a layer on top and you know, if we need to we can stop there. But you know, we're not going to stop there. Right. And we want to kind of like go ahead and try to actually make sure that the Ethereum ecosystem can support 500 million users before, you know, the bull where 500 million users are knocking on the door actually yet, you know, ends up happening.
That's great.
So that's, you know, that, yeah, so that's, that's probably the next part of the future. You know, the transition from Ethereum as this kind of very theoretical ecosystem that's still discovering and finding itself to Ethereum as an ecosystem that actually tries to be useful and usable and you know, secure and, and all of those things and like actually provide value for hundreds of millions of people.
Here's a question which you can skip if you want, but basically in terms of Ethereum being done. So you mentioned, you know, the trustlessness, you know, some folks have talked about like the OFAC compliant blocks due to, you know, the whole MEV issue. Others have said, oh, when are, when are we going to be able to withdraw Ethereum from staking? Do you have any thoughts on. And then the third is basically, you know, I think Zuko has mentioned that it'll be hard to have privacy completely bolted onto Ethereum if it's not there at the base layer. And I think I might agree with that third one, but maybe do you have any thoughts on those three, or do you not want to address those or. Go ahead.
I think they're definitely important issues, so withdrawals are the easiest one. Like, it's uncontroversial. Everyone agrees that it's going in the next hard fork, which is, I think expected to happen early next year. On the like, privacy and censorship resistance stuff, I mean, it's. There's definitely like a big bundle of problems that I think the Ethereum ecosystem is facing at the same time that are important, right? So it's like basically one of the things that's happened over the last year, a few years, is the rise of MEV and mev. Like, one simple way to think about it is it's like the fact that there exist strategies for miners or block proposers or whoever creates the block to make even more money, where those strategies are complex and require you to have complex algorithms to be able to execute on them, right? So it's basically the fact that like, being a really dumb automaton is no longer the optimal strategy for a block builder. The challenge is like, how do we prevent that fact from being a source of centralization where, let's say staking ends up centralizing into two or three pools that become better than everyone else at actually implementing these algorithms. So that discussion started happening in around 2019 and flashbots came out around that time. And then at the same time, there definitely were mining pools that were independently thinking about how they would try to extract this extra MBV revenue as pools. So that, that was one of the things that happened and the way that we ended up solving that problem is basically this concept of proposer builder separation, right? Where instead of the whoever creates the block, the proposer being able to, or needing to figure out the contents of the block themselves, they can auction that off to third parties, right? And they can basically run an auction and they can accept bids that say, hey, here's an idea I have for what to include in a block. And if you include this, or you know, I'll let you include this and collect the fees. And if you let me do that, I'll pay you 0.018 ETH. And someone else might say, oh, here's another block that I have, and if you include this, I'll pay you 0.022 eth. Right? And there's like a lot of complexities around how to make that kind of market fair for all participants and like make it decentralized and resistance to cheating and attacks on all, on all sides without the resistance or without the anti cheating itself turning into a centralization vector. But one of the things that happened as a result of this is basically that, you know, we ended up outsource like block proposers ended up outsourcing too much, right? Like you don't actually need to outsource the entire process of block creation if all you want to do is to capture MEV revenue. And the problem with outsourcing the entire process of block creation is that we've moved block creation from this set of more distributed actors to this set of more concentrated actors. And more concentrated actors are inevitably going to be much more legally conservative and even more likely to overcomply in terms of what kinds of transactions they are accepting. Right? Like basically we now have about 70% of block of the builders that are creating, that are actually responsible for constructing blocks that are going into the chain that are refusing to include certain kinds of transactions. Like I've actually, you know, I've even like talks to legal counsel that think that they're going too far and that they're even, you know, blocking transactions to an extent, to an extent where they don't need to. Right? But you know, the fact that they are centralized actors, the fact that, you know, even lots of them are, you know, based in the US the fact that they are actors that are connected to other actors and all of these things, right? Like it ends up kind of pushing things over to the, you know, to this conservative side that's like, you know, goes beyond what a lot of legal counsel even have even, even told me is legally necessary. And so the good news is that nothing has been censored in Ethereum, right? So the good news is that even the transactions of the type that people are being most conservative about trying to censor those transactions can still on average get included into the chain after about three blocks, right? So actually yeah, post EIP one like basically EIP 1559 did more to make those, to make those transactions faster to include than the whole IBV situation. Make them slower to include.
Is there something which is like a warrant canary for Ethereum transaction censorship? Like could you. There's probably something there, but I maybe I just don't know the site that's just looking at the mempool or and seeing that there aren't blocks or there aren't transactions with valid high amounts of fees that aren't making it in so.
The, the canonical site for this is mev watch.info that's actually the site where I pulled the 70%.
Yeah, I do remember this. The OFAC compliant blocks the top right. But the censorship offenders says censored. So it does actually claim that some of them are censoring.
These entities run censoring MEV relays on their validators. Yeah, but it's improved.
Like there's one thing I had not seen this graph at the bottom the post merge daily. So, so it looks like green is increasing, which is interesting and a little bit counterintuitive is, is it your view that that's going to continue to increase or that green is large enough, that that's the free Ethereum for a while and it just needs to be large enough or how, how do you think about that?
