Ethereum co-founder Vitalik Buterin admits being naive in early crypto forecast

Ethereum co-creator Vitalik Buterin unleashed a “Twitterstorm” as the new year ushered in, rehashing ideas formulated earlier in the decade. 

His perspectives on Bitcoin Cash, Bitcoin regulation, proof-of-work vs. proof-of-stake, self-enforcing smart contracts, and the cost of blockchain transactions were all covered in his social media comments.

An efficient but sophisticated way

Buterin admits that he was a proponent of Proof-of-Work before discovering proof-of-stake, which is algorithmically more sophisticated but more energy-efficient. 

Buterin first mentioned Proof-of-Stake as an alternative consensus method in 2013, and wrote about it in a blog post on the Ethereum website.

A consensus mechanism provides for the secure updating of a state based on certain state transition rules. 

Buterin defines his conceptual progression as “I like X but X has defects and it looks like Y (proof-of-stake) fixes them, so I support X+Y now” to “I like X but X has flaws and it seems like Y (proof-of-stake) fixes them, so I support X+Y now.”

Transaction fees shouldn’t cost more than 5 cents

Buterin also agreed with a 2017 report that transaction expenses should not be more than five cents. As a result, he said, more work is being spent on scalability.

Buterin also reaffirmed his support for alternative currencies and addressed several of the use cases he identified in the initial Ethereum whitepaper. 

He was right on ERC20-style tokens, algorithmic stablecoins, Domain Name Systems (like ENS), Decentralized Autonomous Organizations, and Oracles, as it turned out. 

He missed the NFT boom, which generated $23 billion in trading volume in 2021, as well as the possibility of DAO collusion.

“My thinking about politics and large-scale human organization was more naive then,” Vitalik admits in the end. 

He said he was “too concentrated on simple” and full “formal models” at the time.

“I didn’t recognize cultural issues then, but I do now,” Buterin said.

Image courtesy of Cointelegraph News/YouTube