Ethereum founder Vitalik Buterin, a prominent leader in the crypto space, has recently shared some controversial opinions on the importance of public legitimacy for crypto companies. He cites two recent crises as examples of how ignoring public legitimacy can lead to serious consequences.
The first crisis involved Sam Bankman-Fried, the CEO of FTX, a leading crypto exchange. Bankman-Fried was accused of manipulating the price of Solana, a blockchain platform with which he is closely associated. He allegedly used his influence and resources to artificially inflate the demand and supply of Solana tokens, resulting in a huge price spike.
The second crisis concerned the OpenAI board, a nonprofit research organization dedicated to creating artificial intelligence that can benefit humanity. The board announced that it had appointed a new CEO, Sam Altman, without any prior consultation or explanation to the public. Altman is a controversial figure criticized for his views on wealth inequality, democracy, and biotechnology.
Buterin argues that the main problem in both cases was not the actions themselves but the lack of transparency and accountability to the public. He says that Bankman-Fried and the OpenAI board failed to respect the principle of public legitimacy, which he defines as “the extent to which the public agrees that an actor or institution has the right to wield power over some domain.”
Buterin’s Vision For Crypto Governance
Buterin believes public legitimacy is essential for the crypto industry, often seen as a disruptive and revolutionary force worldwide. He says that crypto companies should follow the legal rules, engage with their communities and stakeholders, and explain their decisions and actions to the public.
He says that companies should adopt a governance model that balances the needs of efficiency, innovation, and legitimacy. He suggests that companies should have governing boards that are diverse, representative, and accountable. He also advocates for more participation and feedback from the public, such as through voting, surveys, and forums.
Buterin acknowledges that his vision may seem idealistic and that some followers may disagree. He says that he is open to debate and criticism and that he welcomes different perspectives on the issue of crypto governance. He hopes his views can spark a constructive dialogue within the crypto community, ultimately leading to a more trustworthy and legitimate crypto industry.
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