Recorded on September 18, 2017.
AngelList’s Naval Ravikant brings Ethereum’s Vitalik Buterin onstage to explain what it is and why it’s useful.
Naval Ravikant: Hi, everyone. Thanks for having us this morning. It sounds like you’re already spending $100 million to find aliens and we have one here. An alien of extraordinary ability. Most of you probably know a little bit about Vitalik. I’m not going to go through his whole bio, that’s what Google is for. But just as a quick interesting background or note, I discovered crypto currencies in 2013. And for me, a brain virus is kind of the best way to describe it. When you first understand the concept, that’s sort of all you can think about. And in the four years subsequent, all I managed to do was invest a little bit here and there, write a little bit about it, and just try and understand it. In that period of time, in late 2013, Vitalik, very young at the time, 18, 19, how old were you?
Vitalik: When I created Ethereum?
Naval Ravikant: Yes.
Vitalik: Yeah, 19.
Naval Ravikant: 19 years old, conceived of the project, tried to build it on top of Mastercoin, spun it out as his own thing, and created what is the most exciting project in the space since Satoshi Nakamoto, whoever that is, originally created Bitcoin. And as you all hopefully know, it’s a platform for distributed applications in a trustless, secure, decentralized way. And we’re going to talk a little bit more about what that means. We’ll try and keep it very high level because I understand this is a general audience. But yeah, without further ado, here’s Vitalik. And we’re going to talk a little bit about Ethereum. So please give him a big welcome.
Naval Ravikant: Maybe we’ll just start very high level. In your own words, how would you describe Ethereum to the average person, why it’s important?
Vitalik: Yeah, so, I mean, first of all there’s two kinds of average people. There’s the average person who has already heard of Bitcoin, and there’s the average person who hasn’t, right. So for the first category, it’s a bit easier, because if you understand what Bitcoin is, and you understand that it’s a peer-to-peer digital currency, and you understands that if you wants to have a digital currency that’s decentralized, then you need some kind of database to store how much money everyone has. Like, if I have 100 mil digital Bitcoin, dollars, or digital whatever, cash, and I send 100 to you, and I also send the same 100 to someone else, then those are two transactions, either one of which is legal by itself, but both of which are illegal in combination, because they’d be turning 100 units of cash into 200.
Vitalik: And then this is the classic double spending problem, and in order to solve it, you basically need to have some system that keeps track of, have these coins already been spent? How much money do I actually have at any given time? How much money do I have the right to spend at any given time? And you can very easily do this with a centralized server, but if you want to do this in a way that’s decentralized, which is Bitcoin’s original point, in the spirit of things like BitTorrent.
Vitalik: It’s actually a very hard computer science problem to figure out how to do it. And Satoshi Nakamoto probably came up with the first solution that really is practical in this kind of open, permission-less context, which is the Nakamoto blockchain. And that was where the idea of watching technology in general came from. Now, where Ethereum comes from is, basically you take that idea, the idea that you can use what I call crypto-economics, so a combination of cryptographic algorithms, things like [inaudible 00:03:26] and digital signatures, and the kinds of economic incentives that keeps systems like Bitcoin going, and use them to create these kind of decentralized networks with memories, so these kind of decentralized database-like things, for a whole bunch of other applications as well.
Vitalik: So around 2013, people started realizing, really, that these blockchains are usable for much more that peer-to-peer digital currency, and the first major thing aside from Bitcoin was probably Namecoin, which was trying to do a peer-to-peer decentralized DNS, but then people started thinking, you know, can you do other kinds of digital assets? Can you do smart contracts; can you do financial agreements? Can you do registries about identity? Can you do all these other things?
Vitalik: And there were so many applications that building a blockchain for each one doesn’t really work. And so, the core idea behind Ethereum is, you know, you can have a general purpose blockchain. We can have a blockchain where, instead of the blockchain working like a Swiss Army knife, where we have five different tools for five different categories of applications, you have a blockchain that understands a general purpose programming language, so kind of like your phone, in your phone you have Android or iOS, and inside of Android or…
