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Vitalik Buterin

Ethereum’s Vitalik Buterin Suggests ‘Success’ of ETH’s Scalability Solution

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Whether it’s Bitcoin or Ethereum, the lack of scalability has been a major conundrum that continues to plague all the blockchain assets. However, the latter asset is said to be almost there with its development as revealed by its enigmatic co-founder.

According to Vitalik Buterin’s recent tweet thread, it was suggested that the network layer 2 of the blockchain had ‘basically’ been successful in terms of development and that only proper refinement and deployment had been left.

The key difference in the proposed layer-2 scaling solution of Ethereum is that it is not subject only to network updates. The use of plasma technology and Zero-Knowledge (ZK) roll-ups was largely highlighted by Buterin as he clarified the need to adopt layer-2 solutions. Buterin said,

“The challenge is that users would need to have wallets where their coins are stored in a rollup(or plasma). This is an adoption challenge, not a technical challenge. Though a part of the adoption challenge is tightening the guarantees so users will feel comfortable “living” inside an L2 system.”

In addition, Buterin implied that such 2-layer solutions are more beneficial than sidechains, but implementation and design remain key.

The contrasting fact of the development is back in 2018, Buterin had identified sharding as the key strategy for creating scalability in the blockchain. Sharding allows transactions to go through without every node process for each transaction. The foundation also announced that it would put capital in the range of $50,000 to $1 million for developers working on existing second layer strategies.

However, now that Plasma and ZKPs are in the mix, the prospect of solving the scalability conundrum has been moved up a notch.

With respect to the thread, one particular faced difficulty in understanding Buterin’s explanation, to which the Ethereum Co-Founder replied,

“Squish the transactions together so they don’t take up too much space. Instead of everyone checking everything, have a few people check things and raise an alarm if they see something wrong. Or use fancy math to check everything at the same time. Before: 15 TPS After: 2500 TPS.”

Crypto Twitter Community Loves Elon Musk’s Attempt to Explain Bitcoin to JK Rowlings

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British author of the popular Harry Potter series of novels, J.K. Rowlings asked for an explanation of Bitcoin on Twitter. Despite the attempts by the crypto Twitter community to educate the author on Bitcoin through memes, links and other materials, she was still not convinced. To much delight, the CEO of Tesla, Elon Musk joined the conversation, principally agreeing with the author that it is difficult to understand Bitcoin.

After starting global waves over the name of his son, Tesla CEO Elon Musk has created sparks again on the internet after his attempt to explain Bitcoin to J.K. Rowlings. Immediately after Rowling’s tweet, the crypto Twitter community flooded the thread offering their insights to the renowned author and her 14.6 million followers.

Ethereum founder joins Crypto Twitter community

Among the respondents to Rowling’s tweet was Ethereum co-founder Vitalik Buterin. According to Buterin, Bitcoin is:  

“Basically global digital payments, plus the store of value properties of gold, all with 21st century cryptographic tech to keep the whole thing running safely.”

Additionally, Gemini which is owned by the Winklevoss brothers also responded to the author’s tweet. The New-York based crypto exchange noted that unlike the popular sentiment, BTC is not ‘magic money’. As the discussions heated up, with popular figures in the cryptocurrency industry offering to help, Tron’s Justin Sun offered to send 1BTC to Rowlings. He tweeted: 

 “I can send you 1 bitcoin. Seeing is believing … Just imagine a magic coin (bitcoin) Dumbledore doesn’t understand (like Warren Buffett) but Harry Potter is fascinated about it.”

Nevertheless, despite the multiple attempts to explain Bitcoin to Rowlings, she admitted that she is still confused and even gave up hope of ever understanding the most popular digital currency: “God bless every single one of you now earnestly explaining bitcoin to me as though I’ll grasp it if you break it down properly. Things like this are white noise to me,” Rowling admitted. “I cannot and will not ever understand Bitcoin, but I love you for thinking that I can or will.”

