Ethereum’s Vitalik Buterin Is Worried About Crypto’s Future
ItWithin a matter minutes, the electronic music will turn on, there will be toys being thrown into the air, and then women spinning Technicolor hoops will appear. Finally, a bull-like mechanical will take control, pulling off one happy rider after another. It’s the closing party of ETHDenver, a weeklong cryptocurrency conference dedicated to the blockchain Ethereum. For days, lines have stretched across the block. This Sunday night, February 2, the energy levels are high.
The crowd is pushing in and the wiry man, with his elfin features, sprints out of the venue past stunned selfie-takers, venture capitalists, and others. He is urged to remain by some who call for him, while others chase him down streets on their scooters and foot. The man, however, outruns all of them and disappears into his hotel lobby alone.
Vitalik Buterin, the most influential person in crypto, didn’t come to Denver to party. He doesn’t drink or particularly enjoy crowds. Not that there isn’t plenty for the 28-year-old creator of Ethereum to celebrate. Buterin invented Ethereum in order to harness the technology behind Bitcoin’s blockchain for other uses than currency nine years ago. It has been the foundation of what supporters claim will be an open-source and decentralized new internet. Ether, the platform’s native currency, has become the second biggest cryptocurrency behind Bitcoin, powering a trillion-dollar ecosystem that rivals Visa in terms of the money it moves. Ethereum is a platform that has enabled capital flow across borders and brought in thousands of people who were not banked. It also provided an infrastructure to enable entrepreneurs to create new products.
Photograph taken by Benjamin Rasmussen in TIME
Buterin is proud and terrified that crypto will continue to rise in price and volume. Ethereum has brought untold wealth to a few white men, made it easier for money laundering and tax evasion and created a whole new world. “Crypto itself has a lot of dystopian potential if implemented wrong,” the Russian-born Canadian explains the morning after the party in an 80-minute interview in his hotel room.
Buterin is concerned about overeager investors and high transaction fees. He also worries about shameless wealth displays that dominate the public’s perceptions of cryptocurrency. “The peril is you have these $3 million monkeys and it becomes a different kind of gambling,” he says, referring to the Bored Ape Yacht Club, an überpopular NFT collection of garish primate cartoons that has become a digital-age status symbol for millionaires including Jimmy Fallon and Paris Hilton, and which have traded for more than $1 million a pop. “There definitely are lots of people that are just buying yachts and Lambos.”
Continue reading: At ETHDenver 20,22 Politicians Take a Growing Interest in Crypto
Buterin is hopeful that Ethereum will serve as a launchpad for many sociopolitical experiments, including fairer voting systems and urban planning. Above all, he wants the platform to be a counterweight to authoritarian governments and to upend Silicon Valley’s stranglehold over our digital lives. However, he admits that his vision of Ethereum as a transformative platform is being overtaken in greed. So he reluctantly took on an increased public role to shape its future. “If we don’t exercise our voice, the only things that get built are the things that are immediately profitable,” he says, reedy voice rising and falling as he fidgets his hands and sticks his toes between the cushions of a lumpy gray couch. “And those are often far from what’s actually the best for the world.”
The irony is that despite all of Buterin’s cachet, he may not have the ability to prevent Ethereum from veering off course. That’s because he designed it as a decentralized platform, responsive not only to his own vision but also to the will of its builders, investors, and ever sprawling community. Buterin isn’t the official leader of Ethereum. He rejects the notion that any one should have unilateral control over Ethereum’s future.
Buterin wears Shiba-Inu pants while on stage at ETHDenver
Benjamin Rasmussen for TIME
Buterin has become dependent on soft power, writing blogs, interviews, conducting research, and speaking at conferences. Many attendees simply want to enjoy the newfound wealth. “I’ve been yelling a lot, and sometimes that yelling does feel like howling into the wind,” he says, his eyes darting across the room. Whether or not his approach works (and how much sway Buterin has over his own brainchild) may be the difference between a future in which Ethereum becomes the basis of a new era of digital life, and one in which it’s just another instrument of financial speculation—credit-default swaps with a utopian patina.
The next day is three days the music stops at ETHDenver, Buterin’s attention turns across the world, back to the region where he was born. In response to the Russian president Vladimir Putin’s war, crypto almost immediately became an instrument of resistance in Ukraine. More than $100 million in crypto was raised in the invasion’s first three weeks for the Ukrainian government and NGOs. Some fleeing Ukrainians who cannot access their banks have found refuge in cryptocurrency. However, authorities are concerned that Russian oligarchs could use cryptocurrency to bypass sanctions.