I think we're expecting green to solely increase over time. Right. So by the way, just like my view on like is it are, are we in a state that's good enough or not? Is that one of the nice things about blocks, be it a transaction censorship in blocks, is that it's what I call a one event trust model. Right. So even if you know you have 99% of builders or block proposers connecting to builders that are censoring, that just means that someone has to wait 100 blocks instead of one and that's still like kind of fine for them. Right. Like basically if you, if you want stuff to be censored you'd have to like reach pretty much everyone. But at the same time we had. Or you'd have to lean on pretty much everyone and get them to stop, including uncensored blogs. But at the same time like you know, given how things like you know, norm Cascades work and just all their social phenomena, like we're definitely not head in the sand about this. Right. So like just to give something concrete examples of the Ethereum ecosystem being not head in the sand, one is that a multiple new entity is announced in, I think is in December, in January that they yes, started operating. I did see that nonsense during realize. Right. And yeah, and like a lot of them are even you know, entities that are, you know, outside the US serving stakers that are outside the US and all and all that. But you know they, they did launch and some people have switched over to them. But it's, it's like one of those slow processes because you know, staking is like a multi billion dollar thing and everyone who participates wants to be just careful about moving over infrastructure and all that. So that was the first thing. The second thing is that the Flashbots team added a setting to MEV Boost that allows you to say, I'm only outsourcing block production. In those cases, when outsourcing, the block production is significantly profitable, right? So if the revenue is like less than 0.05 or some threshold, then you can still make blocks yourself. If it's over 0.05, then you can go and outsource. And it turns out that if everyone said 0.05 as their fee setting, then you would have a world where 40% of blocks would not be outsourced, but every single validator would gain like something like 96% of the revenue gains that they would gain from outsourcing all of the time. Right? So this is like one of the examples of what I mean when I say that people are outsourcing too much and that's a setting that people are starting to use. And then in the longer term, I think one thing that we want to do is this concept of partial block auctions where, and basically instead of, it's like when you outsource, you set conditions. So you say, for example, I have seen these 20, these 23 transactions. And so when you create a block, I want you to include all 23 of these transactions. Or I'm going to let you choose the first five transactions in the block, but I'm going to choose the other ones. And if you do this, then like, you're still going to be able to get like 99% of the revenue from full outsourcing. But because 99% of the revenue from full outsourcing really comes in like the first five or 10 transactions. But at the same time, if everyone does that, then from a censorship perspective, the chain is going to be fine. So that's the base chain. I think the other thing that I think is worth talking about is the application layer perspective on privacy, which I think is important. Privacy is super important. But I do think that there is like there definitely are these kind of extra legal challenges that have to be, that have to be navigated, right? Like basically. So you know, Tornado Cash exists and Tornado Cash still exists, right? But like, even if Tornado Cash is, is still completely, you know, usable and, and uncensored from an Ethereum protocol perspective, that does still in practice, like, like the legal actions have in practice limited its usefulness. Right? And they've limited its usefulness for two reasons. One of those reasons is that it's become extremely legally risky to use for US persons. But the other reason is that if you receive a tornado cash coin, you're going to get a lot more trouble from like exchanges and the entire rest of the kind of crypto fiat bridge ecosystem that needs to comply. Right. Like one approach to trying to kind of deal with that is to basically say, you know, we're going to make privacy a default for everyone and we're just going to make it, you know, impossible for anyone to distinguish themselves from anyone else unless they try real.
So that's actually where I was going to go is basically that and maybe we can do this and then we'll move on to other stuff besides crypto stuff. But it seems to me like something where, you know, whether it's commit reveal or zero knowledge commit, there's like a bunch of different dynamics, but where miners can't see what transactions they're including, nobody can see what transactions are including. It takes away mev. That's a justification for it on a completely different grounds. And you're sort of privacy baked in at the base layer where you intentionally make miners dumb pipes in a sense. Right. They're blinded to it. And there's probably some clever crypto, you know, cryptographic tricks you could pull to make that feasible. And then you also support zero knowledge for the transactions themselves, not just the, you know, the mining process. And so something like that, where the system cannot, quote, discriminate against transactions because it cannot tell the difference between them, seems like where you ultimately want to go or, you know, tell me, tell me your thoughts on that.
Yes, and I think at protocol level, moving in that direction, it would definitely be really interesting.
But maybe you could do it on an L2.
Yeah, but, but I mean like at application level I think it's more challenging. Right. And at application level, I think the, like, I mean, I know this is a very controversial topic and you know, people have, you know, all kinds of opinions on this and I think like my view on this is probably a little bit more willing to compromise than some of the purists, which is that like, even though, like, I think that the Ethereum chain should, should absolutely have like layer one censorship resistance as the halo dies on and you know, if it has a choice between, you know, censoring on L1 and you know, even like a, a 50 chance of getting killed, like it should even take a 50% that take the 50 chance of getting killed because what's creative, what's credible neutrality is of the chain is broken, then what's the point? But on the application layer, like, like first of all, you know, I think, you know, there, there are legitimate concerns, right? So like, you know, it is true that a very large portion of the inputs to Tornado cash ended up being these large scale defi hacks, hackers. You know, it is true that there are a lot of large scale criminals who are using these, using these systems and who would use these kinds of systems if they ended up, you know, even big, kind of becoming much larger.
Of which one of the largest criminals is maybe supposedly the North Korean government. So would you say government was one of the largest criminals anyway? Just go, yes, keep going.
Very possible, you know, but it's. And I think just also from a philosophical perspective, right? Like, like if I had to choose, you know, what would the right kind of place to be in terms of financial privacy. Like there is this. So there's this slogan that you know, even I think the cypherpunks originated like 20 or 30 years ago, which is like what we want is transparency for the powerful and privacy for the weak. Right?
Yeah, like surveillance, but from below, Right, exactly.
And I think like even outside of law enforcement use cases like, you know, people appreciate the fact that they can do kind of open source on chain analytics and like track the crazy billion dollar stuff that's been happening inside of FTX or you know, what some of the other large exchanges are doing or whatever. Right. So I think what would be, what would be nice, you know, is a world where there was something approaching complete anonymity for small transactions and you know, very high privacy for medium transactions, but where larger transactions and especially transactions that you know, huge amounts of people don't, don't even, you know, want to mix, tend to mix themselves in with, you know, don't necessarily have that same level of privacy. And the interesting thing, right, and the interesting thing about zero knowledge cryptography is that it actually lets us do this, right? So here's like the simple way to do this. So imagine a version of Tornado Cash where when you withdraw from Tornado Cash you make one proof which is proving that you know, you have a valid coin that deposited to the system and you haven't done you and you haven't withdrawn yet. Which is the thing that's being proven now. But you also add in another proof which proves that you are not one of, let's say 23 addresses that like Chainalysis or some collection of organizations decided are large scale, possibly North Korean hackers, right? So you as a user decide to say, hey, I'm willing to mix myself in with the randos, but I'm not willing to mix myself in with large scale defi hackers and contribute to large scale defi hackers anonymity sets, right? And if, let's say 95% of users take this option, then the anonymity set of the large scale defi hacker reduces by a factor of 20. Right. And so that makes like privacy for large scale defi hackers much smaller without affecting privacy for everyone else. And like, the really nice thing about it is that it's incentive compatible, right? Because like you as a user, you know, you want to, I think, prove that you're not a large scale defi hacker, both because, you know, you as a user, you know, I think morally don't want to support that kind of behavior and because you as a user don't want to get this mistaken for a possible defi hacker and you know, get a higher suspicion score or whatever because of this. Right.