Still confused? Steps up Tesla CEO Elon Musk

Among the respondents attempting to explain the concept of Bitcoin to the Harry Potter Author was Tesla CEO and SpaceX founder Elon Musk. Musk responded: “Massive currency issuance by govt central banks is making Bitcoin Internet money look solid by comparison.” He added, “I still only own 0.25 bitcoins btw.” 

The SpaceX founder who condemned the United States government’s stimulus relief plans the other day has come under siege off late; following his comment that the price of the Tesla stock was “too high,” which instantly sent the price down.

Ethereum co-founder Vitalik Buterin comments on the future of money and Ethereum’s role in it

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Cryptocurrency proponents have always played a key role in paving the way for the adoption of digital assets. Some have become more popular icons than others and are revered in the modern, decentralized community.

One such person was Vitalik Buterin, the co-founder of Ethereum. In a recent interview with Lex Fridman, Buterin talked about Bitcoin’s journey and how it transformed the financial ecosystem.

The co-founder of Ethereum began by discussing the importance of Bitcoin in the timeframe of the cryptocurrency industry.

He claimed that Bitcoin creator Satoshi Nakamoto was a quasi-god-like character and deserved all the applause he received. Buterin added that his interest in blockchain was piqued by its use cases. He stated:

“It is a known fact that Bitcoin opened a lot of doors to a lot of people. In my opinion, Hal Finney was Satoshi Nakamoto because Bitcoin reflected his working style. It is also a known fact that the first Bitcoin transaction occurred between Satoshi Nakamoto and Hal Finney.”

Vitalik Buterin also talked about the use of quadratic funding as an important aspect of the streamlined processes in blockchain space.

The concept of cryptocurrencies was invented in order to create a faster, more streamlined form of capital transfer. Buterin once claimed that his inspiration for Ethereum was a world supercomputer.

According to him, while Bitcoin created the foundation for the cryptocurrency world, it was Ethereum who decided to build applications on it.

He believed that features such as Proof of Work and public keys would greatly benefit the general public. Buterin has drawn on his extensive knowledge of cryptocurrency space since he was a writer in Bitcoin Magazine.

Buterin also talked about how cryptocurrency space has improved over the last decade. Several cryptocurrency projects have seen light over the years, and some have been based on Ethereum.

Projects like MakerDAO have been at the forefront of cryptocurrency innovations.

During the interview, Buterin also elaborated on his skepticism of the centralized industry. The fiat industry has always attacked crypto for being fundamentally flawed but there were several cases when fiat failed miserably, said Buterin.

He pointed out that governments were being aloof to the dangers of what was going on around them. Buterin put forth the idea of a highly mismanaged society with a crumbling financial structure if the current model stands.

 

Vitalik Buterin Interacts With the Community on Fork Futures – Twitter Edition

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On 29th February, Angela Walch a popular Prof. of Law and Bitcoin researcher went on Twitter to talk about Bitcoin devs being funded by various companies and how they have contracts with the “applicable companies to prevent the company from interfering in their Bitcoin work”. Vitalik Buterin, the Founder of Ethereum, replied to this tweet regarding Bitcoin developers and his opinion around it which also lead him to discuss his views on Fork Futures.

Vitalik said:

“I love the denials of any validity to the notion of publicness in the responses to this.

Ironically I think they themselves are guilty of “law maximalism”: they think government law has a monopoly on “publicness”, so they seek to hide from the law by denying their own publicness”

He further explained how he prefers “more honest”, and a “mildly Zamfirian strategy”. Wherein one can openly admit that “publicness is a legitimate and large category, but argue that the nation-state system does not have a monopoly on publicness”.

Along with this, Vitalik tapped into one of the potential upcoming market categories of the crypto space – Fork Futures.

