Vitalik 2049 speech full text: Ethereum needs to maintain open source and decentralized values while meeting demand

Ethereum co-founder Vitalik Buterin delivered a keynote speech entitled "What Excites Me About the Next Decade" on the first day of the TOKEN2049 main venue, telling what he thinks is different from the past in the current crypto field, and bluntly stated that "the current crypto field is no longer in its early stages; Ethereum now needs to meet the needs of mainstream adoption while maintaining open source and decentralized values." The following is the original text of Vitalik's speech, which is organized by BlockBeats:

People often say that crypto is still in its early stages and we are still building infrastructure. Indeed, how long did it take for something like the Internet to come to fruition? I think people have been saying this almost since the launch of Bitcoin. And one of the real challenges we face now is that today's crypto field is no longer in its early stages.

Ethereum as a project has existed for more than 10 years, and in the 15 years since the birth of Bitcoin, we have seen things like ChatGPT develop from non-existence to sudden rise, completely changing people's understanding of artificial intelligence.

So the question we have to ask ourselves is how exactly should we view all of this? Are we really still in the early stages? My answer to that question is that I don't think we are early in crypto, but we are definitely in a special stage.

What happened? Let's dig a little deeper. I'm reminded of my visit to Argentina in 2021. It was my first time in Argentina. The first thing that caught my attention was that there was a demographic group across the country that was not only incredibly excited about cryptocurrency, but was actively using it on a large scale.

But actually, I was walking around on Christmas Day and the first coffee shop I noticed was open. I walked in and the owner knew me and allowed me to pay for my coffee and the dessert that I was having with my friends with ETH. But they were not using decentralized technology.

This is the same thing that ultimately made me think that the "getting everyone to accept Bitcoin as money" thing failed, at least in the early stages. It was fees. If you remember the marketing in the beginning, why Bitcoin was so great. PayPal is usually mentioned, as are some credit card companies, which rip off their customers with fees. The fees they charge are so high, it's just terrible, but Bitcoin itself has fees of $1 to $50.

Ethereum fees have also gone up.

The highest fees I pay on Ethereum are actually for privacy-preserving transactions. Gas has been going up, so to speak, and every time I do an operation, there are a lot of comments on Twitter. So privacy protocols have very good market fit. Some transactions cost around $800. A lot of projects fail because of fees. So what’s new in 2024?

Here’s a fee chart of Ethereum’s weird phenomenon. Fees have dropped from between $10 and $0.50 to less than a cent, basically close to zero. Meanwhile, two major Ethereum Laeyr 2 projects, OP and ARB, have reached a major security milestone called Phase 1, and multiple ZK-based Rollups have told me that they plan to reach Phase 1 soon. So Rollups will soon become more secure, too.

Fees are finally becoming affordable. But that’s not the only thing that’s improved. Another annoyance I remember vividly while traveling in Argentina was trying to send money to someone using the Ethereum mainnet, and the transaction fee was about $4, and the transaction took about 5 minutes to confirm. Although EIP-1559 was already live at this time, this particular wallet was not actually upgraded.

Bitcoin blocks are generated every 10 minutes, so you might have to wait 10 minutes or even an hour for your transaction to be confirmed. Ethereum's theoretical block time is 13 seconds, but because the gas market was very inefficient in the past, sometimes if you were unlucky, you might have to wait a completely random amount of time, which could be 5 minutes or even longer for your transaction to be included. EIP-1559 actually basically solves this problem.

So these two things actually keep my transaction confirmation time stable between 5 and 15 seconds today. If you use a Layer 2 solution with fast and free confirmations, it can usually be reduced to one second. So basically, these two main issues are the biggest factors that lead to the centralized user experience being far superior to the decentralized user experience in 2021.

We can also simply evaluate the quality of the user experience of an application. You can see (in the talk slides) a tweet from 2015, which is a demo of a hackathon. And next to it, you can see Firefly, which is a client for Farcaster and Twitter and Lens. If you look at the quality of the user interface, it looks like it's in line with the quality of a Web2 product, but it's a decentralized application.

We've also seen progress on account abstraction this year. We've seen more and more people using security tools. We've seen EIP-7702. We're starting to see mainstream adoption of ZK-snarks, all kinds of different applications. So we have new, better privacy protocols.

Even with the existing usability improvements, a few years ago people were complaining about having to manually switch networks. Today, I don't think I've actually switched networks manually in at least the past year. So the limitations of the technology were a barrier. I even remember that moment when it looked like CryptoKitties might become a real hit app. But then what happened? The success of CryptoKitties drove Ethereum gas prices to the extreme.

Ethereum became essentially unusable, which in itself limited its growth. That's no longer true today, but it basically means that the reason not to use crypto is gone. So what was the reason to get in in the first place? I think one mistake people sometimes make is to look at crypto as an efficiency technology. That's something a lot of people were talking about a decade ago.

