Ethereum co-founder on why he got into crypto: Empower the little guy, 'screw' the big guy — 'they already have enough money'

Ethereum co-founder on why he got into crypto: Empower the little guy, ‘screw’ the big guy — ‘they already have enough money’

Before Vitalik Buterin co-created Ethereum, he first learned about bitcoin in 2011, when he was 17 years old.

Initially he dismissed it, but Buterin eventually connected with the idea of bitcoin after a second look, he told Wired in 2016. Like many bitcoin evangelists, Buterin, a Russian-Canadian programmer, was curious about the decentralized payment system.

Back then, “I had a much more cartoon mentality,” he told Wired.

“I saw everything to do with either government regulation or corporate control as just being plain evil. And I assumed that people in those institutions were kind of like Mr. Burns [on “The Simpsons”], sitting behind their desks saying, ‘Excellent. How can I screw a thousand people over this time.'”

Though his take on good and evil “substantially updated” as time went on, he told Wired, Buterin still felt motivated to get involved with bitcoin to adjust the balance of power between “the big guy” and “the little guy.”

“I think a large part of the consequence is necessarily going to be disempowering some of these centralized players to some extent,” he said in 2016.

“Because ultimately power is a zero sum game. And if you talk about empowering the little guy, as much as you want to couch it in flowery terminology that makes it sound fluffy and good, you are necessarily disempowering the big guy. And personally, I say screw the big guy. They have enough money already.”

It’s a mindset held by many who were drawn to the crypto space early on — and is especially relevant now.

Meme stocks and cryptocurrencies have become prevalent this year, with many in the space citing the same opinion Buterin talked about. Starting in January, retail investors on Reddit planned to help drive the price of GameStop stock after it was bet against by Wall Street hedge funds, calling their campaign as a “great wealth redistribution.” Since, cryptocurrencies like bitcoin have reached record-highs with supporters rallying behind the decentralized system.

“I thought [bitcoin] was something really interesting,” Buterin told Business Insider in 2019. “I started getting into the community more and more.”

Seeing value in the space, Buterin co-founded Bitcoin Magazine in September 2011 while in college. There, he became an expert on bitcoin and learned what could make the blockchain better.

In May 2013, Buterin attended a bitcoin conference that convinced him to pursue development of the cryptocurrency full-time, and by the end of the semester, he had dropped out of school to do so.

For six months in 2013, Buterin traveled around the world to meet with bitcoin developers. He realized that he could iterate on the bitcoin blockchain to create a new, potentially better, one.

Bitcoin had “too limited functionality,” he told Business Insider.

To explain his thinking, Buterin compared bitcoin to a pocket calculator and a new potential blockchain to a smartphone.

“A pocket calculator does one thing and it does one thing well, but really, people want to do all these other things. And if you have a smartphone, then you have a pocket calculator as an app,” he said. “So basically, taking that same kind of idea of increasing the power of the system by making it more general purpose and applying it to blockchains.”

As a result, he came up with Ethereum, the blockchain that powers the cryptocurrency ether. (He wrote its white paper in November 2013 when he was just 19.)

Bitcoin is known for its peer-to-peer payment system, whereas Ethereum is capable of more than solely transactions — it can power and build decentralized applications, like financial tools and social media platforms, along with NFTs, or nonfungible tokens, due to its smart contracts.

“When I came up with Ethereum, my first first thought was, ‘OK, this thing is too good to be true and I’m going to have five professional cryptographers raining down on me and telling me how stupid I am for not seeing a bunch of very obvious flaws,'” Buterin told Wired in 2016. “Two weeks later I was extremely surprised that none of that happened.”

Today, ether is the second largest cryptocurrency after bitcoin and has a current market value of over $400 billion.

Buterin recently became the world’s youngest crypto billionaire at 27. On Wednesday, he donated over $1 billion to the India Covid-19 Relief Fund and other charities.

A representative for Buterin declined CNBC Make It’s request for comment.

