Ethereum co-founder Vitalik Buterin delivered a keynote speech titled "What Excites Me About the Next Decade" on the first day of the TOKEN2049 main venue. He talked about what he thought was the difference between the current crypto field and the past, and said bluntly that "the current crypto field is no longer in its early stages; Ethereum now needs to meet the needs of mainstream adoption while maintaining open source and decentralized values." The following is the original text of Vitalik's speech, which is BlockBeats by BlockBeats:
People tend to say it's still early days for crypto, we're still building the infrastructure. Really, how long did it take for something like the internet to come to fruition, and I think people have been saying that almost since Bitcoin was launched. And one of the real challenges we face now is that it's no longer early days for crypto today.
Ethereum as a project has been around for over 10 years, and in the 15 years since Bitcoin was created, we’ve seen things like ChatGPT go from being completely non-existent to suddenly emerging and completely changing people’s understanding of AI.
So the question we have to ask ourselves is how exactly should we view all of this? Are we really still in the early stages? My answer to this question is that I don’t think we are early in crypto, but we are definitely in a special stage.
What happened? Let's dig a little deeper. I'm reminded of my visit to Argentina in 2021. It was my first time in Argentina. The first thing that caught my attention was that there was a demographic across the country that was not only incredibly excited about cryptocurrency, but was actively using it on a massive scale.
But literally, I was walking around on Christmas Day and the first coffee shop I noticed was open. I walked in and the owner knew me and allowed me to pay with ETH for my coffee and the dessert that I was having with my friends. But they were not using decentralized technology.
This is the same thing that ultimately makes me think that at least initially, the failure of the whole "getting everyone to accept Bitcoin as money" thing. It's fees. If you remember the marketing in the beginning, why Bitcoin is so great. It was usually about PayPal and some of the credit card companies, who ripped off their customers with fees. They charged very high fees, it was terrible, but the fees for Bitcoin itself were $1 to $50.
Ethereum transaction fees have also risen.
The highest fees I pay on Ethereum are actually for privacy-preserving transactions. Gas has been going up, so to speak, and every time I do an operation, there are a lot of comments on Twitter. So there is a very good market fit for privacy protocols. Some transactions cost around $800. A lot of projects fail because of fees. So what’s new in 2024?
Here’s a fee chart of a weird Ethereum phenomenon. Fees have dropped from between $10 and $0.50 to less than a cent, basically close to zero. Meanwhile, OP and ARB, two major Ethereum Laeyr 2 projects, have reached a major security milestone called Phase 1, and multiple ZK-based Rollups have told me that they plan to reach Phase 1 soon. So Rollups will soon become more secure, too.
Fees are finally becoming affordable. But that’s not the only thing that’s improved. Another annoyance I vividly remember while traveling in Argentina was trying to send someone money using the Ethereum mainnet, and the transaction fee was about $4, and the transaction took about 5 minutes to confirm. Although EIP-1559 was already live at this time, this particular wallet had not actually been upgraded.
Bitcoin blocks are generated every 10 minutes, so you may have to wait 10 minutes or even an hour for a transaction to be confirmed. Ethereum's theoretical block time is 13 seconds, but because the gas market was very inefficient in the past, sometimes if you are unlucky, you may have to wait a completely random time, which may be 5 minutes or even longer, for the transaction to be packaged. EIP-1559 actually basically solves this problem.
So, these two things are really what keep my transaction confirmation times stable between 5 and 15 seconds today. If you use a Layer 2 solution with fast free confirmations, you can get it down to typically under a second. So, basically, these two main issues are the biggest factors that are causing centralized UX to be far superior to decentralized UX in 2021.
We can also simply evaluate the quality of the user experience of an application. You can see (slides) a tweet from 2015, a demo from a hackathon. And next to it, you can see Firefly, which is a client for Farcaster and Twitter and Lens. If you look at the quality of the user interface, it looks like the quality of a Web2 product, but it's a decentralized application.
We've also seen progress this year on account abstraction. We've seen more and more people using security tools. We've seen EIP-7702. We're starting to see mainstream adoption of ZK-snarks, all kinds of different applications. So we have new, better privacy protocols.
Even with the existing usability improvements, a few years ago people were complaining about having to manually switch networks. Today, I don't think I've actually manually switched networks in at least the past year. So the limitations of the technology were a barrier. I even remember the moment when CryptoKitties looked like it might become a real hit app. But what happened? The success of CryptoKitties pushed Ethereum's gas price to an extreme.
Ethereum became essentially unusable, which in itself limited its growth. That's no longer true today, but it basically means the reason not to use crypto is gone. So what was the reason to get in in the first place? I think one mistake people make sometimes is to think of crypto as an efficiency technology. That's something a lot of people were talking about a decade ago.