Have you ever seen the ending of the Thomas Crown affair? It's the, it's a scene where they all are wearing hats and they're indistinguishable from each other. And I think what I just, you know, Zuko has talked about this as well, but it's not a private transaction. It's a privacy set, right? That pool in which you can. So I think, you know, your comment there just made me realize that privacy is actually a collective good, that a group can choose to give a member or not. It's not that, say it's not just a technical thing. It is that because obviously there's cryptographic kinds of privacy where you can't invert a function, you know, determine who wrote something. Like, you know, let's say you hash a document, you can't just invert that doesn't matter how many people around it. But, but a collective privacy does exist as well for some use cases. And thinking about that as a tool that you can dial up or dial down based on consent is interesting. Just interesting point. I, I had known about in the context of zcash, I just hadn't thought about it in the context of something that the members could selectively do. Actually, you know, in ring signatures that's more common where people are choosing who's part of the ring. Right. But I just hadn't seen it in just this particular context, which is interesting. So do you want to switch gears for a second? We've talked about crypto for about an hour. We'll spend one more hour on other stuff. All right, so second big question, first big question was basically, what's going on with Ethereum what should we know about the history? What should we know about, you know, what happened with the merge and with all the stuff in 2016 and, you know, how does Ethereum actually become a final product? How do you get past, you know, the issues with OFAC compliant miners and how do we increase freedom there? How do we get past the withdrawal issue? There's a pull request or, you know, there's, there's going to be a hard fork on that early or next year and then how do we add more privacy? We talked about all that stuff. Okay, so now switching gears, here's a big question. Ready? All right, so Vitalik, you have, you know, as I've said many times, we've started new companies, we started new communities, and you yourself have started a very important new currency. So if you could go one more level, what new country would you start and why?
So I think it's important to approach that question not from the, yeah, the kind of larpy point of view of like, I want to have a country because countries are cool, right? It's like this, like, it's actually important, I think, to kind of dig down into, you know, what is a country, break it into its constituent parts and like, which of those constituent parts do you need? Do, do we need? And particularly, you know, which of those parts and what combination are valuable for people in the context of, you know, being just out of the grand old year of 2022. Right.
I mean, the serious version is what is the single biggest problem in the world that you'd address with that new country? Or would you, for example, disagree that there'd be a single biggest problem, as per our discussion the other day, maybe you can go into that.
Right? So I think one of the ways to kind of break down a country, right, is that there is the social network and there are the legal and jurisdictional properties, right? And I mean, possibly a third one is like physical location properties, right? So like, for example, if, you know, even if, you know, you decide that the legal environment, environments and even cultural environment of like, you know, Dubai, for example, is, is perfect for you and like, which, like, I personally, you know, don't think. I mean, I think there's a lot of, a lot of upsides, definite, but also a lot of downsides there, there too, right? But like the, the really big one is climate, right? And climate is not their fault. And climate is not, is kind of something that definitely has been, you know, unfairly allocated in a lot of, in a lot of ways. And you know, there's a Strong case that climate is kind of being unfairly reallocated with, you know, global warming and the emissions that are, that are happening and how that's kind of maybe good for Canada and Russia and Norway, but, you know, not very good for a huge number of other people. But climate's like the third one, right? So one is social network, two is jurisdictional properties, and three is climate and.
The lives, the laws of the land.
That. Right, exactly.
It's funny because, you know, one thing, when I talk about this with people, I think most people go immediately to how do you get the land? Or okay, we need to write up a constitution, write up laws. And I think that the, the people is actually the most important part because, you know, laws are boundary conditions. You know, in the sense of you're, they're the things that are mandatory or forbidden. They're, they're the edge cases. Typically you don't usually run into a law in your daily basis. You know, like as you're, as you're running around and, and the land also, you know, it's hard to get land and you might just start with a community and then you can afford land rather than vice versa. So I'd always been, you know, that's a big premise of the network tape. I think those are two. I don't quite call them false doors, but they're traditional ways that people have started things or thought about things that are perhaps a little less applicable today. The counterargument would be something like code is very similar to law, but you're writing code all the time. And I think the difference is the machine doesn't do anything unless the code is telling it to do something. But the human does something unless the law tells it not to do something. And that's like, I think a difference in terms of code versus law. That's the difference between code I know I like less than code is law, but that is one difference in code and law. Anyway, go ahead. You're saying. So all those three things, climate, you thought was, or land was a big thing. So for those folks who have bad land, you would do X. What is X?
I think one way to look at it, one way to kind of separate out like to what extent what properties you need of jurisdiction is to think about the difference between starting a new country and starting a new city. Right. So a city is also a social network and cities are also very climate dependent. Right. So I don't know if you've seen the, the, the charts and maps, but like there's this really Annoying fact about the US and this is one of the reasons why, why so many people end up moving to California, is that California is like literally the only place in the mainland US that has what a lot of people would call a pleasant climate. Right. So if you look at like number of hours of sunshine, California scores remarkably well. If you look at there is a statistic number of pleasant days. Like someone actually tried going through this. They defined a pleasant day as like a day where the temperature doesn't go out somewhere outside of like, I think it's 8 to 24 degrees. And the average might be like between 12 and 20 or something like that. And there's no rain or there's no rain and there's no snow on the ground. Like California just like beats out all the other parts of the mainland US There. Like there is a huge tax to being in California, right? Like there's, I mean, first of all, you know, regulatory issues and kind of, you know, the, the whole famous thing where like pretty much everything that's based there needs to have, you know, some kind of a warning label saying that it's, you know, may contain traces of something that make it that, that may contain traces of causing cancer or whatever. But then there, the other one that I think is so much bigger for a lot of people's lives is the cost. Right. And cost is California is expensive. Real estate in California is expensive. And there even is this kind of pathological effect where you know, the, the combination of building restrictions and property rights rules and like a whole bunch of aspects of law basically mean that like there is this, you know, funnel where huge amounts of the. Yes, basically this, the Silicon Valley startup ecosystem essentially gets really heavily, you know, de facto kind of taxed and kind of blood sucked by California landowners.
A lot of his deadweight loss also though, because landlords would prefer to actually just build more. So it's like laws that are just causing them to jack up prices because they can't build more units. They prefer to do it on volume. Any of them anyway. Go ahead.