Buterin also stepped up and donated hundreds of thousands in aid funds to relief efforts and publicly lambasting Putin’s decision to invade. “One silver lining of the situation in the last three weeks is that it has reminded a lot of people in the crypto space that ultimately the goal of crypto is not to play games with million-dollar pictures of monkeys, it’s to do things that accomplish meaningful effects in the real world,” Buterin wrote in an email to TIME on March 14.
He is a bold advocate for change, a departure from a leader who was slow to voice his opinion. “One of the decisions I made in 2022 is to try to be more risk-taking and less neutral,” Buterin says. “I would rather Ethereum offend some people than turn into something that stands for nothing.”
Buterin is Ukrainian-Russian and has personal memories of the war. Born in Moscow to Dmitry Buterin (computer scientist) and Natalia Ameline (nearly ten years after the fall Soviet Union, Buterin was raised outside Moscow. Monetary and social systems had collapsed; his mother’s parents lost their life savings amid rising inflation. “Growing up in the USSR, I didn’t realize most of the stuff I’d been told in school that was good, like communism, was all propaganda,” explains Dmitry. “So I wanted Vitalik to question conventions and beliefs, and he grew up very independent as a thinker.”
In the beginning, his family lived in an apartment at a university with a shared toilet. Because there weren’t disposable diapers, his parents used to hand wash their baby. Vitalik had a chaotic, troubled childhood. Dmitry states that Vitalik learnt to read long before he was capable of sleeping through the night. He also struggled to make sentences when compared to his peers. “Because his mind was going so fast,” Dmitry recalls, “it was actually hard for him to express himself verbally for some time.”
Vitalik opted instead for the clearness of numbers. At 4, he inherited his parents’ old IBM computer and started playing around with Excel spreadsheets. By age seven, he was able to recite over 100 digits of pi and could shout out mathematical equations in order to entertain himself. At 12 he could code in Microsoft Office Suite. The precocious child’s isolation from his peers had been exacerbated by a move to Toronto in 2000, the same year Putin was first elected. His father characterizes Vitalik’s Canadian upbringing as “lucky and naive.” Vitalik himself uses the words “lonely and disconnected.”
Buterin at his IBM
Courtesy of Dmitry Buterin
Dmitry presented Vitalik to Bitcoin in 2011, which was established following 2008’s financial crisis. Dmitry, who had seen the fall of the Russian and American financial system in 2008, was fascinated by the notion of another global money source. Vitalik began to write articles about the technology in the Bitcoin Weekly magazine. He earned five bitcoins per article (back then it was $4, today it is worth around $200,000).
Vitalik Buterin, an 18-year-old, was an articulate writer who could convey complex ideas regarding cryptocurrency and its technology in simple prose. He founded the first cryptocurrency exchange at age 18. Bitcoin MagazineHe became the lead writer of the magazine, gaining a large following in Toronto as well as abroad. “A lot of people think of him as a typical techie engineer,” says Nathan Schneider, a media-studies professor at the University of Colorado, Boulder, who first interviewed Buterin in 2014. “But a core of his practice even more so is observation and writing—and that helped him see a cohesive vision that others weren’t seeing yet.”
Buterin became more knowledgeable about Bitcoin’s blockchain technology and began to think that it was wasteful to use it for money. He believed that the blockchain could be used to secure all kinds of assets, including web apps, organisations, financial derivatives and non-predatory loans programs. Each of these could be operated by “smart contracts,” code that could be programmed to carry out transactions without the need for intermediaries. Uber could not take a cut from the profits, so a decentralized model of ridesharing industry could be developed to allow passengers and drivers to pay each other directly.
Read the rest of Buterin’s interview in TIME’s newsletter Into the Metaverse. Receive a weekly update on the Internet’s future by signing upIt is possible to find You can find past newsletter issues here.
Buterin quit college in 2013 and wrote a 36-page paper outlining his vision for Ethereum. It was a new open source blockchain that programmers could use to create any kind of applications. Buterin borrowed the name from a Wikipedia article about elements in science fiction. The Bitcoin community sent the email to some of his friends, who then passed it on. A few programmers and businessmen from all over the globe sought Buterin out to help them bring their ideas to life. Within months, a group of eight men who would become known as Ethereum’s founders were sharing a three-story Airbnb in Switzerland, writing code and wooing investors.