Let's look at what people were saying about Bitcoin in 2013 - the benefits of accepting Bitcoin included easier payments, security and control over your funds, zero or low fees, and protection of your identity. Of the first four, two of them are what I think are very unique to cryptocurrencies. The other two used to be unique to cryptocurrencies, but are they still? Today we have Venmo, and some better payment methods, and WeChat Pay.

Centralized systems are getting better, but they still have problems in some places.

Access to payments and financing is still very difficult. Why are they still difficult? It's not because of access to technology. It's basically due to global political constraints. So I think it's important to remember that the benefits that cryptocurrencies have brought to the world are not related to the same kind of technological improvements. Just like switching from a regular jet to a supersonic jet is a technological improvement, but it's a different type of improvement.

In terms of technology, what kind of technology? One way to think about it is to look at this blog post by Josh Stark at the Ethereum Foundation, which was published about two years ago. It's called "Atoms, Institutions, Blockchains." The argument is that blockchains allow us to create a kind of digital solidity, basically any kind of social solidity, which allows us to create durable digital structures that are difficult to change.

And this resists being destroyed, just like you can make solid physical structures out of materials like concrete. If you think about how blockchains are different from other things.

Some of the early cyberpunk technologies, like mixnets, Tor, BitTorrent, etc. You realize that at its core, blockchain is all about creating structures that are durable and extremely robust. So if your file sharing network crashes, that's OK, you just switch to another one. In a week, everyone forgets about it. If one locking mechanism crashes and you switch to another, everyone loses all their money. That's a fundamental difference.

So blockchain enables the internet to not only work around the weaknesses of the old world structures, but also to better build alternatives that can solve similar problems.

Blockchain is like digital concrete. So what is digital concrete for? Digital concrete is used to build virtual castles in the sky. So who here has seen the movie Castle in the Sky? Come on, raise your hand if you have.

So the reason why this movie is interesting is, first of all, I really think it's great. I think it's an absolute masterpiece from Studio Ghibli, and I've seen it at least five times. But it turns out that the movie also sort of accidentally became the inspiration for Ethereum, and I didn’t even realize it. Basically what happened is that in 2013, I was browsing through a list of fictional elements on Wikipedia and I found Ethereum.

It sounded like a really nice name, and it reminded me of a 19th century scientific theory that there was a medium that permeated everything. So I chose the name Ethereum. And then two months later, one of the designers at the Ethereum Foundation, before the organization was even called the Ethereum Foundation, decided to use this diamond as the Ethereum logo. I thought that was cool at the time, and that’s why I like the logo, it’s beautiful.

The serious and fun aspects of cryptocurrency are combined, and that’s what I want people to remember. A castle is something that protects you, your family, and your tribe. A castle can also be a castle in Disneyland, where your community can have fun. A castle can also be a museum that preserves thousands of years of your culture. A castle can also be all of these things, and various types of digital councils. Anything that we can build on Ethereum.

Once we have completed Digital Castle, what should be our key goals? My view all along is that we need to meet the needs of mainstream adoption while maintaining the values of open source and decentralization. What does that mean? For example, wallet security. Historically, there have been basically two ways to keep your funds.

One of the ways is basically you take the crazy self-sovereignty extremist approach. You write down a mnemonic phrase and do everything offline. You carve the mnemonic phrase into a piece of titanium, and then put the titanium into a stronger titanium lockbox, and then bury the lockbox 10 meters underground, and your coins are safe. This is one way.

The other way is to say, I'm just a regular guy, I don't want to go through all this trouble. You give your coins to someone who is trustworthy, there's a "good guy" named Sam, he went to events with Clinton, he must be trustworthy. But two years later, it turns out that you were a little wrong about who is trustworthy and who is not trustworthy. So I think these are not the only two options. If you want to protect yourself from centralized bad actors, then you have to take traditional self-protection measures.

What if you are a centralized exchange platform and you want both? This is where multi-signature smart wallets come in. Multi-signature means that you have multiple keys, for example, you may have 6 keys, and you need 4 to send a transaction. You can even set a rule that only one key is required for small transactions. These keys can be any combination that you control.

Friends and family and so on, you can actually create an Ethereum account, which is a smart contract wallet that can only send transactions if you generate a proof that you control a specific email address, right. So you can basically bring the trust anchor of Web2.0 into the world of Web3.0, where you can even diversify your trust. I personally trust my multi-signature wallet more than any one centralized account.

For example, this is a demo wallet (PPT content) that is completely based on Ethereum, but its user experience is the same as Venmo. Through a special mechanism, users can prove that their withdrawals came from a deposit, without revealing which one, but can prove that their deposits did not come from criminals.

This is a way to give ordinary users a high degree of privacy while meeting many important compliance requirements, but there are actually no backdoors.

You can have privacy and trust at the same time. On the Ethereum mainnet, many technical improvements are happening to make Layer 1 more decentralized and easy to verify while reducing final confirmation time and increasing capacity. These things are already happening.

This is the direction that the Ethereum ecosystem and I think the entire cryptocurrency will go in the next decade.

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