Yeah, you're saying exactly right. But despite this, you know, heavy drag on the doing things in California, there's like, it's still a huge network effect. Right. And you know, we've just been seeing how much of an uphill battle it is to, for, for projects to, you know, relocate to other places. I'm actually, I think crypto, interestingly enough, has been possibly the one frontier tech industry of the last decade that has managed to really be, really not be California centric. Right. I Mean, maybe there is a couple of others, like maybe, you know, bio is some California and some Boston and. But I feel like crypto is like score. Crypto is scored better on decentralization than a lot of the others. But like AI very Bay Area focused, you know, VR from what I can tell seems pretty barrier focused. You know, meta is there, Apple is in Cupertino, you know, Google's great, Google's there. Like it is a huge attractor. And part of that is just network effects and a strong initial network effect leading to even more network effects. But part of that is just like the climate being plaza, right?
So, but coming back up. So, so then how would you relate that to say to if you're starting a new country, you are addressing climate, how?
Right. If you're starting a new country or a new city, right. So this is where we have to kind of unpack things, right? Like one is that like climate is just an important property, right? So of, you know, whatever kind of in person physical thing that you want to start and basically if you're starting a new X, then the thing that you have to create from scratch is the network effects, right. Like you're basically paying a large network effects penalty from the beginning. And there are people who I think are willing to pay the network effects penalty because they want a different kind of network effects. They're willing to sacrifice quality quantity of network to get quality of network, right? But the network effect is one thing that's being like sacrificed or at least kind of radically reimagined out the door as far as like what the climate needs are. That's, that's one of the two factors that's going to judge where you want to base yourself. And you know, do you want to be in an existing country, do you want to, you know, be in a big country, do you want to be in a small country? Do you want to be in a particular part of the world? I think other things that I would add to climate because like even though they're not technically climate, but they're still kind of features that are given to us by the physical world. Time zones are a big one, right? So if you watch the like remote work for American companies, it's much easier to be in Argentina than it is to be in Europe, despite those two being equal distances from America. Because you know, in Argentina you have, and in Latin America in general you have time zone compatibility, right? So there's a lot of those deciding factors that come from the natural environment. And then there are also these deciding factors that come from the law. Right. And so basically the question is like, what, what is the benefit that you're trying to achieve and what are the things that you're willing to sacrifice? A lot of people don't really have that much fancy stuff that they wanted that they need to do in terms of, in terms of law, for example. Right. Like for a lot of, you know, people and projects, actually the big law that, that people don't sometimes don't realize that is a law, but that they want to escape, that they want to escape is a U.S. immigration law. Right. Like the U.S. and a lot of other wealthy countries, they do have, you know, quite restrictive immigration a lot of ways. And like the tragedy is that sometimes it's pathologically restrictive in that like people who, you know, try to go in the front door can, you know, apply for visas and all that. Like in India I think it takes like what, 900 days to get an appointment or something crazy like that. But on the other hand, you know, if you're willing to take the, the route of, you know, jumping fences a bunch of times, then like sometimes that's even easier than, you know, taking.
It is anarcho tyrannical in the sense of like the law isn't enforced on the law abiding or the law is enforced, but only on the law abiding. And it's not a forced on, you know, it seems how logical. But it's not. It's like those who are habitually law abiding or have, have the book thrown at them for small immigration things.
Yeah, but like US immigration law, like is like, it really is a huge drag on, I think a lot of different.
It's also not letting in high end talent. It's basically just dead weight loss across the whole system. It's not, it's not smart.
Yeah, right. And it's one of like, it's one of those things that's like Potentially A, like a 2x or 3x tax on many groups of people's ability to operate, even if they're doing some completely normal thing that.
And the thing is it's one of those things where basically different groups. It's not simply about making immigration law harsher as some people think it is, because what happens is that is just those laws are just enforced against those people who are, who are not the folks that are. It's not like the guy who came across and shot somebody. You know, it's a person who's filling out, you know, paperwork to be a programmer. But anyway, so we Kind of got off track a little bit here. So climate and cost. I mean the one thing about climate just for a second or land is I would argue potentially at least for a new country, the more desirable the land, the less desirable the land. And the reason I say that is the more desirable the land, the more contentious it is for people to try it and get it. Whereas if it's something that's God forsaken, middle of nowhere, like what Burning man was built on, it's easier to build on it if your goal is freedom as opposed to a pleasant climate. Pleasant climate I think is like the very hardest thing to get because it's, it's so broadly appreciated and so mimetic in a sense. So you might have to suffer a bit, you know, land wise in order to, you know, get freedom.
Yeah, I think that's, I think that's very possible, I think. But I think the bigger lesson from all of this, right is that there are ways to improve your situation in terms of law, right? So like for example, there are lots of countries that are visa free to Chinese people. There's an unfortunately smaller number, but definitely still a significant number of countries that are even visa free to India people. I mean India itself, visa free to India people obviously, but at the, and then there are countries that are just easier to get visas for, right? Like there's, you know, countries that have visa regimes but you know, they're not. Indians are not going to have to wait 900 days to get one. But at the same time, like if you have to be willing to sacrifice something, right? Like the hard thing in the world is to find kind of like actual alpha, like to find, to actually find something which is like further along the frontier, along all the dimensions that people.
Care about is pre optimal of some kind. You're trading off A for B.
Exactly. The easier thing to do is to try to, is to get a better score on dimensions that you care more about by sacrificing something on dimensions that you care less about either because you have like you're, you just are the kind of person or you're more. Or, or you have some trick for like tolerating lower quality on those dimensions or because you have like some different path for getting those same things right. And I think the big thing, like one of the ways to think about the like network the start a new city or start a new country genre is that it's basically the genre of saying, well, what are the things that you can get if you're willing to completely sacrifice on Network effects. Because you're going to bring your own network effect, right? If you can bring your own, like there's a lot of. You get a lot of options, right? So for example, over the last year and a quarter, one of the things that I did is I am intentionally spent more time than I usually do in like very small towns. Right?
Tell. Tell everybody about it because most people don't know about.
Okay, yeah. So Svalbard is an island a thousand kilometers north of Norway. It is officially part of Norway, but there are international treaties that have existed for about 100 years that say that anyone from the world is legally allowed to come and love there Open Borders.
Act, but it's so forbidding that many people don't actually exercise that.
Right, exactly. So the largest city in Svalbard is a town called Longearby. And it has a population of about 3,000. Its latitude is 78 degrees north. But interestingly enough, the climate is somewhat less inhospitable than it seems. Right? Because basically that entire region, like all of Scandinavia, benefits hugely from the Gulf Stream. And the Gulf Stream makes all of those regions significantly warmer than like lots of stuff at comparable latitude. If you look at say Tromso, a city in Norway, 69 degrees latitude, the lowest temperatures there are like actually not much worse than the lowest temperatures in Toronto, which has 45 degrees latitude. But the latitude there is much higher than Svalbard. Like when I was there in September, the temperature is like between minus five and plus five. So like actually, you know, New Yorkers can totally adapt to it.