Let's look at what people said about Bitcoin in 2013 - the benefits of accepting Bitcoin include easier payments, security and control over funds, zero or low fees, and protection of personal identity. Of the first four, two are characteristics that I think are very unique to cryptocurrencies. The other two were once unique to cryptocurrencies, but are they still? Today we have Venmo, some better payment methods, and WeChat Pay.
Centralized systems are improving, but they still have problems in some places.
Access to payments and financing is still very difficult. Why are they still difficult? It's not because of access to technology. It's fundamentally because of global political constraints. So I think it's important to remember that the benefits that cryptocurrencies bring to the world are not related to the same kind of technological improvements. Just like switching from a regular jet to a supersonic jet is a technological improvement, but it's a different type of improvement.
What kind of technology? One way to think about it is to refer to this blog post written by Josh Stark at the Ethereum Foundation, which was published about two years ago. The title of the article is "Atoms, Institutions, Blockchains". The argument is that blockchains allow us to create a kind of digital solidity, basically any form of social solidity, which allows us to create persistent digital structures that are difficult to change.
And that can resist being destroyed, just like you can make a strong physical structure out of something like concrete. If you think about how blockchain is different from other things.
Some of the early cyberpunk technologies, like mixnets, Tor, BitTorrent, etc. You realize that at its core, blockchain is about creating structures that are durable and extremely robust. So if your file sharing network goes down, it doesn't matter, you just switch to another one. In a week, everyone forgets about it. If one locking mechanism goes down and you switch to another one, everyone loses all their money. That's a fundamental difference.
Thus, blockchain enables the internet to not only circumvent the weaknesses of old-world structures, but also to better build alternatives that can solve similar problems.
Blockchain is like digital concrete. So what is digital concrete used for? Digital concrete is used to build a virtual castle in the sky. So who here has seen the movie "Castle in the Sky"? Come on, raise your hand if you have seen it.
So the reason this movie is interesting is, first of all, I really think it's great. I think it's an absolute masterpiece from Studio Ghibli, and I've seen it at least five times. But it turns out that this movie was also, in a way, an accidental inspiration for Ethereum, without me even realizing it. Basically what happened is that in 2013, I discovered Ethereum while browsing a list of fictional elements on Wikipedia.
It sounded like a really good name, and reminded me of a 19th century scientific theory that there was a medium (Ethereum) that permeated everything. So I chose the name "Ethereum". Then two months later, a designer at the Ethereum Foundation, before the organization was even called the Ethereum Foundation, decided to use this diamond as the Ethereum logo. I thought it was cool at the time, and that's why I like this logo, it's beautiful.
The combination of the serious and the fun aspects of crypto is what I want people to remember. A castle is something that protects you, your family, and your tribe. It can also be a castle in Disneyland, where your community can have fun. It can also be a museum that preserves thousands of years of your culture's history. It can also be all of these things, and various types of digital councils. Anything we can build on Ethereum.
What should be our key goals after completing the digital castle? My view has always been that we need to meet the needs of mainstream adoption while maintaining the values of open source and decentralization. What does this mean? For example, wallet security. Historically, there are basically two ways to keep your funds.
One way is basically you take this crazy self-sovereignty maximalist approach. You write down a seed phrase and do everything offline. You carve that seed phrase into a piece of titanium and then you put that titanium into a stronger titanium lockbox and you bury that lockbox 10 meters underground and your coins are safe. That's one way.
The other way is to say, I'm just an ordinary person, I don't want to go through all this trouble. You give your coins to a trustworthy person, there's a "good guy" named Sam, he attended the event with Clinton, he must be trustworthy. But two years later, it turns out that you were a little wrong about who is trustworthy and who is not trustworthy. So I don't think these are the only two options. If you want to protect yourself from centralized bad actors, then you have to take traditional self-protection measures.
What if you are a centralized exchange and you want both? This is where multi-signature smart wallets come in. Multi-signature means you have multiple keys, for example you may have 6 keys and you need 4 to send a transaction. You can even set a rule that only one key is needed for small transactions. These keys can be any combination that you can control.
Friends and family and so on, you can actually create an Ethereum account, which is a smart contract wallet that can only send transactions if you generate a proof that you control a specific email address, right. So you can basically bring the trust anchor of Web2.0 into the world of Web3.0, where you can even diversify your trust. I personally trust my multi-signature wallet more than any one centralized account.
For example, this is a Demo wallet (PPT content), which is completely based on Ethereum, but its user experience is the same as Venmo. Through a special mechanism, users can prove that their withdrawals come from a certain deposit without revealing which one, but can prove that their deposits are not from criminals.
This is a way to allow ordinary users to have a high degree of privacy while meeting many important compliance requirements, but without actually having a backdoor.
You can have privacy and trust at the same time. On the Ethereum mainnet, many technical improvements are happening to make Layer 1 more decentralized and easier to verify while reducing final confirmation time and increasing capacity. These things are already happening.
This is where the Ethereum ecosystem, and I think cryptocurrency as a whole, is going to go over the next decade.