While some of the other founders mixed work and play—watching Game of Thrones persuading friends to bring over beer in exchange for Ether IOUs—Buterin mostly kept to himself, coding away on his laptop. The group developed very distinct plans for the emerging technology. Buterin desired a platform that was open and decentralized so anyone could create anything. Other people wanted the technology for creating businesses. Another idea was to create a crypto-equivalent to Google. Ethereum would sell personalized ads using customer data. They also quarreled over titles and power. One co-founder, Charles Hoskinson, appointed himself CEO—a designation that was of no interest to Buterin, who joked his title would be C-3PO, after the droid from Star Wars.
Buterin was left with shock from culture after the ensuing conflict. Within a matter of months, Buterin had transformed from living a quiet life writing code and articles into a career as a software developer and decision maker who was consumed by power struggles and bloatedegos. The fate of his vision for Ethereum was in doubt. “The biggest divide was definitely that a lot of these people cared about making money. For me, that was totally not my goal,” says Buterin, According to the public records of blockchain, his net worth was at least $800million. A spokesperson confirmed this accuracy. “There were even times at the beginning where I was negotiating down the percentages of the Ether distribution that both myself and the other top-level founders would get, in order to be more egalitarian. That did make them upset.”
Buterin says the other founders tried to take advantage of his naiveté to push through their own ideas about how Ethereum should run. “People used my fear of regulators against me,” he recalls, “saying that we should have a for-profit entity because it’s so much simpler legally than making a nonprofit.” As tensions rose, the group implored Buterin to make a decision. Hoskinson, Amir Chetrit and other co-founders of Ethereum, were asked to leave the group in June 2014. He then set in motion the creation of the Ethereum Foundation (EF), a nonprofit established to safeguard Ethereum’s infrastructure and fund research and development projects.
Each founder left the company over time to start their own ventures, whether they were in partnership with Ethereum or not. Some of them remain critical of Buterin’s approach. “In the dichotomy between centralization and anarchy, Ethereum seems to be going toward anarchy,” says Hoskinson, who now leads his own blockchain, Cardano. “We think there’s a middle ground to create some sort of blockchain-based governance system.”
With the founders splintered, Buterin emerged as Ethereum’s philosophical leader. Buterin was elected to the EF board. He also had the influence and power to create industry trends, and help move the markets by his public pronouncements. He even became known as “V God” in China. But he didn’t exactly step into the power vacuum. “He’s not good at bossing people around,” says Aya Miyaguchi, the executive director of the EF. “From a social-navigation perspective, he was immature. He’s probably still conflict-averse,” says Danny Ryan, a lead researcher at the EF. Buterin calls his struggle to inhabit the role of an organizational leader “my curse for the first few years at Ethereum.”
It’s not hard to see why. Buterin is not a typical leader when you first meet him. Although he stutters and sniffles through his sentences, he walks rigidly and struggle to maintain eye contact. Most of his clothes, Uniqlo T-shirts or clothing he has been gifted from friends, he puts very little effort into. Because of his messy appearance, he has been a popular target via social media. recently shared insults from online hecklers who said he looked like a “Bond villain” or an “alien crackhead.”
Buterin’s conversation is so fascinating that almost everybody who listens to it leaves starry-eyed. Buterin’s humor is almost devoid of pretense or ego. He’s an unabashed geek whose eyes spark when he alights upon one of his favorite concepts, whether it be quadratic voting or the governance system futarchy. Buterin, like Ethereum, is designed to become an all-purpose machine. He is fluent in a variety of disciplines, from sociological theory, advanced calculus, and land-tax history. (He’s currently using Duolingo to learn his fifth and sixth languages.) He doesn’t talk down to people, and he eschews a security detail. “An emotional part of me says that once you start going down that way, professionalizing is just another word for losing your soul,” he says.
Buterin seen through a monitor from ETHDenver
Benjamin Rasmussen for TIME
Alexis Ohanian, the co-founder of Reddit and a major crypto investor, says being around Buterin gives him “a similar vibe to when I first got to know Sir Tim Berners-Lee,” the inventor of the World Wide Web. “He’s very thoughtful and unassuming,” Ohanian says, “and he’s giving the world some of the most powerful Legos it’s ever seen.”
For years, Buterin has been grappling with how much power to exercise in Ethereum’s decentralized ecosystem. In 2016, the first big test was the hacking of the DAO, an Ethereum-based fundraising organization. This amount was more than 4%. The hack tested the crypto community’s values: if they truly believed no central authority should override the code governing smart contracts, then thousands of investors would simply have to eat the loss—which could, in turn, encourage more hackers. Buterin would have the same authority over the financial system he wanted to replace if he chose to reverse the hack with a trick called a hardfork.
