Vitalik Buterin's vision for 2023, and his thoughts on Ethereum's use cases.
Original title: " Bankless 149 - Ethereum in 2023 with Vitalik Buterin "
Written by: The Reading Ape
Compilation: Deep Tide TechFlow
Foreword: As the year draws to a close, Vitalik Buterin returns to the Bankless podcast to reflect on the cryptocurrency industry in 2022 and his hopes for 2023. He also shared his thoughts on Ethereum's use cases such as currencies, DeFi Dapp, identity, DAOs, and hybrid applications.
Cryptocurrencies of 2022
- People remember all the horrible things that happened that year.
- Of course positive events are also important (for example, mergers).
- Consolidation is about reducing transaction inclusion time.
- Has multiple zk-EVMs that will launch the Mainnet in 2023.
- Signing in with Ethereum has made huge strides in adoption.
- Cryptocurrency payments came into play during Ukraine's invasion.
Is 2022 an unusual year?
- The Mt Gox incident in 2014 was like an existential crisis for cryptocurrencies.
- In 2022, we have a thicker, more interconnected cryptocurrency space.
- In both cases, there is vulnerability and contagion that causes crypto prices to plummet.
- Cryptocurrencies are no longer in the phase of increasing adoption from 0.1% to 10%.
- Cryptocurrencies are now at the stage of increasing adoption from 10% to 70%, which requires a different strategy.
- People losing money is not the main message we want cryptocurrencies to convey.
Will we become a niche market?
- In 2011, Vitalik wrote an article comparing Bitcoin to Esperanto, Linux, and the Internet.
- Each of these comparisons began as an idealistic movement to replace the existing system with something better.
Esperanto
- Esperanto is a man-made language that strives to become a universal language. But it didn't work out and just survived as a niche interest.
- English wins because it has too many network effects.
Linux
Linux is an interesting intermediate case. It is an open source operating system with its successes and failures:
- For the desktop, it fails, and it doesn't appeal to most people.
- But Linux has become an important backend for Android, servers, and developers.
Internet
- There is no doubt that the Internet has taken over.
bitcoin
The question Vitalik posed in 2011 was, will Bitcoin eventually evolve like Esperanto, Linux, or the Internet? The upshot is that Bitcoin may end up somewhere in the middle:
- In developed countries, it may be what Linux is on the desktop.
- In developing countries, it can be ubiquitous, like the Internet.
ideas and suggestions
- The use of the word ETH will surpass the use of the word cryptocurrency.
- This is not to say to be an ethereumist.
- The problem is that the crypto space is an ungovernable public space with no barriers to entry.
- Talking about Ethereum is not about not caring about the wonderful things that are happening in other ecosystems.
Lessons for the industry in 2022
- It is most honorable when the cryptocurrency space is truly serious about its core principles.
- Open and decentralized projects survived while centralized ones were questioned.
Use Cases for Ethereum as Money
- In the Ethereum community, there is a tension as some want Ethereum to be just a currency, while others want it to be more than just a currency. The two views seem compatible.
- Stablecoin are part of DeFi. But they are so simple and straightforward that most people don't realize they are DeFi.
- Most of the apps that came out during the OG era were apps that really cared about whether it provided real utility.
Newer projects focus on providing Liquidity and high yield, whether it is sustainable or not.
“Newer stuff tends to be more about short-term proof of what it does. And that’s a really bad epistemology in DeFi because it’s so easy to sacrifice long-term performance for short-term success. "
-Vitalik Buterin
Why are cryptocurrencies important?
- Have personally used cryptocurrencies as funds for medium-sized investments and charitable donations.
- Cryptocurrencies are by far the easiest way to send money to people's families.
- Fiat currencies in many places are volatile.
- In these places, cryptocurrencies have clear use cases and promise long-term success.
“In my country, there is actually hyperinflation. But I can deposit money in Bitcoin and ETH and thus actually protect my savings.”
-Vitalik Buterin
Thoughts on DeFi Dapp
- There are fewer and fewer low-hanging fruit for people to create.
- There are also massive opportunities (e.g. making a wallet used by billions of people, a Stablecoin that can survive dollar hyperinflation).
Authentication
Blockchain identity and identity platform.
- The concept of authentication: proving the identity you use to sign messages/transactions.
- Over the past decade, Vitalik Buterin has noticed a number of people interested in creating identity platforms and identity blockchains.
- These people see identity as an abstraction, rather than starting from the concrete use cases that people care about.
emergence of identity
- You have to get network effects to work first.
- In the Cypherpunk world, everyone has a PGP key. None of them really work.
- Now we have an Ethereum account - a private and public key pair.
How do different ID systems communicate with each other?
- POAP has been more successful in the Ethereum ecosystem than anything claiming to be a proof-of-concept protocol.
- Many people have dozens of POAPs.
- There is also a lot of room for people to start businesses.
- At some point, they have to talk to each other and agree to a unified encryption standard.
Why is identity important?
- People want to have an identifier that they can use to talk to other people.
DAOs
Vitalik is excited about the DAO.
- DAOs will replace many things outside of corporations.
- Think of corporations as one of the less likely forms of DAO to replace.
- There are two architectures that make sense: being able to start multisig quickly, creating a trusted product that is resistant to takeover attacks and can last for decades.
- DAO does not emphasize smart contract logic. They place more emphasis on an open and spontaneous decentralized cooperation model.
- Trying to be a DAO for venture capital funds doesn't make much sense. It makes you slow in a competitive environment, and people can use that against you.
Governance structure of DAO
- Definancialized governance is needed to create intentional friction/speed bumps and prevent hostile takeovers.
hybrid application
- Applications that are not fully on-chain, but benefit from being connected to the chain.
- Hybrid applications do not present scalability challenges.
- Deployment is much simpler because it doesn't require users to change their workflow.
- For example: the solvency proof protocol makes CEX more secure, game servers use ZK proofs to publish status to the chain, vote.
actively build space
- Do more applications that promote space development, and less glamorous applications that are of little significance.
- Continuing dialogue with regulators around the world.
Vitalik's role in 2023
- Help projects that are building great apps succeed.
- Interact and connect with the Ethereum community around the world.