Minus five and plus five. I guess that's adapt at least. It's, it's, it's not like too bad, right?
I mean, it does get, it definitely does get bad and like in January, for example. Right? But so, you know, there is a reason it hasn't grown to more than 3,000 people, but it's like it's less bad than a lot of people think, right? And there is a town of 3,000 people. And that town has a large supermarket and has a post office. It has a hospital, it has an airport and it has one of the best sushi restaurants I've been to in a while.
Okay. Now it's going to have lots and lots of people going and visiting there for good to have 100,000 people, right?
I mean, like, I think marginally it'll benefit by getting more people coming there. Right? But it's definitely, you know, encourage people to just like go and visit and you know, if they can visit for a longer time, like you know, given up to two weeks or so just to get a feel for what it feels like to actually live in this kind of place. But it's interesting how even in a town of 3,000 people, like that kind of infrastructure you can get, right. Like you have a supermarket, you have a hospital, you have sushi. If you do the math, then 3,000 people basically means that you have about 30 people per year level, which means that so long European also has a school, right. And at 30 people, that's enough for like one or two classes per grade. So it's actually surprising like how few people need to civilization enough network effects to at least have the, to at least have the boring basics. Right. But the one thing that you can't get with 3,000 people is you can't get like people that are organized around particular interests, right. Whether that's for like work or whether that's for like, for, for you know, just like social interaction reasons. Right.
I've often thought about how the early American colonies, only about two and a half million people at the time of independence, something like that. You know, the Greeks, very small population at the time. I think Rome was only like a million people.
Yeah.
Or something like, I mean these are much smaller than we think of and not, not Rome, the entire empire, but I think the city of Rome in the Roman Empire was like a million people at that time. I might be wrong about that. We'll check that in the show notes.
Yeah, the thing that's fascinating, right, is that 3,000 people is like actually, yeah, it's totally viable from that standpoint. Like I think as a resident of 3000 Person Town, your main risk is getting bored, right. And also you have a risk of, you know, not having, not being able to find a good job. And one way to answer that is to basically say we're only going to cater to remote workers and remote work is only going to grow from here. Another way to answer that is basically through the same channel that we can answer the being bored problem, which is, well, let's look at the one type of town that already exists that has a small population that is still very interesting for people to often spend large amounts of time in. And that's the university town, right. So you know, you have something like Ithaca in upstate New York, population 30,000, home of Cornell. And you know, if you care about any of the academic topics that Cornell specializes in, then like, you know, you're, you're not going to be bored. Right. And so if you like really concentrate and you really try to create a network effect around specific kinds of people, then you don't, you don't even need 30,000. Like even 3,000 is going to be enough. Right. Like if half of those 3,000 are people who are into, let's say crypto or let's say a longevity research, you can create an environment that's like, gives people enough of that, that with a surprisingly small, small size. Right. So then, you know, what do you get for that? Right. One of the things that you get is I think, cost savings. Right. Another thing that you get is like the right type of network effect. Right. So you, or a different type of network effect, you sacrifice on quality and, or you sacrifice on quantity and you get quality. Cost savings are also huge. Right. Like, one of the big things that I think has happened over the last 10 years is that prices have increased in the US significantly more than they have increased in a lot of other countries.
We were talking about this. Do you have a graph of that? I'd love to. I think that's true, but I'd love to see that. I agree, but go ahead.
You know, that's actually something that I haven't checked yet. Right. Well, I can just like it feels true from my, from my personal experience in even Switzerland, I think the price of like tea and Starbucks has increased very little. Little or like maybe even not at all over the last, over the last 10 years, which I thought was fascinating. Right. So costs are huge. And the cost difference between being in the US and being in basically any other country is like getting to be pretty significant at this point. Well, I think to be fair, it's always been significant, but I think what we're seeing now is like, it's qualitative difference at the same time.
And you can earn outside.
Right. But it's like at the same time. Right. A significant. Right. One thing is that a significant cost difference is staying. Another thing is that now you can earn outside and more generally like the quality of life difference between being in a major center and, and being in, you know, what gets called a kind of quote, periphery location.
The costs have increased as the benefits have decreased and so they're coming closer together. Yeah, go ahead.
Exactly. Right. So that creates a big opportunity. Right. So cost is one. And then, you know, you've mentioned the law is another one and law is an interesting one because I think it's, it's one that a lot of people don't think about it and it's easier to not think about if you're in a situation that, that is kind of like that feels to you as being normal, right? Because if you're just an average American and you know, you're, you're doing some completely, you know, Norby industry that's, you're not going to feel, you know, law as like, as being a large drag. And it's, and it's even easy for you to get into the mindset of believing that, oh, if someone does come up to them and tell them the law is a big drag, well, possibly they're doing something wrong and they have something to hide. Right. And what's interesting is like, the further away you get from like that kind of like privileged rich country context, the. And like, I think it's even important to kind of talk about the rich country part, right? Because like, even the privilege discourse that exists within rich countries, it tends to like, at least in my view, it focus a lot on underprivileged people within those rich countries. But you know, there's also this entire, like, much larger mass of people around the world, around the world that are not even in those rich countries. Right. And I think even the US and even progressives in the US often still have, you know, what's de facto very much and out of sight, out of mind mentality toward a lot of those people. But the further away you get from, you know, being in, in a, a citizen of a rich country, the further away you get from being in a kind of average industry, the more you start feeling these kinds of things. Right? So obviously the crypto space, I think, has felt regulatory pressures very keenly from the, from the beginning. But in 2022, I think caring about the law, like really universalized in a lot of ways, right? In the sense that like there were a lot of countries, like a lot of non US countries and even, you know, anti Western countries that have historically been authoritarian. But the political geopolitical environment for the last 20 years has been this kind of fairly stable one and fairly friendly one where even in the authoritarian ones, the authoritarianism kind of felt theoretical. And it's like, oh, you know, if you personally aren't somebody who like really cares about criticizing the government and like, why would you even do that? Why not just focus on your family? Then you're not really feeling much, right? You know, hey, yeah, you know, focus on the family, you know, enjoy the, enjoy the local culture, enjoy the trains and it doesn't look that bad in the normal case from like that kind of a cultural standpoint. But like in 2022, in a whole bunch of ways, the Authoritarianism became real, right? And it became something that even really heavily touched the lives of normal people. And it's something that just overnight created a whole bunch of, like, basically homeless nomads, right? Like, I personally have multiple friends who, who in 2022, just like, packed up, left their country, and they're just jumping around so they're not really clear where they live. And these, in a lot of those cases, these are even people who were not that worried about the political environments of where they came from before 2022 hit, right? So on the one hand, you have.
