Vitalik Buterin: The man who co-created Ethereum
Vitalik Buterin is a Russian-Canadian writer and programmer and has been involved in the Bitcoin community since 2011, co-founding and writing articles for Bitcoin magazine. He is primarily known as the one behind Ethereum, a blockchain platform that operates as a world computer for decentralized applications, or DApps.
Buterin traveled around the world for six months in 2013 to speak with Bitcoin (BTC) developers. He understood that he could construct a new, possibly superior version by iterating on the Bitcoin blockchain. To explain this idea, he linked Bitcoin to a calculator and a future blockchain to a smartphone and applied the same principle of improving the system's strength by making it more general-purpose to blockchain networks. Bitcoin is the world’s first cryptocurrency, while Ether (ETH) is a digital currency based on the Ethereum blockchain network.
Buterin co-created Ethereum, the blockchain that supports various functions including developing apps and programs with the power of cryptocurrencies such as Ether. Smart contracts, which are essentially programs that can be saved and operated on the Ethereum platform, are how the platform accomplishes this.
Vitalik was born on Jan. 31, 1994, in Kolomna, Moscow Oblast, Russia. He lived in Russia until the age of six and then his parents decided to immigrate to Canada to search for better employment opportunities.
When he was in the third grade of a Canadian primary school, he was placed in a program for the gifted. While in the program, Vitalik quickly realized that his particular skills and talents made him somewhat of an oddity to his peers and even teachers. He was naturally predisposed to math and programming, possessed an early and strong interest in economics and could add three-digit numbers in his head twice as fast as the average person of his age.
Buterin was a stranger to social gatherings and extracurricular events. As he recalls, quite many people talked about him like he was some math genius. He then spent four years at the Abelard School, a private high school in Toronto. The school changed his perception of education, with both his attitude and results changing drastically. In Abelard, he developed his trademark hunger for learning, essentially making knowledge his primary goal in life.
Apart from his academics, he happily played World of Warcraft (WoW) from 2007-2010. However, when Blizzard decided to remove the damage component from his favorite warlock's Siphon Life skill, he sobbed himself to sleep that night. Vitalik realized how horrible centralized services could be, and he quit World of Warcraft.
While looking for a new direction in life, Vitalik came across Bitcoin in 2011. He was initially suspicious, and he couldn't see how it could have any value if it didn't have any physical backing. But as time went on, he learned more and became fascinated.
He wanted to formally join this new and experimental economy by getting his hands on some tokens, but he had neither the computing power to mine them nor the cash to purchase Bitcoin. So, he looked for work in Bitcoin on various forums and eventually began writing articles for a blog, earning him around five Bitcoin per article.
At the same time, he looked into all the different economic, technological and political aspects of cryptocurrency. His articles attracted Mihai Alisie, a Romanian-based Bitcoin enthusiast, leading to the co-founding Bitcoin Magazine in late 2011. He was writing, traveling and working on crypto for over 30 hours a day and hence, he decided to quit university.
He traveled across the world looking at various crypto projects and eventually determined that they were too focused on specific uses and not broad enough.
After looking at the protocols those projects were using, Vitalik realized that it's possible to massively generalize what the protocols were doing by replacing all their functionality with a Turing-complete programming language. In computer science, a Turing-complete programming language enables a computer to solve any particular problem, given the appropriate algorithm and necessary amounts of time and memory. After being refused by the existing projects, he decided to do it himself — thus the birth of Ethereum.
The birth of Ethereum
In late 2013, Vitalik Buterin described his idea in a white paper, which he sent out to a few of his friends who shared it even more. As a result, about 30 people reached out to Vitalik to discuss the concept. Initially, the idea behind Ethereum was still very much about digital currency. Over time, the vision changed, and by the end of January 2014, the team had realized that it is relatively easy to create decentralized file storage, and concepts like name registry can be brought to life with just a couple of lines of code.
The project was publicly announced in January 2014, with the core team consisting of Vitalik Buterin, Mihai Alise, Anthony Di Iorio, Charles Hoskinson, Joe Lubin and Gavin Wood. Buterin also presented Ethereum on stage at a Bitcoin conference in Miami. A few months later, the team decided to hold an initial coin offering (ICO) of Ether, the native token of the Ethereum network, to fund the development. Around the same time, Vitalik himself received the Thiel Fellowship grant of $100,000.
The team raised more than 31,000 BTC from the sale of ETH, around $18 million at the time. The Ethereum team established the Ethereum Foundation, a non-profit organization based in Switzerland, which was tasked with overseeing Ethereum's open-source software development. Despite some turbulence, Ethereum's crowdfunding campaign turned out to be successful.
Overall, Ethereum's design is meant to adhere to several principles including simplicity, universality, modularity, agility, non-discrimination and non-censorship.