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(Bloomberg) – Elon Musk helped legitimize cryptocurrencies in the eyes of Wall Street investors. Now, his tweets are scaring them off.About a quarter of Bitcoin’s value has been wiped away in the span of a week, in part thanks to headspinning tweets from Musk on everything from Bitcoin’s toll on the environment to whether Dogecoin is the better digital currency. The token is now worth about as much as it was when Tesla first disclosed in February its intention to buy some.Musk has always been tongue in cheek with his crypto dabbling, but his latest posts have sown confusion across the industry and revived the debate over whether the nascent asset class is a serious investment.Can Bitcoin ever be a hedge against inflation and gold alternative with volatility like this? And is it simply a running joke on Twitter for the world’s second-richest man?These questions are resonating with GAM Holding AG, which oversees 124.5 billion Swiss francs ($138 billion), as unpredictable swings in crypto are proving a major drawback.“Its volatility is so huge that it can actually distract clients from their investment goals,” said Julian Howard, head of multi-asset solutions at the firm. “It’s often driven by tweets rather than fundamentals.”Before this month’s roller-coaster, the widespread adoption of crypto had been on an upswing, with Tesla’s $1.5 billion purchase of Bitcoin in February a watershed moment. At the time, Musk announced he would allow customers to buy cars with Bitcoin and would keep a portion of Tesla’s balance sheet in the token.Read: Burry of ‘Big Short’ Fame Places Big Bet Against Musk, TeslaThe move, the first by a major corporation, raised expectations that other corporate treasurers would follow suit and adoption of crypto as a medium of exchange would take hold. Goldman Sachs Group Inc. and Morgan Stanley also announced plans to offer their clients exposure to crypto.With hordes of new retail and institutional investors piling in, prices shot up from $29,000 in January and reached $60,000 last month. After the pullback, the token now trades around $43,000 and some analysts say the market still looks precarious, especially as the fate of Bitcoin becomes tied to Musk’s Twitter outbursts.“I would definitely expect reduced appetite going forward,” said Felix Dian, founder of crypto-focused MVPQ Capital in London, which counts 70% of its investors as institutions. “First, because of the loss of momentum from a technical perspective, but also because of the extreme sensitivity on environmental issues.”Because Bitcoin has no underlying fundamentals, such as profit streams or interest payments that help anchor the value of stocks and bonds, it’s inherently a speculative bet on market trends in the years ahead.“It’s the ultimate momentum trade,” said Wayne Wicker, chief investment officer at Vantagepoint Investment Advisers. “The mainstream adoption will come from institutional investors over time and regardless of Elon Musk.”Still, for all the eye-watering moves lately, Bitcoin is far less volatile than it used to be. Benson Durham of Cornerstone Macro LLC says Bitcoin’s correlation to other assets, therefore its impact on overall portfolio swings, is a more relevant metric for investors.By that measure, there’s “not much change to write home about during the recent pullback,“ he wrote.Meanwhile, crypto insiders say the Musk-driven volatility is just a temporary blip and will soon blow over.“We take a longer view, and investors would be right to do the same,“ said Greg King, chief executive officer of Osprey Funds, which offers crypto trust funds. “The key question is whether we think this asset is going to last? The answer is yes.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Ethereum Difficulty Bomb Delayed Till December 2021

Ethereum Difficulty Bomb Delayed Till December 2021

Ethereum core developers have agreed to delay the network’s difficulty bomb until December this year. As the name implies, the Ethereum difficulty bomb or Ice Age makes mining more complex by increasing the amount of time required to mine a new block on the network, thereby making Ethereum mining operations less profitable.

Ethereum Difficulty Bomb Defused Again

With Eth 2.0 development going exactly as planned, Ethereum core developers, including James Hancock and Tim Beiko have agreed to alter the Ethereum Improvement Proposal (EIP-3554) code which is also known as the difficulty bomb, in a bid to push back its detonation from July to December 1, 2021.

For the uninitiated, EIP-3554 was introduced in 2015 to motivate Ethereum developers to Fastrack Eth2 development. The difficulty bomb is designed to make Ethereum mining less profitable by simply increasing the time required to mine a new block on the network.

For context, the Ethereum block time (time required to mine a new block) presently sits at just above 13 seconds, however, that number could go as high as 20 or even roughly 30 seconds if the difficulty bomb is not taken care of.

https://twitter.com/TimBeiko/status/1393232988901580803

Eth1 & Eth2 to Merge in December

The team says the difficulty bomb has now been delayed by 9,700,000 blocks or until December 1, 2021, as the devs expect the Eth1 and Eth2 Merge operation to have been completed by then, effectively dumping proof-of-work (PoW) for Proof-of-Stake (PoS).

However, if things do not go as planned, and the team feels the transition to PoS may not be possible by December this year, the difficulty bomb will be further delayed during the Shanghai fork scheduled for October 2021.

“If the Merge is ready by December, we won’t need to do anything about the bomb because the Ethereum network will move away from mining to staking,” said Tim Beiko, an Ethereum core developer.

Notably, this is the fourth time the Ethereum team is delaying the detonation of the difficulty bomb. The exercise was first carried out in October 2017 via the Byzantium upgrade, followed by another during the February 2019 Constantinople fork and the last was done in January 2020, when the Ice Age was delayed by four million blocks.

At press time, the price of ether (ETH) sits at $3,482, with a market cap of $403.01 billion, as seen on CoinMarketCap.