Like, I have a visual analogy. You may or may have agreed. This is like a, you know. You know, for example, when you're driving on the highway, your speed limit could be minimum 40 miles, maximum 55 miles per hour. And that's like a, you know, it's a bounding box that you have to be within. Your V has to be within that, right? And you start extending that to every other set of laws. And essentially, regulations in the law are a bounding box where you have to remain within that right? Speed greater than this, you know, not less than this. Your, you know, bank account balance at a certain time can't be over this or under this or in that sort of, I don't know, for example, building cannot be more than this high. It probably cannot be more than this low. That kind of stuff, right? Multiply that across thousands, hundreds of thousands of laws, all the laws. So you have to sit within this box. And most of the time, most of your environment, most of your life is configured to live within that box. So you're so in the box that you don't even feel the edges. But then sometimes, like in 2022 or really recently, those edges suddenly, like, move, and they kind of put you outside of that box where what was totally normal suddenly becomes abnormal. And you're, you know, looking around, you're like, how did that happen? I thought I was just totally in the mainstream. And then this just sliding of walls got you outside the mainstream. And I think that in many ways, what we're. We do in crypto is for the powerless and the power user. In different ways, they're pushing the limits. Like, the powerless wants to hold on to a bank account, and the power user is pushing the limits of what a bank account can even do. And sometimes they're the same person or the same entity. Like. Like Binance is both absolutely a power user of money. But I'm sure early on, maybe now, but, you know, they had, like, it's. Let's call it regulatory issues or what have you. Right. Like they, you know, well reported. I, you know, I have no beef with Binance whatsoever. Just saying sometimes it's the same person at the same time. Those are not necessarily disjoint categories. And so that reminds me of what you're saying, which is these walls on this box that people took for being static became dynamic, these constants became variables.
Right. Like some, like I think up until2022 you just had to be either one of those people whose situation was that you were in a, beside a wall or in a, or in a corner of the room or you just had to be an explorer that would frequently touch against them. But like yes, in 2022 the walls moved.
Yes, exactly. So, so I'm bringing that back to the start a new country thing. Right. So if you could start a new country, how would you. So you know, we talked about the climate aspect, so when we talked about cost, so and now we're talking about law. So it seems like what you try to do is hyper deflate cost or you know, obviously I know I'm poking on this thing because I've thought about this a lot and you know, but you know what is, would you, would it be Ethereum based? I assume either Landia. Right. Is there, is there some funny Etheria? I don't know what would be the, would be the land if the dollar is a currency? Well, it doesn't actually conjugate in quite that way. Right. You might have Germany and the Germans, but the mark doesn't quite conjugate. So let's say you've got Ethereum. What does the Ethereum land look like?
Right.
And is that related to this?
Yeah, well, right, it's a good question. I mean I think one of the questions as like what actually makes sense to create as a ulan and the other question is what level of tie it should have to Ethereum. Right. Because I think on the second question like one of the things that I do wants to be careful about is like not assuming, you know, more agreement between people than actually exists and you know, not basically like I want to avoid getting into the like intersectional activism trap where you know, you start by creating a community around one cause and then you know, you start kind of like adding on more and more of these coalition partners that have their own causes that you know they're, they're good at expressing in your language. But then a lot of the time when you poke into the details you're just end up getting Stuck in a mindset where like the, the, you know, the intersection of all the causes actually only they're against 1 to 5% people.
Are, who are against what you're against, but they're not for what you're for. That's the tricky part where you'll win the war but you won't win the piece. Go ahead.
Right, that's exactly right. So yeah, to what extent like some, you know, new city or new country started by Ethereum, people like should even market itself as being part, a part of the Ethereum verse or even being a central part of the Ethereum verse. Right. Like those two are different. Like, like to what extent? Like I think it would be, it might even be good to be careful about creating the impression that if you're an Ethereum person you have to like this other thing.
Like I think it's big enough now, it's millions of people using it so.
Exactly. Like I think there's even, you know, virtue in kind of, you know, people who are in multiple movements, like basically yes, say, like saying that it's okay to be with me on one thing but not, but not the other thing on the second question. Right. I think the answer is maybe anything but at the same time I like, I do think that there's huge momentum, momentum within the Ethereum ecosystem for wanting this kind of thing. And so I think like the crypto world and the, and the Ethereum world are definitely like natural places to start and I think are just inevitably going to be big parts of, you know, any new country that's or, or any new city that gets created. Right.
So it's, it's, you know, there's about 300 million depending on how you count it. But like Coinbase and Binance alone are a good chunk of at least 300 million crypto users worldwide who hold at least some cryptocurrency. And I kind of do think of them as an intuit country because you know, they, they all need to kind of accept each other's coin. Right. And so they have to have in a sense a bilateral relationship where it started kind of currency and network first. So it is a good group of people, early adopters, somewhat risk tolerant that could pioneer something like this. Even if they aren't all pure 100 Ethereum or what have you, they're likely certainly know about it and hold some. So that's why I think it's not a bad analogy or at least it's a, it's a, it's a predicate for it. It's not, it's not the full thing.
Right? I mean I think one good analogy for this might be like, so if you take like Forecaster for example, right? So this actually gets to another topic that I think is important which is that one thing that I think network states and social networks have in common is that especially just to be able to get them started, it's not about the institutions, it's not about the technology, it's about the people. Right? Like if, if you imagine five clones of Forecaster where let's say one of them is run by Dan Romero, another of them is run by let's say a, an American trans social justice activist, a third is run by let's say an Indian person, a fourth is run by let's say some Eastern European ultra nationalist and who by the way likes Bitcoin and thinks that Bitcoin is the only coin. And a fifth is run by like some 14 year old in, in Hangzhou that just you know, happens to be interested in, in let's say like West African philosophy and has some, you know, really crazy fusion ideology that for whatever reason they can convince, he can convince a significant fraction of Chinese people to, or Chinese Generation Z or Generation A to adopt, but no one else. Right? Like those five forecasters are going to look very different.