Buterin took a middle ground. Buterin consulted other Ethereum leaders and wrote blogs advocating the hard fork. He watched the community vote in support of the option through forums and petitions. The fork was created by Ethereum developers so that users and miners were able to choose whether they wanted the modified version or not. They chose to fork the blockchain and Ethereum rapidly recovered its value.
The DAO hack was, for Buterin at least, a symbol of the decentralized governance approach. “Leadership has to rely much more on soft power and less on hard power, so leaders have to actually take into account the feelings of the community and treat them with respect,” he says. “Leadership positions aren’t fixed, so if leaders stop performing, the world forgets about them. And the converse is that it’s very easy for new leaders to rise up.”
In the last few years,There have been many leaders who rose up within Ethereum and created a variety of tokens, products, and subcultures. 2017 saw the ICO boom, in which billions were raised by venture capitalists for blockchain projects. DeFi summer 2020 saw new trading methods and derivative structures send money at hyperspeed around the globe. And there was last year’s explosion of NFTs: tradeable digital goods, like profile pictures, art collections, and sports cards, that skyrocketed in value.
Skeptics have criticized the utility of NFTs. These billion-dollar economies are based on the perception of digital ownership, which is simple and easy to copy and paste. They have quickly become one the most popular components of Ethereum’s ecosystem. OpenSea, an NFT trading platform for NFTs, reached a new record of $5 billion monthly in January.
Conferencegoers line up to ask Buterin questions after his keynote
Benjamin Rasmussen for TIME
Buterin didn’t predict the rise of NFTs, and has watched the phenomenon with a mixture of interest and anxiety. One, NFTs have helped increase Ether’s price, more than tenfold over the past 2 years. Disclosure: The amount of Ether I have is less than $1300. I bought it in 2021. However, their volumes have overwhelmed the network. This has resulted in a sharp rise in congestion charges. Bidders looking to purchase rare NFTs pay hundreds of dollars more in order to expedite their transactions.
Continue reading: NFT Art Collectors Are Playing a Risky Game—And Winning
They have eroded the fees some of Buterin’s favorite projects on the blockchain. Take Proof of Humanity, which awards a universal basic income—currently about $40 per month—Anyone who registers. Depending on the week, the network’s congestion fees can make pulling money out of your wallet to pay for basic needs prohibitively expensive. “With fees being the way they are today,” Buterin says, “it really gets to the point where the financial derivatives and the gambley stuff start pricing out some of the cool stuff.”
Crypto has been affected by inequalities, including the lack of gender diversity and racial diversity. “It hasn’t been among the things I’ve put a lot of intellectual effort into,” Buterin admits of gender parity. “The ecosystem does need to improve there.” He’s scornful of the dominance of coin voting, a voting process for DAOs Buterin believes that this is a new form of plutocracy in which rich venture capitalists are able to make their own decisions without much resistance. “It’s become a de facto standard, which is a dystopia I’ve been seeing unfolding over the last few years,” he says.
Both within and without the blockchain community, these problems are causing a backlash. The widespread disdain for crypto’s esoteric language and excessive financial practices has been evident as it rockets to mainstream. Users are leaving for newer blockchains such as Solana or BNB Chain because they see lower transaction fees and alternative tools.
Buterin knows why Ethereum is losing its users. Unlike virtually any other leader in a trillion-dollar industry, he says he’s fine with it—especially given that Ethereum’s current problems stem from the fact that it has too many users. (Losing immense riches doesn’t faze him much, either: last year, he dumped $6 billion worth of Shiba Inu tokens that were gifted to him, explaining that he wanted to give some to charity, help maintain the meme coin’s value, and surrender his role as a “locus of power.”)
In the meantime, he and the EF—which holds almost a billion dollars worth of Ether in reserve, a representative confirmed—are taking several approaches to improve the ecosystem. They gave out $27million to Ethereum-based projects last year. This is an increase of $7.7 million from 2019, which was given to smart-contract developers as well as a conference for educators in Lagos.
Two important technical improvements are also being worked on by the EF research group. The first is known as the “merge,” which converts Ethereum from Proof of Work, a form of blockchain verification, to Proof of Stake, which the EF says will reduce Ethereum’s energy usage by more than 99% and make the network more secure. Buterin has been stumping for Proof of Stake since Ethereum’s founding, but repeated delays have turned implementation into a Waiting for Godot–style drama. At ETHDenver, the EF researcher Danny Ryan declared that the merge would happen within the next six months, unless “something insanely catastrophic” happens. The same day, Buterin encouraged companies worried about the environmental impact to delay using Ethereum until the merge is completed—even if it “gets delayed until 2025.”