The Ethereum network regularly undergoes upgrades to improve its underlying architecture such as London and Berlin upgrades and the upcoming Shanghai hard fork. These upgrades bring together several network changes to continue Ethereum's natural progression towards Ethereum 2.0 (Eth2), also known as Serenity.
The struggles of Ethereum
The DAO attack
Apart from building decentralized applications (DApps) and various other use cases, the Ethereum platform enables users to set up and run DAOs (decentralized autonomous organizations). The DAO raised over $150 million in ETH from more than 11,000 members. However, the DAO was hacked due to flaws in its codebase.
Because of this, Vitalik Buterin advocated for a soft fork of the Ethereum network that included a snippet of code, blacklisting the attacker and preventing them from moving the stolen cash. However, according to the smart contract's regulations, the attacker (or someone portraying as the hacker) wrote an open letter to the Ethereum community claiming that the funds were gained legally. The assailant further stated that anyone attempting to seize Ether would face legal consequences.
As a result, the Ethereum blockchain was hard forked to restore the stolen funds (but not everyone agreed), resulting in the network separating into two blockchains: Ethereum or ETH (newer blockchain) and Ethereum Classic or ETC (original blockchain). This was extremely controversial as blockchains are intended to be unchangeable and censorship-resistant. The scenario posed technical difficulties and called into question the technology's moral and philosophical foundations — as well as the Ethereum project's leadership's resiliency.
ETH is more popular than ETC, and it has the support of the Enterprise Ethereum Alliance, which has over 200 members, including financial titans like JPMorgan and Citigroup. Another distinction is that the Ethereum chain is moving from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus method to make the Ethereum network faster, more efficient and capable of scaling transactions dramatically.
In retrospect, it's evident that Vitalik Buterin, Etheruem developers and the worldwide community took decisions that assured the blockchain's survival in its early days. Ethereum has grown in importance as a pillar of blockchain, cryptocurrency and decentralized finance since the DAO hack.
Vitalik Buterin: Why are the Eth2 upgrades important?
Ethereum 2.0 is expected to bring several significant improvements to the existing ecosystem including cost, speed, functionality and miner concerns. Vitalik realized that Ethereum's current version has become a victim of its own success, with demand driving network fees to new highs, making the bulk of transactions too expensive for the typical user.
Moreover, Ethereum is more of a utility platform like the Apple app ecosystem as there are many other things that people are building in the Ethereum space.
Still, the blockchain's ability to handle all of the transactions is having a hard time keeping up with demand, so all of the scalability and proof-of-stake work that Ethereum's team is doing on the technology side is quite important. In comparison with the earlier proof-of-work paradigm, proof-of-stake allows for faster transactions and reduced fees. The proof-of-stake approach allows Ethereum investors to “stake” their assets in “stake pools” to earn rewards and build their holdings over time.
Buterin noted in May at the StartmeupHK Festival 2021's Virtual Fintech Forum that constructing Ethereum was taking longer than he expected. He stated that the Ethereum team estimated that proof-of-stake would take one year, while it took six years.
Buterin emphasized the importance of having Ethereum's “most promising solution” for long-term scalability as a distinct upgrade from the rest because of the potential risks. This long-awaited feature is called sharding. Sharding is the process of horizontally partitioning a database to distribute the load, reduce network congestion and increase transactions per second. The shard chains are expected to increase Ethereum's data storage and access capability.
The significant change to the new network, on the other hand, indicates a unilateral move from decentralized planning by miners and developers to Vitalik Buterin and his colleagues. It also alters purchasers' expectations of receiving dividends in proportion to their network ownership position. As a result, Ether will become much more analogous to an investment security than decentralized network money.
Buterin in China
Despite the Chinese government’s complex and often conflicting stance on Bitcoin and other cryptocurrencies, blockchain technology and the Ethereum platform are being actively adopted by small and large businesses across the country. Vitalik’s persona plays a part in that development, especially considering that he managed to learn Chinese in just a few months using an app on his phone.
In China, Ethereum is being researched and integrated on institutional levels. For example, Peking University, a #1 ranked university in China, is creating an Ethereum Laboratory that will work on protocol improvements and application use cases in Chinese supply chains and energy markets. The Royal Chinese Mint, a subordinate unit of China Banknote Printing and Minting, is experimenting with Ethereum’s ERC-20 token standard and smart contracts to digitalize the Chinese Yuan. There are also numerous companies and startups, some of which are founding members of the Enterprise Ethereum Alliance that focus their resources on researching and implementing various aspects of the Ethereum platform.
In May 2016, 11 regional commodity exchanges, equity exchanges and financial asset exchanges created a ChinaLedger Alliance. The aim is to establish an open-source Blockchain protocol that developers can further build upon in the future that complies with China’s rather unique regulatory requirements. The Internet Commission of the Securities Association of China is acting in an advisory capacity, with prominent Blockchain community members, including Vitalik Buterin, acting as advisers.