If you’ve been in the space for long you already know people have come up with Hashrate Futures too. Which has been carried out in order to support and extend the crypto mining industry. Creating a marketplace for mining contracts that allows contributors and miners to exchange hashpower in a transparent and auditable way.

When it comes to Fork Futures its as good as normal futures but here the bets are placed on the Forks.

When a Twitterati said:

 

Vitalik responded saying that he doesn’t expect “fork futures markets to be a good idea”. He states, that Fork futures is a multi-equilibrium mechanism. In which everyone can speculate as people who want X to win make it a point that X wins. This creates incentives to “misrepresent, lie, grandstand, etc;” and does not lead to good dynamics.

Buterin even says that “some mechanisms have these dynamics more than others; fork futures are unfortunately definitely on the high side.” As an example he mentioned voting schemes being succumbed to Duverger’s Law, and how it can only “knock you down to two choices [and not one]”.

Albeit the fact that Fork Futures significantly improves the process of transitions, even to a minority fork, the subject is not very well researched considering its the first time a speculative market from forks is emerging.

Is an Economic Incentive the Only Way to Keep the Network Decentralized?

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The economic incentive is the motivation a player gets to behave in a particular manner. With needs, wants and desires as the priority for the player, it works towards the preference set by the motivator for a particular incentive. 

As a contingent motivator economic incentives are classified in multiple forms. The top and the most relevant for the cryptospace being the extrinsic incentives – rewards for a particular behavior and punishment for another. 

This type of economic incentive runs on positive and negative reinforcement. 

Economics of incentivizing cryptocurrencies

Bitcoin’s incentive scheme depends on the presumption that individuals are sane players. If these players are rational, they are incentivized to participate in mining, buying and holding BTC. The concept of rationality is significant but often taken for granted.

Silvio Micali, an MIT professor and founder of Algorand says, that the creator of Bitcoin probably never imagined its incentive structure would cause capitalist industrial-scale mining pools. He even believes that the system does not need to reward trivial computations. Miners are compensated for their role while validators who don’t invest in overpriced equipment and excessive electricity are not.

With beliefs such as incentives should be the last resort, Micali is building Algorand. 

“Algorand’s logic is simple: it ties the security of the whole economy to the honesty of the majority of the economy, and makes it impossible for a small subset of the economy to control the fate of the whole economy.”

To give some background, Algorand is a public blockchain that works on a novel version of the Byzantine Agreement [BA]. Here, players are replaced in each round of communication. In this BA protocol, users do not keep any data except for their private keys, which allows Algorand to replace participants immediately after they send a message. 

Vitalik Buterin as the Founder of the second biggest cryptocurrency, Ethereum, believes that such a network wouldn’t work. 

Buterin stated that having no incentives at all means there’s no incentive for someone to not be lazy and go offline. While Micali from Algorand believes that all players on the network are honest, Vitalik’s belief is that the majority of the players are not; emphasizing the crypto phrase: verify, don’t trust. 

A fundamental insight at the heart of economics is that people respond to incentives

Under the assumptions that:

  1. Cryptography can be hacked 
  2. All players are honest
  3. Nevertheless, there will still be bad players and,
  4. Economic incentives significantly influence human behavior

Financial security becomes important!

The economic incentives drive humans to act in a particular way that makes them bet stakes [tokens, computational power, etc.] on the network to provide support for protocol stability with optimal security through a reward structure that prevents its unethical behavior.

Achieving all of this without an incentive model and keeping the network decentralized might be difficult or rather impossible.

All things considered, users are egotistically unpredictable in nature and they may decline to participate because of their concerns on electricity and data transmission consumption. This is why it is necessary that each user participating in the network receives a satisfying reward to compensate for their efforts. However, suitable incentive mechanisms that can meet the diverse requirements of users in dynamic and distributed peer-to-peer environments have yet not been invented. 

 

Disclaimer note: This article is based on the contributor’s opinions/research and does not necessarily represent the views and opinions of Tron Weekly.