I've. I have a concrete, a concrete example for you during share chat. Is it, is that third example, it's an Indian social network that is non English and so there's a Hindi channel, a Bengali channel, Malayalam channel, Canada channel and so on. Right. Tamil channel. And so that's an example of something which is Twitter like but looks very different than actually because Farcaster has Ethereum functionality built into it. So therefore it's like Ethereum Twitter. This has, it's, it's just partitioned different axis you wouldn't have thought of. Okay, which Indian language do you speak as being a primary axis for Farcaster? But it is for this, right? Whereas Farcaster is like which NFTs do you hold? So it's just like moving on a different axis. Go ahead.
Yeah, right, but I think the larger point, right is that like the, the root community is important and I think this was a lesson that I, I think I kind of intuited for Ethereum itself, right, that like the different, one of the differences between like Web two and Web three I think is that like things like Facebook, they just tried to scale to the world and reach out to everyone. Right? And things in the crypto space and things in the network state space and things in even, let's say the radical democracy space, like they're, they are more rooted in specific communities and they do, they are, I think, kind of more respectful of the idea that like, well, sometimes network effects aren't positive. Network effects are negative. Right. There are people who are negative value to other participants. Especially when you create like products or ecosystems where the interaction between the participants.
Says yes, I think it is. It's like saying like law is meant for virtuous people. And you know, like I'm paraphrasing, but I was like the early, the, you know, founding fathers said, you know, we can write all this stuff down, but it's meant to deal with things in the breach. You have to basically be good, you know, or like you have to be virtuous. So it's kind of like that. The, the structure is something that expresses the community's will. Okay, so basically we've got about, you know, 15ish 10 minutes left and so just to recap, what do we talk about? Well, we talked about a brief history of Ethereum from concepts of present day. We covered the merge and the DAO hack and OFAC and privacy and a bunch of other things. We talked about, you know, what new country you'd start and addressing problems like climate and cost and whether Ethereum people would be there. You talked about actually the really interesting place, Svalbard, that anybody can go to and how, what open borders would actually look like in real life. We have, we have an empirical example of it should be on the COVID of a bunch of books. Maybe it'll be changed by that attention. And I wanted to maybe touch on one last thing, which is, you know, we've talked about how to improve the world. We've talked about how to improve Ethereum, how can people improve themselves? What should they read, watch and listen? What online courses, what should they be doing, you know, like how, what would you advise people to do to level up?
Sure. So I think one of the reasons why this is an interesting topic is that it's not even entirely, entirely separate from the network state topic because to a very surprising extent I think learning and motivation are very social. Right. And being really successful in those things actually depends on having the right social environment. And I think this is one of the key reasons why, for example, Coursera and the various MOOCs have failed to completely replace Stanford to the, in anything like the extent that a lot of people were predicting. Like, I mean one aspect is definitely just like credentialism and the facts that the books don't give you a fancy diploma, but I think the like, the social elements to learning and motivation is the other really big one. And actually it's like the question of like what new country would I start? Like that might even be part of the answer, right? Like, I mean, I, like, I personally would start with a city before a country by the way. I mean I would like a city, locate a city located in a country that has enough of the right, you know, law properties to get the 80, the 80, 20 of that right. But like, like trying to like actually, you know, tweak the root of, you know, of the legal system and like go at the sovereign level. Like that's post. It's very difficult and it's a very challenging project and it's just like all kinds of international diplomatic risks that you don't really want to get into unless you're fairly big. Right. And so I think, you know, working with existing countries is just something that's going to realistically make sense for projects going, I think going into the future for a while, right? But starting in your city and at the same time like having the country aspects to the extent that you're creating a network effect and in a country that, that would otherwise not have that network effect. But one of the things that I would add in there is definitely like have a stronger emphasis on like education as a part of the culture, right? Like imagine going through your entire life, like your living experience for your entire life being a university at 10, at 10% intensity. Right? So not a university at 100% intensity. Intensity but you know, keep it at 10% at 10 intensity. Have like very easy and like very socially available opportunities to constantly keep learning new things.
It's funny you say this because basically, sorry, I mean to cut you off but like the, it's like buying a car, a college is like buying a car and not budgeting for maintenance over your life. The entire cost is up front and then you have no gas or oil change. And then people are like, oh, I studied him, like studied for four years and doesn't remember any of it. This extremely expensive installation of ostensibly education that is has zero maintenance associated with it. You know, don't. Anyway, go ahead. So I'm agreeing with you.
Learning I think especially in the fast changing world that we're in, like it really is something that should be a lifelong process, right? It's like, and especially once we, you know, solve longevity. I think I forget either Aubrey de Gray or someone else talked about this that like historically the pattern has been Study, work, retire. But the new pattern might be study, work, retire, study, work, retire, study, work, study, retire, work, retire, study, work, study. But the other approach, of course, is to like really integrate the two more. And that like studying should not even necessarily be a phase. It should just be like a regular part of your life. Right. But so the social aspect is important. Right. And I think like one of my number one advices to like probably young people and old people everywhere is to be intentional about the social environment and you know, to have, to have friends that help you bring out the virtues that you want to see in yourself is something that I like. I just think that's so hugely important. Right. Like you're. There's just all kinds of subconscious ways in which your behavior changes for the better when you're around people.
But also it's funny because the way to prove that to people is just actually AI prompts. Like the prompt is so insanely important. And so you're just getting effectively prompted in a sensory fashion by, oh, okay, yeah, all right, they're lifting weights. I should probably go and do that too, like as a small example or. Oh, they're studying math. Oh yeah, let me take a look at that. So like the prompts that you surround yourself with both digitally and physically have like such an influence on you and that. And one of them is like your social network. It's such an obvious thing, but people don't usually think about it.