Brent Burdick is an attendee of ETHDenver and checks his phone at NFT gallery space
Benjamin Rasmussen for TIME
Moxie Marlinspike was the co-founder and CEO of Signal. He wrote an extensive critique in January pointing out that, despite their collectivist slogans, web3 was already coalescing around central platforms. Buterin replied to legitimate criticism with a detailed, thoughtful post on Reddit. “The properly authenticated decentralized blockchain world is coming, and is much closer to being here than many people think,” he wrote. “I see no technical reason why the future needs to look like the status quo today.”
Buterin is aware that crypto’s utopian promises sound stale to many, and calls the race to implement sharding in the face of competition a “ticking time bomb.” “If we don’t have sharding fast enough, then people might just start migrating to more centralized solutions,” he says. “And if after all that stuff happens and it still centralizes, then yes, there’s a much stronger argument that there’s a big problem.”
We’re working out the technical kinksButerin is now focusing his efforts on larger sociopolitical problems that the blockchain may solve. On his blog and on Twitter, you’ll find treatises on housing; on voting systems; on the best way to distribute public goods; on city building and longevity research. Buterin was a Singaporean who lived through the pandemic. He now writes dispatches on the road and blogs about it.
Many who are familiar with Buterin have observed a change in his philosophy throughout the years. “He’s gone on a journey from being more sympathetic to anarcho-capitalist thinking to Georgist-type thinking,” says Glen Weyl, an economist who is one of his close collaborators, referring to a theory that holds the value of the commons should belong equally to all members of society. One of Buterin’s recent posts calls for the creation of a new type of NFT, based not on monetary value but on participation and identity. The commitment of an individual to the organization, rather than the amount of tokens that they have, might determine the allocation of votes within an organization. “NFTs can represent much more of who you are and not just what you can afford,” he writes.
Continue reading: How Crypto Investors Are Handling Plunging Prices
While Buterin’s blog is one of his main tools of public persuasion, his posts aren’t meant to be decrees, but rather intellectual explorations that invite debate. Buterin frequently dissects obscure ideas, which he had once extolled about like Harberger taxes. He is a great example of how to work with complex ideas and communicate the process of intellectual growth.
Some of Buterin’s more radical ideas can provoke alarm. On Twitter, Buterin caused some minor fury in January. advocating for synthetic wombsHe argued that it could decrease the gender pay gap. He predicts there’s a decent chance someone born today will live to be 3,000, and takes the anti-diabetes medication Metformin in the hope of slowing his body’s aging, despite mixed studies on the drug’s efficacy.
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As governmental bodies prepare to wade into crypto—in March, President Biden signed an Executive Order seeking a federal plan for regulating digital assets—Buterin has increasingly been sought out by politicians. He had a private conversation at ETHDenver with Jared Polis (a Colorado Democrat who supports cryptocurrencies), Buterin is anxious about crypto’s political valence in the U.S., where Republicans have generally been more eager to embrace it. “There’s definitely signs that are making it seem like crypto is on the verge of becoming a right-leaning thing,” Buterin says. “If it does happen, we’ll sacrifice a lot of the potential it has to offer.”
Buterin sees the most likely outcome for cryptocurrency’s future as a concentration of blockchain technology in dictatorial government hands. He is unhappy with El Salvador’s rollout of Bitcoin as legal tender, which has been riddled with identity theft and volatility. Buterin believes that crypto should remain decentralized because governments could use the technology to suppress dissent. He sees the technology as the most powerful equalizer to surveillance technology deployed by governments (like China’s) and powerful companies (like Meta) alike.
If Mark Zuckerberg shouldn’t have the power to make epoch-changing decisions or control users’ data for profit, Buterin believes, then neither should he—even if that limits his ability to shape the future of his creation, sends some people to other blockchains, or allows others to use his platform in unsavory ways. “I would love to have an ecosystem that has lots of good crazy and bad crazy,” Buterin says. “Bad crazy is when there’s just huge amounts of money being drained and all it’s doing is subsidizing the hacker industry. Good crazy is when there’s tech work and research and development and public goods coming out of the other end. So there’s this battle. And we have to be intentional, and make sure more of the right things happen.”
—With reporting by Nik Popli and Mariah Espada/Washington
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