One in a billion - Ethereum co-founder is not your typical billionaire
For those outside the crypto-world Bitcoin is likely the only new fangled form of money you have heard about. There are thousands of coins and platforms. Many are simply copycat versions hoping to catch unwary investors but some do offer new ways to imagine how finance, business and even governments can operate.
Vitalik Buterin became intrigued with Bitcoin after his father introduced him to it at age 17. He was so intrigued he started writing for a Bitcoin publication and got paid as you might expect in Bitcoin. At the time he made less than $4 dollars per submission.
Despite the praise for his clear writing the magazine was closed, so he started his own Bitcoinmagazine.com which is still operating and should you wish you can read all of the hundreds of pieces he wrote. He now publishes his thoughts on his own blog.
After school he enrolled at the University of Waterloo and focussed on courses relating to cryptography. He attended Bitcoin conferences and was impressed by the size and the passion of the community. He had found his home. He did not finish his studies thanks to being selected as a Thiel Fellow which awards $100 000 to aspiring students looking to tackle big projects. He was one of 20 selected from thousands of applicants from around the world and used the money to complete his vision of what should come next. He published a white paper and impressed a number of others to join with him to found the Ethereum Foundation.
The issue he saw with Bitcoin was that its value was determined by the value of the coin, not the network and blockchain it operated on. It was a digital currency.
Ethereum was to be a platform and the value of the platform would underpin the value of the currency created to power it. Many refer to the coin as Ethereum when it is actually called Ether and rather than being just a decentralised currency it was a computing platform capable of running a distributed set of programs that could be initiated by anyone and confirmed though the decentralised nature of its confirmation of actions or transactions that took place on the network.
Things I'm excited about (incomplete list)— vitalik.eth (@VitalikButerin) June 18, 2020
* Cryptography+blockchains esp @ethereum family
* Life extension @SENSResearchFou
* New governance/"social tech" @RadxChange
* Better online education of all types
* Building cities @CCIdotCity
* Ongoing global poverty reduction
While Bitcoin addressed the issue of requiring a trusted 3rd party to confirm the people looking to transact had the funds to do so and that they would keep an authoritative record of the transactions it was focused on money transfers.
Ethereum was built to allow any contract to be carried out without a trusted 3rd party.
Considering this highly complex network was principally conceived by a 19 year-old is astounding. He did rely on the collaboration of other very accomplished programmers to create the initial version.
A smart contract uses a set of conditions that need to be met before a transaction is carried out. It could run a payroll that checks the work submissions or time spent on a task to release payment as soon as the conditions have been met.
Provided the conditions can be clearly defined and a suitable method can be used to determine they have been met, you don’t need to have anyone check or approve even request the payment be made.
It may still be some time, but smart contracts for government departments could allow for very transparent contracts to be created and settled as soon as the work is completed and it would require the proof to show the project was delivered in accordance with the specifications.
It would also allow for the creation of contracts to become a specialised and centralised role within the government bureaucracy and limit the opportunity for meddling or under the table dealing.
Not only can smart contracts specify when payment can be made, it can also define how the funds can be used. So if purchases for medical supplies were needed the funds released could only be transferred to companies that qualify to provide medical supplies.
From the beginning he had seen the potential for creating decentralised autonomous organisations (DAO). This was taking a smart contract to the next level and effectively allowing shareholders to directly vote on what a company should do and as a consequence create smart contracts to direct how those actions should be carried out.
Each investor would be issued with a token that equated to how many votes they would be able to cast when deciding what the company needed to do.
Currently shareholders also vote on actions they would like to see the company carry out but rely on company management to achieve it. There is no management layer in a DAO so if a DAO was created to run a soup kitchen, the members who donate the money will determine what meals need to be provided where and when. Contractors or staff are tasked with fulfilling the contract.
It is still quite new and the early version created called The DAO resulted in the first crisis for Ethereum and DAO.
In 2016 a DAO was created and funded to the tune of $150 million. Because they are transparent anyone can review the contracts and the transactions. A $150 million pot of money is a major incentive for someone to find a flaw in the code and manage to find one to satisfy the existing code to transfer $50 million to someone outside the DAO.
Buterin noted that while the action was in effect theft it was done within the rules of the code. It would be similar to someone looking to sell a low priced item but made a very high priced item instead. You know it was an error and not the intention, but you did not do anything illegal by buying the item at a much lower price.
Buterin proposed rolling back the blockchain before the transaction took place while others said that would effectively centralise control as were against it.
You might imagine that the majority would rule, but a feature of the blockchain allows for another outcome, split the blockchain.
In the end the chain was split before the transaction which returned the funds to the DAO in what remained as the Ethereum blockchain, while the newly split blockchain became known as Ethereum Classic and still operates albeit with a lower valuation than the main blockchain. One benefit to those that held Ether at that point is that they would effectively have the number of tokens in both coins.
It was not the only issue that saw Buterin being called to take a side.
There is still no evidence to determine who created Bitcoin. The name on the white paper that proposed it in 2008 was Satoshi Nakamoto but no-one knew who it was. In 2016 Craig Wright said he was Nakamoto, but Buterin was sceptical and went so far as to call him a fraud not just for his claims for creating Bitcoin but for not even understanding enough to manage crypto networks.
He does not say he knows who Nakamoto is, but suspects that Hal Finnney who received the first Bitcoin transaction from Nakamoto was Finney. Unfortunately Finney died in 2014.
While not a household name, he is very well known in crypto circles and was listed in Forbes 40 under 40 and Time’s list of 100 most influential people of 2021. The creators of a dog coin gave Buterin half the total supply of coins to give it a big marketing push. As a result of Buterin owning the coins it created a run of people who wanted to buy them, They were valued at over $8 billion at the time. He opted to donate over a $1 billion to Covid relief in India and destroyed the rest. In doing so it only made the remaining coins worth more and showed that he was not in it for the money although few would be willing to do the same. He has over 300 000 Ether and so has become a billionaire during the course of 2021.
It is this approach that suggests he is a good person to be steering the new financial future as he does not see himself as an entrepreneur but a tech philosopher.
He is still very young and so it remains to be seen if he can remain true to his current goals, but even if he does not, he has created something that for many has issued in a new form of the internet and has not only created significant disruption but has managed to do so in a way that the current financial system need not be in opposition to it but rather make the most of it to improve their own operations while offering users a greater stake in how their money is managed and used to drive the global economy.
This article first appeared on 702 : One in a billion - Ethereum co-founder is not your typical billionaire
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