Exactly. Yeah. But I think, you know, until you can, you know, until we have multiple of these established intentional communities and all of this, whether they're, you know, creating new cities or you or new countries or, you know, new bitcoin monasteries or, you know, whatever people in that camp are trying to create or whatever. It's things that you can do while you're by yourself. Yeah. I think, look, motivation as the number one problem is I think one of the key lessons that I've learned and there are like less not social ways to get that too. Right. So like one of my personal experiences. Right. Is that like I've used Duolingo for a while. I mean, I've, you know, used that as one of my ways to kind of practice on my Spanish for a while, have, you know, also experimented with some of the other East Asian languages with it too. And it's like the way that the app prods you into just trying like into doing at least one thing every day. And the way that the app makes you like even feel the fear of, you know, losing a multi hundred day streak if you decide to go away from it. Like it's stupid and it's like so obviously, you know, gamified in a, in a way that even seems a little bit trashy. But like for me it works somehow. Like though there are limits to it. Right. So like one of the things that just to kind of go down the path of duolingo in particular that I found and that other people have found is that it pushes you to optimize not for the game of knowing the language, but for the game of winning duolingo. Right. Like for example, sometimes duolingo gives you a task like translate this sentence. And like maybe about 20% of the time you don't even need to look at what's at the top of the screen, like the yes sentence in Spanish or whatever. You just like go down, you look at the list of words that they give you to select for from, and there just obviously is one sentence in English you can construct from those words. And so you look at the bottom of the screen, you just like tap that sentence and you're done. Right. And like you've won the game but you haven't actually learned any Spanish. Yeah. So I do think it's like important to mix other tools. I mean I can actually tell you the path that I took to learn Chinese. So at the beginning I started with PIMS or that's P I M S L E U R. It's this set of online course, well, basically audio courses. Right. So it's like a 30 minute like base course that. And they have 90 of them. Right. You go through them and you know, it gets you up to a very basic level. Right. So I think different people might have different experiences, but for me personally, you know, there's this kind of, there's this stereotype that exists online that like it's possible to somehow pick up languages just by like you know, going into a country and eventually kind of pick up words. And obviously two year old kids can do it and possibly extroverts can do it, but I totally can't. Right? Like if you just like stuck me into China with no training, possibly after, even after 20 years, I would not like, you know, quote, pick up Chinese from zero. I would just be miserable. And. But so for me personally, you know, for the first stage of learning languages, like, you know, you need the structured stuff. So I use PIMS or I also used some flashcard apps to learn the characters. And then once you get above a certain point, there's like a certain level of medium comprehension where that's the point where you can start picking the language up from. Right. So before Medium, you start with the podcasts. I did Pam Soar, I think I did Chinese Pod and a couple of others. Once you get past that point with the flashcard apps, then you go like, for me personally, and I actually spent a total of about one and a half years in China and sometime in Taiwan and sometime in Singapore, and just like a lot of time talking to just like other Chinese friends that I had outside of China. And it's. Once you get to that level, then you actually can just keep learning by just talking to people. So talking to people. And this is, ironically enough, actually there is one particular way in which Chinese is easier than languages. Like, you know, German, for example, which is that if you try to speak in. In English to. Or if you try to speak in. In broken German to someone in Germany, very often they very quickly switch to English.
So you don't get those training wheels.
In China, like this might. Right, exactly. You don't get the training wheels right. But like, in Chinese. Oh, no, no. You know, there's lots of people who barely speak English at all. And like, they're. They'll be happy to try their best to understand you actually Spanish as well. It's like, I think in. Maybe in Spain, a bit more English speakers, but in like, deep Latin America, you know, definitely lots of people whose English is very bad. And you could definitely, yeah, get your Spanish up there, especially if. If you try. Right. But, like, past the other thing that I did in China is like, you just like walk around the city and you look at street signs, and the street signs, they all have the name of the street in Chinese characters and then the name of the street in Pinyin. Right. That gives you the pronunciation. And so you just, like, look at street names and you passively learn a whole bunch of characters just like, as part of your life. Right? So, like, basically, yeah. So to get from, like zero to mid, you know, you do the podcasts, so you do the flashcard apps, you do the, like, very structured courses. And then to get from bid to high, that's when, like, picking up things up and the more social approach, that's.
That's a good combination. So basically, if you're an adult, to summarize, if you're an adult, don't just start with immersion. Do courses to bootstrap yourself to that basic level. Get your bios up and running, and then you can kind of assimilate content. If you're two years old, you might just be Able to be dumped in. Right?
Exactly, yeah. And then for technology, for like things like cryptography for example. One of my lessons has been the importance of learning by doing. Right. Like if you just, you know, if you just read and listen, there's just, it's just so easy to kind of go, you know, in one ear or one eye and out the other. Um, but if you actually make yourself build the thing, that's the way that like you actually kind of get the knowledge into muscle memory. Like you, you work with the concepts, with your brain in a much deeper way.
You're heard of Shams outlines? It's basically like I have very similar. Shams outlines are pretty famous in India. Basically these yellow outline books where they just have solved problems, they just go straight to solve problems. And so you just go straight to the exercises and it's like relatively minimal introduction. Just go straight to exercise. Just like just start working out, not reading about working out, you work out, you know, and that's similar to this where basically by coding, coding it, by building it and then trying to break it, you understand it in a way that just theory alone, reading about it doesn't get you something.
No, that's actually fascinating. Like if trying to. The idea of teaching people even without content by just like repeatedly giving them exercises that are like one inference step away from the previous exercise that they solved. Regardless of what specific tool you use, I think if you want to learn about snarks, build a snark. If you want to learn about how Ethereum works, build an Ethereum implementation and get it to pass some of the tests or may even get to a point where it passes all the tests. Then if you want to learn about homomorphic encryption, build an implementation of homomorphic encryption. Right? Like if you want to learn about AI, then like actually, yeah, you know, build a neural network that's like, you know, at least powerful enough to do some like basic job of recognizing digits or whatever. Right? That's. I think that's one of the things that helped me in 2011. I went through some of the machine learning course on. I forget the. There was one in Udacity and one in Coursera that was one by one was by Andrew. Right? One was by Sebastian Thrun, one was by Andrew Ng and they were very hands on, right. Where you had to actually implement a lot of things like a star search algorithms and implement multi layer neural networks and all of those things. So actually implementing a thing just gives you this very deep and hands on understanding about what the thing is and how to work with it. It just gets intuitions that you can't get by just reading a textbook. So highly, you know, encourage taking an experiential approach. You know, definitely. It's the. Yeah, no, I think there it's the equivalent of like the, the Star wars like kind of Jedi tradition where you're supposed to build your own lightsaber. Right. It's do or do not. There's no try. Except for the Merkel Patricia try, which by the way, you should actually do an implement.
That's a good one. That's a good.
So lesson, you know, build your own people laws and, and the land. You know, sacrifice quantity of network effects. Go for quality. You know, get the, get the right group of people. You know, be modest on. On what Especially, especially at first. You know, focus on the public goods motivation. If you want to learn about things, then, you know, go and build your own lightsaber. And I think.
Awesome.
Yeah, lots of stuff for people to do.
Thanks for coming on Vitalik. And this is the first episode of the Network State podcast.
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