Moreover, Vitalik is also a general partner at Fenbushi Venture Capital, the first and the most prominent China-based capital firm that exclusively invests in Blockchain-enabled companies.
Buterin in Russia
The basic concept of cryptocurrencies — their decentralized and uncontrollable nature — is somewhat rebellious and anti-establishment, which seems to be the opposite of what Russia stands for, making Buterin an extraordinarily prominent and well-regarded person in Russia.
In August 2017, more than 5,000 people gathered in the Skolkovo Innovation Center in Moscow for Vitalik’s speech. He mentioned that Russia is among the top three states when it comes to research and testing of Blockchain technologies, alongside England and Singapore. Moreover, Moscow boasts one of the enormous clusters of nodes on the entire Ethereum network.
Vitalik also mentioned that Russian President Vladimir Putin is aware of blockchain, saying that this means that the hype around the technology is at its peak. Buterin met with Putin during his visit, with some media outlets claiming this meeting was one of Vitalik’s conditions for the trip. During the meeting, Buterin described the opportunities for using the technologies he developed in Russia, and the president has supported this idea.
In October 2017, Russia’s largest and state-owned bank Sberbank announced that it joined Enterprise Ethereum Alliance. Before that, the only Russian company in the alliance was QIWI — an electronic payment service provider. Already, Sberbank reported that it has been working with regulators, the minister of economy, other Russian banks and Russia’s International Chamber of Commerce and completed testing on a “smart” letter of credit and a letter of guarantee.
During his visit to Russia in Aug. 2017, Buterin has also struck a deal with Vladislav Martynov, CEO of Yota Services, a Russia-based mobile communications and connectivity devices company. The agreement entails creating a new entity — Ethereum Russia — which will provide education, events and architecture review for a state-owned Russian development bank Vneshtorgbank, or VTB bank. Moreover, the VTB bank financed a new center for blockchain research at the National University of Science and Technology (MISiS), which Ethereum Russia will also support. The new center aimed at providing solutions to government services, collaborating with both government and corporate bodies.
Philanthropy efforts and awards
On May 12, 2021, Vitalik Buterin was praised for donating $1.2 billion to India's COVID-19 relief fund and putting a leash on dog meme coins (which had been gifted into his Etherscan public wallet). These tokens included Akita Inu (AKITA), Shiba Inu (SHIB) and Dogelon Mars (ELON). The most significant payment, 13,292 ETH, was sent to Givewell, a non-profit charity evaluation service. The Methuselah Foundation, which focuses on making people live longer, received 1,000 ETH and 430 billion ELON tokens. He donated 1,050 ETH to the Machine Intelligence Research Institute, which is dedicated to ensuring that artificial intelligence has a good influence on society.
Buterin was awarded the Thiel Fellowship Award in 2014 to bring his innovative scientific and technical projects to life. He has also won the World Technology Network (WTN) prize for IT software in 2014, defeating Mark Zuckerberg of Facebook. He also made it to Fortune 40 under 40 list and Forbes 30 under 30 lists. In 2018, the University of Basel awarded Buterin with an honorary degree. At the Dies Academicus — an annual celebration of the university's establishment — he was honored by the institution's Faculty of Business and Economics for his work on blockchain development.
Buterin’s plans for the future
Buterin expects that Ethereum will be “ruling the Metaverse” in ten years. The metaverse is an idea for a vast virtual world where people can interact with one another and with digital objects as avatars.
According to him, Ethereum is amazingly positioned to be a fundamental part of the Metaverse as the internet plus the shared state allows objects to flow between platforms. Overall, he believes that the Ethereum Name Service (ENS) ecosystem provides a web 3.0 username for all of your Bitcoin addresses and decentralized websites, as well as the concept of users and items having cross-platform identities, is an obvious application that people don't understand, but ENS offers these solutions.
Buterin is most intrigued about Zero-Knowledge Succinct Non-Interactive Argument of Knowledge, or zk-SNARKS, a cryptographic proof that allows one party to establish that it has specific information without exposing it. It essentially eliminates the need for interaction between the prover and the verifier.
He also believes that zk-SNARKs will be the most extensively deployed privacy-preserving technology in the next 30 years. Buterin thinks it will be “a big revolution” as it spreads into the mainstream over the next 10-20 years.
Ethereum is a long-term, function-oriented cryptocurrency that will help decentralized finance, or DeFi, succeed in the future. However, many people are waiting for official laws to be adopted before taking action.
While long-time cryptocurrency investors lament the prospect of regulation restricting the market's existing flexibility, big investors and corporations see the eventual implementation of such rules as a source of stability that might lead to widespread adoption. When markets are regulated, they become safer for regular people, and Ethereum, with its wide range of decentralized apps and applications, can become “normal.”